CASH ACCUMULATION TRUST, 485APOS, 1998-10-01

CASH ACCUMULATION TRUST
485APOS, 1998-10-01

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<PAGE>

As filed with the Securities and Exchange Commission on October 1, 1998

Securities Act Registration Statement No. 2-91889
Investment Company Act Registration No. 811-4060
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM N-1A

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 / /

PRE-EFFECTIVE AMENDMENT NO. / /

POST-EFFECTIVE AMENDMENT NO. 24 /X/

AND/OR

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /

AMENDMENT NO. 25 /X/

(Check appropriate box or boxes)

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

CASH ACCUMULATION TRUST

(Exact name of registrant as specified in charter)

GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077

(Address of Principal Executive Offices) (Zip Code)

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

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (973) 367-7530

S. JANE ROSE, ESQ.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
(Name and Address of Agent for Service of Process)

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective
date of the Registration Statement.

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE
(CHECK APPROPRIATE BOX):

/ / immediately upon filing pursuant to paragraph (b)

/ / on (date) pursuant to paragraph (b)

/X/ 60 days after filing pursuant to paragraph (a)(1)

/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)

/ / on (date) pursuant to paragraph (a)(2) of Rule 485.

IF APPROPRIATE, CHECK THE FOLLOWING BOX:

/ / this post-effective amendment designates a new
effective date for a previously filed
post-effective amendment.

Titles of Securities Being Registered ....... Shares of beneficial interest,
without par value.

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<PAGE>

TYPE OF FUND
Money market

INVESTMENT OBJECTIVE
Current income to the extent consistent
with preservation of capital and
liquidity

CASH ACCUMULATION TRUST
National Money Market Fund

PROSPECTUS
DECEMBER __, 1998

As with all mutual funds, filing this prospectus with the Securities and
Exchange Commission does not mean that the SEC has judged this Fund a good
investment, nor has the SEC determined that this Prospectus is complete or
accurate. It is a criminal offense to state otherwise.

[LOGO]
PRUDENTIAL
INVESTMENTS
<PAGE>

TABLE OF CONTENTS

1 RISK/RETURN SUMMARY
1 Investment Objective and Principal Strategies
1 Principal Risks
2 Evaluating Performance
3 Shareholder Fees and Expenses

4 HOW THE FUND INVESTS
4 Investment Objective and Policies
5 Other Investments
6 Additional Strategies
7 Investment Risks

8 HOW THE FUND IS MANAGED
8 Manager
8 Investment Adviser
8 Distributor
8 Year 2000

10 FUND DISTRIBUTIONS AND TAX ISSUES
10 Distributions
10 Tax Issues

12 HOW TO BUY AND SELL SHARES OF THE FUND
12 How to Buy Shares
14 How to Sell Your Shares

16 FINANCIAL HIGHLIGHTS

17 THE PRUDENTIAL MUTUAL FUND FAMILY

FOR MORE INFORMATION (BACK COVER)
<PAGE>

RISK/RETURN SUMMARY

This section highlights key information about the NATIONAL MONEY MARKET FUND,
which we refer to as "the Fund." Additional information follows this summary.

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

Our investment objective is CURRENT INCOME to the extent CONSISTENT WITH THE
PRESERVATION OF CAPITAL AND LIQUIDITY. To achieve this objective, we invest
primarily in commercial paper, asset-backed securities, obligations of
financial institutions and other high-quality money market instruments that
mature in thirteen months or less. While we make every effort to achieve our
investment objective and maintain a net asset value of $1 per share, we can't
guarantee success. To date, the Fund's net asset value has never deviated
from $1 per share.

SIDE BAR
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MONEY MARKET FUNDS

Money market funds--which hold high-quality short-term debt obligations--provide
investors with a lower risk, highly liquid investment option. These funds
attempt to maintain a net asset value of $1 per share, although there can be no
guarantee that they will always be able to do so.
- - --------------------------------------------------------------------------------

PRINCIPAL RISKS

Although we try to invest wisely, all investments involve risk. The money
market securities in which the Fund invests are generally subject to the risk
that the issuer may be unable to make principal and interest payments when
they are due. The Fund's investments in foreign securities involve certain
additional risks. For example, foreign banks and companies generally are not
subject to regulatory requirements comparable to those applicable to U.S.
banks and companies. In addition, political developments and changes in
currency rates may adversely affect the value of the Fund's foreign
securities. In all cases, however, we invest only in U.S. dollar-denominated
securities. Although investments in mutual funds involve risk, investing in
money market portfolios like the Fund is generally less risky than investing
in other types of funds. This is because the Fund invests only in high-quality
securities, limits the average maturity of the portfolio to 90 days or less,
and limits the maturity of any security to no more than thirteen months. To
satisfy the average maturity and maximum maturity requirements, securities
with demand features, described elsewhere, are treated as maturing on the
date that the Fund can demand repayment of the security.

An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the Fund.

<PAGE>

EVALUATING PERFORMANCE

A number of factors - including risk - can affect how the Fund performs. The
following bar chart and table show the Fund's performance over the last 10 years
and demonstrate how returns can change from year to year. Past performance
does not mean that the Fund will achieve similar results in the future.

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ANNUAL RETURNS

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

10%
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8%
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6%
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4%
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2%
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0%
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</TABLE>

BEST QUARTER: WORST QUARTER:
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AVERAGE ANNUAL RETURNS as of 12-31-97

1 YR 5 YRS 10 YRS SINCE
INCEPTION
<S> <C> <C> <C> <C>
FUND SHARES
------ ------- -------- -------
LIPPER ANALYTICAL SERVICES
U.S. TAXABLE MONEY MARKET
FUNDS (1)
------ ------- -------- -------
</TABLE>

7-DAY YIELD (AS OF DECEMBER 31, 1997)(2)

National Money Market Fund %
---
IBC General Purpose
Money Market Funds (3) %
---

(1) The Lipper Analytical Services U.S. Taxable Money Market Funds average is
based upon the average return of all mutual funds in the U.S. Taxable Money
Market Funds category.

(2) The Fund's yield is after deduction of expenses.

(3) The IBC General Purpose Money Market Funds average is based on the
average gross return of general purpose money market funds with assets
greater than $500 million.

<PAGE>

SHAREHOLDER FEES AND EXPENSES

This table shows the fees and expenses of the Fund.

SHAREHOLDER FEES (paid directly from your investment)
Maximum sales charge (load)
imposed on purchases (as a percentage of
offering price) . . . . . . . . . . . . . . . . . . . . . . .None
Maximum deferred sales charge (load) (as a percentage
of the lower of original purchase price or
sale proceeds) . . . . . . . . . . . . . . . . . . . . . . .None
Maximum sales charge (load)
imposed on reinvested dividends
and other distributions. . . . . . . . . . . . . . . . .None
Redemption fees. . . . . . . . . . . . . . . . . . . . . . . . . .None
Exchange fee . . . . . . . . . . . . . . . . . . . . . . . . . . .None

ANNUAL FUND OPERATING EXPENSES
(DEDUCTED FROM FUND ASSETS)
Management fees. . . . . . . . . . . . . . . . . . . . . . . . . .39%
+Distribution (12b-1) and service fees. . . . . . . . . . . . . .10%
+Other expenses. . . . . . . . . . . . . . . . . . . . . . . . . .13%
-----
=TOTAL ANNUAL FUND OPERATING EXPENSES. . . . . . . . . . . . . . .62%
-----
-----

FEES AND EXPENSES EXAMPLE

The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------- ------- --------
<S> <C> <C> <C> <C>
$ $ $ $
------ ------ ------ -------
</TABLE>
<PAGE>

HOW THE FUND INVESTS

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is CURRENT INCOME to the extent CONSISTENT
WITH THE PRESERVATION OF CAPITAL AND LIQUIDITY. While we make every effort
to achieve our objective, we can't guarantee success.

The Fund invests in high-quality money market instruments to try to provide
investors with current income while maintaining a stable net asset value of
$1 per share. We manage the Fund to comply with specific rules designed for
money market mutual funds. We will purchase obligations such as, but not
limited to, commercial paper, asset-backed securities, certificates of
deposit, time deposits of banks, bankers' acceptances, bank notes, funding
agreements, and other obligations of both banks and corporations. These
obligations must be rated in one of the two highest rating categories by at
least two nationally recognized statistical rating organizations (NRSROs),
such as Moody's Investors Service (rated at least Prime-2) and Standard &
Poor's Ratings Group (rated at least A-2) or, if unrated, of comparable
quality. We may also purchase securities of the U.S. Government and its
agencies. All securities that we purchase will be denominated in U.S.
dollars.

COMMERCIAL PAPER is short-term debt obligations of banks, corporations and other
borrowers. The obligations are usually issued by financially strong businesses
and often include a line of credit to protect purchasers of the obligations. An
ASSET-BACKED SECURITY is a loan or note that pays interest based upon the cash
flow of a pool of assets, such as mortgages, loans and credit card receivables.
CERTIFICATES OF DEPOSIT, TIME DEPOSITS and BANKERS' ACCEPTANCES are obligations
issued by or through a bank. These instruments depend upon the strength of the
bank involved in the borrowing to give investors comfort that the borrowing will
be repaid when promised.

DEBT OBLIGATIONS in general, including those listed above and any others that
we may purchase, are basically written promises to repay a debt. Among the
various types of debt securities we may purchase, the terms of repayment may
vary, as may the commitment of other parties to honor the obligations of the
issuer of the security. We may purchase securities that include DEMAND
FEATURES, which allow us to demand repayment of a debt obligation before the
obligation is due or "matures". This means that we can purchase longer-term
securities because of the expectation that we can demand repayment of the
obligation at an agreed-upon price within a relatively short period of time.
This procedure follows the rules applicable to money market funds. We will
not purchase an instrument that allow us to resell a security, known as a
"put", separately from the longer term security to which it relates.

The securities that we may purchase may change over time as new types of
money market instruments are developed. We will purchase these new
instruments, however, only if their characteristics and features follow the
rules governing the operation of money market mutual funds.

<PAGE>

The Fund's investment objective is a fundamental policy that cannot be
changed without shareholder approval. The Board of Cash Accumulation Trust
can change investment policies that are not fundamental.

OTHER INVESTMENTS

The Fund may also invest in DEBT OBLIGATIONS ISSUED BY THE U.S. TREASURY.
Treasury securities have varying interest rates and maturities, but they are
all backed by the full faith and credit of the U.S Government.

Brokerage firms sometimes "strip" Treasury debt; obligations into their
component parts: the Treasury's obligation to make periodic interest payments
and its obligation to repay the amount borrowed. These STRIPPED SECURITIES are
sold to investors separately. Stripped securities do not make periodic interest
payments. They are usually sold at a discount and then redeemed for their
face value on their maturity dates. These securities increase in value when
interest rates fall and lose value when interest rates rise. However, the value
of stripped securities generally fluctuates more in response to interest rate
movements than the value of traditional bonds. The Fund may try to earn money
by buying stripped securities at a discount and either selling them after they
increase in value or holding them until they mature.

The Fund may also invest in other DEBT OBLIGATIONS ISSUED OR GUARANTEED BY THE
U.S. GOVERNMENT and government-related entities. Some of these debt securities
are backed by the full faith and credit of the U.S. Government, like obligations
of the Government National Mortgage Association (GNMA or "Ginnie Mae"). Debt
securities issued by other government entities, like obligations of the Federal
National Mortgage Association (FNMA or "Fannie Mae") and the Student Loan
Marketing Association (SLMA or "Sallie Mae"), are not backed by the full faith
and credit of the U.S. Government. However, these issuers have the right to
borrow from the U.S. Treasury to meet their obligations. In contrast, the debt
securities of other issuers, like the Farm Credit System, depend entirely upon
their own resources to repay their debt.

ADDITIONAL STRATEGIES

We may use a number of investment strategies to try to improve the Fund's
returns or protect its assets.

The Fund may use REPURCHASE AGREEMENTS, where a party agrees to sell a security
to the Fund and then repurchase it at an agreed-upon price and time, which
creates a fixed return for the Fund. The Fund will only enter into these
repurchase agreements with parties whom we believe can honor their obligations
in the transactions.

The Fund may use REVERSE REPURCHASE AGREEMENTS where we borrow money on a
temporary basis by selling a security with an obligation to repurchase it at an
agreed-upon price and time.

The Fund may also purchase money market obligations under a FIRM COMMITMENT
AGREEMENT. When the Fund makes this type of purchase, the price and interest
rate are

<PAGE>

fixed at the time of purchase, but delivery and payment for the obligations take
place at a later time. The Fund does not earn interest income until the date
the obligations are delivered.

The Fund may purchase FLOATING RATE and VARIABLE RATE securities. These
securities pay interest at rates that change periodically to reflect changes
in market interest rates. Because these securities adjust the interest they
pay, they may be beneficial when interest rates are rising because of the
additional return the Fund will receive, and they may be detrimental when
interest rates are falling because of the reduction in interest payments to
the Fund.

The Fund also follows certain policies when it: BORROWS MONEY (the Fund may
borrow up to 10% of the value of its total assets); LENDS ITS SECURITIES to
others; and holds ILLIQUID SECURITIES (the Fund may hold up to 10% of its net
assets in securities, including restricted securities, those without a
readily available market and repurchase agreements with maturities longer
than seven days). The Fund is subject to certain investment restrictions that
are fundamental policies, which means they cannot be changed without
shareholder approval. For more information about these restrictions, see the
SAI.

INVESTMENT RISKS

The Fund's investments in money market instruments involve both CREDIT RISK --
the possibility that the issuer will default, and MARKET RISK -- the risk that
an instrument will lose value because interest rates change or investors lose
confidence in the issuer's ability to pay back the debt. To limit these risks,
we invest only in high-quality securities with short maturities (no more than
thirteen months).

Foreign securities and foreign markets involve additional risk. Foreign laws
and accounting standards typically are not as strict as they are in the U.S.
Foreign fixed income and currency markets may be less stable than U.S. markets.
Changes in the exchange rates of foreign currencies can affect the value of
foreign assets. There is a risk that foreign companies and governments, just as
is the case in the U.S., will not be prepared to handle issues that will arise
when we reach the year 2000 if their computer systems cannot differentiate the
year 2000 from the year 1900.
<PAGE>

This chart outlines the key risks and potential rewards of the Fund's
principal investments.

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INVESTMENT TYPE
% OF FUND'S TOTAL ASSETS RISKS POTENTIAL REWARDS
- - ---------------------------- ----------------------- ------------------------
<S> <C> <C>
HIGH-QUALITY MONEY MARKET - Credit risk-the risk - Regular interest
OBLIGATIONS OF ALL that the borrower income
TYPES can't pay back the
------------------------ money borrowed or make
interest payments

Up to 100% - Market risk - the - May be more secure
risk that the than stock and
obligations may lose equity securities
value because since companies
interest rates must pay their
change or there is a debts before
lack of confidence they pay dividends
in the borrower
- - --------------------------------------------------------------------------------
MONEY MARKET OBLIGATIONS - Foreign markets, - Investors may
OF FOREIGN ISSUERS economies and realize higher
(DOLLAR- political systems returns based upon
DENOMINATED) may not be as stable higher interest
------------------------ as those in the U.S. rates paid on
Up to 100% - May be less public foreign investments
information about
foreign issuers
- - --------------------------------------------------------------------------------
ILLIQUID - May be difficult to - May offer a more
SECURITIES value and sell attractive yield
------------------------ - Could result in than more liquid
Up to 10% of net assets losses securities
- - --------------------------------------------------------------------------------
</TABLE>

HOW THE FUND IS MANAGED

MANAGER
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC (PIFM)
GATEWAY CENTER THREE, 100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077

Under a management agreement with the Fund, PIFM manages the Fund's investment
operations and administers its business affairs. For the fiscal year ended
September 30, 1998, the Fund paid PIFM management fees of [__%] of the Fund's
average net assets.

<PAGE>

As of October 31, 1998, PIFM served as the Manager to all __ of the Prudential
Mutual Funds, and as Manager or administrator to __ closed-end investment
companies, with aggregate assets of approximately $__ billion.

INVESTMENT ADVISER

The Prudential Investment Corporation, known as Prudential Investments, is the
Fund's investment adviser. Its address is Prudential Plaza, 751 Broad Street,
Newark, New Jersey 07102. PIFM has responsibility for all investment advisory
services, supervises Prudential Investments and reimburses Prudential
Investments for its reasonable costs and expenses.

DISTRIBUTOR

Prudential Investment Management Services LLC (PIMS) distributes the Fund's
shares under a Distribution Agreement with the Fund. The Fund has a
Distribution and Service Plan under Rule 12b-1 of the Investment Company Act.
Under the Plan and the Distribution Agreement, PIMS pays the expenses of
distributing the Fund's shares and provides certain shareholder support
services. The Fund pays distribution and other fees to PIMS as compensation
for its services. These fees - known as 12b-1 fees - are shown in the
SHAREHOLDER FEES AND EXPENSES table.

YEAR 2000

Many computer systems used today cannot tell the year 2000 from the year 1900
because of the way dates are encoded. This could be a problem when the year
2000 arrives and could affect securities trades, interest and dividend payments,
pricing and account services. Although we can't guarantee that this won't be a
problem, the Fund's service providers have been working on adapting their
computer systems. They expect that their systems, and the systems of their
service providers, will be ready for the new millennium.

FUND DISTRIBUTIONS AND TAX ISSUES

Investors who buy shares of the Fund should be aware of some important tax
issues. For example, the Fund distributes DIVIDENDS and CAPITAL GAINS, if any,
to shareholders. These distributions are subject to taxes, unless you hold your
shares in a 401(k) plan, an Individual Retirement Account (IRA), or some other
qualified tax-deferred plan or account.

The following briefly discusses some of the important tax issues you should be
aware of, but is not meant to be tax advice. For tax advice, please speak with
your tax adviser.

DISTRIBUTIONS

The Fund distributes DIVIDENDS of any net investment income to shareholders
every month. The dividends you receive from the Fund will be taxed as ORDINARY
INCOME, whether or not they are reinvested in the Fund.

<PAGE>

Although the Fund is not likely to realize capital gains because of the types of
securities we purchase, any CAPITAL GAINS will be paid to shareholders
(typically once a year). CAPITAL GAINS are generated when the Fund sells its
assets for a profit.

For your convenience, Fund distributions of dividends and capital gains are
AUTOMATICALLY REINVESTED in the Fund. If you ask us to pay the distributions in
cash, we will send you a check instead of purchasing more shares of the Fund.
Either way, the distributions are subject to taxes, unless your shares are
held in a qualified tax-deferred plan or account. For more information about
automatic reinvestment and other shareholder services, see Step 3: Additional
shareholder services.

TAX ISSUES

FORM 1099

During the tax season every year, you will receive a FORM 1099, which reports
the amount of dividends and capital gains we distributed to you during the prior
year. If you own shares of the Fund as part of a qualified tax-deferred plan or
account, your taxes are deferred, so you will not receive a Form 1099. However,
you will receive a Form 1099 when you take any distributions from your qualified
tax-deferred plan or account.

Fund distributions are generally taxable to you in the year they are
received, except when we declare certain dividends in December of a calendar
year, and actually pay them in January of the following year. In such cases,
the dividends are treated as if they were paid on December 31 of the prior
year.

WITHHOLDING TAXES

If federal law requires you to provide the Fund with your tax identification
number and certifications as to your tax status, and you fail to do this, we
will withhold and pay to the U.S. Treasury 31% of your distributions. If you
are subject to backup withholding, we will withhold and pay to the U.S. Treasury
31% of your distributions. Dividends of net investment income and short-term
capital gains paid to a nonresident foreign shareholder generally will be
subject to a U.S. withholding tax of 30%. This rate may be lower, depending on
any tax treaty the U.S. may have with the shareholder's country.

HOW TO BUY AND SELL SHARES OF THE FUND

HOW TO BUY SHARES

STEP 1: OPEN AN ACCOUNT

Shares of the Fund are available only to clients of Prudential Securities
Incorporated that participate in any of the following managed account
programs:

<PAGE>

- Gibraltar Advisors
- Prudential Securities Portfolio Management (PSPM)
- Quantum Portfolio Management (Quantum)
- Managed Assets Consulting Services (MACS)
- Managed Assets Consulting Services--Custom Services (MACS--CS)
- Prudential Securities Investment Supervisory Group

Eligibility for any of these programs is within the discretion of
Prudential Securities. You should contact a Prudential Securities financial
adviser for more information. We have the right to reject any purchase
order or suspend or modify the sale of Fund shares.

AUTOMATIC PURCHASE (AUTOSWEEP). Shares of the Fund can only be purchased
through automatic investment procedures (the Autosweep program). The Autosweep
program allows you to designate a money market fund as your primary money sweep
fund. If you do not designate a primary money sweep fund, the Fund will
automatically be your primary money sweep fund. You have the option to change
your primary money sweep fund at any time by notifying your Prudential
Securities financial adviser.

When your Prudential Securities account has a credit balance (that is,
immediately available funds), Prudential Securities will purchase shares of the
Fund equal to that amount. This will occur on the business day following
confirmation that a credit balance exists. Prudential Securities may use and
retain the benefit of credit balances in your account until Fund shares are
purchased (that is, until the next business day).

Your investment in the Fund will be held in the name of Prudential Securities.
Prudential Securities will receive all statements and dividends from the Fund
and will, in turn, send you account statements showing your purchases, sales and
dividends.

AUTOMATIC PURCHASE PROCEDURES. Prudential Securities will purchase shares of
the Fund on behalf of participating clients each business day at the current NAV
as described below.

Credit balances of $1 or more in your account will automatically be invested
in shares of the Fund. Where your credit balance results from a sale of
securities, the available cash will be invested in the Fund on settlement
date. Where your credit balance results from any other transaction (that is,
receipt of a dividend or interest payment, maturity of a bond or your own
cash payment to your securities account), the available cash will be invested
in the Fund on the first business day after it is received by Prudential
Securities. All available cash in your account, regardless of its source,
will automatically be invested.

You will begin earning dividends on your shares purchased through Autosweep on
the day the order is placed. Prudential Securities will purchase shares of the
Fund at 4:30 p.m. New York Time on the business day the order is placed and
payment for the shares will be made by 4:30 p.m. New York Time on the next
business day.

<PAGE>

STEP 2: UNDERSTANDING THE PRICE YOU'LL PAY

When you invest in a mutual fund, you buy shares of the Fund. Shares of a money
market mutual fund, like the Fund, are priced differently than shares of common
stock and other securities.

The share price of a mutual fund--known as the Net Asset Value or NAV per
share--is determined by a simple calculation; the total value of the fund
(assets minus liabilities) divided by the total number of shares outstanding.
In determining NAV, the Fund values its securities using the amortized cost
method. The Fund seeks to maintain an NAV of $1 per share at all times.

We determine the NAV of our shares once each business day at 4:30 p.m. New
York Time on days that the New York Stock Exchange is open for trading. We
do not determine NAV on days when we have not received any orders to purchase
or sell or when changes in the value of the Fund's portfolio do not materially
affect the NAV.

STEP 3: ADDITIONAL SHAREHOLDER SERVICES

As a Fund shareholder, you can take advantage of the following services and
privileges:

AUTOMATIC REINVESTMENT. As we explained in the Fund Distributions and Tax
Issues section, the Fund pays out--or distributes--its net investment income and
any capital gains to all shareholders. For your convenience, we will
automatically reinvest your distributions in the Fund at NAV. If you want your
distributions paid in cash, you can indicate this preference on your
application, or notify your Prudential Securities financial adviser not less
than five full business days before the date we determine who receives
dividends.

REPORTS TO SHAREHOLDERS. Every year we will send you an annual report (along
with an updated prospectus) and a semi-annual report, which contain important
financial information about the Fund. If there are multiple shareholders in the
same household, you will receive only one copy of each of these per household.

HOW TO SELL YOUR SHARES

You can sell your shares of the Fund for cash (in the form of a check) at any
time, subject to certain restrictions.

When you sell shares of the Fund - also known as redeeming shares - the
price you will receive will be the NAV next determined after the we receive your
order to sell. Prudential Securities must receive your order to sell by 4:30
p.m. New York Time to process the sale on that day.

Generally, we will pay you for the shares that you sold within seven days after
we receive your sell order.

<PAGE>

RESTRICTIONS ON SALES

There are certain times when you may not be able to sell shares of the Fund
or when we may delay paying you the proceeds from a sale. This may happen
during unusual market conditions or emergencies when the Fund can't determine
the value of its assets or sell its holdings. For more information, see the
SAI, "Purchase and Redemption of Fund Shares."

REDEMPTION IN KIND

If the sales of Fund shares you make during any 90-day period reaches the
lesser of $250,000 or 1% of the value of the Fund's net assets, we can then
give you securities from the Fund's portfolio instead of cash. If you want
to sell the securities for cash, you would have to pay the costs charged by a
broker. See the SAI, "Purchase and Redemption of Fund Shares."

AUTOMATIC REDEMPTION FOR AUTOSWEEP

Because you participate in the Autosweep program, your Fund shares will be
automatically redeemed to cover any deficiency in your Prudential Securities
account. The amount redeemed will be the nearest dollar amount necessary to
cover the deficiency.

The amount of the redemption will be the lesser of the total value of Fund
shares held in your Prudential Securities account or the deficit in your
Prudential Securities account. If you use this automatic redemption procedure
and want to pay for a securities transaction in your account other than through
this procedure, you must deposit cash in your securities account before the
settlement date. If you use this automatic redemption procedure and want to pay
any other deficit in your securities account other than through this procedure,
you must deposit cash in your securities account before you incur the deficit.

AUTOMATIC REDEMPTION

Redemptions are automatically made by Prudential Securities, to the nearest
dollar, on each day to satisfy deficits from securities transactions or to
honor your redemption requests. Your account will be automatically scanned
for deficits each day and, if there is insufficient cash in your account, we
will redeem an appropriate number of shares of the Fund at the next
determined NAV to satisfy any remaining deficit. You are entitled to any
dividends declared on the redeemed shares through the day before the
redemption is made. Dividends declared on the redemption date will be
retained by Prudential Securities, which has advanced monies to satisfy
deficits in your account.

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights will help you evaluate the Fund's financial
performance. The TOTAL RETURN in the chart represents the rate that a
shareholder earned on an investment in the Fund, assuming reinvestment of all
dividends and other distributions. The information is for shares of the Fund
for the periods indicated. The financial statements and audit reports are
available upon request.

Review this chart with the financial statements, which appear in the SAI.
Additional performance information is contained in the annual report, which
you can receive at no charge.

The financial highlights for the two fiscal years ended September 30, 1998
were audited by , and the financial highlights for
the three years ended September 30, 1996 were audited by other independent
auditors, whose reports were unqualified.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period . . . . . . . . . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Income from investment
operations-net investment
income . . . . . . . . . . . . . . . . . .05 .05 .05 .03 .02 .04 .06 .08 .09
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Dividends to shareholders. . . . . . . . . . ( ) .05 .05 .05 .03 .02 .04 .06 .08 .09
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- -----

TOTAL RETURN: . . . . . . . . . . . . . . . % 5.0% 5.0% 5.2% 3.2% 2.3% 3.7% 6.2% 7.8% 8.6%
-----

RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of period
(000) . . . . . . . . . . . . . . . . . $ $702 $652 $685 $823 $652 $2.286 $2.523 $2.217 $2.438
-----
Ratios to average net assets

Net investment income. . . . . . . . . % 4.89% 4.86% 5.16% 3.20% 2.26% 3.70% 6.17% 7.75% 8.64%
-----
Expenses . . . . . . . . . . . . . . . . % .65% .69% .69% .61% .71% .74% .74% .73% .71%
-----
</TABLE>

<PAGE>

THE PRUDENTIAL MUTUAL FUND FAMILY

Prudential offers a broad range of mutual funds designed to meet your
individual needs. For information about these funds, contact your dealer or
Prudential professional or call us at (800) 225-1852.

STOCK FUNDS GLOBAL FUNDS
Prudential Balanced Fund Prudential Developing Markets Fund
Prudential Distressed Securities Fund, Prudential Developing Markets Equity
Inc. Fund
Prudential Emerging Growth Fund, Inc. Prudential Latin America Equity Fund
Prudential Equity Fund, Inc. Prudential Europe Growth Fund, Inc.
Prudential Equity Income Fund Prudential Global Genesis Fund, Inc.
Prudential Index Series Fund Prudential Global Limited Maturity
Prudential Bond Market Index Fund Fund, Inc.
Prudential Europe Index Fund Limited Maturity Portfolio
Prudential Pacific Index Fund Prudential Intermediate Global Income
Prudential Small-Cap Index Fund Fund, Inc.
Prudential Stock Index Fund Prudential International Bond Fund,
The Prudential Investment Portfolios, Inc.
Inc. Prudential Natural Resources Fund,
Prudential Active Balanced Fund Inc.
Prudential Jennison Growth Fund, Prudential Pacific Growth Fund, Inc.
Prudential Jennison Growth & Income Prudential World Fund, Inc.
Fund Global Series
Prudential Mid-Cap Value Fund International Stock Series
Prudential Real Estate Securities Fund The Global Total Return Fund, Inc.
Prudential Small-Cap Quantum Fund, Global Utility Fund, Inc.
Inc.
Prudential Small Company Value Fund, MONEY MARKET FUNDS
Inc. TAXABLE MONEY MARKET FUNDS
Prudential 20/20 Focus Fund Cash Accumulation Trust
Prudential Utility Fund, Inc. Liquid Assets Fund
Nicholas-Applegate Fund, Inc. National Money Market Fund
Nicholas-Applegate Growth Equity Fund Prudential Government Securities Trust
Money Market Series
TAXABLE BOND FUNDS U.S. Treasury Money Market Series
Prudential Diversified Bond Fund, Inc. Prudential Special Money Market Fund,
Prudential Government Income Fund, Inc.
Inc. Money Market Series
Prudential Government Securities Trust Prudential MoneyMart Assets, Inc.
Short-Intermediate Term Series
Prudential High Yield Fund, Inc. Tax-Free Money Market Funds
Prudential Mortgage Income Fund, Inc. Prudential Tax-Free Money Fund, Inc.
Prudential Structured Maturity Fund, Prudential California Municipal Fund
Inc. California Money Market Series
Income Portfolio Prudential Municipal Series Fund
Connecticut Money Market Series
TAX-EXEMPT BOND FUNDS Massachusetts Money Market Series
Prudential California Municipal Fund New Jersey Money Market Series
California Series New York Money Market Series
California Income Series COMMAND FUNDS
Prudential Municipal Bond Fund Command Money Fund
High Income Series Command Government Fund
Insured Series Command Tax-Free Fund
Intermediate Series Institutional Money Market Funds
Prudential Municipal Series Fund Prudential Institutional Liquidity
Florida Series Portfolio, Inc.
Maryland Series Institutional Money Market Series
Massachusetts Series
Michigan Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund,
Inc. <PAGE>

FOR MORE INFORMATION

Please read this prospectus before you invest in the Fund and keep it for future
reference. You can get additional information about the Fund in the following
documents:

STATEMENT OF ADDITIONAL INFORMATION
(incorporated by reference into this Prospectus)
ANNUAL REPORT
(contains a discussion of the market conditions and investment
strategies that significantly affect the Fund's performance)
SEMI-ANNUAL REPORT

To get this information free of charge or for shareholder questions, contact
your dealer, the Distributor, or Prudential at:
PRUDENTIAL MUTUAL FUND SERVICES LLC
P.O. BOX 15005
NEW BRUNSWICK, NEW JERSEY 08906-5005
(800) 225-1852
(908) 417-7555 (if calling from outside the U.S.)

Dealers should contact:
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
P.O. BOX 15035
NEW BRUNSWICK, NEW JERSEY 08906-1852
(800) 225-1852

Visit Prudential's web site at HTTP://WWW.PRUDENTIAL.COM

You can also obtain copies of Fund documents from the Securities and Exchange
Commission as follows:

BY MAIL: IN PERSON:
SECURITIES AND EXCHANGE COMMISSION PUBLIC REFERENCE ROOM IN WASHINGTON
PUBLIC REFERENCE SECTION D.C.
WASHINGTON, D.C. 20549-6009 (For hours of operation, call 1-800-
(The SEC charges a fee to copy any SEC-0330)
documents)

THE FUND'S CUSIP NUMBER IS: VIA THE INTERNET:
147541106 HTTP://WWW.SEC.GOV
Investment Company Act File No: 811-4060

<PAGE>

TYPE OF FUND
Money market

INVESTMENT OBJECTIVE
Current income to the extent consistent
with preservation of capital and
liquidity

CASH ACCUMULATION TRUST
Liquid Assets Fund

PROSPECTUS
DECEMBER __, 1998

[LOGO]
PRUDENTIAL
INVESTMENTS

<PAGE>

TABLE OF CONTENTS

1 RISK/RETURN SUMMARY
1 Investment Objective and Principal Strategies
1 Principal Risks
2 Evaluating Performance
2 Shareholder Fees and Expenses

4 HOW THE FUND INVESTS
4 Investment Objective and Policies
5 Other Investments
6 Additional Strategies
6 Investment Risks

8 HOW THE FUND IS MANAGED
8 Manager
8 Investment Adviser
8 Distributor
8 Year 2000

9 FUND DISTRIBUTIONS AND TAX ISSUES
9 Distributions
9 Tax Issues

11 HOW TO BUY AND SELL SHARES OF THE FUND
11 How to Buy Shares
13 How to Sell Your Shares

15 FINANCIAL HIGHLIGHTS

16 THE PRUDENTIAL MUTUAL FUND FAMILY

FOR MORE INFORMATION (BACK COVER)

<PAGE>

RISK/RETURN SUMMARY

This section highlights key information about the LIQUID ASSETS FUND, which
we refer to as "the Fund." Additional information follows this summary.

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

SIDE BAR

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

MONEY MARKET FUNDS

Money market funds--which hold high-quality short-term debt obligations--
provide investors with a lower risk, highly liquid investment option. These
funds attempt to maintain a net asset value of $1 per share, although there can
be no guarantee that they will always be able to do so.

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

PRINCIPAL RISKS

Although we try to invest wisely, all investments involve risk. The money
market securities in which the Fund invests are generally subject to the risk
that the issuer may be unable to make principal and interest payments when they
are due. The Fund's investments in foreign securities involve certain
additional risks. For example, foreign banks and companies generally are not
subject to regulatory requirements comparable to those applicable to U.S. banks
and companies. In addition, political developments and changes in currency
rates may adversely affect the value of the Fund's foreign securities. In all
cases, however, we invest only in U.S. dollar-denominated securities. Although
investments in mutual funds involve risk, investing in money market portfolios
like the Fund is generally less risky than investing in other types of funds.
This is because the Fund invests only in high-quality securities, limits the
average maturity of the portfolio to 90 days or less, and limits the maturity
of any security to no more than thirteen months.

<PAGE>

To satisfy the average maturity and maximum maturity requirements, securities
with demand features, described elsewhere, are treated as maturing on the
date that the Fund can demand repayment of the security.

<PAGE>

EVALUATING PERFORMANCE

A number of factors - including risk - can affect how the Fund performs. The
Fund has not operated for a full calendar year, so there is no annual
performance to report. For information about the Fund's performance since
inception, see "Financial Highlights." Past performance does not mean that the
Fund will achieve similar results in the future.

SHAREHOLDER FEES AND EXPENSES

This table shows the fees and expenses of the Fund.

SHAREHOLDER FEES (paid directly from your investment)
Maximum sales charge (load) imposed on purchases (as a percentage
of offering price) . . . . . . . . . . . . . . . . . . . . . . . . . . None
Maximum deferred sales charge (load) (as a percentage of the lower of
original price or sale proceeds) . . . . . . . . . . . . . . . . . . . None
Maximum sales charge (load) imposed on reinvested dividends and
other distributions. . . . . . . . . . . . . . . . . . . . . . . . . . None
Redemption fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Exchange fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
Management fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . .09%
+ Distribution and 12b-1 service fees. . . . . . . . . . . . . . . . . .None
+ Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .13%
----
= TOTAL ANNUAL FUND OPERATING EXPENSES . . . . . . . . . . . . . . . . .22%(1)
----
----

(1) The Total Annual Fund operating expenses are based upon the estimated
direct expenses, excluding any profit or overhead, of the Manager and
the Fund's other service providers.

FEES AND EXPENSES EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
$ $ $ $
---- ---- ---- ----
</TABLE>

<PAGE>

HOW THE FUND INVESTS

INVESTMENT OBJECTIVE AND POLICIES

The Fund invests in high-quality money market instruments to try to provide
investors with current income while maintaining a stable net asset value of
$1 per share. We manage the Fund to comply with specific rules designed for
money market mutual funds. We will purchase obligations such as, but not
limited to, commercial paper, asset-backed securities, certificates of
deposit, time deposits of banks, bankers' acceptances, bank notes, funding
agreements and other obligations of both banks and corporations. These
obligations must be rated in one of the two highest rating categories by at
least two nationally recognized statistical rating organizations (NRSROs),
such as Moody's Investors Service (rated at least Prime-2) and Standard &
Poor's Ratings Group (rated at least A-2), or, if unrated, of comparable
quality. We may also purchase securities of the U.S. Government and its
agencies. All securities that we purchase will be denominated in U.S.
dollars.

The securities that we may purchase may change over time as new types of money
market instruments are developed. We will purchase these new instruments,
however, only if their characteristics and features follow the rules governing
the operation of money market mutual funds.

<PAGE>

Any of the money market instruments that the Fund may purchase may be
accompanied with the right to resell the instrument prior to the instrument's
maturity. In addition, we may separately purchase rights to resell these
instruments. These rights are referred to as "PUTS." The purchase of
instruments with puts allows the Fund to sell the security when the investment
adviser believes it is appropriate to do so to honor redemption requests or to
buy more attractive securities.

OTHER INVESTMENTS

Brokerage firms sometimes "strip" Treasury debt obligations into their
component parts: the Treasury's obligation to make periodic interest payments
and its obligation to repay the amount borrowed. These STRIPPED SECURITIES
are sold to investors separately. Stripped securities do not make periodic
interest payments. They are usually sold at a discount and then redeemed for
their face value on their maturity dates. These securities increase in value
when interest rates fall and lose value when interest rates rise. However,
the value of stripped securities generally fluctuates more in response to
interest rate movements than the value of traditional bonds. The Fund may
try to earn money by buying stripped securities at a discount and either
selling them after they increase in value or holding them until they mature.

ADDITIONAL STRATEGIES

We may use a number of investment strategies to try to improve the Fund's
returns or protect its assets.

<PAGE>

The Fund may use REVERSE REPURCHASE AGREEMENTS where we borrow money on a
temporary basis by selling a security with an obligation to repurchase it at an
agreed-upon price and time.

The Fund may also purchase money market obligations on a "WHEN-ISSUED" or
"DELAYED-DELIVERY" basis. When the Fund makes this type of purchase, the price
and interest rate are fixed at the time of purchase, but delivery and payment
for the obligations take place at a later time. The Fund does not earn interest
income until the date the obligations are delivered.

The Fund may purchase FLOATING RATE and VARIABLE RATE securities. These
securities pay interest at rates that change periodically to reflect changes in
market interest rates. Because these securities adjust the interest they pay,
they may be beneficial when interest rates are rising because of the additional
return the Fund will receive, and they may be detrimental when interest rates
are falling because of the reduction in interest payments to the Fund.

The Fund also follows certain policies when it: BORROWS MONEY (the Fund may
borrow up to 10% of the value of its total assets); LENDS ITS SECURITIES to
others; and holds ILLIQUID SECURITIES (the Fund may hold up to 10% of its net
assets in securities, including restricted securities, those without a
readily available market and repurchase agreements with maturities longer
than seven days). The Fund is subject to certain investment restrictions
that are fundamental policies, which means they cannot be changed without
shareholder approval. For more information about these restrictions, see the
SAI.

INVESTMENT RISKS

<PAGE>

This chart outlines the key risks and potential rewards of
the Fund's principal investments.

<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
INVESTMENT TYPE
% OF FUND'S TOTAL ASSETS RISKS POTENTIAL REWARDS
------------------------- ------------------------- ----------------------
<S> <C> <C>
HIGH-QUALITY MONEY MARKET - Credit risk-the risk - Regular interest
OBLIGATIONS OF ALL that the borrower income
TYPES can't pay back the
money borrowed or
make interest
------------------------ payments

Up to 100% - Market risk - the - May be more secure
risk that the than stock and
obligations may lose equity securities
value because since companies
interest rates must pay their debts
change or there is a before they pay their
lack of confidence dividends
in the borrower
- - --------------------------------------------------------------------------------

MONEY MARKET OBLIGATIONS - Foreign markets, - Investors may
OF FOREIGN ISSUERS economies and realize higher
(DOLLAR- political systems returns based upon
DENOMINATED) may not be as stable higher interest
------------------------ as those in the U.S. rates paid on
foreign investments
Up to 100% - May be less public
information about
foreign issuers
- - --------------------------------------------------------------------------------

ILLIQUID - May be difficult to - May offer a more
SECURITIES value and sell attractive yield
than more liquid
------------------------ - Could result in securities
Up to 10% of net assets losses
- - --------------------------------------------------------------------------------
</TABLE>

HOW THE FUND IS MANAGED

MANAGER
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC (PIFM)
GATEWAY CENTER THREE, 100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077

INVESTMENT ADVISER

DISTRIBUTOR

Prudential Investment Management Services LLC (PIMS) distributes the Fund's
shares under a Distribution Agreement with the Fund. PIMS does not receive any
compensation from the Fund for distributing its shares.

YEAR 2000

DISTRIBUTIONS AND TAX ISSUES

The following briefly discusses some of the important tax issues you should be
aware of, but is not meant to be tax advice. For tax advice, please speak with
your tax adviser.

DISTRIBUTIONS

<PAGE>

TAX ISSUES

FORM 1099

During the tax season every year, you will recieve a FORM 1099, which reports
the amount of dividends and capital gains we distributed to you during the
prior year. If you own shares of the Fund as part of a qualified
tax-deferred plan or account, your taxes are deferred, so you will not
receive a Form 1099. However, you will receive a Form 1099 when you take any
distributions from your qualified tax-deferred plan or account.

WITHHOLDING TAXES

HOW TO BUY AND SELL SHARES OF THE FUND

HOW TO BUY SHARES

STEP 1: OPEN AN ACCOUNT
Shares are available only to clients of Prudential Securities Incorporated
that participate in any of the following managed account programs:

<PAGE>

- Prudential Securities Investment Supervisor Group

To invest in the Fund, you must participate in any one of these programs, and
you must be an Eligible Benefit Plan. Eligible Benefit Plans are:

- employee benefit plans as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 (ERISA) other than government
plans as defined in 3(32) of ERISA and church plans as defined in
Section 3(33) of ERISA;
- pension, profit-sharing or other employee benefit plans qualified
under Section 401 of the Internal Revenue Code of 1986, as amended
(the Internal Revenue Code);
- deferred compensation and annuity plans under Section 457 or 403(b)(7)
of the Internal Revenue Code; and
- Individual Retirement Accounts (IRAs) as defined in Section 408(a) of
the Internal Revenue Code

Eligibility for in any of these programs is within the discretion of
Prudential Securities. You should contact a Prudential Securities financial
adviser for more information. We have the right to reject any purchase
order or suspend or modify the sale of Fund shares.

AUTOMATIC PURCHASE (AUTOSWEEP). Shares of the Fund can only be purchased
through automatic investment procedures (the Autosweep program). The Autosweep
program allows you to designate a market money fund as your primary money sweep
fund. If you do not designate a primary money sweep fund, the Fund will
automatically be your primary money sweep fund. You have the option to change
your primary money sweep fund at any time by notifying your Prudential
Securities financial adviser.

AUTOMATIC PURCHASE PROCEDURES. Prudential Securities will purchase shares of
the Fund on behalf of participating clients each business day at the current
NAV as described below. Credit balances of $1 or more in your account will
automatically be invested in shares of the Fund. Where your credit balance
results from a sale of securities, the available cash will be reinvested in
the Fund on settlement date. Where your credit balance results from

<PAGE>

any other transaction (that is, receipt of a dividend or interest payment,
maturity of a bond or your own cash payment to your securities account), the
available cash will be invested in the Fund on the first business day after
it is received by Prudential Securities. All available cash in your account,
regardless of its source, will automatically be invested.

STEP 2: UNDERSTANDING THE PRICE YOU'LL PAY
When you invest in a mutual fund, you buy shares of the Fund. Shares of a money
market mutual fund, like the Fund, are priced differently than shares of common
stock and other securities.

STEP 3: ADDITIONAL SHAREHOLDER SERVICES
As a Fund shareholder, you can take advantage of the following services and
privileges:

AUTOMATIC REINVESTMENT. As we explained in the FUND DISTRIBUTIONS AND TAX
ISSUES section, the Fund pays out--or distributes--its net investment income and
any capital gains to all shareholders. For your convenience, we will
automatically reinvest your distributions in the Fund at NAV. If you want your
distributions paid in cash, you can indicate this preference on your
application, or notify your Prudential Securities financial adviser not less
than five full business days before the date we determine who receives dividend.

HOW TO SELL YOUR SHARES

You can sell your shares of the Fund for cash (in the form of a check) at any
time, subject to certain restrictions.

<PAGE>

When you sell shares of the Fund--also known as redeeming shares--the price you
will receive will be the NAV next determined after we receive your order to
sell. Prudential Securities must receive your order to sell by 4:30 p.m. New
York Time to process the sale on that day.

Generally, we will pay you for the shares that you sold within seven days after
we receive your sell order.

RESTRICTIONS ON SALES

There are certain times when you may not be able to sell
shares of the Fund or when we may delay paying you the proceeds from a sale.
This may happen during unusual market conditions or emergencies when the Fund
can't determine the value of its assets or sell its holdings. For more
information, see the SAI, "Purchase and Redemption of Fund Shares."

REDEMPTION IN KIND

AUTOMATIC REDEMPTION FOR AUTOSWEEP

Because you participate in the Autosweep program, your Fund shares will be
automatically redeemed to cover any deficit in your Prudential Securities
account. The amount redeemed will be the nearest dollar amount necessary to
cover the deficit.

AUTOMATIC REDEMPTION

<PAGE>

FINANCIAL HIGHLIGHTS

Review this chart with the financial statements which appear in the SAI.
Additional performance information is contained in the annual report, which you
can receive at no charge.

The financial highlights for the fiscal year ended September 30, 1998 were
audited by , whose report was unqualified.

----
1998
----
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period. . . . . . . . . . . . . . . . . . . $1.00
-----
Income from investment operations--net investment income. . . . . . . . .
-----
Dividends to shareholders . . . . . . . . . . . . . . . . . . . . . . . . ( )
Net asset value, end of period. . . . . . . . . . . . . . . . . . . . . . $1.00
-----
-----
TOTAL RETURN: %
-----

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (500) . . . . . . . . . . . . . . . . . . . . . $
-----
Ratios to average net assets:

Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . %
-----
Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %
-----
</TABLE>

<PAGE>

THE PRUDENTIAL MUTUAL FUND FAMILY

Prudential offers a broad range of mutual funds designed to meet your
individual needs. For information about these funds, contact your dealer or
Prudential professional or call us at (800) 225-1852.

STOCK FUNDS GLOBAL FUNDS
Prudential Balanced Fund Prudential Developing Markets Fund
Prudential Distressed Securities Fund, Prudential Developing Markets Equity
Inc. Fund
Prudential Emerging Growth Fund, Inc. Prudential Latin America Equity Fund
Prudential Equity Fund, Inc. Prudential Europe Growth Fund, Inc.
Prudential Equity Income Fund Prudential Global Genesis Fund, Inc.
Prudential Index Series Fund Prudential Global Limited Maturity
Prudential Bond Market Index Fund Fund, Inc.
Prudential Europe Index Fund Limited Maturity Portfolio
Prudential Pacific Index Fund Prudential Intermediate Global Income
Prudential Small-Cap Index Fund Fund, Inc.
Prudential Stock Index Fund Prudential International Bond Fund,
The Prudential Investment Portfolios, Inc.
Inc. Prudential Natural Resources Fund,
Prudential Active Balanced Fund Inc.
Prudential Jennison Growth Fund, Prudential Pacific Growth Fund, Inc.
Prudential Jennison Growth & Income Prudential World Fund, Inc.
Fund Global Series
Prudential Mid-Cap Value Fund International Stock Series
Prudential Real Estate Securities Fund The Global Total Return Fund, Inc.
Prudential Small-Cap Quantum Fund, Global Utility Fund, Inc.
Inc.
Prudential Small Company Value Fund, MONEY MARKET FUNDS
Inc. TAXABLE MONEY MARKET FUNDS
Prudential 20/20 Focus Fund Cash Accumulation Trust
Prudential Utility Fund, Inc. Liquid Assets Fund
Nicholas-Applegate Fund, Inc. National Money Market Fund
Nicholas-Applegate Growth Equity Fund Prudential Government Securities Trust
Money Market Series
TAXABLE BOND FUNDS U.S. Treasury Money Market Series
Prudential Diversified Bond Fund, Inc. Prudential Special Money Market Fund,
Prudential Government Income Fund, Inc.
Inc. Money Market Series
Prudential Government Securities Trust Prudential MoneyMart Assets, Inc.
Short-Intermediate Term Series
Prudential High Yield Fund, Inc. TAX-FREE MONEY MARKET FUNDS
Prudential Mortgage Income Fund, Inc. Prudential Tax-Free Money Fund, Inc.
Prudential Structured Maturity Fund, Prudential California Municipal Fund
Inc. California Money Market Series
Income Portfolio Prudential Municipal Series Fund
Connecticut Money Market Series
TAX-EXEMPT BOND FUNDS Massachusetts Money Market Series
Prudential California Municipal Fund New Jersey Money Market Series
California Series New York Money Market Series
California Income Series Command Funds
Prudential Municipal Bond Fund Command Money Fund
High Income Series Command Government Fund
Insured Series Command Tax-Free Fund
Intermediate Series Institutional Money Market Funds
Prudential Municipal Series Fund Prudential Institutional Liquidity
Florida Series Portfolio, Inc.
Maryland Series Institutional Money Market Series
Massachusetts Series
Michigan Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund,
Inc.

<PAGE>

[BACK COVER PAGE]

FOR MORE INFORMATION ABOUT THE FUND

Please read this prospectus before you invest in the Fund and keep it for future
reference. You can get additional information about the Fund in the following
documents:

STATEMENT OF ADDITIONAL INFORMATION
(incorporated by reference into this Prospectus)
ANNUAL REPORT
(contains a discussion of the market conditions and investment strategies
that significnatly affect the Fund's performance)
SEMI-ANNUAL REPORT

Dealers should contact:
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
P.O. BOX 15035
NEW BRUNSWICK, NEW JERSEY 08906-1852
(800) 225-1852

Visit Prudential's web site at HTTP://WWW.PRUDENTIAL.COM
You can also obtain copies of Fund documents from the Securities and Exchange
Commission as follows:

THE FUND'S CUSIP NUMBER IS: VIA THE INTERNET:
147541502 HTTP://WWW.SEC.GOV
Investment Company Act File No: 811-4060

<PAGE>

CASH ACCUMULATION TRUST
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER __, 1998

Cash Accumulation Trust (the Trust), an open-end, diversified, management
investment company is offered in two series: National Money Market Fund (NMMF)
and Liquid Assets Fund (LAF) (each a Fund and collectively, the Funds). Each
series operates as a separate fund with identical investment objectives and
similar policies designed to meet its investment goals. The investment objective
of each of NMMF and LAF is current income to the extent consistent with
preservation of capital and liquidity. There can be no assurance that either
Fund's investment objective will be achieved. See "How the Fund Invests" in the
applicable Prospectus and "Description of the Funds, their Investments and
Risks."

The Trust's address is Gateway Center Three, 100 Mulberry Street, Newark,
New Jersey 07102-4077 and its telephone number is (800) 225-1852.

This Statement of Additional Information sets forth information about each
of the Funds. This Statement of Additional Information is not a prospectus and
should be read in conjunction with the NMMF Prospectus or the LAF Prospectus,
each dated December __, 1998, copies of which may be obtained from the Trust
upon request.

TABLE OF CONTENTS

PAGE CROSS-REFERENCE CROSS-REFERENCE
---- TO PAGE IN TO PAGE IN
THE NMMF THE LAF
PROSPECTUS PROSPECTUS
---------- ----------
<S> <C> <C> <C>
Trust History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
Description of the Funds, their Investments and Risks. . . . . . . . . B-2
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . B-5
Management of the Trust . . . . . . . . . . . . . . . . . . . . . . . B-8
Control Persons and Principal Holders of Securities . . . . . . . . . B-11
Investment Advisory and Other Services . . . . . . . . . . . . . . . . B-12
Brokerage Allocation and Other Practices . . . . . . . . . . . . . . . B-14
Securities and Organization . . . . . . . . . . . . . . . . . . . . . B-15
Purchase and Redemption of Fund shares . . . . . . . . . . . . . . . . B-16
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
Taxes, Dividends and Distributions . . . . . . . . . . . . . . . . . . B-17
Calculation of Yield . . . . . . . . . . . . . . . . . . . . . . . . . B-18 - -
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . B-19 - -
Reports of Independent Accountants . . . . . . . . . . . . . . . . . .
Appendix I-Description of Security Ratings . . . . . . . . . . . . . . I-1 - -
Appendix II-Historical Performance Data . . . . . . . . . . . . . . . II-1 - -
Appendix III-General Investment Information . . . . . . . . . . . . . III-1 - -
Appendix IV-Information Relating to Prudential . . . . . . . . . . . . IV-1 - -
</TABLE>

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TRUST HISTORY

The Trust was organized under the laws of Massachusetts on April 27, 1984
as an unincorporated business trust, a form of organization that is commonly
referred to as a Massachusetts business trust.

DESCRIPTION OF THE FUNDS, THEIR INVESTMENTS AND RISKS

(a) CLASSIFICATION. The Trust is a diversified open-end management
investment company.

(b) INVESTMENT STRATEGIES AND RISKS.

Each Fund's investment objective is current income to the extent
consistent with preservation of capital and liquidity. While the principal
investment policies and strategies for seeking to achieve this objective are
described in each Fund's Prospectus, a Fund may from time to time also utilize
the securities, instruments, policies and strategies described below in seeking
to achieve its objective. A Fund may not be successful in achieving its
objective and you can lose money.

OBLIGATIONS ISSUED OR GUARANTEED BY THE U.S. GOVERNMENT, ITS AGENCIES AND
INSTRUMENTALITIES

Obligations issued or guaranteed as to principal and interest by the U.S.
Government may be acquired by a Fund in the form of custodial receipts that
evidence ownership of future interest payments, principal payments or both on
certain United States Treasury notes or bonds. Such notes and bonds are held in
custody by a bank on behalf of the owners. These custodial receipts are known by
various names, including "Treasury Receipts," "Treasury Investment Growth
Receipts" (TIGRs) and "Certificates of Accrual on Treasury Securities" (CATS).
Neither Fund intends to purchase TIGRs or CATS during the coming year.

FLOATING RATE AND VARIABLE RATE SECURITIES

Each Fund may purchase "floating rate" and "variable rate" securities.
Investments in floating or variable rate securities normally will involve
securities which provide that the rate is set as a spread to a designated base
rate, such as rates on Treasury bills, and, in some cases, that the purchaser
can demand payment of the obligation at specified intervals or after a specified
notice period (in each case a period of less than thirteen months) at par plus
accrued interest, which amount may be more or less than the amount paid for
them. Variable rate securities provide for a specified periodic adjustment in
the interest rate, while floating rate securities have an interest rate which
changes whenever there is a change in the designated base interest rate.

DEMAND FEATURES AND GUARANTEES

LAF may purchase demand features and guarantees. A demand feature
supporting a money market fund instrument can be relied upon in a number of
respects. First, the demand feature can be relied upon to SHORTEN THE
MATURITY of the underlying instrument. Second, the demand feature, if
unconditional, can be used to EVALUATE THE CREDIT QUALITY of the underlying
security. This means that the credit quality of the underlying security can
be based solely on the credit quality of the unconditional demand feature
supporting that security.

A GUARANTEE is a form of unconditional credit support that may include bond
insurance, a letter of credit, and an unconditional demand feature. A money
market fund holding a security subject to a guarantee may determine the credit
quality of the underlying security solely on the basis of the credit quality of
the supporting guarantee.

LAF can only invest 10% of its total assets in securities directly issued
by, or supported by, a demand feature provider or guarantor. Investment Company
Act Rule 2a-7 provides a more stringent limit on demand features and guarantees
that are "second tier securities" under the Rule; that is, those securities that
are rated in the second highest category by a specified number of rating
organizations. Specifically, Rule 2a-7 provides that a money market fund cannot
invest more than 5% of its total assets in securities directly issued by, or
supported by, second tier demand features or guarantees that are issued by the
same entity.

LENDING OF SECURITIES

Consistent with applicable regulatory requirements, NMMF may lend its
portfolio securities to broker-dealers and LAF may lend its portfolio to
brokers, dealers and financial institutions, provided that outstanding loans
for LAF do not exceed in the aggregate 15% of the value of LAF's total assets
and, provided that such loans are callable at any time by either Fund and are
at all times secured by cash or U.S. Government securities that is equal to
at least the market value, determined daily, of the loaned securities. The
advantage of such loans is that the Fund continues to receive payments in
lieu of the interest on the loaned securities, while at the same time earning
interest either directly from the borrower or on the collateral which will be
invested in short-term obligations. Any voting rights, or rights to

B-2

<PAGE>

consent relating to the securities loaned pass to the borrower. However, if a
material event affecting the investment occurs, such loans will be called so
securities may be voted by the Fund (or Funds).

A loan may be terminated by the borrower on one business day's notice or by
a Fund at any time. If the borrower fails to maintain the requisite amount of
collateral, the loan automatically terminates, and the Fund could use the
collateral to replace the securities while holding the borrower liable for any
excess of replacement cost over collateral. As with any extensions of credit,
there are risks of delay in recovery and in some cases loss of rights in the
collateral should the borrower of the securities fail financially. However,
these loans of portfolio securities will only be made to firms determined to be
creditworthy pursuant to procedures approved by the Board of Trustees of the
Trust. On termination of the loan, the borrower is required to return the
securities to the Fund, and any gain or loss in the market price during the loan
would inure to that Fund.

Each Fund will pay reasonable finders', administrative and custodial fees
in connection with a loan of its securities or may share the interest earned on
collateral with the borrower.

ILLIQUID SECURITIES

LAF may not hold more than 10% of its net assets and NMMF may not hold more
than 10% of its total assets in illiquid securities, including securities that
are illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale and repurchase agreements which have a
maturity of longer than seven days. Historically, illiquid securities have
included securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act of 1933, as
amended (Securities Act), securities which are otherwise not readily marketable
and repurchase agreements having a maturity of longer than seven days.
Securities which have not been registered under the Securities Act are referred
to as private placements or restricted securities and are purchased directly
from the issuer or in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted or other illiquid securities because of
the potential for delays on resale and uncertainty in valuation. Limitations on
resale may have an adverse effect on the marketability of portfolio securities
and a mutual fund might be unable to dispose of restricted or other illiquid
securities promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions within seven days. A mutual fund might also
have to register such restricted securities in order to dispose of them,
resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.

In recent years, however, a large institutional market has developed for
certain securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
securities.

Rule 144A of the Securities Act allows for a broader institutional trading
market for securities otherwise subject to restriction on resale to the general
public. Rule 144A establishes a "safe harbor" from the registration requirements
of the Securities Act for resales of certain securities to qualified
institutional buyers. The investment adviser anticipates that the market for
certain restricted securities such as institutional commercial paper and foreign
securities will expand further as a result of this regulation and the
development of automated systems for the trading, clearance and settlement of
unregistered securities of domestic and foreign issuers, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc.

Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act and commercial paper for which there is a readily available
market will not be deemed to be illiquid. The investment adviser will monitor
the liquidity of such restricted securities subject to the supervision of the
Board of Trustees. In reaching liquidity decisions, the investment adviser will
consider, inter alia, the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers wishing to purchase or sell
the security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security; and (4) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfer). In addition, in order for commercial paper that is issued in
reliance on Section 4(2) of the Securities Act to be considered liquid, (i) it
must be rated in one of the two highest rating categories by at least two
nationally recognized statistical rating organizations (NRSRO), or if only one
NRSRO rates the securities, by that NRSRO, or, if unrated, be of comparable
quality in the view of the investment adviser; and (ii) it must not be "traded
flat" (i.e., without accrued interest) or in default as to principal or
interest. Repurchase agreements subject to demand are deemed to have a maturity
equal to the notice period.

SECURITIES OF OTHER INVESTMENT COMPANIES

Each Fund may invest up to 10% of its total assets in securities of
other money market funds registered under the Investment Company Act.
Generally, each Fund does not intend to invest more than 5% of its total
assets in such securities. To the extent that a Fund invests in securities of
other registered investment companies, shareholders of the Fund may be
subject to duplicate management and advisory fees.

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<PAGE>

BORROWING

NMMF may borrow (including through entering into reverse repurchase
agreements) up to and including 10% of the value of its total assets taken at
cost for temporary or emergency purposes. NMMF may pledge up to and including
10% of its net assets to secure such borrowings. LAF may borrow (including
through entering reverse repurchase agreements) up to 33 1/3 % of the value of
its total assets (computed at the time the loan is made) from banks for
temporary, extraordinary or emergency purposes. LAF may pledge up to 33 1/3% of
its total assets to secure such borrowings. A Fund will not purchase portfolio
securities if its borrowings (other than permissible securities loans) exceed 5%
of its total assets.

REPURCHASE AGREEMENTS

Each Fund may purchase securities and concurrently enter into "repurchase
agreements" with the seller, whereby the seller agrees to repurchase such
securities at a specified price within a specified time (generally seven days or
less). The repurchase agreements provide that the Fund will sell the underlying
instruments back to the dealer or the bank at the specified price and at a fixed
time in the future, usually not more than seven days from the date of purchase.
The difference between the purchase price and the resale price represents the
interest earned by the Fund, which is unrelated to the coupon rate or maturity
of the purchased security. Repurchase agreements will at all times be fully
collateralized in an amount at least equal to the resale price. Such collateral
will be held by the Trust's Custodian, either physically or in a book-entry
account.

A Fund will enter into repurchase transactions only with parties which meet
creditworthiness standards approved by the Trust's Board of Trustees. The Fund's
investment adviser monitors the creditworthiness of such parties under the
general supervision of the Board of Trustees. In the event of a default or
bankruptcy by a seller, the Fund will promptly seek to liquidate the collateral.
To the extent that the proceeds limit any sale of such collateral upon a default
in the obligation to repurchase are less than the resale price, the Fund will
suffer a loss, if the financial institution that is a party to the repurchase
agreement petitions for bankruptcy or becomes subject to the U.S. Bankruptcy
Code, the law regarding the rights of the trust is unsettled. As a result, under
these circumstances, there may be a restriction on the Fund's ability to sell
the collateral, and the Fund could suffer a loss.

LAF participates in a joint repurchase account with other investment
companies managed by Prudential Investments Fund Management LLC (PIFM or the
Manager) pursuant to an order of the Securities and Exchange Commission. On a
daily basis, any uninvested cash balances of LAF may be aggregated with those of
such other investment companies and invested in one or more repurchase
agreements. LAF participates in the income earned or accrued in the joint
account based on the percentage of its investment. In connection with
transactions in repurchase agreements with U.S. financial institutions, it is
the Trust's policy that its custodian or designated subcustodians, as the case
may be, under triparty repurchase agreements, take possession of the underlying
collateral securities, the value of which equals or exceeds the resale price of
the agreement. If the seller defaults and the value of the collateral declines
or if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Trust may be delayed or limited.

NMMF does not currently participate in the joint repurchase account.

REVERSE REPURCHASE AGREEMENTS

Reverse repurchase agreements have the characteristics of borrowing and
involve the sale of securities held by a Fund with an agreement to repurchase
the securities at a specified price, date and interest payment. Each Fund
intends only to use the reverse repurchase technique when it will be to its
advantage to do so. These transactions are only advantageous if the Fund has an
opportunity to earn a greater rate of interest on the cash derived from the
transaction than the interest cost of obtaining that cash. A Fund may be unable
to realize earnings from the use of the proceeds equal to or greater than the
interest required to be paid. The use of reverse repurchase agreements may
exaggerate any increase or decrease in the value of the Fund's portfolio. The
Trust's Custodian will maintain in a segregated account cash, or other liquid
assets, maturing not later than the expiration of the reverse repurchase
agreements and having a value equal to or greater than such commitments.

FIRM COMMITMENT AGREEMENTS

NMMF may enter into firm commitment agreements with banks or
broker-dealers for the purchase of securities at an agreed-upon price on a
specified future date. Such agreements might be entered into, for example,
when NMMF anticipates a decline in the yield of securities of a given issuer
and is able to obtain a more advantageous yield by committing currently to
purchase securities to be issued later. Entry into firm commitment agreements
with broker-dealers requires the creation and maintenance of a segregated
account. The underlying securities subject to a firm commitment agreement are
subject to fluctuation in market value and, therefore, to the extent that
NMMF

B-4

<PAGE>

remains fully invested at the same time that it has entered into firm
commitment agreements, there will be a greater possibility that the net asset
value of NMMF shares will vary from $1.00.

Pending delivery of securities purchased under firm commitment agreements,
the amount of the purchase price will be held in liquid assets such as cash or
high-quality debt obligations. Such obligations will be maintained in a separate
account with NMMF's custodian in an amount equal on a daily basis to the amount
of NMMF's firm commitments. When the time comes to pay for securities subject to
firm commitment agreements, NMMF will meet its obligations from then-available
cash flow or the sale of securities.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

LAF may purchase securities on a "when-issued" or delayed delivery basis.
When-issued or delayed delivery transactions arise when securities are purchased
or sold by LAF with payment and delivery taking place in the future in order to
secure what is considered to be an advantageous price and yield to the Fund at
the time of entering into the transaction. LAF will limit such purchases to
those which the date of delivery and payment falls within 90 days of the date of
the commitment. LAF will make commitments for such when issued transactions only
with the intention of actually acquiring the securities. The Trust's Custodian
will segregate cash or other liquid assets having a value equal to or greater
than LAF's purchase commitments. If LAF chooses to dispose of the right to
acquire a when-issued security prior to its acquisition, it could, as with the
disposition of any other portfolio security, incur a gain or loss due to market
fluctuations. The securities so purchased are subject to market fluctuation and
no interest accrues to the purchaser during the period between purchase and
settlement.

INVESTMENT RESTRICTIONS

The following restrictions are fundamental policies. Fundamental policies
are those which cannot be changed without the approval of the holders of a
majority of the outstanding voting securities of a Fund. A "majority of the
outstanding voting securities," when used in this Statement of Additional
Information, means the lesser of (i) 67% of the voting shares represented at a
meeting at which more than 50% of the outstanding voting shares are present in
person or represented by proxy or (ii) more than 50% of the outstanding voting
shares. With respect to the submission of a change in fundamental policy or
investment objective to a particular Fund, such matters shall be deemed to have
been effectively acted upon with respect to such Fund if a majority of the
outstanding voting securities of the particular Fund votes for the approval of
such matters as provided above, notwithstanding (1) that such matter has not
been approved by a majority of the outstanding voting securities of the other
Fund affected by such matter and (2) that such matter has not been approved by a
majority of the outstanding voting securities of the Trust.

NATIONAL MONEY MARKET FUND

The following investment restrictions are fundamental policies of NMMF and
may not be changed except as described above.

NMMF may not:

1. Purchase any security if, as a result, more than 5% of its total
assets (based on current value) would then be invested in the
securities of a single issuer, except that the Fund may invest up to
15% of its total net assets (based on current value) in the
obligations of any one bank. This limitation does not apply to U.S.
Government Securities.

2. Purchase voting securities or make investments for the purpose of
exercising control or management.

3. Invest more than 25% of its total assets in any one industry. This
restriction does not apply to U.S. Government Securities or to bank
obligations. For purposes of this restriction, telephone, gas and
electric public utilities are each regarded as separate industries and
finance companies whose financing activities are related primarily to
the activities of their parent companies are classified in the
industry of their parents.

4. Participate on a joint or joint and several basis in any trading
account in securities. (The "bunching" of orders for the purchase or
sale of portfolio securities with other accounts managed by the
Manager or the Sub-advisor to reduce acquisition costs, to average
prices among them, or to facilitate such transactions, is not
considered participating in a trading account in securities.)

5. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Fund may obtain short-term
credits as necessary for the clearance of security transactions.

6. Borrow money except for temporary or emergency purposes and then only
in an amount not exceeding 10% of its total assets taken at cost;
provided, however, that the Fund may loan its securities as described
in the Prospectus and this Statement of Additional Information under
the caption "Description of the Funds, their Investments and
Risks-Lending of

B-5
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Securites."

However, the Fund will not borrow if the value of the Fund's assets
would be less than 300% of its borrowing obligations. In addition,
when borrowings (other than permissible securities loans) exceed 5% of
its total assets, the Fund will not purchase additional portfolio
securities. Permissible borrowings will be entered into solely for the
purpose of facilitating the orderly sale of portfolio securities to
accommodate redemption requests.

7. Make loans, except that the Fund may purchase or hold debt instruments
in accordance with its investment objective and policies. This
restriction does not apply to repurchase agreements or loans of
portfolio securities.

8. Pledge, mortgage or hypothecate more than 10% of its net assets taken
at cost at the time of the incurrence of such borrowings.

9. Act as an underwriter of securities of other issuers except that, in
the disposition of portfolio securities, it may be deemed to be an
underwriter under the federal securities laws.

10. Invest in securities of other investment companies, except by
purchases in the open market involving only customary brokers'
commissions, or in connection with a merger, consolidation,
reorganization or similar transactions. For the purposes of this
restriction, foreign banks or their agents or subsidiaries are not
considered investment companies. (Under the Investment Company Act of
1940 (the "Investment Company Act") no registered investment company
may (a) invest more than 10% of its total assets (taken at current
value) in securities of other investment companies, (b) own securities
of any one investment company having a value in excess of 5% of its
total assets (taken at current value), or (c) own more than 3% of the
outstanding voting stock of any one investment company.)

11. Purchase or retain securities of an issuer if, to the knowledge of the
Trust, any officers, trustees and directors of the Trust or any
investment adviser of the Trust, who individually own beneficially
more than 1/2 of 1% of the shares or securities of that issuer, own in
the aggregate more than 5% of such shares or securities.

12. Purchase securities of any company which has (with predecessor
businesses and entities) a record of less than three years' continuous
operation or purchase securities whose source of repayment if based,
directly or indirectly, on the credit of such a company if as a result
more than 5% of the total assets of the Fund (taken at current value)
would be invested in such securities; provided, however, that the Fund
may purchase U.S. Government Securities without regard to this
limitation.

13. Buy or sell oil, gas or other mineral leases, rights or royalty
contracts, commodities or commodity contracts or real estate. This
restriction does not prevent the Fund from purchasing securities of
companies investing in real estate or of companies which are not
principally engaged in the business of buying or selling such leases,
rights or contracts nor does it prevent the Fund from purchasing
securities secured by real estate or interests therein.

14. Purchase any illiquid security, including any securities whose
disposition is restricted under federal securities laws and securities
that are not readily marketable, if, as a result, more than 10% of the
Fund's total assets (based on current value) would then be invested in
such securities. The staff of the Securities and Exchange Commission
is presently of the view that repurchase agreements maturing in more
than seven days are subject to this restriction. Until that position
is revised, modified or rescinded, the Fund will conduct its
operations in a manner consistent with this view.

15. Write or purchase puts, calls, warrants, straddles, spreads or
combinations thereof except that, as described above under "Firm
Commitment Agreements," the Fund may enter into firm commitment
agreements with respect to securities otherwise eligible for purchase
by the Fund.

Restriction 1 applies to securities subject to repurchase agreements but
not to the repurchase agreements themselves provided that the obligation of the
seller to repurchase the securities from the Fund is "collateralized fully" as
defined in Rule 2a-7 under the Investment Company Act. Although Restriction 1
permits the Fund to invest up to 15% of its total assets in the obligations of
any one bank, federal regulations applicable to the Fund currently prohibit the
Fund (with limited exceptions) from making any investment that would result in
more than 5% of the Fund's assets being invested in obligations of a single
issuer.

Although Restriction 3 states that it does not apply to bank obligations,
federal regulations applicable to the Fund currently limit bank obligations to
include all banks which are organized under the laws of the United States or a
state (as defined in the Investment Company Act), U.S. branches of foreign banks
that are subject to the same regulations as U.S. banks and foreign branches of
domestic banks.

The limitation on investment in illiquid securities set forth in
Restriction 14 does not apply to certain restricted securities, including
securities issued pursuant to Rule 144A under the Securities Act of 1933 and
certain commercial paper, that the Manager or Sub-adviser has determined to be
liquid under procedures approved by the Board of Trustees.

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For purposes of the foregoing restrictions, U.S. Government Securities
refer to obligations of the U.S. Treasury and obligations issued by agencies of
the U.S. Government or instrumentalities established or sponsored by the U.S.
Government.

LIQUID ASSETS FUND

The following investment restrictions are fundamental policies of LAF and
may not be changed except as described above.

LAF may not:

1. Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions);
provided that the deposit or payment by the Fund of initial or
maintenance margin in connection with options or futures contracts is
not considered the purchase of a security on margin.

2. Make short sales of securities or maintain a short position.

3. Issue senior securities, borrow money (including through the entry
into reverse repurchase agreement transactions) or pledge its assets,
except that the Fund may borrow up to 33 1/3% of the value of its
total assets (calculated when the loan is made) from banks for
temporary, extraordinary or emergency purposes or for the clearance of
transactions and may pledge up to 33 1/3% of the value of the Fund's
total assets to secure such borrowings. The Fund will purchase
portfolio securities if its borrowings exceed 5% of the Fund's net
assets. The purchase or sale of securities on a "when-issued" or
delayed delivery basis, the entry into reverse repurchase agreements,
the purchase and sale of financial futures contracts and collateral
arrangements with respect thereto and with respect to the writing of
options and obligations of the Trust to Trustees pursuant to deferred
compensation arrangements are not deemed to be a pledge of assets and
such arrangements are not deemed to be the issuance of a senior
security.

4. Purchase any security (other than obligations of the U.S. Government,
its agencies or instrumentalities) if as a result, with respect to 75%
of the value of the Fund's total assets, more than 5% of the value of
the Fund's total assets would be invested in the securities of a
single issuer.

5. Purchase any securities (other than obligations of the U.S.
Government, its agencies and instrumentalities) if, as a result, 25%
or more of the value of the Fund's total assets (determined at the
time of investment) would be invested in the securities of one or more
issuers conducting their principal business activities in the same
industry, provided that there is no limitation with respect to money
market instruments of domestic banks. For purposes of this exception,
domestic banks shall include all banks which are organized under the
laws of the United States or a state (as defined in the Investment
Company Act), U.S. branches of foreign banks that are subject to the
same regulations as U.S. banks and foreign branches of domestic banks.

6. Buy or sell real estate or interests in real estate, except that the
Fund may purchase and sell securities which are secured by real
estate, securities of companies which invest or deal in real estate
and publicly traded securities of real estate investment trusts.

7. Act as underwriter except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.

8. Make investments for the purpose of exercising control or management.

9. Invest in securities of other non-affiliated investment companies,
except by purchases in the open market involving only customary
brokerage commissions and as a result of which the Fund will not hold
more than 3% of the outstanding voting securities of any one
investment company, will not have invested more than 5% of its total
assets in any one investment company and will not have invested more
than 10% of its total assets (determined at the time of investment) in
such securities of one or more investment companies, or except as part
of a merger, consolidation or other acquisition.

10. Make loans, except through (i) repurchase agreements and (ii) loans of
portfolio securities (limited to 33 1/3% of the value of the Fund's
total assets).

11. Buy or sell commodities or commodity contracts, except that the Fund
may purchase and sell futures contracts and options thereon.

12. Purchase more than 10% of the outstanding voting securities of any one
issuer.

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Although Restriction 4 limits the Fund's investments in the securities of a
single issuer to 5% of the value of 75% of the value of the Fund's total assets,
federal regulations applicable to the Fund currently prohibit the Fund from
making any investment that would result in more than 5% of the Fund's total
assets being invested in securities of a single issuer.

Whenever any fundamental investment policy or investment restriction states
a maximum percentage of a Fund's assets, it is intended that if the percentage
limitation is met at the time the investment is made, a later change in
percentage resulting from changing total or net asset values will not be
considered a violation of such policy. However, in the event that the Fund's
asset coverage for borrowings falls below 300%, the Fund will take prompt action
to reduce its borrowing, as required by applicable law.

MANAGEMENT OF THE FUND

(a) TRUSTEES

The Trust has Trustees who, in addition to overseeing the actions of
each Fund's Manager, Subadviser, and Distributor, decide upon matters of
general policy.

The Trustees also review the actions of the officers of the Trust, who
conduct and supervise the daily business operations of the Trust.

(b) MANAGEMENT INFORMATION-TRUSTEES AND OFFICERS

POSITION PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE(1) WITH THE TRUST AND OTHER AFFILIATIONS
----------------------- -------------- ----------------------
<S> <C> <C>
Edward D. Beach(73) Trustee President and Director of BMC
Fund, Inc., a closed-end
investment company; previously
Vice Chairman of Broyhill
Furniture Industries, Inc.,
Certified Public Accountant;
Secretary and Treasurer of
Broyhill Family Foundation,
Inc.; Member of the Board of
Trustees of Mars Hill College;
and Director of The High Yield
Income Fund, Inc.
Stephen C. Eyre(75) Trustee Executive Director (May 1985
through December 1997) of The
John A. Hartford
Foundation, Inc. (charitable
foundation); and Trustee
Emeritus of Pace University.
Delayne Dedrick Gold(59) Trustee Marketing and Management
Consultant; Director of The High
Yield Income Fund, Inc.
*Robert F. Gunia(51) Trustee Vice President of Prudential
Investments (since September
1997); Executive Vice President
and Treasurer (since
December 1996) of Prudential
Investments Fund Management LLC
(PIFM); Senior Vice President
(since March 1987) of Prudential
Securities Incorporated
(Prudential Securities);
formerly Chief Administrative
Officer (July 1990-September
1996), Director (January 1989-
September 1996) and Executive
Vice President, Treasurer and
Chief Financial Officer (June
1987-September 1996) of
Prudential Mutual Fund
Management, Inc. (PMF); Vice
President and Director (since
May 1989) of The Asia Pacific
Fund, Inc.; Director of The High
Yield Income Fund, Inc.

Don G. Hoff (62) Trustee Chairman and Chief Executive
Officer (since 1980) of
Intertec, Inc. (investments);
Chairman and Chief Executive
Officer of The Lamaur
Corporation, Inc.; Director of
Innovative Capital
Management, Inc. and The Greater
China Fund, Inc.; and Chairman
and Director of The Asia Pacific
Fund, Inc.
Robert E. LaBlanc(63) Trustee President (since 1981) of
Robert E. LaBlanc
Associates, Inc.
(telecommunications); formerly

B-8

<PAGE>

General Partner at Salomon
Brothers; and Vice-Chairman of
Continental Telecom; Director of
Storage Technology Corporation,
Titan Corporation, Salient 3
Communications, Inc. and Tribune
Company; and Trustee of
Manhattan College.
*Mendel A. Melzer, Trustee Chief Investment Officer (since
CFA(37) October 1996) of Prudential
751 Broad Street Mutual Funds; formerly Chief
Newark, NJ 07102 Financial Officer (November 1995
- September 1996) of Prudential
Investments; Senior Vice
President and Chief Financial
Officer of Prudential Preferred
Financial Services (April 1993 -
November 1995); Managing
Director of Prudential
Investment Advisors (April 1991
- April 1993) and Senior Vice
President of Prudential Capital
Corporation (July 1989-April
1991); Chairman and Director of
Prudential Series Fund, Inc.;
and Director of The High Yield
Income Fund, Inc.
Robin B. Smith(58) Trustee Chairman and Chief Executive
Officer (since August 1996) of
Publishers Clearing House;
formerly President and Chief
Executive Officer (January 1988-
August 1996) and President and
Chief Operating Officer
(September 1981-December 1988)
of Publishers Clearing House;
Director of BellSouth
Corporation, Texaco Inc.,
Springs Industries Inc., and
Kmart Corporation.
Stephen Stoneburn(54) Trustee President and Chief Executive
Officer (since June 1996) of
Quadrant Media Corp. (a
publishing company); formerly
President (June 1995 -
June 1996) of Argus Integrated
Media, Inc.; Senior Vice
President and Managing Director
(January 1993 - 1995) of Cowles
Business Media; Senior Vice
President (January 1991 - 1992)
and Publishing Vice President
(May 1989-December 1990) of
Gralla Publications (a division
of United Newspapers, U.K.); and
Senior Vice President of
Fairchild Publications, Inc.
Nancy H. Teeters(67) Trustee Economist; Director of Inland
Steel Industries; formerly, Vice
President and Chief Economist of
International Business Machines;
Member of the Board of Governors
of the Federal Reserve System;
Governor of the Horace H.
Rackham School of Graduate
Studies of the University of
Michigan; Assistant Director of
the Committee on the Budget of
the US House of Representatives;
Senior Fellow at the Library of
Congress; Senior Fellow at the
Brookings Institution; staff at
Office of Management and Budget,
Council of Economic Advisors and
the Federal Reserve Board.
Richard A. Redeker(54) President Employee of Prudential
751 Broad Street Investments; formerly President,
Newark, NJ 07102 Chief Executive Officer and
Director (October 1993 -
September 1996) of PMF,
Executive Vice President,
Director and Member of the
Operating Committee
(October 1993 - September 1996)
of Prudential Securities,
Director (October 1993 -
September 1996) of Prudential
Securities Group, Inc. (PSG);
Executive Vice President of The
Prudential Investment
Corporation (January 1994 -
September 1996), Director
(January 1994 - September 1996)
of Prudential Mutual Fund
Distributors, Inc. and
Prudential Mutual Fund
Services, Inc. and Senior
Executive Vice President and
Director of Kemper Financial
Services, Inc. (September 1978 -
September 1993); and President
and Director of the High Yield
Income Fund, Inc.

B-9
<PAGE>

S. Jane Rose(52) Secretary Senior Vice President (since
December 1996) of PIFM; Senior
Vice President and Senior
Counsel (since July 1992) of
Prudential Securities; formerly
Senior Vice President
(January 1991 - September 1996)
and Senior Counsel (June 1987 -
September 1996) of PMF.
Robert C. Rosselot(38) Assistant Secretary Assistant General Counsel (since
September 1997) of PIFM;
formerly, partner with the firm
of Howard & Howard, Bloomfield
Hills, Michigan ( December 1995-
September 1997) and Corporate
Counsel, Federated Investors
(1990 - 1995).
Grace C. Torres(39) Treasurer and First Vice President (since
Principal Financial December 1996) of PIFM; First
and Accounting Vice President (since
Officer March 1994) of Prudential
Securities; formerly First Vice
President (March 1994 -
September 1996), Prudential
Mutual Fund Management, Inc. and
Vice President (July 1989 -
March 1994) of Bankers
Trust Corporation.
Stephen M. Ungerman(44) Assistant Treasurer Vice President and Tax Director
(since March 1996) of Prudential
Investments; formerly First Vice
President of Prudential Mutual
Fund Management, Inc. (February
1993-September 1996).
</TABLE>

- - -------

(1) Unless otherwise noted, the address for each of the above persons is c/o
Prudential Investments Fund Management LLC, Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102-4077.

* "Interested" Trustee of the Fund, as defined in the Investment Company Act
of 1940 (the Investment Company Act).

Trustees and officers of the Trust are also trustees, directors and
officers of some or all of the other investment companies distributed by
Prudential Securities or Prudential Investment Management Services LLC.

The Trustees have adopted a retirement policy which calls for the
retirement of Trustees on December 31 of the year in which they reach the age of
72, except that retirement is being phased in for Trustees who were age 68 or
older as of December 31, 1993. Under this phase-in provision, Messrs. Beach and
Eyre are scheduled to retire on December 31, 1999 and December 31, 1998,
respectively.

Pursuant to the terms of the Management Agreements with the Trust, the
Manager pays all compensation of officers of the Trust as well as the fees and
expenses of all Trustees of the Trust who are affiliated persons of the Manager.

The Trust pays each of its Trustees who is not an affiliated person of PIFM
or Prudential Investments (PI) annual compensation of $3,000, in addition to
certain out-of-pocket expenses. The amount of annual compensation paid to each
Trustee may change as a result of the introduction of additional funds on the
board of which the Trustee will be asked to serve.

Trustees may receive their Trustee's fees pursuant to a deferred fee
agreement with the Trust. Under the terms of the agreement, the Trust accrues
daily the amount of such Trustee's fees in installments which accrue interest at
a rate equivalent to the prevailing rate applicable to 90-day U.S. Treasury
Bills at the beginning of each calendar quarter or, at the daily rate of return
of the Trust (the Fund Rate). Payment of the interest so accrued is also
deferred and accruals become payable at the option of the Trustee. A Fund's
obligation to make payments of deferred Trustees' fees, together with interest
thereon, is a general obligation of the Fund.

The following table sets forth the aggregate compensation paid by the Fund
to the Trustees who are not affiliated with the Manager for the fiscal year
ended September 30, 1998 and the aggregate compensation paid to such Trustees
for service on the Trust's Board and that of all other funds managed by PIFM
(Fund Complex) for the calendar year ended December 31, 1998. In October 1997,
PIFM recommended to the Board of Trustees, and the Board approved, certain
changes in the Trust's management and operations, subject to shareholder
approval, whereby substantially similar services would be furnished, but with
lower expenses. Accordingly, on December 11, 1997, the shareholders elected a
new Board of Trustees, approved a management agreement between the Trust and
PIFM and approved a subadvisory agreement between PIFM and The Prudential
Investment Corporation. These new agreements became effective at the close of
business on December 12, 1997.

B-10
<PAGE>

COMPENSATION TABLE

PENSION OR APPROXIMATE
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM TRUST
AGGREGATE ACCRUED AS PART ANNUAL AND PRUDENTIAL FUND
COMPENSATION OF TRUST BENEFITS UPON COMPLEX PAID
NAME AND POSITION FROM TRUST EXPENSES RETIREMENT TO TRUSTEES(2)
----------------- ---------- -------- ---------- --------------
<S> <C> <C> <C> <C>
Edward D. Beach - Trustee None N/A
E. Philip Cannon - Former $5,325 None N/A **
Trustee
Donald P. Carter - Former $6,150 None N/A **
Trustee
Gary A. Childress - Former $5,325 None N/A **
Trustee
William D. Cvengros - Former $0 None N/A **
Trustee
Stephen C. Eyre - Trustee None N/A
Delayne D. Gold - Trustee None N/A
Robert F. Gunia(1) - Trustee _ None N/A _
Don G. Hoff - Trustee None N/A
Robert E. LaBlanc - Trustee None N/A
Gary L. Light - Former Trustee $5,475 None N/A **
Mendel A. Melzer(1) - Trustee _ None N/A _
Richard L. Nelson - Former $4,300 None N/A **
Trustee
Lyman W. Porter - Former $4,150 None N/A **
Trustee
Robert A. Prindiville - Former $0 None N/A **
Trustee
Alan Richards - Former Trustee $4,525 None N/A **
Joel Segall - Former Trustee $5,225 None N/A **
Robin B. Smith - Trustee None N/A
Stephen Stoneburn - Trustee $0 None N/A
W. Bryant Stooks - Former $5,325 None N/A **
Trustee
Nancy H. Teeters - Trustee None N/A
Gerald M. Thorne - Former $5,325 None N/A **
Trustee
Stephen J. Treadway - Former $0 None N/A **
Trustee
</TABLE>

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

* Indicates number of funds/portfolios in Prudential Fund Complex (including
the Trust) to which aggregate compensation relates.

** Former Trustees receive no compensation from any fund in the Prudential
Fund Complex, other than the Trust as shown in the first column.

<PAGE>

(1) Robert F. Gunia and Mendel A. Melzer, who are interested Trustees, do not
receive compensation from the Trust or any fund in the Fund Complex.

(2) Total compensation from all the funds in the Prudential Fund Complex for
the calendar year ended December 31, 1998, including amounts deferred at
the election of Trustees under the funds' deferred compensation plans.
Including accrued interest, total deferred compensation amounted to
$________ for Trustee Robin B. Smith. Currently, Ms. Smith has agreed to
defer some of her fees at the T-Bill rate and other fees at the Fund Rate.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of ____________, 1998, the Trustees and officers of the Trust, as a
group, owned less than 1% of the outstanding shares of beneficial interest of
each of the Funds and of the Trust as a whole.

As of ___________, 1998, Prudential Securities Incorporated, One Seaport
Plaza, New York, New York 10292 was the record owner of ____________ shares (or
____% of the shares) of NMMF and _____________shares (or _____% of the shares)
of LAF. In the event of any meetings of shareholders, Prudential Securities will
forward, or cause the forwarding of, proxy material to the beneficial owners
for which it is the record holder.

B-11
<PAGE>

INVESTMENT ADVISORY AND OTHER SERVICES

(a) INVESTMENT ADVISERS

The manager of the Trust is Prudential Investments Fund Management LLC,
(PIFM or the Manager), Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077 (PIFM or the Manager). PIFM serves as manager to all of the
other investment companies that, together with the Trust, comprise the
Prudential Mutual Funds. See "How the Fund is Managed" in each Prospectus. As of
November 30, 1998, PIFM managed and/or administered open-end and closed-end
management investment companies with assets of approximately $__ billion.
According to the Investment Company Institute, as of _______________, 1998, the
Prudential Mutual Funds were the __th largest family of mutual funds in the
United States.

PIFM is a subsidiary of Prudential Securities Incorporated. Prudential
Mutual Fund Services LLC (PMFS or the Transfer Agent), a wholly-owned subsidiary
of PIFM, serves as the transfer agent for the Prudential Mutual Funds and, in
addition, provides customer service, recordkeeping and management and
administration services to qualified plans.

Pursuant to the Management Agreement for NMMF (the NMMF Management
Agreement) and the Management Agreement for LAF (the LAF Management Agreement
and, together with the NMMF Management Agreement, the Management Agreements),
both of which became effective on December 12, 1997, PIFM, subject to the
supervision of the Trust's Board of Trustees and in conformity with the stated
policies of the Funds, manages both the investment operations of each Fund and
the composition of each Fund's portfolio, including the purchase, retention,
disposition and loan of securities. In connection therewith, PIFM is obligated
to keep certain books and records of the Trust. PIFM also administers the
Trust's business affairs and, in connection therewith, furnishes the Trust with
office facilities, together with those ordinary clerical and bookkeeping
services which are not being furnished by State Street Bank and Trust Company,
the Trust's custodian, and PMFS, the Trust's transfer and shareholder servicing
agent. The management services of PIFM for the Trust are not exclusive under the
terms of the Management Agreements and PIFM is free to, and does, render
management services to others.

For its services, PIFM receives, pursuant to the NMMF Management Agreement,
a fee at an annual rate of the average daily net assets of the Fund of .390% of
the first $1 billion of net assets; .375% of the next $500 million of net
assets; .350% of the next $500 million of net assets; and .325% of net assets in
excess of $2 billion. The fee is computed daily and payable monthly. PIFM has
agreed, to the extent NMMF's total expenses exceed .62 of 1% of the average
daily net assets of NMMF for the fiscal year ending September 30, 1998, to
reimburse NMMF for certain expenses up to an aggregate amount of $100,000 to the
extent necessary to reduce such total operating expenses to .62 of 1%. For the
expenses PIFM assumes pursuant to the LAF Management Agreement, PIFM will be
reimbursed for its direct costs, exclusive of any profit or overhead, not to
exceed .39% of the LAF's average daily net assets. It is expected that this
amount will be approximately .09 of 1% of the average daily net assets of LAF
for the fiscal year ending September 30, 1999.

In connection with its management of the business affairs of the Trust
pursuant to the Management Agreements, PIFM bears the following expenses:

(a) the salaries and expenses of all personnel of the Trust and the
Manager, except the fees and expenses of Trustees who are not affiliated persons
of PIFM or the Trust's investment adviser;

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

(c) the costs and expenses payable to The Prudential Investment
Corporation, doing business as Prudential Investments (PI or the Subadviser),
pursuant to subadvisory agreements on behalf of the Funds between PIFM and PI
(the Subadvisory Agreements).

Under the terms of the Management Agreements, the Trust is responsible for
the payment of the following expenses, including (a) the fees or reimbursements
payable to the Manager, (b) the fees and expenses of Trustees who are not
affiliated with the Manager or the Trust's investment adviser, (c) the fees and
certain expenses of the Trust's Custodian and Transfer and Dividend Disbursing
Agent, including the cost of providing records to the Manager in connection with
its obligation of maintaining required records of the Trust and of pricing the
Trust's shares, (d) the charges and expenses of the Trust's legal counsel and
independent accountants, (e) brokerage commissions, if any, and any issue or
transfer taxes chargeable to the Trust in connection with its securities
transactions, (f) all taxes and trust fees payable by the Trust to governmental
agencies, (g) the fees of any trade association of which the Trust is a member,
(h) the cost of share certificates, if any, representing, and/or non-negotiable
share deposit receipts evidencing, shares of the Trust, (i) the cost of fidelity
and liability insurance, (j) the fees and expenses involved in registering and
maintaining registration of the Trust and of its shares with the Commission,
including the preparation and printing of the Trust's registration statements
and prospectuses for such purposes, and paying the fees and expenses of notice
filings made in accordance with state securities laws, (k) allocable
communications expenses with respect to investor services and all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing
reports, proxy

B-12
<PAGE>

statements and prospectuses to shareholders, (l) litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Trust's business and (m) any expenses assumed by the
Fund pursuant to a distribution plan adopted under Rule 12b-1 of the
Investment Company Act.

Each Management Agreement also provides that PIFM will not be liable for
any error of judgment or any loss suffered by the Trust in connection with the
matters to which the Management Agreements relate except a loss resulting from
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.
Each Management Agreement provides that it will terminate automatically if
assigned (as defined in the Investment Company Act), and that it may be
terminated without penalty by either party upon not more than 60 days' nor less
than 30 days' written notice. The Management Agreements provide that each said
agreement will continue in effect for a period of more than two years from its
execution only so long as such continuance is specifically approved at least
annually in accordance with the requirements of the Investment Company Act.

For the fiscal year ended September 30, 1998, PIFM received management fees
from NMMF and LAF of $_______ and $_________, respectively.

For the fiscal year ended September 30, 1997 and the prior fiscal years,
PIMCO Advisors L.P. (PALP), served as manager for NMMF. PALP did not serve as
manager of LAF. Pursuant to a management contract between PALP and NMMF, which
contract was terminated by a vote of the former Trustees on October 22, 1997,
effective at the close of business on December 12, 1997, the Fund paid PALP a
monthly fee as follows: .425% of the first $500 million of the average net
assets of NMMF, .400% of the next $500 million, .375% of the next $500 million,
.350% of the next $500 million and .325% of amounts in excess of $2 billion. For
the fiscal years ended September 30, 1996 and 1997, NMMF paid PALP $2,560,734
and $2,886,449, respectively, for its services under its management contract.

PIFM has entered into Subadvisory Agreements with PIC, doing business as PI
(the Subadviser), a wholly-owned subsidiary of Prudential, on behalf of each of
NMMF and LAF. The Subadvisory Agreements provide that PI furnish investment
advisory services in connection with the investment management of the Funds. In
connection therewith, PI is obligated to keep certain books and records of the
Funds. PIFM continues to have responsibility for all investment advisory
services pursuant to the Management Agreements and supervises PI's performance
of such services. In connection with NMMF, PI is reimbursed by PIFM for the
reasonable costs and expenses incurred by PI in furnishing services to PIFM. In
connection with LAF, PI is reimbursed by PIFM for its direct costs, excluding
profit and overhead, incurred by PI in furnishing services to PIFM.

The Subadviser maintains a corporate credit unit which provides credit
analysis and research on taxable fixed-income securities including money market
instruments. The portfolio manager consults routinely with the credit unit in
managing the Funds' portfolios. The credit unit, with a staff including 7 credit
analysts, reviews on an ongoing basis commercial paper issuers, commercial
banks, non-bank financial institutions and issuers of other taxable fixed-income
obligations. Credit analysts have broad access to research and financial
reports, data retrieval services and industry analysts. They maintain
relationships with the management of corporate issuers and from time to time
visit companies in whose securities the Funds may invest.

The Subadvisory Agreements provide that each will terminate in the event
of its assignment (as defined in the Investment Company Act) or upon the
termination of the Management Agreements. The Subadvisory Agreements may be
terminated by the Trust, PIFM or PI upon not more than 60 days' nor less than
30 days' written notice. The Subadvisory Agreements provide that they will
continue in effect for a period of more than two years from their execution
only so long as such continuance is specifically approved at least annually
in accordance with the requirements of the Investment Company Act.

The Management Agreement between the Trust and PIFM and the Subadvisory
Agreements between PIFM and PIC were last approved by the Board of Trustees,
including a majority of the Trustees who are not parties to the contracts or
interested persons of any such parties, as defined in the Investment Company
Act, on May 13, 1998. Shareholders of NMMF and LAF last approved the Management
Agreement and the Subadvisory Agreements on December 12, 1997.

(b) PRINCIPAL UNDERWRITER, DISTRIBUTOR AND RULE 12b-1 PLAN

Prudential Investment Management Services LLC (PIMS or the Distributor),
Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077, acts
as the distributor of the shares of the Trust. Prior to July 1, 1998,
Prudential Securities Incorporated (Prudential Securities, also referred to as
the Distributor), One Seaport Plaza, New York, New York 10292, served as the
distributor of the Trust's shares. In November 1998, more than __% of the
outstanding voting shares of NMMF and more than __% of the outstanding voting
securities of LAF were owned by clients of Prudential Securities.

Pursuant to the Distribution Agreement, the Trust has agreed to indemnify
the Distributor to the extent permitted by applicable law against certain
liabilities under the federal securities laws.

B-13

<PAGE>

DISTRIBUTION PLAN

Under the NMMF Distribution Plan (the Plan) and the Trust's Distribution
Agreement dated December 12, 1997, NMMF pays the Distributor a distribution fee
of up to 0.10% of the average daily net assets of the shares of NMMF, computed
daily and payable monthly which is designed to reimburse the Distributor, in
whole or in part, for its services. The Distributor incurs the expenses of
distributing LAF shares, none of which are reimbursed by or paid for by LAF.

For the fiscal year ended September 30, 1998, the Distributor received
payments of $__________ under the Plan. This amount was primarily expended for
payment of account servicing fees to financial advisers and other persons who
sell shares of NMMF.

The Board of Trustees has determined that, in its judgment, there is a
reasonable likelihood that the Plan will benefit NMMF and its shareholders.

Pursuant to the Plan, the Trustees will be provided with, and will review,
at least quarterly, a written report of the distribution expenses incurred on
behalf of the Trust by the Distributor. The report will include an itemization
of the distribution expenses and the purpose of such expenditures.

The Plan may not be amended to increase materially the amount to be spent
for the services described therein with respect to NMMF without approval of the
shareholders of NMMF, and all material amendments of the Plan must also be
approved by the Trustees in the manner described above. The Plan may be
terminated at any time, by vote of a majority of the Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or any agreements related to the Plan (the
Rule 12b-1 Trustees) or by a vote of a majority of the outstanding voting
securities of the shares of the Fund (as defined in the Investment Company Act).
The Trust's Distribution Agreement provides that it will terminate automatically
if assigned and that it may be terminated, without payment of any penalty, by a
majority of the Rule 12b-1 Trustees or by vote of a majority of the outstanding
voting securities of the Trust, or by the Distributor, on 60 days' written
notice to the other party.

NASD MAXIMUM SALES CHARGE RULE. Pursuant to rules of the NASD, the Distributor
is required to limit aggregate initial sales charges, deferred sales charges and
asset-based sales charges to 6.25% of total gross sales of NMMF shares. Interest
charges on unreimbursed distribution expenses equal to the prime rate plus one
percent per annum may be added to the 6.25% limitation. Sales from the
reinvestment of dividends and distributions are not included in the calculation
of the 6.25% limitation. The annual asset-based sales charge on shares of NMMF
may not exceed .75 of 1% per class. The 6.25% limitation applies to NMMF rather
than on a per shareholder basis. If aggregate sales charges were to exceed 6.25%
of the total gross sales of NMMF, all sales charges on shares of NMMF would be
suspended.

State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for the Trust's portfolio securities,
and in that capacity maintains cash and certain financial and accounting books
and records pursuant to an agreement with the Trust.

Prudential Mutual Fund Services LLC (PMFS), Raritan Plaza One, Edison, New
Jersey 08837, serves as the Transfer and Shareholder Servicing Agent of the
Trust. It is a wholly-owned subsidiary of PIFM. PMFS provides customary transfer
agency services to the Trust, including the handling of shareholder
communications, the processing of shareholder transactions, the maintenance of
shareholder account records, payment of dividends and distributions and related
functions. In connection with services rendered to NMMF, PMFS receives an annual
fee ($9.50) per shareholder account, a new account set up fee ($2.00) for each
manually-established account and a monthly inactive zero balance account fee
($0.20) per shareholder account plus its out-of-pocket expenses, including but
not limited to postage, stationery, printing, allocable communications and other
costs. In connection with the transfer agency services rendered by PMFS to LAF,
PMFS will be reimbursed for its direct costs, excluding profit and overhead.

PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036, serves as the Trust's independent public accountants.
PricewaterhouseCoopers LLP provides audit services, accounting assistance, and
consultation in connection with Securities and Exchange Commission filings. The
financial information for NMMF and LAF provided under "Financial Statements" for
the fiscal year ended September 30, 1998 has been audited by
PricewaterhouseCoopers LLP, whose report is also included under "Financial
Statements."

BROKERAGE ALLOCATION AND OTHER PRACTICES

The Manager is responsible for decisions to buy and sell securities for the
Trust, the selection of brokers and dealers to effect the transactions and the
negotiation of brokerage commissions, if any. (For purposes of this section, the
term "Manager" includes the Subadviser.) The Trust does not normally incur any
brokerage commission expense on such transactions. In the market for money
market

B-14
<PAGE>

instruments, securities are generally traded on a "net" basis, with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price which includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. On occasion, certain money market
instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Portfolio securities may not be purchased
from any underwriting or selling syndicate of which the Distributor, or an
affiliate (including Prudential Securities), during the existence of the
syndicate, is a principal underwriter (as defined in the Investment Company
Act), except in accordance with rules of the SEC. The Trust will not deal with
the Distributor or its affiliates on a principal basis.

In placing orders for portfolio securities of the Trust, the Manager is
required to give primary consideration to obtaining the most favorable price and
efficient execution. This means that the Manager will seek to execute each
transaction at a price and commission, if any, which provide the most favorable
total cost or proceeds reasonably attainable under the circumstances. While the
Manager generally seeks reasonably competitive spreads or commissions, the Trust
will not necessarily be paying the lowest spread or commission available. Within
the framework of this policy, the Manager may consider research and investment
services provided by brokers or dealers who effect or are parties to portfolio
transactions of the Trust, the Manager or the Manager's other clients. Such
research and investment services are those which brokerage houses customarily
provide to institutional investors and include statistical and economic data and
research reports on particular companies and industries. Such services are used
by the Manager in connection with all of its investment activities, and some of
such services obtained in connection with the execution of transactions for the
Trust may be used in managing other investment accounts. Conversely, brokers
furnishing such services may be selected for the execution of transactions for
such other accounts, whose aggregate assets are far larger than the Trust's, and
the services furnished by such brokers may be used by the Manager in providing
investment management for the Trust. While such services are useful and
important in supplementing its own research and facilities, the Manager believes
that the value of such services is not determinable and does not significantly
reduce expenses. The Trust does not reduce the advisory fee it pays to the
Manager by any amount that may be attributed to the value of such services.

Subject to the above considerations, Prudential Securities, as an affiliate
of the Trust, may act as a securities broker (or futures commission merchant)
for the Trust. In order for Prudential Securities to effect any portfolio
transactions for the Trust, the commissions, fees or other remuneration received
by Prudential Securities must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold
during a comparable period of time. This standard would allow Prudential
Securities to receive no more than the remuneration which would be expected to
be received by an unaffiliated broker in a commensurate arm's-length
transaction. Furthermore, the Board of Trustees of the Trust, including a
majority of the Trustees who are not "interested" persons, has adopted
procedures which are reasonably designed to provide that any commissions, fees
or other remuneration paid to Prudential Securities are consistent with the
foregoing standard. Brokerage transactions with Prudential Securities are also
subject to such fiduciary standards as may be imposed by applicable law.

During the fiscal years ended September 30, 1996, 1997 and 1998, the Trust
paid no brokerage commissions.

SECURITIES AND ORGANIZATION

The Trust is authorized to issue an unlimited number of full and fractional
shares of beneficial interest, which may be divided into an unlimited number of
series of such shares, and which presently consist of NMMF and LAF. Each share
of a series represents an equal proportionate interest in that series with each
other share of that series and is entitled to a proportionate interest in the
dividends and distributions from that series. Upon termination of a series,
whether pursuant to liquidation of the series or otherwise, shareholders of that
series are entitled to share pro rata in the net assets of the series then
available for distribution to such shareholders. Shareholders have no preemptive
rights.

A copy of the Agreement and Declaration of Trust (the Declaration of Trust)
establishing the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts. The Declaration of Trust provides for the
perpetual existence of the Trust. The Trust or a series, however, may be
terminated at any time by vote of at least two-thirds of the outstanding shares
of an affected series or by the Trustees upon written notice to the
shareholders. Upon termination of the Trust or of a series, after paying or
otherwise providing for all charges, taxes, expenses and liabilities, whether
due or accrued or anticipated, of the Trust or of the series as may be
determined by the Trustees, the series shall, in accordance with such procedures
as the Trustees consider appropriate, reduce the remaining assets to
distributable form in cash or shares or other securities, or any combination
thereof, and distribute the proceeds to the shareholders of the series involved,
ratably according to the number of shares of such series held by the several
shareholders of the series on the date of termination.

The assets received by the Trust for the issue or sale of shares of a
series and all income, earnings, profits, losses and proceeds therefrom, subject
only to the rights of creditors, are allocated to that series, and constitute
the underlying assets of that series. The underlying assets of a series are
segregated and are charged with the expenses, including the organizational
expenses, in respect of that series and with a share of the general expenses of
the Trust. While the expenses of the Trust are allocated to the separate books
of account of the series, if more than one series has shares outstanding,
certain expenses may be legally chargeable against the assets of all series.

B-15
<PAGE>

Under Massachusetts law, shareholders could, under certain circumstances,
be held liable for the obligations of the Trust. However, the Declaration of
Trust disclaims shareholder liability for acts or obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Trust or the Trustees. The
Declaration of Trust provides for indemnification out of the property of a
series for all loss and expense of any shareholder of that series held liable on
account of being or having been a shareholder. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the series of which he was a shareholder would be unable
to meet its obligations.

The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a Trustee against any liability to which the
Trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The Declaration of Trust provides for indemnification by the Trust
of the Trustees and the officers of the Trust except with respect to any matter
as to which any such person did not act in good faith in the reasonable belief
that his action was in or not opposed to the best interests of the Trust. Such
person may not be indemnified against any liability to the Trust or the Trust
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.

The Trust will not normally hold annual shareholders' meetings. At such
time as less than a majority of the Trustees have been elected by the
shareholders, the Trustees then in office will call a shareholders' meeting for
the election of Trustees. In addition, Trustees may be removed from office by a
written consent signed by the holders of two-thirds of the outstanding shares
and filed with the Trust's custodian or by a vote of the holders of two-thirds
of the outstanding shares at a meeting duly called for the purpose, which
meeting shall be held upon written request of the holders of not less than 10%
of the outstanding shares. Upon written request by ten or more shareholders, who
have been such for at least six months and who hold shares constituting 1% of
the outstanding shares, stating that such shareholders wish to communicate with
the other shareholders for the purpose of obtaining the signatures necessary to
demand a meeting to consider removal of a Trustee, the Trust has undertaken to
provide a list of shareholders or to disseminate appropriate materials (at the
expense of the requesting shareholders).

Except as otherwise disclosed in the Prospectuses and in this Statement of
Additional Information, the Trustees shall continue to hold office and may
appoint their successors.

<PAGE>

PURCHASE AND REDEMPTION OF FUND SHARES

PURCHASE OF SHARES

Shares of the NMMF are offered to investment advisory clients of Prudential
Securities that participate in any of the following managed account programs
sponsored by Prudential Securities: Gibraltar Advisors, Prudential Securities
Portfolio Management (PSPM), Quantum Portfolio Management (Quantum), Managed
Assets Consulting Services (MACS), Managed Assets Consulting Services_Custom
Services (MACS-CS) and Prudential Securities Investment Supervisory Group. See
"How to Buy and Sell Shares of the Fund" in the NMMF Prospectus. A Prudential
Securities client who applies to participate in these managed account programs
will be eligible to purchase shares of NMMF during the period between submission
to and acceptance of the application by Prudential Securities. Eligibility of
participants is within the discretion of Prudential Securities. In the event a
client of Prudential Securities leaves a managed account program, the client may
continue to hold shares of NMMF.

Shares of LAF are offered to investment advisory clients of Prudential
Securities Incorporated (Prudential Securities) that (a) participate in any of
the following managed account programs sponsored by Prudential Securities:
Gibraltar Advisors, Prudential Securities Portfolio Management (PSPM), Quantum
Portfolio Management (Quantum), Managed Assets Consulting Services (MACS) and
Prudential Securities Investment Supervisory Group and (b) are "Eligible Benefit
Plans." "Eligible Benefit Plans" include (i) employee benefit plans as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974 (ERISA)
other than governmental plans as defined in Section 3(32) of ERISA and church
plans as defined in Section 3(33) of ERISA, (ii) pension, profit-sharing or
other employee benefit plans qualified under Section 401 of the Internal Revenue
Code, (iii) deferred compensation and annuity plans under Section 457 or
403(b)(7) of the Internal Revenue Code, and (iv) Individual Retirement Accounts
(IRAs) as defined in Section 408(a) of the Internal Revenue Code. See "How to
Buy and Sell Shares of the Fund" in the LAF Prospectus. A Prudential Securities
client who applies to participate in these managed account programs will be
eligible to purchase shares of LAF during the period between submission to and
acceptance of the application by Prudential Securities. Investment advisory
clients of Prudential Securities which receive Managed Assets Consulting
Services Custom Services are not eligible to purchase shares of LAF. Eligibility
of participants is within the discretion of Prudential Securities. In the event
a client of Prudential Securities leaves a managed account program, the client
may continue to hold shares of LAF.

If the Board of Trustees determines that it would be detrimental to the
best interests of the remaining shareholders of a Fund to make payment wholly or
partly in cash, the Fund may pay the redemption price in whole or in part by a
distribution in kind of securities from the investment portfolio of the Fund, in
lieu of cash, in conformity with applicable rules of the SEC. Securities will be
readily

B-16
<PAGE>

marketable and will be valued in the same manner as in a regular
redemption. If your shares are redeemed in kind, you would incur transaction
costs in converting the assets into cash. The Trust, however, has elected to be
governed by Rule 18f-1 under the Investment Company Act pursuant to which each
Fund is obligated to redeem shares solely in cash up to the lesser of $250,000
or 1% of the net asset value of the Fund during any 90-day period for any one
shareholder.

The Trust may suspend the right of redemption or postpone the date of
payment for a period of up to seven days. Suspensions or postponements may not
exceed seven days except (1) for any period (a) during which the New York Stock
Exchange is closed other than customary weekend and holiday closings or (b)
during which trading on the New York Stock exchange is restricted; (2) for any
period during which an emergency exists as a result of which (a) disposal by a
Fund of securities owned by it is not reasonably practicable or (b) it is not
reasonably practicable for a Fund fairly to determine the value of its net
assets; or (3) for such other periods as the SEC may by order permit for the
protection of shareholders of a Fund. The SEC by rules and regulations
determines the conditions under which (i) trading shall be deemed to be
restricted and (ii) an emergency is deemed to exist within the meaning of clause
(2) above.

NET ASSET VALUE

Each Fund's net asset value per share is determined by subtracting its
liabilities from the value of its assets and dividing the remainder by the
number of outstanding shares.

Each Fund uses the amortized cost method of valuation to determine the
value of its portfolio securities. In that regard, the Trust's Board of Trustees
has determined to maintain a dollar-weighted average portfolio maturity of 90
days or less, to purchase only instruments having remaining maturities of
thirteen months or less, and to invest only in securities determined by the
investment adviser under the supervision of the Board of Trustees to be of
minimal credit risk and to be of "eligible quality" in accordance with
regulations of the SEC. The remaining maturity of an instrument held by the
Trust that is subject to a put is deemed to be the period remaining until the
principal amount can be recovered through demand or, in the case of a variable
rate instrument, the next interest reset date, if longer. The value assigned to
the put is zero. The Board of Trustees also has established procedures designed
to stabilize, to the extent reasonably possible, a Fund's price per share as
computed for the purpose of sales and redemptions at $1.00. Such procedures will
include review of a Fund's portfolio holdings by the Board, at such intervals as
deemed appropriate, to determine whether a Fund's net asset value calculated by
using available market quotations deviates from $1.00 per share based on
amortized cost. The extent of any deviation will be examined by the Board, and
if such deviation exceeds 1/2 of 1%, the Board will promptly consider what
action, if any, will be initiated. In the event the Board of Trustees determines
that a deviation exists which

may result in material dilution or other unfair results to investors or existing
shareholders, the Board will take such corrective action as it regards necessary
and appropriate, including the sale of portfolio instruments prior to maturity
to realize gains or losses, the shortening of average portfolio maturity, the
withholding of dividends or the establishment of net asset value per share by
using available market quotations.

Each Fund computes its net asset value at 4:30 PM New York time, on each
day the New York Stock Exchange (the Exchange) is open for trading. In the event
the New York Stock Exchange closes early on any business day, the net asset
value of a Fund's shares shall be determined at a time between such closing and
4:30 PM New York time. The Exchange is closed on the following holidays: New
Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

TAXES, DIVIDENDS AND DISTRIBUTIONS

NMMF and LAF have elected to qualify, and each Fund intends to remain
qualified, as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. This relieves a fund (but not its
shareholders) from paying federal income tax on income which is distributed to
shareholders, and, if a fund did realize long-term capital gains, permits net
capital gains of the fund (i.e., the excess of net long-term capital gains over
net short-term capital losses) to be treated as long-term capital gains of the
shareholders, regardless of how long shareholders have held their shares in that
fund.

Qualification as a regulated investment company requires, among other
things, that (a) at least 90% of a fund's annual gross income (without reduction
for losses from the sale or other disposition of securities or foreign
currencies) be derived from interest, dividends, payments with respect to
securities loans, and gains from the sale or other disposition of securities or
options thereon, or other income (including, but not limited to, gains from
options) derived with respect to its business of investing in such securities;
(b) a fund must diversify its holdings so that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of a fund's assets is
represented by cash, U.S. Government obligations and other securities limited in
respect of any one issuer to an amount not greater than 5% of the market value
of the fund's assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than U.S. Government obligations) and
(c) the fund must distribute to its shareholders at least 90% of its net
investment income and net short-term gains (i.e., the excess of net short-term
capital gains over net long-term capital losses) in each year.

B-17
<PAGE>

Gains or losses on sales of securities by a Fund will be treated as
long-term capital gains or losses if the securities have been held by it for
more than one year. The Funds do not anticipate realizing long-term capital
gains. Other gains or losses on the sale of securities will be short-term
capital gains or losses. In addition, debt securities acquired by a Fund may be
subject to original issue discount and market discount rules.

Each Fund is required to distribute 98% of its ordinary income in the same
calendar year in which it is earned. Each Fund is also required to distribute
during the calendar year 98% of the capital gain net income it earned during the
twelve months ending on October 31 of such calendar year, as well as all
undistributed ordinary income and undistributed capital gain net income from the
prior year or the twelve-month period ending on October 31 of such prior year,
respectively. To the extent it does not meet these distribution requirements, a
Fund will be subject to a non-deductible 4% excise tax on the undistributed
amount. For purposes of this excise tax, income on which a Fund pays income tax
is treated as distributed. The Fund intends to make timely distributions in
order to avoid this excise tax. For this purpose, dividends declared in October,
November and December payable to shareholders of record on a specified date in
October, November and December and paid in the following January will be treated
as having been received by shareholders on December 31 of the calendar year in
which declared. Under this rule, therefore, a shareholder may be taxed in the
prior year on dividends or distributions actually received in January of the
following year.

It is anticipated that the net asset value per share of each Fund will
remain constant. However, if the net asset value per share fluctuates, a
shareholder may realize gain or loss upon the disposition of a share. Any gain
or loss realized upon a sale or redemption of shares by a shareholder who is not
a dealer in securities will generally be treated as long-term capital gain or
loss if the shares have been held for more than one year and otherwise as
short-term capital gain or loss. Any such loss, however, although otherwise
treated as short-term capital loss, will be treated as long-term capital loss to
the extent of any capital gain distributions received by the shareholder, if the
shares have been held for six months or less. Futhermore, certain rules may
apply which would limit the ability of the shareholder to recognize any loss if,
for example, the shareholder replaced the shares within 30 days of the
disposition of the shares.

Dividends and distributions may also be subject to state and local taxes.

The Trust under which the Funds are created is organized as a Massachusetts
business trust. Under current law, so long as the Funds qualify for federal
income tax treatment as described above, it is believed that neither the Trust
nor the Funds should be liable for any income or franchise tax in The
Commonwealth of Massachusetts.

CALCULATION OF YIELD

Each Fund will prepare a current quotation of yield daily. The yield quoted
will be the simple annualized yield for an identified seven calendar day period.
The yield calculation will be based on a hypothetical account having a balance
of exactly one share at the beginning of the seven-day period. The base period
return will be the change in the value of the hypothetical account during the
seven-day period, including dividends declared on any shares purchased with
dividends on the shares, but excluding any capital changes, divided by the value
of the account at the beginning of the base period. The yield will vary as
interest rates and other conditions affecting money market instruments change.
Yield also depends on the quality, length of maturity and type of instruments in
a Fund's portfolio, and its operating expenses. Each Fund also may prepare an
effective annual yield computed by compounding the unannualized seven-day period
return as follows: by adding 1 to the unannualized seven-day period return,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result.

365/7
Effective yield = [(base period return+1) ]-1

The yield and effective yield for NMMF based on the 7 days ended September
30, 1998 were _____% and ____%, respectively. The yield and effective yield
for LAF based on 7 days ended September 30, 1998 were ___% and ____%,
respectively.

Comparative performance information may be used from time to time in
advertising or marketing the Funds' shares, including data from Lipper
Analytical Services, Inc., Morningstar Publications, Inc., IBC Financial
Data, Inc., The Bank Rate Monitor, other industry publications, business
periodicals and market indices.

Each Fund's yield fluctuates, and an annualized yield quotation is not a
representation by the Fund as to what an investment in the Fund will actually
yield for any given period. Actual yields will depend upon not only changes in
interest rates generally during the period in which the investment in a Fund is
held, but also on changes in the Fund's expenses. Yield does not take into
account any federal or state income taxes.

B-18
<PAGE>

[FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT
ACCOUNTANTS]

B-19

<PAGE>

APPENDIX I - DESCRIPTION OF RATINGS

BOND RATINGS

MOODY'S INVESTORS SERVICE - Bonds which are rated Aaa are judged to be of
the best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than Aaa securities. Bonds
which are rated A possess many favorable investment attributes and are to be
considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future. Moody's
applies numerical modifiers "1", "2" and "3" in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier "1" indicates that the company ranks in the higher end of its generic
rating category; the modifier "2" indicates a mid-range ranking; and the
modifier "3" indicates that the company ranks in the lower end of its generic
rating category.

STANDARD & POOR'S RATINGS GROUP - Debt rated AAA has the highest rating
assigned by S&P. Capacity to pay interest and repay principal is extremely
strong. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree. Debt
rated A has a strong capacity to pay interest and repay principal although it is
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than debt in higher rated categories.

DUFF AND PHELPS CREDIT RATING CO. - The following summarizes the ratings
used by Duff & Phelps for long-term debt:

"AAA": Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury
debt.

"AA+", "AA" or "AA-": High credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to
time because of economic conditions.

"A+", "A" or "A-": Protection factors are average but adequate.
However, risk factors are more variable and greater in periods of
economic stress.

COMMERCIAL PAPER RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations which have an original maturity not
exceeding one year. Issuers rated "Prime-1" (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Issuers
rated "Prime-2" (or supporting institutions) have a strong ability for repayment
of senior short-term debt obligations. Issuers rated "Prime-3" (or supporting
institutions) have an acceptable ability for repayment of senior short-term
obligations.

An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market. The
designation A-1 indicates that the degree of safety regarding timely payment is
strong. A "+" designation is applied to those issues rated A-1 which possess
extremely strong safety characteristics. Capacity for timely payment on issues
with the designation A-2 is satisfactory. However, the relative degree of safety
is not as high as for issues designated A-1. Issues carrying the designation A-3
have adequate capacity for timely payment. They are however, somewhat more
vulnerable to the adverse effects of changes in circumstances than obligations
carrying the higher designations.

The following summarizes the ratings used by Duff & Phelps for short-term
debt, which apply to all obligations with maturities of under one year,
including commercial paper.

D-1+: Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding and safety is just below risk-free U.S. Treasury short-term
obligations.

D-1: Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk factors are
minor.

I-1
<PAGE>

D-1-: High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.

D-2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.

D-3: Satisfactory liquidity and other protection factors qualify issue as
to investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.

I-2
<PAGE>

APPENDIX II - HISTORICAL PERFORMANCE DATA

The historical performance data contained in this Appendix relies on data
obtained from statistical services, reports and other services believed by the
Manager to be reliable. The information has not been independently verified by
the Manager.

This chart shows the long-term performance of various asset classes and the
rate of inflation.

EACH INVESTMENT PROVIDES A DIFFERENT OPPORTUNITY

Source: Stocks, Bonds, Bills and Inflation 1997 Yearbook, Ibbotson Associates,
Chicago, Illinois (annually updates work by Roger G. Ibbotson and Rex A.
Sinquefield). Used with permission. This chart is for illustrative purposes only
and is not indicative of the past, present, or future performance of any asset
class or any Prudential Mutual Fund.

Generally, stock returns are due to capital appreciation and reinvestment of
distributions. Bond returns are attributable mainly to reinvestment of interest.
Also, stock prices are usually more volatile than bond prices over the
long-term. Small stock returns for 1926-1980 are those of stocks comprising the
5th quintile of the New York Stock Exchange. Thereafter, returns are those of
the Dimensional Fund Advisors (DFA) Small Company Fund. Common stock returns are
based on the S&P 500 Composite index, a market-weighted, unmanaged index of 500
stocks (currently) in a variety of industries. It is often used as a broad
measure of stock market performance.

Long-term government bond returns are measured using a constant one-bond
portfolio with a maturity of roughly 20 years. Treasury bill returns are for a
one-month bill. Treasuries are guaranteed by the government as to the timely
payment of principal and interest; equities are not. Inflation is measured by
the consumer price index (CPI).

II-1
<PAGE>

Set forth below is historical performance data relating to various sectors
of the fixed-income securities markets. The chart shows the historical total
returns of U.S. Treasury bonds, U.S. mortgage securities, U.S. corporate bonds,
U.S. high yield bonds and world government bonds on an annual basis from 1987
through 1997. The total returns of the indices include accrued interest, plus
the price changes (gains or losses) of the underlying securities during the
period mentioned. The data is provided to illustrate the varying historical
total returns and investors should not consider this performance data as an
indication of the future performance of the Fund or of any sector in which the
Fund invests.

All information relies on data obtained from statistical services, reports
and other services believed by the Manager to be reliable. Such information has
not been verified. The figures do not reflect the operating expenses and fees of
a mutual fund. See "Fund Expenses" in the Prospectus. The net effect of the
deduction of the operating expenses of a mutual fund on these historical total
returns, including the compounded effect over time, could be substantial.

HISTORICAL TOTAL RETURNS OF DIFFERENT BOND MARKET SECTORS

'87 '88 '89 '90 '91 '92 '93 '94 '95 '96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT 2.0% 7.0% 14.4% 8.5% 15.3% 7.2% 10.7% (3.4)% 18.4% 2.7%
TREASURY
BONDS(1)

U.S. Government 4.3% 8.7% 15.4% 10.7% 15.7% 7.0% 6.8% (1.6)% 16.8% 5.4%
Mortgage
Securities(2)

U.S. Investment 2.6% 9.2% 14.1% 7.1% 18.5% 8.7% 12.2% (3.9)% 22.3% 3.3%
Grade
Corporate
Bonds(3)

U.S. 5.0% 12.5% 0.8% (9.6)% 46.2% 15.8% 17.1% (1.0)% 19.2% 11.4%
High Yield
Corporate
Bonds(4)

World 35.2% 2.3% (3.4)% 15.3% 16.2% 4.8% 15.1% 6.0% 18.6% 4.1%
Government
Bonds(5)

Difference between 33.2 10.2 18.8 24.9 30.9 11.0 10.3 9.9 5.5 8.7
highest
and lowest return
percent
</TABLE>

(1) Lehman Brothers Treasury Bond Index is an unmanaged index made up of over
150 public issues of the U.S. Treasury having maturities of at least one
year.

(2) Lehman Brothers Mortgage-Backed Securities Index is an unmanaged index that
includes over 600 15- and 30-year fixed-rate mortgage-backed securities of
the Government National Mortgage Association (GNMA), Federal National
Mortgage Association (FNMA), and the Federal Home Loan Mortgage Corporation
(FHLMC).

(3) Lehman Brothers Corporate Bond Index includes over 3,000 public fixed-rate,
nonconvertible investment-grade bonds. All bonds are U.S.
dollar-denominated issues and include debt issued or guaranteed by foreign
sovereign governments, municipalities, governmental agencies or
international agencies. All bonds in the index have maturities of at least
one year.

(4) Lehman Brothers High Yield Bond Index is an unmanaged index comprising over
750 public, fixed-rate, nonconvertible bonds that are rated Ba1 or lower by
Moody's Investors Service (or rated BB+ or lower by Standard & Poor's or
Fitch Investors Service). All bonds in the Index have maturities of at
least one year.

II-2
<PAGE>

(5) Salomon Brothers World Government Index (Non U.S.) includes over 800 bonds
issued by various foreign governments or agencies, excluding those in the
U.S., but including those in Japan, Germany, France, the U.K., Canada,
Italy, Australia, Belgium, Denmark, the Netherlands, Spain, Sweden, and
Austria. All bonds in the index have maturities of at least one year.

II-3

<PAGE>

This chart illustrates the performance of major world stock markets for the
period from December 31, 1985 through December 31, 1997. It does not represent
the performance of any Prudential Mutual Fund.

AVERAGE ANNUAL TOTAL RETURNS OF MAJOR WORLD STOCK MARKETS (DECEMBER 31,
1985-DECEMBERR 31, 1997)(IN U.S. DOLLARS)

Source: Morgan Stanley Capital International (MSCI) based on data retrieved from
Lipper Analytical New Application (LANA) as of
September 30, 1997. Used with permission. Morgan Stanley Country indices are
unmanaged indices which include those stocks making up the largest two-thirds of
each country's total stock market capitalization. Returns reflect the
reinvestment of all distributions. This chart is for illustrative purposes only
and is not indicative of the past, present or future performance of any specific
investment. Investors cannot invest directly in stock indices.

This chart shows the growth of a hypothetical $10,000 investment made in
the stocks representing the S&P 500 Stock Index with and without reinvested
dividends.

Source: Stocks, Bonds, Bills, and Inflation 1998 Yearbook, Ibbotson Associates,
Chicago (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield).
Used with permission. All rights reserved. This chart is used for illustrative
purposes only and is not intended to represent the past, present or future
performance of any Prudential Mutual Fund. Common stock total return is based on
the Standard & Poor's 500 Stock Index, a market-value-weighted index made up of
500 of the largest stocks in the U.S. based upon their stock market value.
Investors cannot invest directly in indices.

II-4

<PAGE>

WORLD STOCK MARKET CAPITALIZATION BY REGION
WORLD TOTAL: $12.5 TRILLION

Source: Morgan Stanley Capital International, December 31, 1997. Used with
permission. This chart represents the capitalization of major world stock
markets as measured by the Morgan Stanley Capital International (MSCI) World
Index. The total market capitalization is based on the value of 1577 companies
in 22 countries (representing approximately 60% of the aggregate market value of
the stock exchanges). This chart is for illustrative purposes only and does not
represent the allocation of any Prudential Mutual Fund.

This chart below shows the historical volatility of general interest rates
as measured by the long U.S. Treasury Bond.

Source: Stocks, Bonds, Bills, and Inflation 1998 Yearbook, Ibbotson Associates,
Chicago (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield).
Used with permission. All rights reserved. The chart illustrates the historical
yield of the long-term U.S. Treasury Bond from 1926-1997. Yields represent that
of an annually renewed one-bond portfolio with a remaining maturity of
approximately 20 years. This chart is for illustrative purposes and should not
be construed to represent the yields of any Prudential Mutual Fund.

II-5

<PAGE>

APPENDIX III- GENERAL INVESTMENT INFORMATION

The following terms are used in mutual fund investing.

ASSET ALLOCATION

Asset allocation is a technique for reducing risk, providing balance. Asset
allocation among different types of securities within an overall investment
portfolio helps to reduce risk and to potentially provide stable returns, while
enabling investors to work toward their financial goal(s). Asset allocation is
also a strategy to gain exposure to better performing asset classes while
maintaining investment in other asset classes.

DIVERSIFICATION

Diversification is a time-honored technique for reducing risk, providing
"balance" to an overall portfolio and potentially achieving more stable returns.
Owning a portfolio of securities mitigates the individual risks (and returns) of
any one security. Additionally, diversification among types of securities
reduces the risks (and general returns) of any one type of security.

DURATION

Debt securities have varying levels of sensitivity to interest rates. As
interest rates fluctuate, the value of a bond (or a bond portfolio) will
increase or decrease. Longer term bonds are generally more sensitive to changes
in interest rates. When interest rates fall, bond prices generally rise.
Conversely, when interest rates rise, bond prices generally fall.

Duration is an approximation of the price sensitivity of a bond (or a bond
portfolio) to interest rate changes. It measures the weighted average maturity
of a bond's (or a bond portfolio's) cash flows, i.e., principal and interest
payments. Duration is expressed as a measure of time in years the longer the
duration of a bond (or a bond portfolio), the greater the impact of interest
rate changes on the bond's (or the bond portfolio's) price. Duration differs
from effective maturity in that duration takes into account call provisions,
coupon rates and other factors. Duration measures interest rate risk only and
not other risks, such as credit risk and, in the case of non-U.S. dollar
denominated securities, currency risk. Effective maturity measures the final
maturity dates of a bond (or a bond portfolio).

MARKET TIMING

Market timing buying securities when prices are low and selling them when
prices are relatively higher may not work for many investors because it is
impossible to predict with certainty how the price of a security will fluctuate.
However, owning a security for a long period of time may help investors offset
short-term price volatility and realize positive returns.

POWER OF COMPOUNDING

Over time, the compounding of returns can significantly impact investment
returns. Compounding is the effect of continuous investment on long-term
investment results, by which the proceeds of capital appreciation (and income
distributions, if elected) are reinvested to contribute to the overall growth of
assets. The long-term investment results of compounding may be greater than that
of an equivalent initial investment in which the proceeds of capital
appreciation and income distributions are taken in cash.

STANDARD DEVIATION

Standard deviation is an absolute (non-relative) measure of volatility
which, for a mutual fund, depicts how widely the returns varied over a certain
period of time. When a fund has a high standard deviation, its range of
performance has been very wide, implying greater volatility potential. Standard
deviation is only one of several measures of a fund's volatility.

III-1

<PAGE>

APPENDIX IV - INFORMATION RELATING TO PRUDENTIAL

Set forth below is information relating to The Prudential Insurance Company
of America (Prudential) and its subsidiaries as well as information relating to
the Prudential Mutual Funds. See "Manager" in the Prospectus. The data will be
used in sales materials relating to the Prudential Mutual Funds. Unless
otherwise indicated, the information is as of December 31, 1995 and is subject
to change thereafter. All information relies on data provided by The Prudential
Investment Corporation (PIC) or from other sources believed by the Manager to be
reliable. Such information has not been verified by the Fund.

INFORMATION ABOUT PRUDENTIAL

The Manager and PIC(1) are subsidiaries of Prudential, which is one of the
largest diversified financial services institutions in the world and, based on
total assets, the largest insurance company in North America as of December 31,
1996. Principal products and services include life and health insurance, other
healthcare products, property and casualty insurance, securities brokerage,
asset management, investment advisory services and real estate brokerage.
Prudential (together with its subsidiaries) employs almost 79,000 persons
worldwide, and maintains a sales force of approximately 10,100 agents and nearly
6,500 financial advisors. Prudential is a major issuer of annuities, including
variable annuities. Prudential seeks to develop innovative products and services
to meet consumer needs in each of its business areas. Prudential uses the rock
of Gibraltar as its symbol. The Prudential rock is a recognized brand name
throughout the world.

INSURANCE. Prudential has been engaged in the insurance business since 1875.
It insures or provides financial services to nearly 40 million people worldwide.
Long one of the largest issuers of individual life insurance, the Prudential has
25 million life insurance policies and group certificates in force today with a
face value of almost $1 trillion. Prudential has the largest capital base ($12.3
billion) of any life insurance company in the United States. Prudential provides
auto insurance for approximately 1.5 million cars and insures approximately 1.2
million homes.

MONEY MANAGEMENT. Prudential is one of the largest pension fund managers in
the country, providing pension services to 1 in 3 Fortune 500 firms. It manages
$36 billion of individual retirement plan assets, such as 401(k) plans. As of
December 31, 1997, Prudential had more than $370 billion in assets under
management. Prudential Investments, a business group of Prudential (of which
Prudential Mutual Funds is a key part) manages over $211 billion in assets of
institutions and individuals. In PENSIONS & INVESTMENTS, May 12, 1997,
Prudential was ranked third in terms of total assets under management.

REAL ESTATE. Prudential Real Estate Affiliates, the fourth largest real estate
brokerage network in the United States, has more than 37,000 brokers and agents
across the United States.(2)

HEALTHCARE. Over two decades ago, Prudential introduced the first
federally-funded, for-profit HMO in the country. Today, approximately 4.9
million Americans receive healthcare from a Prudential managed care membership.

FINANCIAL SERVICES. The Prudential Bank, a wholly-owned subsidiary of
Prudential, has over $4 billion in assets and serves nearly 1.5 million
customers across 50 states.

INFORMATION ABOUT THE PRUDENTIAL MUTUAL FUNDS

As of December 31, 1997, Prudential Investments Fund Management LLC is the
eighteenth largest mutual fund company in the country, with over 2.5 million
shareholders invested in more than 50 mutual fund portfolios and variable
annuities with more than 3.7 million shareholder accounts.

The Prudential Mutual Funds have over 30 portfolio managers who manage over
$55 billion in mutual fund and variable annuity assets. Some of Prudential's
portfolio managers have over 20 years of experience managing investment
portfolios.

From time to time, there may be media coverage of portfolio managers and
other investment professionals associated with the Manager and the Subadviser in
national and regional publications, on television and in other media.
Additionally, individual mutual fund portfolios are frequently cited in surveys
conducted by national and regional publications and media organizations such as
THE WALL STREET JOURNAL, THE NEW YORK TIMES, BARRON'S and USA TODAY.

EQUITY FUNDS. FORBES magazine listed Prudential Equity Fund among twenty
mutual funds on its Honor Roll in its mutual fund issue of August 28, 1995.
Honorees are chosen annually among mutual funds (excluding sector funds) which
are open to new investors and have had the same management for at least five
years. Forbes considers, among other criteria, the total return of a mutual fund
in both bull and bear markets as well as a fund's risk profile. Prudential
Equity Fund is managed with a "value" investment style by PIC. In 1995,
Prudential

IV-1
<PAGE>

Securities introduced Prudential Jennison Fund, a growth-style equity fund
managed by Jennison Associates Capital Corp., a premier institutional equity
manager and a subsidiary of Prudential.

HIGH YIELD FUNDS. Investing in high yield bonds is a complex and research
intensive pursuit. A separate team of high yield bond analysts monitor
approximately 200 issues held in the Prudential High Yield Fund (currently
the largest fund of its kind in the country) along with 100 or so other high
yield bonds, which may be considered for purchase. (3) Noninvestment grade
bonds, also known as junk bonds or high yield bonds, are subject to a greater
risk of loss of principal and interest including default risk than
higher-rated bonds. Prudential high yield portfolio managers and analysts
meet face-to-face with almost every bond issuer in the High Yield Fund's
portfolio annually, and have additional telephone contact throughout the
year.

Prudential's portfolio managers are supported by a large and sophisticated
research organization. Fourteen investment grade bond analysts monitor the
financial viability of approximately 1,750 different bond issuers in the
investment grade corporate and municipal bond markets - from IBM to small
municipalities, such as Rockaway Township, New Jersey. These analysts consider
among other things sinking fund provisions and interest coverage ratios.

Prudential's portfolio managers and analysts receive research services from
almost 200 brokers and market service vendors. They also receive nearly 100
trade publications and newspapers - from PULP AND PAPER FORECASTER to WOMEN'S
WEAR DAILY - to keep them informed of the industries they follow.

Prudential Mutual Funds' traders scan over 100 computer monitors to collect
detailed information on which to trade. From natural gas prices in the Rocky
Mountains to the results of local municipal elections, a Prudential portfolio
manager or trader is able to monitor it if it's important to a Prudential mutual
fund.

Prudential Mutual Funds trade approximately $31 billion in U.S. and foreign
government securities a year. PIC seeks information from government policy
makers. In 1995, Prudential's portfolio managers met with several senior U.S.
and foreign government officials, on issues ranging from economic conditions in
foreign countries to the viability of index-linked securities in the United
States.

Prudential Mutual Funds' portfolio managers and analysts met with over
1,200 companies in 1995, often with the Chief Executive Officer (CEO) or Chief
Financial Officer (CFO). They also attended over 250 industry conferences.

Prudential Mutual Fund global equity managers conducted many of their
visits overseas, often holding private meetings with a company in a foreign
language (our global equity managers speak 7 different languages, including
Mandarin Chinese).

TRADING DATA. (4) On an average day, Prudential Mutual Funds' U.S. and foreign
equity trading desks traded $77 million in securities representing over
3.8 million shares with nearly 200 different firms. Prudential Mutual Funds'
bond trading desks traded $157 million in government and corporate bonds on an
average day. That represents more in daily trading than most bond funds tracked
by Lipper even have in assets. (5) Prudential Mutual Funds' money market desk
traded $3.2 billion in money market securities on an average day, or over $800
billion a year. They made a trade every 3 minutes of every trading day. In 1994,
the Prudential Mutual Funds effected more than 40,000 trades in money market
securities and held on average $20 billion of money market securities. (6)

Based on complex-wide data, on an average day, over 7,250 shareholders
telephoned Prudential Mutual Fund Services, Inc., the Transfer Agent of the
Prudential Mutual Funds, on the Prudential Mutual Funds' toll-free number. On an
annual basis, that represents approximately 1.8 million telephone calls
answered.

INFORMATION ABOUT PRUDENTIAL SECURITIES

Prudential Securities is the fifth largest retail brokerage firm in the
United States with approximately 6,000 financial advisors. It offers to its
clients a wide range of products, including Prudential Mutual Funds and
annuities. As of December 31, 1997, assets held by Prudential Securities for its
clients approximated $235 billion.

During 1997, approximately 29,000 new customer accounts were opened each
month at Prudential Securities. (7)

Prudential Securities has a two-year Financial Advisor training program
plus advanced education programs, including Prudential Securities "university,"
which provides advanced education in a wide array of investment areas.
Prudential Securities is the only Wall Street firm to have its own in-house
Certified Financial Planner (CFP) program. In the December 1995 issue of
REGISTERED REP, an industry publication, Prudential Securities Financial Advisor
training programs received a grade of A- (compared to an industry average of
B+).

In 1995, Prudential Securities' equity research team ranked 8th in
INSTITUTIONAL INVESTOR magazine's 1995 "All America Research Team" survey. Five
Prudential Securities analysts were ranked as first-team finishers. (8)

IV-2

<PAGE>

In addition to training, Prudential Securities provides its financial
advisors with access to firm economists and market analysts. It has also
developed proprietary tools for use by financial advisors, including the
Financial Architect, a state-of-the-art asset allocation software program which
helps Financial Advisors to evaluate a client's objectives and overall financial
plan, and a comprehensive mutual fund information and analysis system that
compares different mutual funds.

Standard & Poor's rates Prudential Securities Incorporated BBB+, with a
"stable outlook."

For more complete information about any of the Prudential Mutual Funds,
including charges and expenses, call your Prudential Securities financial
advisor or Pruco/Prudential representative for a free prospectus. Read it
carefully before you invest or send money.

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

(1) Prudential Investments, a business group of PIC, serves as the subadviser
to substantially all of the Prudential Mutual Funds. Wellington Management
Company serves as subadviser to Global Utility Fund, Inc., Nicholas-Applegate
Capital Management as the subadviser to Nicholas-Applegate Fund, Inc.,
Jennison Associates LLC as one of the subadvisers to The Prudential
Investment Portfolios, Inc. and Mercator Assets Management LP, as the
subadviser to International Stock Series, a portfolio of Prudential World
Fund, Inc. There are multiple subadvisers for The Target Portfolio Trust.

(2) As of December 31, 1996.

(3) As of December 31, 1995. The number of bonds and the size of the Fund
are subject to change.

(4) Trading data represents average daily transactions for portfolios of the
Prudential Mutual Funds for which PIC serves as the subadviser, portfolios of
the Prudential Series Fund and institutional and non-US accounts managed by
Prudential Mutual Fund Investment Management, a division of PIC, for the year
ended December 31, 1995.

(5) Based on 669 funds in Lipper Analytical Services categories of Short U.S.
Treasury, Short U.S. Government, Intermediate U.S. Treasury, Intermediate
U.S. Government, Short Investment Grade Debt, Intermediate Investment Grade
Debt, General U.S. Treasury, General U.S. Government and Mortgage funds.

(6) As of December 31, 1994.

(7) As of December 31, 1997.

(8) On an annual basis, INSTITUTIONAL INVESTOR magazine surveys more than 700
institutional money managers, chief investment officers and research
directors, asking them to evaluate analysts in 76 industry sectors. Scores
are produced by taking the number of votes awarded to an individual analyst
and weighting them based on the size of the voting institution. In total, the
magazine sends its survey to approximately 2,000 institutions and a group of
European and Asian institutions.

IV-3

<PAGE>

PART C
OTHER INFORMATION

ITEM 23. EXHIBITS.

(a) (i) Agreement and Declaration of Trust of the Trust dated April 27, 1984
and Amendment No. 1 dated June 19, 1984 incorporated by reference to
Exhibit 1 to Registration Statement on Form N-1A (No. 2-91889) filed on
June 26, 1984 (the "Registration Statement").

(ii) Amendment No. 2 to Agreement and Declaration of Trust of the Trust
dated August 9, 1984 incorporated by reference to Exhibit 1 to
Pre-Effective Amendment No. 1 to the Registration Statement filed on
September 12, 1984.

(iii) Amendment No. 3 to Agreement and Declaration of Trust of the Trust
dated September 11, 1984 incorporated by reference to Exhibit 2 to
Post-Effective Amendment No. 1 to the Registration Statement filed on
February 1, 1985.

(b) (i) By-Laws of the Trust incorporated by reference to Exhibit 2(a) to
Post-Effective Amendment No. 22 to the Registration Statement filed via
EDGAR on November 7, 1997.

(ii) Amendment to By-Laws of the Trust dated July 25, 1990 incorporated
by reference to Exhibit 2(b) to Post-Effective Amendment No. 22 to the
Registration Statement filed via EDGAR on November 7, 1997.

(iii) Amendment to By-Laws of the Trust dated May 24, 1991 incorporated
by reference to Exhibit 2(c) to Post-Effective Amendment No. 22 to the
Registration Statement filed via EDGAR on November 7, 1997.

(iv) Amendment to By-Laws of the Trust dated October 22, 1997
incorporated by reference to Exhibit 2(d) to Post-Effective Amendment No.
22 to the Registration Statement filed via EDGAR on November 7, 1997.

(c) (i) Specimen Share Certificates of the National Money Market Fund
incorporated by reference to Exhibit 4 to Pre-Effective Amendment No. 1
to the Registration Statement filed on September 12, 1984.

(ii) Specimen Share Certificate for the Liquid Assets Fund*

(d) (i) Management Agreement between the Registrant, on behalf of the
National Money Market Fund, and Prudential Investments Fund Management
LLC.*

(ii) Subadvisory Agreement, with respect to the National Money Market
Fund, between Prudential Investments Fund Management LLC and The
Prudential Investment Corporation.*

(iii) Management Agreement between the Registrant, on behalf of the
Liquid Assets Fund, and Prudential Investments Fund Management LLC.*

(iv) Subadvisory Agreement, with respect to the Liquid Assets Fund,
between Prudential Investments Fund Management LLC and the Prudential
Investment Corporation.*

(e) (i) Distribution Agreement between the Registrant and Prudential
Securities Inc.*

(ii) Distribution Agreement between the Registrant and Prudential
Investment Management Services LLC.*

(iii) Form of Dealer Agreement.*

(g) Custodian Contract between the Registrant and State Street Bank and
Trust Company.*

(h) Transfer Agency and Service Agreement between the Registrant and
Prudential Mutual Fund Services.*

(i) Opinion of Counsel, incorporated by reference to Exhibit 10 to
Pre-Effective Amendment No. 1 to the Registration Statement filed on
September 12, 1984.

(m) (i) Amended Distribution Plan of the Trust, as revised through October
22, 1997 incorporated by reference to Exhibit 15 to Post-Effective
Amendment No. 22 to the Registration Statement filed via EDGAR on
November 7, 1997.

(ii) Amended and Restated Distribution and Service Plan, with respect to
National Money Market Fund.*

C-1
<PAGE>

(n) Financial Data Schedule for the fiscal year ended September 30, 1997
filed as Exhibit 27 for EDGAR purposes.*

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

* Filed herewith.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

ITEM 25. INDEMNIFICATION.

As permitted by Section 17(h) and (i) of the Investment Company Act of 1940,
as amended (the 1940 Act) and pursuant to Article V of the Fund's Declaration of
Trust (Exhibit 1 to the Registration Statement) with respect to trustees,
officers, employees and agents thereof and Article VII of the Fund's By-Laws
(Exhibit 2 to the Registration Statement), trustees, officers, employees and
agents of the Fund may be indemnified against certain liabilities in connection
with the Trust. As permitted by Section 17(i) of the 1940 Act, pursuant to
Section 10 of the Distribution Agreement (Exhibit (e)(ii) to the Registration
Statement), the Distributor of the Registrant may be indemnified against
liabilities which it may incur, except liabilities arising from bad faith, gross
negligence, willful misfeasance or reckless disregard of duties. Such Article V
of the Declaration of Trust, Article VII of the By-Laws and Section 10 of the
Distribution Agreement are hereby incorporated by reference in their entirety.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the Securities Act) may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing provisions
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the 1940 Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the 1940 Act and will be governed by the final
adjudication of such issue.

The Registrant intends to purchase an insurance policy insuring its officers
and directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers and directors under certain circumstances.

Section 9 of the Management Agreement (Exhibits (d)(i) and (iii) to the
Registration Statement) and Section 4 of the Subadvisory Agreement (Exhibits
(d)(ii) and (iv) to the Registration Statement) limit the liability of
Prudential Investments Fund Management LLC (PIFM) and The Prudential Investment
Corporation (PIC), respectively, to liabilities arising from willful
misfeasance, bad faith or gross negligence in the performance of their
respective duties or from reckless disregard by them of their respective
obligations and duties under the agreements.

The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws and each Distribution Agreement in a manner consistent
with Release No. 11330 of the Securities and Exchange Commission under the 1940
Act so long as the interpretation of Sections 17(h) and 17(i) of such Act
remains in effect and is consistently applied.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

(i) Prudential Investments Fund Management LLC (PIFM).

See "How the Fund is Managed--Manager" in the Prospectus constituting Part A
of this Post-Effective Amendment to the Registration Statement and "Investment
Advisory and Other Services--Investment Advisers" in the Statement of Additional
Information constituting Part B of this Post-Effective Amendment to the
Registration Statement.

The business and other connections of the officers of PIFM are listed in
Schedules A and D of Form ADV of PIFM as currently on file with the Securities
and Exchange Commission, the text of which is hereby incorporated by reference
(File No. 801-31104).

C-2
<PAGE>

The business and other connections of PIFM's directors and principal
executive officers are set forth below. Except as otherwise indicated, the
address of each person is Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077.

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIFM PRINCIPAL OCCUPATIONS
- - --------------------- ---------------------------- --------------------------------------------------------------
<S> <C> <C>
Frank W. Giordano Executive Vice President, Executive Vice President, Secretary and General Counsel, PIFM;
Secretary and General Senior Vice President, Prudential Securities Incorporated
Counsel (Prudential Securities)

Robert F. Gunia Executive Vice President and Vice President, Prudential Investments; Executive Vice
Treasurer President and Treasurer, PIFM; Senior Vice President,
Prudential Securities

Neil A. McGuinness Executive Vice President Executive Vice President and Director of Marketing, Prudential
Mutual Fund and Annuities (PMF&A); Executive Vice President,
PIFM

Brian Storms Officer-in-Charge, President, PMF&A; Officer-in-Charge, President, Chief
President, Chief Executive Executive Officer and Chief Operating Officer, PIFM
Officer and Chief Operating
Officer

Robert J. Sullivan Executive Vice President Executive Vice President, PMF&A; Executive Vice President,
PIFM
</TABLE>

(ii) The Prudential Investment Corporation (PIC)

The business and other connections of PIC's directors and executive officers
are as set forth below. The address of each person is Prudential Plaza, Newark,
New Jersey 07102-4077.

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIC PRINCIPAL OCCUPATIONS
- - ---------------------- ------------------------- ----------------------------------------------------------------
<S> <C> <C>
E. Michael Caulfield Chairman of the Board, Chief Executive Officer of Prudential Investments of The
President and Chief Prudential Insurance Company of America (Prudential)
Executive Officer and
Director

Jonathan M. Greene Senior Vice President and President--Investment Management of Prudential Investments of
Director Prudential

John R. Strangfeld Vice President and President of Private Asset Management Group of Prudential;
Director Senior Vice President of Prudential
</TABLE>

ITEM 27. PRINCIPAL UNDERWRITER.

(a) Prudential Investment Management Services LLC is distributor for Cash
Accumulation Trust, COMMAND Government Fund, COMMAND Money Fund, COMMAND
Tax-Free Fund, Prudential Government Securities Trust (Intermediate Term Series,
Money Market Series and U.S. Treasury Money Market Series). Prudential MoneyMart
Assets, Inc., Prudential Institutional Liquidity Portfolio, Inc., Prudential
Special Money Market Fund, Inc., Prudential Tax-Free Money Fund, Inc.,
Prudential Distressed Securities Fund, Inc., The Prudential Investment
Portfolios, Inc., Prudential Index Series Fund, Prudential Emerging Growth Fund,
Inc., Target Portfolio Trust, Prudential Balanced Fund, Prudential California
Municipal Fund, Prudential Developing Markets Fund, Prudential Diversified Bond
Fund, Inc., Prudential Equity Fund, Inc., Prudential Equity Income Fund,
Prudential Europe Growth Fund Inc., Prudential Global Genesis Fund, Inc.,
Prudential Global Limited Maturity Fund, Inc., Prudential High Yield Total
Return Fund, Inc., Prudential Natural Resources Fund, Inc., Prudential Real
Estate Securities Fund, Prudential Government Income Fund, Inc., Prudential
Small-Cap Quantum Fund, Inc., Prudential Small Company Value Fund, Inc.,
Prudential High Yield Fund, Prudential Intermediate Global Income Fund, Inc.,
Prudential Mid-Cap Value Fund, Prudential Mortgage Income Fund, Inc., Prudential
Municipal Bond Fund, Prudential Municipal Series Fund, Prudential National
Municipals Fund, Inc., Prudential Pacific

C-3
<PAGE>

Growth Fund, Inc., Prudential Structured Maturity Fund, Inc., Prudential Utility
Fund, Inc., Prudential World Fund, Inc., Prudential International Bond Fund,
Inc., The Global Total Return Fund, Inc., Global Utility Fund, Inc.,
Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth Equity Fund) and
Prudential 20/20 Focus Fund.

(b) Information concerning the Directors and officers of Prudential
Investment Management Services LLC is set forth below:

<TABLE>
<CAPTION>
POSITIONS AND
POSITIONS AND OFFICES OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- - ---------------------------------------- ----------------------------------------------------- ------------------
<S> <C> <C>
E. Michael Caulfield.................... President None
Mark R. Fetting......................... Executive Vice President None
Jonathan M. Greene...................... Executive Vice President None
Jean D. Hamilton........................ Executive Vice President None
Ronald P. Joelson....................... Executive Vice President None
Brian M. Storms......................... Executive Vice President None
John R. Strangfeld...................... Executive Vice President None
Mario A. Mosse.......................... Senior Vice President and Chief Operating Officer None
Scott S. Wallner........................ Vice President, Secretary and Chief Legal Officer None
Michael G. Williamson................... Vice President, Comptroller and Chief Financial None
Officer
C. Edward Chaplin....................... Treasurer None
</TABLE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the Rules thereunder are maintained at the offices of
State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy,
Massachusetts, The Prudential Investment Corporation, Prudential Plaza, 751
Broad Street, Newark, New Jersey, the Registrant, Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102-4077, and Prudential Mutual Fund
Services LLC, Raritan Plaza One, Edison, New Jersey 08837. Documents required by
Rules 31a-1(b)(4), (5), (6), (7), (9), (10) and (11) and 31a-1(d) and (f) will
be kept at Gateway Center Three, Newark, New Jersey 07102-4077, and the
remaining accounts, books and other documents required by such other pertinent
provisions of Section 31(a) and the Rules promulgated thereunder will be kept by
State Street Bank and Trust Company and Prudential Mutual Fund Services LLC.

ITEM 29. MANAGEMENT SERVICES

Other than as set forth under the captions "How the Fund is
Managed--Manager" and "How the Fund is Managed-- Distributor" in the Prospectus
and the captions "Investment Advisory and Other Services--Investment Advisers"
and "Investment Advisory and Other Services--Principal Underwriter, Distributor
and Rule 12b-1 Plan" in the Statement of Additional Information, constituting
Parts A and B, respectively, of this Post-Effective Amendment to the
Registration Statement, Registrant is not a party to any management-related
service contract.

ITEM 30. UNDERTAKINGS

None.

C-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Newark, and
State of New Jersey, on the 1st day of October, 1998

CASH ACCUMULATION TRUST

By: /s/ RICHARD A. REDEKER

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

(Richard A. Redeker, President)

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - ------------------------------------------------------ ---------------------------------------- ---------------------
<C> <S> <C>
/s/ EDWARD D. BEACH
------------------------------------------- Trustee October 1, 1998
Edward D. Beach

/s/ STEPHEN C. EYRE
------------------------------------------- Trustee October 1, 1998
Stephen C. Eyre

/s/ DELAYNE D. GOLD
------------------------------------------- Trustee October 1, 1998
Delayne D. Gold

/s/ ROBERT F. GUNIA
------------------------------------------- Trustee October 1, 1998
Robert F. Gunia

/s/ DON G. HOFF
------------------------------------------- Trustee October 1, 1998
Don G. Hoff

/s/ ROBERT E. LABLANC
------------------------------------------- Trustee October 1, 1998
Robert E. LaBlanc

/s/ MENDEL A. MELZER
------------------------------------------- Trustee October 1, 1998
Mendel A. Melzer

/s/ ROBIN B. SMITH
------------------------------------------- Trustee October 1, 1998
Robin B. Smith

/s/ STEPHEN STONEBURN
------------------------------------------- Trustee October 1, 1998
Stephen Stoneburn

/s/ NANCY H. TEETERS
------------------------------------------- Trustee October 1, 1998
Nancy H. Teeters

/s/ GRACE C. TORRES
------------------------------------------- Treasurer and Principal Financial and October 1, 1998
Grace C. Torres Accounting Officer
</TABLE>

<PAGE>

EXHIBIT INDEX

(b) (i) By-Laws of the Trust incorporated by reference to Exhibit 2(a) to
Post-Effective Amendment No. 22 to the Registration Statement filed via
EDGAR on November 7, 1997.

(ii) Specimen Share Certificate for the Liquid Assets Fund

(d) (i) Management Agreement between the Registrant, on behalf of the
National Money Market Fund, and Prudential Investments Fund Management
LLC.

(ii) Subadvisory Agreement, with respect to the National Money Market
Fund, between Prudential Investments Fund Management LLC and The
Prudential Investment Corporation.

(iii) Management Agreement between the Registrant, on behalf of the
Liquid Assets Fund, and Prudential Investments Fund Management LLC.

(iv) Subadvisory Agreement, with respect to the Liquid Assets Fund,
between Prudential Investments Fund Management LLC and the Prudential
Investment Corporation.

(e) (i) Distribution Agreement between the Registrant and Prudential
Securities Inc.

(ii) Distribution Agreement between the Registrant and Prudential
Investment Management Services LLC.

(iii) Form of Dealer Agreement.

(g) Custodian Contract between the Registrant and State Street Bank and
Trust Company.

(h) Transfer Agency and Service Agreement between the Registrant and
Prudential Mutual Fund Services.

(i) Opinion of Counsel, incorporated by reference to Exhibit 10 to
Pre-Effective Amendment No. 1 to the Registration Statement filed on
September 12, 1984.

(ii) Amended and Restated Distribution and Service Plan with respect to
National Money Market Fund.

(n) Financial Data Schedule for the fiscal year ended September 30, 1997.

<PAGE>
Exhibit (c)(ii)

CUSIP
--------------

NUMBER SHARES

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

ESTABLISHED UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS

CASH ACCUMULATION TRUST
LIQUID ASSETS FUND
THIS CERTIFIES THAT SEE REVERSE FOR
CERTAIN DEFINITIONS

PROOF

is the holder of shares

of beneficial interest in CASH ACCUMULATION TRUST--LIQUID ASSETS FUND, fully
paid and nonassessable, which shares have been issued and are held under and
subject to terms and provisions of the Agreement and Declaration of Trust
dated April 27, 1984, establishing Cash Accumulation Trust, and all
amendments thereto, heretofore or hereafter made, copies of which are on file
with the Secretary of the Commonwealth of Massachusetts.

No transfer hereof will be of any effect as regards the Trustees of CASH
ACCUMULATION TRUST until this certificate, properly endorsed or assigned, has
been surrendered and the transfer recorded upon the books of said Trustees.

This certificate is executed on behalf of the Trustees as Trustees and
not individually and the obligations hereof are not binding upon any of the
Trustees or shareholders individually but are binding only upon the assets
and property of the Fund.

IN WITNESS WHEREOF the Trustees under said Agreement and
Declaration of Trust have caused the following facsimile signatures to
be affixed to this certificate and a facsimile of their common seal to
be hereto affixed by SHAREHOLDER SERVICES, INC., Transfer Agent.
Dated
[SEAL] SHAREHOLDER SERVICES, INC.
Transfer Agent

/s/ Robert W. Prinkinilly
----------------------------------
PRESIDENT FOR THE TRUSTEES

/s/ Joseph F. Masson
----------------------------------

-------------------------------
Authorized Signature

<PAGE>

Exhibit (d)(i)

MANAGEMENT AGREEMENT

CASH ACCUMULATION TRUST
(National Money Market Fund)

Agreement made this 12th day of December, 1997 between Cash Accumulation
Trust, a Massachusetts business trust (the Fund), and Prudential Investments
Fund Management LLC, a New York limited liability company (the Manager).

W I T N E S S E T H

WHEREAS, the Fund is a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended (the 1940 Act);
and

WHEREAS, the Fund desires to retain the Manager to render or contract to
obtain as hereinafter provided investment advisory services to the Fund on
behalf of its series, the National Money Market Fund (NMMF), and the Fund also
desires to avail itself of the facilities available to the Manager with respect
to the administration of its day to day business affairs, and the Manager is
willing to render such investment advisory and administrative services;

NOW, THEREFORE, the parties agree as follows:

1. The Fund hereby appoints the Manager to act as manager of the Fund and
administrator of its business affairs for the period and on the terms set forth
in this Agreement. The Manager accepts such appointment and agrees to render the
services herein described, for the compensation herein provided. The Manager is
authorized to

<PAGE>

enter into an agreement with The Prudential Investment Corporation
(PIC) pursuant to which PIC shall furnish to NMMF the investment advisory
services in connection with the management of NMMF (the Subadvisory Agreement).
The Manager will continue to have responsibility for all investment advisory
services furnished pursuant to the Subadvisory Agreement.

2. Subject to the supervision of the Trustees of the Fund, the Manager shall
administer the Fund's business affairs and, in connection therewith, shall
furnish the Fund with office facilities and with clerical, bookkeeping and
recordkeeping services at such office facilities and, subject to Section 1
hereof and the Subadvisory Agreement, the Manager shall manage the investment
operations of NMMF and the composition of NMMF's portfolio, including the
purchase, retention and disposition thereof, in accordance with NMMF's
investment objectives, policies and restrictions as stated in the Prospectus
(hereinafter defined) and subject to the following understandings:

(a) The Manager shall provide supervision of NMMF's investments and
determine from time to time what investments or securities will be
purchased, retained, sold or loaned by NMMF, and what portion of the assets
will be invested or held uninvested as cash.

(b) The Manager, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Declaration of Trust
(hereinafter defined) and By-Laws of the Fund and the Prospectus
(hereinafter defined) of NMMF and with the instructions and directions of
the Trustees of the Fund and

<PAGE>

will conform to and comply with the requirements of the 1940 Act and all
other applicable federal and state laws and regulations.

(c) The Manager shall determine the securities to be purchased or sold
by NMMF and will place orders pursuant to its determinations with or through
such persons, brokers or dealers (including but not limited to Prudential
Securities Incorporated) in conformity with the policy with respect to
brokerage as set forth in the Fund's Registration Statement and NMMF's
Prospectus (hereinafter defined) or as the Trustees may direct from time to
time. In providing NMMF with investment supervision, it is recognized that
the Manager will give primary consideration to securing the most favorable
price and efficient execution. Consistent with this policy, the Manager may
consider the financial responsibility, research and investment information
and other services provided by brokers or dealers who may effect or be a
party to any such transaction or other transactions to which other clients
of the Manager may be a party. It is understood that Prudential Securities
Incorporated may be used as principal broker for securities transactions but
that no formula has been adopted for allocation of NMMF's investment
transaction business. It is also understood that it is desirable for NMMF
that the Manager have access to supplemental investment and market research
and security and economic analysis provided by brokers and that such brokers
may execute brokerage transactions at a higher cost to NMMF than may result
when allocating brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the Manager is
authorized to

<PAGE>

pay higher brokerage commissions for the purchase and sale of securities for
NMMF to brokers who provide such research and analysis, subject to review by
the Fund's Trustees from time to time with respect to the extent and
continuation of this practice. It is understood that the services provided
by such broker may be useful to the Manager in connection with its services
to other clients.

On occasions when the Manager deems the purchase or sale of a security
to be in the best interest of NMMF as well as other clients of the Manager
or the Subadviser, the Manager, to the extent permitted by applicable laws
and regulations, may, but shall be under no obligation to, aggregate the
securities to be so sold or purchased in order to obtain the most favorable
price or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Manager in the manner it
considers to be the most equitable and consistent with its fiduciary
obligations to NMMF and to such other clients.

(d) The Manager shall maintain all books and records with respect to
NMMF's portfolio transactions and shall render to the Fund's Trustees such
periodic and special reports as the Trustees may reasonably request.

(e) The Manager shall be responsible for the financial and accounting
records to be maintained by NMMF (including those being maintained by the
Fund's Custodian).

(f) The Manager shall provide the Fund's Custodian on each business day

<PAGE>

with information relating to all transactions concerning NMMF's assets.

(g) The investment management services of the Manager to NMMF under
this Agreement are not to be deemed exclusive, and the Manager shall be free
to render similar services to others.

3. The Fund has delivered to the Manager copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:

(a) Agreement and Declaration of Trust of the Fund, as filed with The
Commonwealth of Massachusetts (such Agreement and Declaration of Trust, as
in effect on the date hereof and as amended from time to time, is herein
called the "Declaration of Trust");

(b) By-Laws of the Fund (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");

(c) Certified resolutions of the Trustees of the Fund authorizing the
appointment of the Manager and approving the form of this Agreement;

(d) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (the Registration Statement), as filed with
the Securities and Exchange Commission (the Commission) relating to NMMF and
its shares of beneficial interest and all amendments thereto;

(e) Notification of Registration of the Fund under the 1940 Act on Form
N-8A as filed with the Commission and all amendments thereto; and

(f) Prospectus of NMMF (such Prospectus and Statement of Additional
Information, as currently in effect and as amended or supplemented from time
to

<PAGE>

time being herein called the "Prospectus").

4. The Manager shall authorize and permit any of its officers and employees
who may be elected as trustees or officers of the Fund to serve in the
capacities in which they are elected. All services to be furnished by the
Manager under this Agreement may be furnished through the medium of any such
officers or employees of the Manager.

5. The Manager shall keep the Fund's books and records required to be
maintained by it pursuant to paragraph 2 hereof. The Manager agrees that all
records which it maintains for the Fund are the property of the Fund and it will
surrender promptly to the Fund any such records upon the Fund's request,
provided however that the Manager may retain a copy of such records. The Manager
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act any such records as are required to be maintained by the Manager
pursuant to paragraph 2 hereof.

6. During the term of this Agreement, the Manager shall pay the following
expenses:

(i) the salaries and expenses of all personnel of the Fund and the
Manager except the fees and expenses of trustees who are not affiliated
persons of the Manager or the Fund's investment adviser,

(ii) all expenses incurred by the Manager or by the Fund in
connection with managing the ordinary course of the Fund's business as
required in this Agreement other than those assumed by the Fund herein,
and

(iii) the costs and expenses payable to PIC pursuant to the
Subadvisory

<PAGE>

Agreement.

The Fund assumes and will pay the expenses described below:

(a) the fees and expenses incurred by the Fund in connection with the
management of the investment and reinvestment of the Fund's assets,

(b) the fees and expenses of trustees who are not affiliated persons of
the Manager or the Fund's investment adviser and out-of-pocket travel
expenses of all Trustees and other expenses incurred by the Fund in
connection with Board meetings, including out-of-pocket travel expenses of
any officer of the Fund attending the meeting in an official capacity;

(c) the fees and expenses of the Custodian that relate to (i) the
custodial function and the recordkeeping connected therewith, (ii) preparing
and maintaining the general accounting records of the Fund and the providing
of any such records to the Manager useful to the Manager in connection with
the Manager's responsibility for the accounting records of the Fund pursuant
to Section 31 of the 1940 Act and the rules promulgated thereunder, (iii)
the pricing of the shares of the Fund, including the cost of any pricing
service or services which may be retained pursuant to the authorization of
the Trustees of the Fund, and (iv) for both mail and wire orders, the
cashiering function in connection with the issuance and redemption of the
Fund's securities,

(d) the fees and expenses of the Fund's Transfer and Dividend
Disbursing Agent, which may be the Custodian, that relate to the maintenance
of each shareholder account,

<PAGE>

(e) the charges and expenses of legal counsel and independent
accountants for the Fund,

(f) brokers' commissions and any issue or transfer taxes chargeable to
the Fund in connection with its securities transactions,

(g) all taxes and trust fees payable by the Fund to federal, state or
other governmental agencies,

(h) the fees of any trade associations of which the Fund may be a
member,

(i) the cost of share certificates, if any, representing, and/or
non-negotiable share deposit receipts evidencing, shares of the Fund,

(j) the cost of fidelity, directors and officers and errors and
omissions insurance,

(k) the fees and expenses involved in registering and maintaining
registration of the Fund and of its shares with the Securities and Exchange
Commission, registering the Fund as a broker or dealer and paying notice
filing fees under state securities laws, including the preparation and
printing of the Fund's registration statements, prospectuses and statements
of additional information for filing under federal and state securities laws
for such purposes,

(l) allocable communications expenses with respect to investor services
and all expenses of shareholders' and trustees' meetings and of preparing,
printing and mailing proxy statements, prospectuses and reports to
shareholders in the amount necessary for distribution to the existing
shareholders,

<PAGE>

(m) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business, and

(n) any expenses assumed by the Fund pursuant to a Plan of Distribution
adopted in conformity with Rule 12b-1 under the 1940 Act.

7. For the services provided and the expenses assumed pursuant to this
Agreement, NMMF will pay to the Manager as full compensation therefor a fee
based on its average daily net assets at the following annual rates: 0.390% of
the first $1 billion of net assets; 0.375% of the next $500 million of net
assets; 0.350% of the next $500 million of net assets; and 0.325% of net assets
in excess of $2 billion. This fee will be computed daily and will be paid to the
Manager monthly.

8. The Manager shall not be liable for any error of judgment or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3) of
the 1940 Act) or loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.

<PAGE>

any penalty, by the Trustees of the Fund or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of NMMF, or by the
Manager at any time, without the payment of any penalty, on not more than 60
days' nor less than 30 days' written notice to the other party. This Agreement
shall terminate automatically in the event of its assignment (as defined in the
1940 Act).

10. Nothing in this Agreement shall limit or restrict the right of any
officer or employee of the Manager who may also be a trustee, officer or
employee of the Fund to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any business,
whether of a similar or dissimilar nature, nor limit or restrict the right of
the Manager to engage in any other business or to render services of any kind to
any other corporation, firm, individual or association.

11. Except as otherwise provided herein or authorized by the Trustees of the
Fund from time to time, the Manager shall for all purposes herein be deemed to
be an independent contractor and shall have no authority to act for or represent
the Fund in any way or otherwise be deemed an agent of the Fund.

<PAGE>

Manager copies of any of the above mentioned materials which refer in any way to
the Manager. Sales literature may be furnished to the Manager hereunder by
first-class or overnight mail, facsimile transmission equipment or hand
delivery. The Fund shall furnish or otherwise make available to the Manager such
other information relating to the business affairs of the Fund as the Manager at
any time, or from time to time, reasonably requests in order to discharge its
obligations hereunder.

13. This Agreement may be amended by mutual consent, but the consent of the
Fund must be obtained in conformity with the requirements of the 1940 Act.

14. Any notice or other communication required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (1) to the Manager at Gateway Center Three, 100 Mulberry
Street, Newark, NJ 07102-4077, Attention: Secretary; or (2) to the Fund at
Gateway Center Three, 100 Mulberry Street, Newark, NJ 07102-4077, Attention:
President.

15. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.

16. NMMF may use any name including the word "Prudential" only for so long
as this Agreement or any extension, renewal or amendment hereof remains in
effect, including any similar agreement with any organization which shall have
succeeded to the Manager's business as Manager or any extension, renewal or
amendment thereof remains in effect. At such time as such an agreement shall no
longer be in effect, NMMF will (to the extent that it lawfully can) cease to use
such a name or any other name indicating that it is advised by, managed by or
otherwise

<PAGE>

connected with the Manager, or any organization which shall have so succeeded to
such businesses. In no event shall NMMF use any name including the word
"Prudential" if the Manager's function is transferred or assigned to a company
of which The Prudential Insurance Company of America does not have control.

A copy of the Declaration of Trust of the Fund is on file with the Secretary
of The Commonwealth of Massachusetts, and notice is hereby given that this
Agreement is executed on behalf of the Trustees of the Fund as Trustees and not
individually and that the obligations of this Agreement are not binding upon any
of the Trustees or shareholders individually, but are binding only upon the
assets and property of the Fund.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

CASH ACCUMULATION TRUST
on behalf of the National Money Market Fund

By: /s/ Richard A. Redeker
--------------------------
Richard A. Redeker
President

PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC

By: /s/ Robert F. Gunia
--------------------------
Robert F. Gunia
Executive Vice President

<PAGE>

Exhibit (d)(ii)

SUBADVISORY AGREEMENT

CASH ACCUMULATION TRUST
(National Money Market Fund)

Agreement made as of this 12th day of December, 1997 between Prudential
Investments Fund Management LLC, a New York limited liability company (PIFM or
the Manager), and The Prudential Investment Corporation, a New Jersey
Corporation (the Subadviser).

WHEREAS, the Manager has entered into a Management Agreement, dated December
12, 1997 (the Management Agreement), with Cash Accumulation Trust (the Fund), a
Massachusetts business trust and a diversified open-end management investment
company registered under the Investment Company Act of 1940 (the 1940 Act),
pursuant to which PIFM will act as Manager of a series of the Fund, namely the
National Money Market Fund (NMMF).

WHEREAS, PIFM desires to retain the Subadviser to provide investment
advisory services to NMMF in connection with the management of NMMF and the
Subadviser is willing to render such investment advisory services.

NOW, THEREFORE, the Parties agree as follows:

1. (a) Subject to the supervision of the Manager and of the Trustees of the
Fund, the Subadviser shall manage the investment operations of NMMF and the
composition of NMMF's portfolio, including the purchase, retention and
disposition thereof, in accordance with the Fund's investment objectives,
policies and restrictions as stated in its Prospectus (such Prospectus and
Statement of Additional Information as currently in effect and as amended or
supplemented from time to time, being herein called the "Prospectus"), and
subject to the following understandings:

(i) The Subadviser shall provide supervision of NMMF's investments
and determine from time to time what investments and securities will be
purchased, retained, sold or loaned by NMMF, and what portion of the
assets will be invested or held uninvested as cash.

(ii) In the performance of its duties and obligations under this
Agreement, the Subadviser shall act in conformity with the Agreement
and Declaration of Trust, and By-Laws of the Fund and the Prospectus of
NMMF and with the instructions NMMF and directions of the Manager and
of the Trustees of the Fund and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of 1986 and all

<PAGE>

other applicable federal and state laws and regulations.

(iii) The Subadviser shall determine the securities to be
purchased or sold by NMMF and will place orders with or through such
persons, brokers or dealers (including but not limited to Prudential
Securities Incorporated) to carry out the policy with respect to
brokerage as set forth in the Fund's Registration Statement and NMMF's
Prospectus or as the Trustees may direct from time to time. In
providing NMMF with investment supervision, it is recognized that the
Subadviser will give primary consideration to securing the most
favorable price and efficient execution. Within the framework of this
policy, the Subadviser may consider the financial responsibility,
research and investment information and other services provided by
brokers or dealers who may effect or be a party to any such transaction
or other transactions to which the Subadviser's other clients may be a
party. It is understood that Prudential Securities Incorporated may be
used as principal broker for securities transactions but that no
formula has been adopted for allocation of NMMF's investment
transaction business. It is also understood that it is desirable for
NMMF that the Subadviser have access to supplemental investment and
market research and security and economic analysis provided by brokers
who may execute brokerage transactions at a higher cost to NMMF than
may result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and efficient execution. Therefore,
the Subadviser is authorized to place orders for the purchase and sale
of securities for NMMF with such brokers, subject to review by the
Fund's Trustees from time to time with respect to the extent and
continuation of this practice. It is understood that the services
provided by such brokers may be useful to the Subadviser in connection
with the Subadviser's services to other clients.

On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of NMMF as well as other clients of
the Subadviser, the Subadviser, to the extent permitted by applicable
laws and regulations, may, but shall be under no obligation to,
aggregate the securities or futures contracts to be sold or purchased
in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in
the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its
fiduciary obligations to NMMF and to such other clients.

(iv) The Subadviser shall maintain all books and records with
respect to NMMF's portfolio transactions required by subparagraphs
(b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1
under the 1940 Act and shall render to the Fund's Trustees such
periodic and special reports as the Trustees may reasonably request.

<PAGE>

(v) The Subadviser shall provide the Fund's Custodian on each
business day with information relating to all transactions concerning
NMMF's assets and shall provide the Manager with such information upon
request of the Manager.

(vi) The investment management services provided by the Subadviser
hereunder are not to be deemed exclusive, and the Subadviser shall be
free to render similar services to others.

(b) The Subadviser shall authorize and permit any of its directors, officers
and employees who may be elected as trustees or officers of the Fund to
serve in the capacities in which they are elected. Services to be furnished
by the Subadviser under this Agreement may be furnished through the medium
of any of such directors, officers or employees.

(c) The Subadviser shall keep the Fund's books and records required to be
maintained by the Subadviser pursuant to paragraph 1(a) hereof and shall
timely furnish to the Manager all information relating to the Subadviser's
services hereunder needed by the Manager to keep the other books and records
of the Fund required by Rule 31a-1 under the 1940 Act. The Subadviser agrees
that all records which it maintains for the Fund are the property of the
Fund and the Subadviser will surrender promptly to the Fund any of such
records upon the Fund's request, provided however that the Subadviser may
retain a copy of such records. The Subadviser further agrees to preserve for
the periods prescribed by Rule 31a-2 of the Commission under the 1940 Act
any such records as are required to be maintained by it pursuant to
paragraph 1(a) hereof.

2. The Manager shall continue to have responsibility for all services to be
provided to the Fund pursuant to the Management Agreement and shall oversee
and review the Subadviser's performance of its duties under this Agreement.

3. The Manager shall reimburse the Subadviser for reasonable costs and
expenses incurred by the Subadviser determined in a manner acceptable to the
Manager in furnishing the services described in paragraph 1 hereof.

4. The Subadviser shall not be liable for any error of judgment or for any
loss suffered by the Fund or the Manager in connection with the matters to
which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the Subadviser's part in the
performance of its duties or from its reckless disregard of its obligations
and duties under this Agreement.

<PAGE>

5. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940
Act; provided, however, that this Agreement may be terminated by the Fund at
any time, without the payment of any penalty, by the Trustees of the Fund or
by vote of a majority of the outstanding voting securities (as defined in
the 1940 Act) of NMMF, or by the Manager or the Subadviser at any time,
without the payment of any penalty, on not more than 60 days' nor less than
30 days' written notice to the other party and to the Fund. This Agreement
shall terminate automatically in the event of its assignment (as defined in
the 1940 Act) or upon the termination of the Management Agreement.

6. Nothing in this Agreement shall limit or restrict the right of any of the
Subadviser's directors, officers, or employees who may also be a trustee,
officer or employee of the Fund to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of
any business, whether of a similar or a dissimilar nature, nor limit or
restrict the Subadviser's right to engage in any other business or to render
services of any kind to any other corporation, firm, individual or
association.

7. During the term of this Agreement, the Manager agrees to furnish the
Subadviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature or other material prepared for
distribution to shareholders of the Fund or the public, which refer to the
Subadviser in any way, prior to use thereof and not to use material if the
Subadviser reasonably objects in writing five business days (or such other
time as may be mutually agreed) after receipt thereof. Sales literature may
be furnished to the Subadviser hereunder by first-class or overnight mail,
facsimile transmission equipment or hand delivery.

8. This Agreement may be amended by mutual consent, but the consent of the
Fund must be obtained in conformity with the requirements of the 1940 Act.

9. This Agreement shall be governed by the laws of the State of New York.

<PAGE>

IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC

BY: /s/ Robert F. Gunia
----------------------------------
Robert F. Gunia
Executive Vice President

THE PRUDENTIAL INVESTMENT CORPORATION

BY: /s/ Jonathan M. Greene
----------------------------------
Jonathan M. Greene
Senior Vice President

<PAGE>

Exhibit (d)(iii)

MANAGEMENT AGREEMENT

CASH ACCUMULATION TRUST
(Liquid Assets Fund)

W I T N E S S E T H

WHEREAS, the Fund is a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended (the 1940 Act);
and

WHEREAS, the Fund desires to retain the Manager to render or contract to
obtain as hereinafter provided investment advisory services to the Fund on
behalf of its series, the Liquid Assets Fund (LAF), and the Fund also desires to
avail itself of the facilities available to the Manager with respect to the
administration of its day to day business affairs, and the Manager is willing to
render such investment advisory and administrative services;

NOW, THEREFORE, the parties agree as follows:

<PAGE>

enter into an agreement with The Prudential Investment Corporation
(PIC) pursuant to which PIC shall furnish to LAF the investment advisory
services in connection with the management of LAF (the Subadvisory Agreement).
The Manager will continue to have responsibility for all investment advisory
services furnished pursuant to the Subadvisory Agreement.

2. Subject to the supervision of the Trustees of the Fund, the Manager shall
administer the Fund's business affairs and, in connection therewith, shall
furnish the Fund with office facilities and with clerical, bookkeeping and
recordkeeping services at such office facilities and, subject to Section 1
hereof and the Subadvisory Agreement, the Manager shall manage the investment
operations of LAF and the composition of LAF's portfolio, including the
purchase, retention and disposition thereof, in accordance with LAF's investment
objectives, policies and restrictions as stated in the Prospectus (hereinafter
defined) and subject to the following understandings:

(a) The Manager shall provide supervision of LAF's investments and
determine from time to time what investments or securities will be
purchased, retained, sold or loaned by LAF, and what portion of the assets
will be invested or held uninvested as cash.

(b) The Manager, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Declaration of Trust
(hereinafter defined) and By-Laws of the Fund and the Prospectus
(hereinafter defined) of LAF and with the instructions and directions of the
Trustees of the Fund and will conform to and comply with the requirements of
the 1940 Act and all other applicable federal and state laws and
regulations.

<PAGE>

(c) The Manager shall determine the securities to be purchased or sold
by LAF and will place orders pursuant to its determinations with or through
such persons, brokers or dealers (including but not limited to Prudential
Securities Incorporated) in conformity with the policy with respect to
brokerage as set forth in the Fund's Registration Statement and LAF's
Prospectus (hereinafter defined) or as the Trustees may direct from time to
time. In providing LAF with investment supervision, it is recognized that
the Manager will give primary consideration to securing the most favorable
price and efficient execution. Consistent with this policy, the Manager may
consider the financial responsibility, research and investment information
and other services provided by brokers or dealers who may effect or be a
party to any such transaction or other transactions to which other clients
of the Manager may be a party. It is understood that Prudential Securities
Incorporated may be used as principal broker for securities transactions but
that no formula has been adopted for allocation of LAF's investment
transaction business. It is also understood that it is desirable for LAF
that the Manager have access to supplemental investment and market
research and security and economic analysis provided by brokers and that
such brokers may execute brokerage transactions at a higher cost to LAF
than may result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and efficient execution. Therefore, the
Manager is authorized to pay higher brokerage commissions for the purchase
and sale of securities for LAF to brokers who provide such research and
analysis, subject to review by the Fund's Trustees from time to time with
respect to the extent and continuation of this practice. It is

<PAGE>

understood that the services provided by such broker may be useful to the
Manager in connection with its services to other clients.

On occasions when the Manager deems the purchase or sale of a security
to be in the best interest of LAF as well as other clients of the Manager or
the Subadviser, the Manager, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be so sold or purchased in order to obtain the most favorable
price or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Manager in the manner it
considers to be the most equitable and consistent with its fiduciary
obligations to LAF and to such other clients.

(d) The Manager shall maintain all books and records with respect to
LAF's portfolio transactions and shall render to the Fund's Trustees such
periodic and special reports as the Trustees may reasonably request.

(e) The Manager shall be responsible for the financial and accounting
records to be maintained by LAF (including those being maintained by the
Fund's Custodian).

(f) The Manager shall provide the Fund's Custodian on each business day
with information relating to all transactions concerning LAF's assets.

(g) The investment management services of the Manager to LAF under this
Agreement are not to be deemed exclusive, and the Manager shall be free to
render similar services to others.

<PAGE>

3. The Fund has delivered to the Manager copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:

(b) By-Laws of the Fund (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");

(c) Certified resolutions of the Trustees of the Fund authorizing the
appointment of the Manager and approving the form of this Agreement;

(d) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (the Registration Statement), as filed with
the Securities and Exchange Commission (the Commission) relating to LAF and
its shares of beneficial interest and all amendments thereto;

(e) Notification of Registration of the Fund under the 1940 Act on Form
N-8A as filed with the Commission and all amendments thereto; and

(f) Prospectus of LAF (such Prospectus and Statement of Additional
Information, as currently in effect and as amended or supplemented from time
to time, being herein called the "Prospectus").

<PAGE>

employees of the Manager.

6. During the term of this Agreement, the Manager shall pay the following
expenses:

(i) the salaries and expenses of all personnel of the Fund and the
Manager except the fees and expenses of trustees who are not affiliated
persons of the Manager or the Fund's investment adviser,

(iii) the costs and expenses payable to PIC pursuant to the
Subadvisory Agreement.

The Fund assumes and will pay the expenses described below:

(a) the fees and expenses incurred by the Fund in connection with the
management of the investment and reinvestment of the Fund's assets,

(b) the fees and expenses of trustees who are not affiliated persons of
the Manager or the Fund's investment adviser and out-of-pocket travel
expenses for

<PAGE>

all trustees and other expenses incurred by the Fund in connection with
Board meetings, including out-of-pocket travel expenses of any officer of
the Fund attending the meeting in an official capacity;

(d) the fees and expenses of the Fund's Transfer and Dividend
Disbursing Agent, which may be the Custodian, that relate to the maintenance
of each shareholder account,

(e) the charges and expenses of legal counsel and independent
accountants for the Fund,

(f) brokers' commissions and any issue or transfer taxes chargeable to
the Fund in connection with its securities transactions,

(g) all taxes and trust fees payable by the Fund to federal, state or
other governmental agencies,

<PAGE>

(h) the fees of any trade associations of which the Fund may be a
member,

(i) the cost of share certificates, if any, representing, and/or
non-negotiable share deposit receipts evidencing, shares of the Fund,

(j) the cost of fidelity, directors and officers and errors and
omissions insurance,

(m) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business, and

(n) any expenses assumed by the Fund pursuant to a Plan of Distribution
adopted in conformity with Rule 12b-1 under the 1940 Act.

7. For the expenses assumed pursuant to this Agreement, LAF will reimburse
the Manager's direct costs in managing LAF, exclusive of any profit or overhead,
not to exceed 0.390% of LAF's average daily net assets. This

<PAGE>

reimbursement will be accrued daily and will be paid to the Manager monthly.

9. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Fund at any
time, without the payment of any penalty, by the Trustees of the Fund or by vote
of a majority of the outstanding voting securities (as defined in the 1940 Act)
of LAF, or by the Manager at any time, without the payment of any penalty, on
not more than 60 days' nor less than 30 days' written notice to the other party.
This Agreement shall terminate automatically in the event of its assignment (as
defined in the 1940 Act).

<PAGE>

services of any kind to any other corporation, firm, individual or association.

12. During the term of this Agreement, the Fund agrees to furnish the
Manager at its principal office all prospectuses, proxy statements, reports to
shareholders, sales literature, or other material prepared for distribution to
shareholders of LAF or the public, which refer in any way to the Manager, prior
to use thereof and not to use such material if the Manager reasonably objects in
writing within five business days (or such other time as may be mutually agreed)
after receipt thereof. In the event of termination of this Agreement, the Fund
will continue to furnish to the Manager copies of any of the above mentioned
materials which refer in any way to the Manager. Sales literature may be
furnished to the Manager hereunder by first-class or overnight mail, facsimile
transmission equipment or hand delivery. The Fund shall furnish or otherwise
make available to the Manager such other information relating to the business
affairs of the Fund as the Manager at any time, or from time to time, reasonably
requests in order to discharge its obligations hereunder.

13. This Agreement may be amended by mutual consent, but the consent of the
Fund must be obtained in conformity with the requirements of the 1940 Act.

<PAGE>

Newark, NJ 07102-4077, Attention: Secretary; or (2) to the Fund at Gateway
Center Three, 100 Mulberry Street, Newark, NJ 07102-4077, Attention: President.

15. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.

16. LAF may use any name including the word "Prudential" only for so long as
this Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the Manager's business as Manager or any extension, renewal or amendment
thereof remains in effect. At such time as such an agreement shall no longer be
in effect, LAF will (to the extent that it lawfully can) cease to use such a
name or any other name indicating that it is advised by, managed by or otherwise
connected with the Manager, or any organization which shall have so succeeded to
such businesses. In no event shall LAF use any name including the word
"Prudential" if the Manager's function is transferred or assigned to a company
of which The Prudential Insurance Company of America does not have control.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

CASH ACCUMULATION TRUST
on behalf of the Liquid Assets Fund

By: /s/ Richard A. Redeker
----------------------------------
Richard A. Redeker
President

PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC

By: /s/ Robert F. Gunia
----------------------------------
Robert F. Gunia
Executive Vice President

<PAGE>

Exhibit (d)(iv)

SUBADVISORY AGREEMENT

CASH ACCUMULATION TRUST
(Liquid Assets Fund)

WHEREAS, PIFM desires to retain the Subadviser to provide investment
advisory services to LAF in connection with the management of LAF and the
Subadviser is willing to render such investment advisory services.

NOW, THEREFORE, the Parties agree as follows:

1. (a) Subject to the supervision of the Manager and of the Trustees of the
Fund, the Subadviser shall manage the investment operations of LAF and the
composition of LAF's portfolio, including the purchase, retention and
disposition thereof, in accordance with the Fund's investment objectives,
policies and restrictions as stated in its Prospectus (such Prospectus and
Statement of Additional Information as currently in effect and as amended or
supplemented from time to time, being herein called the "Prospectus"), and
subject to the following understandings:

(i) The Subadviser shall provide supervision of LAF's investments
and determine from time to time what investments and securities will be
purchased, retained, sold or loaned by LAF, and what portion of the
assets will be invested or held uninvested as cash.

(ii) In the performance of its duties and obligations under this
Agreement, the Subadviser shall act in conformity with the Agreement
and Declaration of Trust, and By-Laws of the Fund and the Prospectus of
LAF and with the instructions LAF and directions of the Manager and of
the Trustees of the Fund and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of 1986 and all

<PAGE>

other applicable federal and state laws and regulations.

(iii) The Subadviser shall determine the securities to be
purchased or sold by LAF and will place orders with or through such
persons, brokers or dealers (including but not limited to Prudential
Securities Incorporated) to carry out the policy with respect to
brokerage as set forth in the Fund's Registration Statement and LAF's
Prospectus or as the Trustees may direct from time to time. In
providing LAF with investment supervision, it is recognized that the
Subadviser will give primary consideration to securing the most
favorable price and efficient execution. Within the framework of this
policy, the Subadviser may consider the financial responsibility,
research and investment information and other services provided by
brokers or dealers who may effect or be a party to any such transaction
or other transactions to which the Subadviser's other clients may be a
party. It is understood that Prudential Securities Incorporated may be
used as principal broker for securities transactions but that no
formula has been adopted for allocation of LAF's investment transaction
business. It is also understood that it is desirable for LAF that the
Subadviser have access to supplemental investment and market research
and security and economic analysis provided by brokers who may execute
brokerage transactions at a higher cost to LAF than may result when
allocating brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the Subadviser is
authorized to place orders for the purchase and sale of securities for
LAF with such brokers, subject to review by the Fund's Trustees from
time to time with respect to the extent and continuation of this
practice. It is understood that the services provided by such brokers
may be useful to the Subadviser in connection with the Subadviser's
services to other clients.

On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of LAF as well as other clients of
the Subadviser, the Subadviser, to the extent permitted by applicable
laws and regulations, may, but shall be under no obligation to,
aggregate the securities or futures contracts to be sold or purchased
in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in
the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its
fiduciary obligations to LAF and to such other clients.

(iv) The Subadviser shall maintain all books and records with
respect to LAF's portfolio transactions required by subparagraphs
(b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1
under the 1940 Act and shall render to the Fund's Trustees such
periodic and special reports as the Trustees may reasonably request.

<PAGE>

(v) The Subadviser shall provide the Fund's Custodian on each
business day with information relating to all transactions concerning
LAF's assets and shall provide the Manager with such information upon
request of the Manager.

(vi) The investment management services provided by the Subadviser
hereunder are not to be deemed exclusive, and the Subadviser shall be
free to render similar services to others.

3. The Manager shall reimburse the Subadviser for direct costs, excluding
profit and overhead, incurred by the Subadviser determined in a manner
acceptable to the Manager in furnishing the services described in paragraph
1 hereof.

<PAGE>

5. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940
Act; provided, however, that this Agreement may be terminated by the Fund at
any time, without the payment of any penalty, by the Trustees of the Fund or
by vote of a majority of the outstanding voting securities (as defined in
the 1940 Act) of LAF, or by the Manager or the Subadviser at any time,
without the payment of any penalty, on not more than 60 days' nor less than
30 days' written notice to the other party and to the Fund. This Agreement
shall terminate automatically in the event of its assignment (as defined in
the 1940 Act) or upon the termination of the Management Agreement.

8. This Agreement may be amended by mutual consent, but the consent of the
Fund must be obtained in conformity with the requirements of the 1940 Act.

9. This Agreement shall be governed by the laws of the State of New York.

<PAGE>

IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC

BY: /s/ Robert F. Gunia
------------------------------------
Robert F. Gunia
Executive Vice President

THE PRUDENTIAL INVESTMENT CORPORATION

BY: Jonathan M. Greene
------------------------------------
Jonathan M. Greene
Senior Vice President

<PAGE>

Exhibit (e)(i)

CASH ACCUMULATION TRUST
(Liquid Assets Series)
(National Money Market Fund)

Distribution Agreement

Agreement made as of December 12, 1997 between Cash Accumulation
Trust, a Massachusetts business trust (the Fund), and Prudential Securities
Incorporated, a Delaware corporation (the Distributor).

WITNESSETH

WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the Investment Company Act), as a diversified, open-end,
management investment company and it is in the interest of the Fund to offer
its shares for sale continuously;

WHEREAS, the shares of the Fund may be divided into separate series
(all such shares being referred to herein as Shares) and the Fund currently
is authorized to offer Shares of Liquid Assets Fund and National Money Market
Fund;

WHEREAS, the Distributor is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended, and is engaged in the business
of selling shares of registered investment companies either directly or
through other broker-dealers;

WHEREAS, the Fund and the Distributor wish to enter into an
agreement with each other, with respect to the continuous offering of the
Fund's Shares from and after the date hereof in order to promote the growth
of the Fund and facilitate the distribution of its Shares; and

WHEREAS, the Fund previously adopted a plan of distribution
pursuant to Rule 12b-1 under the Investment Company Act with respect to
Shares of National Money Market Fund, and may adopt additional plans of
distribution pursuant to Rule 12b-1 in the future with respect to the Fund's
separate series (the Plans) authorizing payments by the Fund to the
Distributor with respect to the distribution of such series of Shares and the
maintenance of related shareholder accounts.

NOW, THEREFORE, the parties agree as follows:

Section 1. Appointment of the Distributor

<PAGE>

Fund hereby agrees during the term of this Agreement to sell Shares of the
Fund through the Distributor on the terms and conditions set forth below.

Section 2. Exclusive Nature of Duties

The Distributor shall be the exclusive representative of the Fund
to act as principal underwriter and distributor of the Fund's Shares, except
that:

2.1 The exclusive rights granted to the Distributor to sell Shares
of the Fund shall not apply to Shares of the Fund issued in connection with
the merger or consolidation of any other investment company or personal
holding company with the Fund or the acquisition by purchase or otherwise of
all (or substantially all) the assets or the outstanding shares of any such
company by the Fund.

2.2 Such exclusive rights shall not apply to Shares issued by the
Fund pursuant to reinvestment of dividends or capital gains distributions or
through the exercise of any conversion feature or exchange privilege.

2.3 Such exclusive rights shall not apply to Shares issued by the
Fund pursuant to the reinstatement privilege afforded redeeming shareholders.

2.4 Such exclusive rights shall not apply to purchases made
through the Fund's transfer and dividend disbursing agent in the manner set
forth in the currently effective Prospectus of the Fund. The term
"Prospectus" shall mean the Prospectus and Statement of Additional
Information included as part of the Fund's Registration Statement, as such
Prospectus and Statement of Additional Information may be amended or
supplemented from time to time, and the term "Registration Statement" shall
mean the Registration Statement filed by the Fund with the Securities and
Exchange Commission and effective under the Securities Act of 1933, as
amended (Securities Act), and the Investment Company Act, as such
Registration Statement is amended from time to time.

Section 3. Purchase of Shares from the Fund

3.1 The Distributor shall have the right to buy from the Fund on
behalf of investors the Shares needed, but not more than the Shares needed
(except for clerical errors in transmission) to fill unconditional orders for
Shares placed with the Distributor by investors or registered and qualified
securities dealers and other financial institutions (selected dealers).

3.2 The Shares shall be sold by the Distributor on behalf of the
Fund and delivered by the Distributor or selected dealers, as described in
Section 6.4 hereof, to investors at the offering price as set forth in the
Prospectus.

3.3 The Fund shall have the right to suspend the sale of any or
all

2
<PAGE>

classes and/or series of its Shares at times when redemption is suspended
pursuant to the conditions in Section 4.3 hereof or at such other times as
may be determined by the Trustees. The Fund shall also have the right to
suspend the sale of any or all classes and/or series of its Shares if a
banking moratorium shall have been declared by federal or New York
authorities.

3.4 The Fund, or any agent of the Fund designated in writing by
the Fund, shall be promptly advised of all purchase orders for Shares
received by the Distributor. Any order may be rejected by the Fund;
provided, however, that the Fund will not arbitrarily or without reasonable
cause refuse to accept or confirm orders for the purchase of Shares. The
Fund (or its agent) will confirm orders upon their receipt, will make
appropriate book entries and upon receipt by the Fund (or its agent) of
payment therefor, will deliver deposit receipts for such Shares pursuant to
the instructions of the Distributor. Payment shall be made to the Fund in
New York Clearing House funds or federal funds. The Distributor agrees to
cause such payment and such instructions to be delivered promptly to the Fund
(or its agent).

Section 4. Repurchase or Redemption of Shares by the Fund

4.1 Any of the outstanding Shares may be tendered for redemption
at any time, and the Fund agrees to repurchase or redeem the Shares so
tendered in accordance with its Declaration of Trust as amended from time to
time, and in accordance with the applicable provisions of the Prospectus.
The price to be paid to redeem or repurchase the Shares shall be equal to the
net asset value determined as set forth in the Prospectus. All payments by
the Fund hereunder shall be made in the manner set forth in Section 4.2 below.

4.2 The Fund shall pay the total amount of the redemption price as
defined in the above paragraph pursuant to the instructions of the
Distributor on or before the seventh day subsequent to its having received
the notice of redemption in proper form. The proceeds of any redemption of
Shares shall be paid by the Fund as follows: (i) in the case of Shares
subject to a contingent deferred sales charge, any applicable contingent
deferred sales charge shall be paid to the Distributor, and the balance shall
be paid to or for the account of the redeeming shareholder, in each case in
accordance with applicable provisions of the Prospectus; and (ii) in the case
of all other Shares, proceeds shall be paid to or for the account of the
redeeming shareholder, in each case in accordance with applicable provisions
of the Prospectus.

4.3 Redemption of any class and/or series of Shares or payment may
be suspended at times when the New York Stock Exchange is closed for other
than customary weekends and holidays, when trading on said Exchange is
restricted, when an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets, or during any other period when the Securities and Exchange
Commission, by order, so permits.

3
<PAGE>

Section 5. Duties of the Fund

5.1 Subject to the possible suspension of the sale of Shares as
provided herein, the Fund agrees to sell its Shares so long as it has Shares
of the respective series available.

5.2 The Fund shall furnish the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares, and
this shall include one certified copy, upon request by the Distributor, of
all financial statements prepared for the Fund by independent public
accountants. The Fund shall make available to the Distributor such number of
copies of its Prospectus and annual and interim reports as the Distributor
shall reasonably request.

5.3 The Fund shall take, from time to time, but subject to the
necessary approval of the Trustees and the shareholders, all necessary action
to fix the number of authorized Shares and such steps as may be necessary to
register the same under the Securities Act, to the end that there will be
available for sale such number of Shares as the Distributor reasonably may
expect to sell. The Fund agrees to file from time to time such amendments,
reports and other documents as may be necessary in order that there will be
no untrue statement of a material fact in the Registration Statement, or
necessary in order that there will be no omission to state a material fact in
the Registration Statement which omission would make the statements therein
misleading.

5.4 The Fund shall use its best efforts to register an appropriate
number of its Shares for sales under the securities laws of such states as
the Distributor and the Fund may approve. The Fund shall not be required to
amend its Declaration of Trust or By-Laws to comply with the laws of any
state, to maintain an office in any state, to change the terms of the
offering of its Shares in any state from the terms set forth in its
Registration Statement, to qualify as a foreign corporation in any state or
to consent to service of process in any state other than with respect to
claims arising out of the offering of its Shares. Any such registration
maybe terminated or withdrawn by the Fund at any time in its discretion.

Section 6. Duties of the Distributor

6.1 The Distributor shall devote reasonable time and effort to
effect sales of Shares, but shall not be obligated to sell any specific
number of Shares. Sales of the Shares shall be on the terms described in the
Prospectus. The Distributor may enter into like arrangements with other
investment companies. The Distributor shall compensate the selected dealers
as set forth in the Prospectus.

6.2 In selling the Shares, the Distributor shall use its best
efforts in all

4
<PAGE>

respects duly to conform with the requirements of all federal and state laws
relating to the sale of such securities. Neither the Distributor nor any
selected dealer nor any other person is authorized by the Fund to give any
information or to make any representations, other than those contained in the
Registration Statement or Prospectus and any sales literature approved by
appropriate officers of the Fund.

6.3 The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and selected dealers, the collection of
amounts payable by investors and selected dealers on such sales and the
cancellation of unsettled transactions, as may be necessary to comply with
the requirements of the National Association of Securities Dealers, Inc.
(NASD).

6.4 The Distributor shall have the right to enter into selected
dealer agreements with registered and qualified securities dealers and other
financial institutions of its choice for the sale of Shares, provided that
the Fund shall approve the forms of such agreements. Within the United
States, the Distributor shall offer and sell Shares only to such selected
dealers as are members in good standing of the NASD. Shares sold to selected
dealers shall be for resale by such dealers only at the offering price
determined as set forth in the Prospectus.

Section 7. Payments to the Distributor

7.1 With respect to any series of Shares which impose a front-end
sales charge, the Distributor shall receive and may retain any portion of any
front-end sales charge which is imposed on such sales and not reallocated to
selected dealers as set forth in the Prospectus, subject to the limitations
of Rule 2830 of the Conduct Rules of the NASD. Payment of these amounts to
the Distributor is not contingent upon the adoption or continuation of any
applicable Plan.

7.2 With respect to any series of Shares which impose a contingent
deferred sales charge, the Distributor shall receive and may retain any
contingent deferred sales charge which is imposed on such sales as set forth
in the Prospectus, subject to the limitations of Rule 2830 of the Conduct
Rules of the NASD. Payment of these amounts to the Distributor is not
contingent upon the adoption or continuation of any applicable Plan.

Section 8. Payment of the Distributor under the Plan

8.1 The Fund shall pay to the Distributor as compensation for
services under any Plans adopted by the Fund and this Agreement a
distribution and service fee with respect to the Fund's series of Shares as
described in each of the Fund's respective Plans and this Agreement.

8.2 So long as a Plan or any amendment thereto is in effect, the
Distributor shall inform the Trustees of the commissions and account
servicing fees with

5
<PAGE>

respect to the relevant series of Shares to be paid by the Distributor to
account executives of the Distributor and to broker-dealers and financial
institutions which have dealer agreements with the Distributor. So long as a
Plan (or any amendment thereto) is in effect, at the request of the Board of
Directors or any agent or representative of the Fund, the Distributor shall
provide such additional information as may reasonably be requested concerning
the activities of the Distributor hereunder and the costs incurred in
performing such activities with respect to the relevant series of Shares.

Section 9. Allocation of Expenses

The Fund shall bear all costs and expenses of the continuous
offering of its Shares (except for those costs and expenses borne by the
Distributor pursuant to a Plan and subject to the requirements of Rule 12b-1
under the Investment Company Act), including fees and disbursements of its
counsel and auditors, in connection with the preparation and filing of any
required Registration Statements and/or Prospectuses under the Investment
Company Act or the Securities Act, and all amendments and supplements
thereto, and preparing and mailing annual and periodic reports and proxy
materials to shareholders (including but not limited to the expense of
setting in type any such Registration Statements, Prospectuses, annual or
periodic reports or proxy materials). The Fund shall also bear the cost of
expenses of registration of the Shares for sale, and, if necessary or
advisable in connection therewith, of qualifying the Fund as a broker or
dealer, in such states of the United States or other jurisdictions as shall
be selected by the Fund and the Distributor pursuant to Section 5.4 hereof
and the cost and expense payable to each such state for continuing
registration therein until the Fund decides to discontinue such registration
pursuant to Section 5.4 hereof. As set forth in Section 8 above, the Fund
shall also bear the expenses it assumes pursuant to any Plan, so long as such
Plan is in effect.

Section 10. Indemnification

10.1 The Fund agrees to indemnify, defend and hold the Distributor,
its officers and directors and any person who controls the Distributor within
the meaning of Section 15 of the Securities Act, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and
any reasonable counsel fees incurred in connection therewith) which the
Distributor, its officers, directors or any such controlling person may incur
under the Securities Act, or under common law or otherwise, arising out of or
based upon any untrue statement of a material fact contained in the
Registration Statement or Prospectus or arising out of or based upon any
alleged omission to state a material fact required to be stated in either
thereof or necessary to make the statements in either thereof not misleading,
except insofar as such claims, demands, liabilities or expenses arise out of
or are based upon any such untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with
information furnished in writing by the Distributor to the Fund for use in
the Registration Statement or Prospectus; provided, however, that this
indemnity

6
<PAGE>

agreement shall not inure to the benefit of any such officer, director,
trustee or controlling person unless a court of competent jurisdiction shall
determine in a final decision on the merits, that the person to be
indemnified was not liable by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations under this Agreement (disabling
conduct), or, in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnified person was not liable
by reason of disabling conduct, by (a) a vote of a majority of a quorum of
directors or trustees who are neither "interested persons" of the Fund as
defined in Section 2(a)(19) of the Investment Company Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. The
Fund's agreement to indemnify the Distributor, its officers and directors or
trustees and any such controlling person as aforesaid is expressly
conditioned upon the Fund's being promptly notified of any action brought
against the Distributor, its officers or directors or trustees, or any such
controlling person, such notification to be given by letter or telegram
addressed to the Fund at its principal business office. The Fund agrees
promptly to notify the Distributor of the commencement of any litigation or
proceedings against it or any of its officers or directors in connection with
the issue and sale of any Shares.

10.2 The Distributor agrees to indemnify, defend and hold the Fund,
its officers and Directors and any person who controls the Fund, if any,
within the meaning of Section 15 of the Securities Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending against such claims,
demands or liabilities and any reasonable counsel fees incurred in connection
therewith) which the Fund, its officers and Trustees or any such controlling
person may incur under the Securities Act or under common law or otherwise,
but only to the extent that such liability or expense incurred by the Fund,
its Trustees or officers or such controlling person resulting from such
claims or demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in information furnished in writing by
the Distributor to the Fund for use in the Registration Statement or
Prospectus or shall arise out of or be based upon any alleged omission to
state a material fact in connection with such information required to be
stated in the Registration Statement or Prospectus or necessary to make such
information not misleading. The Distributor's agreement to indemnify the
Fund, its officers and Trustees and any such controlling person as aforesaid,
is expressly conditioned upon the Distributor's being promptly notified of
any action brought against the Fund, its officers and Trustees or any such
controlling person, such notification being given to the Distributor at its
principal business office.

Section 11. Duration and Termination of this Agreement

11.1 This Agreement shall become effective with respect to each
separate series of the Trust as of the date first above written and shall
remain in force for two years from the date hereof and thereafter, but only
so long as such continuance

7
<PAGE>

is specifically approved at least annually by (a) the Trustees of the Fund,
or by the vote of a majority of the outstanding voting securities of the
applicable series of the Fund, and (b) by the vote of a majority of those
Trustees who are not parties to this Agreement or interested persons of any
such parties and who have no direct or indirect financial interest in this
Agreement or in the operation of any of the Fund's Plans or in any agreement
related thereto (Independent Trustees), cast in person at a meeting called
for the purpose of voting upon such approval.

11.2 This Agreement may be terminated with respect to each separate
series of the Trust at any time, without the payment of any penalty, by a
majority of the Independent Trustees or by vote of a majority of the
outstanding voting securities of the applicable series of the Fund, or by the
Distributor, on sixty (60) days' written notice to the other party. This
Agreement shall automatically terminate in the event of its assignment.

11.3 The terms "affiliated person," "assignment," "interested
person" and "vote of a majority of the outstanding voting securities", when
used in this Agreement, shall have the respective meanings specified in the
Investment Company Act.

Section 12. Amendments to this Agreement

This Agreement may be amended by the parties only if such amendment
is specifically approved by (a) the Trustees of the Fund, or by the vote of a
majority of the outstanding voting securities of the applicable class and/or
series of the Fund, and (b) by the vote of a majority of the Independent
Trustees cast in person at a meeting called for the purpose of voting on such
amendment.

Section 13. Separate Agreement as to Series

The amendment or termination of this Agreement with respect to any
series shall not result in the amendment or termination of this Agreement
with respect to any other series unless explicitly so provided.

Section 14. Governing Law

The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of New York as at the time in effect
and the applicable provisions of the Investment Company Act. To the extent
that the applicable law of the State of New York, or any of the provisions
herein, conflict with the applicable provisions of the Investment Company
Act, the latter shall control.

8
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year above written.

Prudential Securities Incorporated

By: /s/ Frank W. Giordano
---------------------------
Frank W. Giordano
Senior Vice President

Cash Accumulation Trust

By: /s/ Richard A. Redeker
---------------------------
Richard A. Redeker
President

<PAGE>

Exhibit (e)(ii)

CASH ACCUMULATION TRUST

Distribution Agreement

Agreement made as of June 1, 1998, between Cash Accumulation Trust
(the Fund), and Prudential Investment Management Services LLC, a Delaware
limited liability company (the Distributor).

WITNESSETH

WHEREAS, the Fund is registered under the Investment Company Act
of 1940, as amended (the Investment Company Act), as a diversified, open-end,
management investment company and it is in the interest of the Fund to offer its
shares for sale continuously;

WHEREAS, the shares of the Fund may be divided into classes and/or
series (all such shares being referred to herein as Shares) and the Fund
currently is authorized to offer Shares without class designation;

WHEREAS, the Distributor is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended, and is engaged in the business of
selling shares of registered investment companies either directly or through
other broker-dealers;

WHEREAS, the Fund and the Distributor wish to enter into an
agreement with each other, with respect to the continuous offering of the Fund's
Shares from and after the date hereof in order to promote the growth of the Fund
and facilitate the distribution of its Shares; and

WHEREAS, the Fund has adopted a plan (or plans) of distribution
pursuant to Rule 12b-1 under the Investment Company Act with respect to certain
of its classes and/or series of Shares (the Plans) authorizing payments by the
Fund to the Distributor with respect to the distribution of such classes and/or
series of Shares and the maintenance of related shareholder accounts.

NOW, THEREFORE, the parties agree as follows:

Section 1. Appointment of the Distributor

The Fund hereby appoints the Distributor as the principal
underwriter and distributor of the Shares of the Fund to sell Shares to the
public on behalf of the Fund and the Distributor hereby accepts such appointment
and agrees to act hereunder. The Fund hereby agrees during the term of this
Agreement to sell Shares of the Fund through the Distributor on the terms and
conditions set forth below.

<PAGE>

Section 2. Exclusive Nature of Duties

Except with respect to a period of time (not to exceed 60 days)
during which the Distributor and Prudential Securities Incorporated will serve
as co-distributors of the Fund in the transition of distribution services from
Prudential Securities Incorporated to the Distributor, the Distributor shall be
the exclusive representative of the Fund to act as principal underwriter and
distributor of the Fund's Shares, provided that:

2.1 The exclusive rights granted to the Distributor to sell Shares
of the Fund shall not apply to Shares of the Fund issued in connection with the
merger or consolidation of any other investment company or personal holding
company with the Fund or the acquisition by purchase or otherwise of all (or
substantially all) the assets or the outstanding shares of any such company by
the Fund.

2.3 Such exclusive rights shall not apply to Shares issued by the
Fund pursuant to the reinstatement privilege afforded redeeming shareholders.

2.4 Such exclusive rights shall not apply to purchases made
through the Fund's transfer and dividend disbursing agent in the manner set
forth in the currently effective Prospectus of the Fund. The term "Prospectus"
shall mean the Prospectus and Statement of Additional Information included as
part of the Fund's Registration Statement, as such Prospectus and Statement of
Additional Information may be amended or supplemented from time to time, and the
term "Registration Statement" shall mean the Registration Statement filed by the
Fund with the Securities and Exchange Commission and effective under the
Securities Act of 1933, as amended (Securities Act), and the Investment Company
Act, as such Registration Statement is amended from time to time.

Section 3. Purchase of Shares from the Fund

<PAGE>

3.3 The Fund shall have the right to suspend the sale of any or
all classes and/or series of its Shares at times when redemption is suspended
pursuant to the conditions in Section 4.3 hereof or at such other times as may
be determined by the Board. The Fund shall also have the right to suspend the
sale of any or all classes and/or series of its Shares if a banking moratorium
shall have been declared by federal or New Jersey authorities.

3.4 The Fund, or any agent of the Fund designated in writing by
the Fund, shall be promptly advised of all purchase orders for Shares received
by the Distributor. Any order may be rejected by the Fund; provided, however,
that the Fund will not arbitrarily or without reasonable cause refuse to accept
or confirm orders for the purchase of Shares. The Fund (or its agent) will
confirm orders upon their receipt, will make appropriate book entries and upon
receipt by the Fund (or its agent) of payment therefor, will deliver deposit
receipts for such Shares pursuant to the instructions of the Distributor.
Payment shall be made to the Fund in New York Clearing House funds or federal
funds. The Distributor agrees to cause such payment and such instructions to be
delivered promptly to the Fund (or its agent).

Section 4. Repurchase or Redemption of Shares by the Fund

4.1 Any of the outstanding Shares may be tendered for redemption
at any time, and the Fund agrees to repurchase or redeem the Shares so tendered
in accordance with its Declaration of Trust as amended from time to time, and in
accordance with the applicable provisions of the Prospectus. The price to be
paid to redeem or repurchase the Shares shall be equal to the net asset value
determined as set forth in the Prospectus. All payments by the Fund hereunder
shall be made in the manner set forth in Section 4.2 below.

4.2 The Fund shall pay the total amount of the redemption price as
defined in the above paragraph pursuant to the instructions of the Distributor
on or before the seventh day subsequent to its having received the notice of
redemption in proper form. The proceeds of any redemption of Shares shall be
paid by the Fund as follows: (i) in the case of Shares subject to a contingent
deferred sales charge, any applicable contingent deferred sales charge shall be
paid to the Distributor, and the balance shall be paid to or for the account of
the redeeming shareholder, in each case in accordance with applicable provisions
of the Prospectus; and (ii) in the case of all other Shares, proceeds shall be
paid to or for the account of the redeeming shareholder, in each case in
accordance with applicable provisions of the Prospectus.

4.3 Redemption of any class and/or series of Shares or payment may
be suspended at times when the New York Stock Exchange is closed for other than
customary weekends and holidays, when trading on said Exchange is restricted,
when an emergency exists as a result of which disposal by the Fund of securities
owned by it is not reasonably practicable or it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or during any
other period when the Securities

<PAGE>

and Exchange Commission, by order, so permits.

Section 5. Duties of the Fund

5.1 Subject to the possible suspension of the sale of Shares as
provided herein, the Fund agrees to sell its Shares so long as it has Shares of
the respective class and/or series available.

5.2 The Fund shall furnish the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares, and
this shall include one certified copy, upon request by the Distributor, of all
financial statements prepared for the Fund by independent public accountants.
The Fund shall make available to the Distributor such number of copies of its
Prospectus and annual and interim reports as the Distributor shall reasonably
request.

5.3 The Fund shall take, from time to time, but subject to the
necessary approval of the Board and the shareholders, all necessary action to
register the same under the Securities Act, to the end that there will be
available for sale such number of Shares as the Distributor reasonably may
expect to sell. The Fund agrees to file from time to time such amendments,
reports and other documents as may be necessary in order that there will be no
untrue statement of a material fact in the Registration Statement, or necessary
in order that there will be no omission to state a material fact in the
Registration Statement which omission would make the statements therein
misleading.

5.4 The Fund shall use its best efforts to notify such states as
the Distributor and the Fund may approve of its intention to sell any
appropriate number of its Shares; provided that the Fund shall not be required
to amend its Declaration of Trust or By-Laws to comply with the laws of any
state, to maintain an office in any state, to change the terms of the offering
of its Shares in any state from the terms set forth in its Registration
Statement, to qualify as a foreign corporation in any state or to consent to
service of process in any state other than with respect to claims arising out of
the offering of its Shares. Any such notification may be withheld, terminated or
withdrawn by the Fund at any time in its discretion. As provided in Section 9
hereof, the expense of notification and maintenance of notification shall be
borne by the Fund. The Distributor shall furnish such information and other
material relating to its affairs and activities as may be required by the Fund
in connection with such notifications.

Section 6. Duties of the Distributor

6.1 The Distributor shall devote reasonable time and effort to
effect sales of Shares, but shall not be obligated to sell any specific number
of Shares. Sales of the Shares shall be on the terms described in the
Prospectus. The Distributor may enter into like arrangements with other
investment companies. The Distributor shall

<PAGE>

compensate the selected dealers as set forth in the Prospectus.

6.2 In selling the Shares, the Distributor shall use its best
efforts in all respects duly to conform with the requirements of all federal and
state laws relating to the sale of such securities. Neither the Distributor nor
any selected dealer nor any other person is authorized by the Fund to give any
information or to make any representations, other than those contained in the
Registration Statement or Prospectus and any sales literature approved by
appropriate officers of the Fund.

6.3 The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and selected dealers, the collection of
amounts payable by investors and selected dealers on such sales and the
cancellation of unsettled transactions, as may be necessary to comply with the
requirements of Securities Exchange Act Rule 10b-10 and the rules of the
National Association of Securities Dealers, Inc. (NASD).

6.4 The Distributor shall have the right to enter into selected
dealer agreements with registered and qualified securities dealers and other
financial institutions of its choice for the sale of Shares, provided that the
Fund shall approve the forms of such agreements. Within the United States, the
Distributor shall offer and sell Shares only to such selected dealers as are
members in good standing of the NASD or are institutions exempt from
registration under applicable federal securities laws. Shares sold to selected
dealers shall be for resale by such dealers only at the offering price
determined as set forth in the Prospectus.

Section 7. Payments to the Distributor

7.1 With respect to classes and/or series of Shares which impose a
front-end sales charge, the Distributor shall receive and may retain any portion
of any front-end sales charge which is imposed on such sales and not reallocated
to selected dealers as set forth in the Prospectus, subject to the limitations
of Rule 2830 of the Conduct Rules of the NASD. Payment of these amounts to the
Distributor is not contingent upon the adoption or continuation of any
applicable Plans.

7.2 With respect to classes and/or series of Shares which impose a
contingent deferred sales charge, the Distributor shall receive and may retain
any contingent deferred sales charge which is imposed on such sales as set forth
in the Prospectus, subject to the limitations of Rule 2830 of the Conduct Rules
of the NASD. Payment of these amounts to the Distributor is not contingent upon
the adoption or continuation of any Plan.

<PAGE>

Section 8. Payment of the Distributor under the Plan

8.1 The Fund shall pay to the Distributor as compensation for
services under any Plans adopted by the Fund and this Agreement a distribution
and service fee with respect to the Fund's classes and/or series of Shares as
described in each of the Fund's respective Plans and this Agreement.

8.2 So long as a Plan or any amendment thereto is in effect, the
Distributor shall inform the Board of the commissions and account servicing fees
with respect to the relevant class and/or series of Shares to be paid by the
Distributor to account executives of the Distributor and to broker-dealers,
financial institutions and investment advisers which have dealer agreements with
the Distributor. So long as a Plan (or any amendment thereto) is in effect, at
the request of the Board or any agent or representative of the Fund, the
Distributor shall provide such additional information as may reasonably be
requested concerning the activities of the Distributor hereunder and the costs
incurred in performing such activities with respect to the relevant class and/or
series of Shares.

Section 9. Allocation of Expenses

The Fund shall bear all costs and expenses of the continuous
offering of its Shares (except for those costs and expenses borne by the
Distributor pursuant to a Plan and subject to the requirements of Rule 12b-1
under the Investment Company Act), including fees and disbursements of its
counsel and auditors, in connection with the preparation and filing of any
required Registration Statements and/or Prospectuses under the Investment
Company Act or the Securities Act, and all amendments and supplements thereto,
and preparing and mailing annual and periodic reports and proxy materials to
shareholders (including but not limited to the expense of setting in type any
such Registration Statements, Prospectuses, annual or periodic reports or proxy
materials). The Fund shall also bear the cost of expenses of making notice
filings for the Shares for sale, and, if necessary or advisable in connection
therewith, of qualifying the Fund as a broker or dealer, in such states of the
United States or other jurisdictions as shall be selected by the Fund and the
Distributor pursuant to Section 5.4 hereof and the cost and expense payable to
each such state for continuing notification therein until the Fund decides to
discontinue such notification pursuant to Section 5.4 hereof. As set forth in
Section 8 above, the Fund shall also bear the expenses it assumes pursuant to
any Plan, so long as such Plan is in effect.

Section 10. Indemnification

<PAGE>

therewith) which the Distributor, its officers, members or any such controlling
person may incur under the Securities Act, or under common law or otherwise,
arising out of or based upon any untrue statement of a material fact contained
in the Registration Statement or Prospectus or arising out of or based upon any
alleged omission to state a material fact required to be stated in either
thereof or necessary to make the statements in either thereof not misleading,
except insofar as such claims, demands, liabilities or expenses arise out of or
are based upon any such untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with information furnished
by the Distributor to the Fund for use in the Registration Statement or
Prospectus; provided, however, that this indemnity agreement shall not inure to
the benefit of any such officer, member or controlling person unless a court of
competent jurisdiction shall determine in a final decision on the merits, that
the person to be indemnified was not liable by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations under this Agreement (disabling
conduct), or, in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnified person was not liable by
reason of disabling conduct, by (a) a vote of a majority of a quorum of trustees
or trustees who are neither "interested persons" of the Fund as defined in
Section 2(a)(19) of the Investment Company Act nor parties to the proceeding, or
(b) an independent legal counsel in a written opinion. The Fund's agreement to
indemnify the Distributor, its officers and members and any such controlling
person as aforesaid is expressly conditioned upon the Fund's being promptly
notified of any action brought against the Distributor, its officers or members,
or any such controlling person, such notification to be given by letter or
telegram addressed to the Fund at its principal business office. The Fund agrees
promptly to notify the Distributor of the commencement of any litigation or
proceedings against it or any of its officers or directors in connection with
the issue and sale of any Shares.

10.2 The Distributor agrees to indemnify, defend and hold the
Fund, its officers and trustees and any person who controls the Fund, if any,
within the meaning of Section 15 of the Securities Act, free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending against such claims, demands or liabilities
and any reasonable counsel fees incurred in connection therewith) which the
Fund, its officers and trustees or any such controlling person may incur under
the Securities Act or under common law or otherwise, but only to the extent that
such liability or expense incurred by the Fund, its trustees or officers or such
controlling person resulting from such claims or demands shall arise out of or
be based upon any alleged untrue statement of a material fact contained in
information furnished by the Distributor to the Fund for use in the Registration
Statement or Prospectus or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such information required
to be stated in the Registration Statement or Prospectus or necessary to make
such information not misleading. The Distributor's agreement to indemnify the
Fund, its officers and trustees and any such controlling person as aforesaid, is
expressly

<PAGE>

conditioned upon the Distributor's being promptly notified of any
action brought against the Fund, its officers and trustees or any such
controlling person, such notification being given to the Distributor at its
principal business office.

Section 11. Duration and Termination of this Agreement

11.1 This Agreement shall become effective as of the date first
above written and shall remain in force for two years from the date hereof and
thereafter, but only so long as such continuance is specifically approved at
least annually by (a) the Board of the Fund, or by the vote of a majority of the
outstanding voting securities of the applicable class and/or series of the Fund,
and (b) by the vote of a majority of those trustees who are not parties to this
Agreement or interested persons of any such parties and who have no direct or
indirect financial interest in this Agreement or in the operation of any of the
Fund's Plans or in any agreement related thereto (Independent trustees), cast in
person at a meeting called for the purpose of voting upon such approval.

11.2 This Agreement may be terminated at any time, without the
payment of any penalty, by a majority of the independent trustees or by vote of
a majority of the outstanding voting securities of the applicable class and/or
series of the Fund, or by the Distributor, on sixty (60) days' written notice to
the other party. This Agreement shall automatically terminate in the event of
its assignment.

11.3 The terms "affiliated person," "assignment," "interested
person" and "vote of a majority of the outstanding voting securities", when used
in this Agreement, shall have the respective meanings specified in the
Investment Company Act.

Section 12. Amendments to this Agreement

This Agreement may be amended by the parties only if such
amendment is specifically approved by (a) the Board of the Fund, or by the vote
of a majority of the outstanding voting securities of the applicable class
and/or series of the Fund, and (b) by the vote of a majority of the independent
trustees cast in person at a meeting called for the purpose of voting on such
amendment.

Section 13. Separate Agreement as to Classes and/or Series

The amendment or termination of this Agreement with respect to any
class and/or series shall not result in the amendment or termination of this
Agreement with respect to any other class and/or series unless explicitly so
provided.

<PAGE>

Section 14. Governing Law

The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New Jersey as at the
time in effect and the applicable provisions of the Investment Company Act. To
the extent that the applicable law of the State of New Jersey, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year above written.

Prudential Investment Management Services LLC

By: /s/ Jonathan M. Greene
-------------------------
Jonathan M. Greene
Executive Vice President

Cash Accumulation Trust

By: /s/ Richard A. Redeker
-------------------------
Richard A. Redeker
President

<PAGE>

Exhibit (e)(iii)

FORM OF

DEALER AGREEMENT

PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC

Prudential Investment Management Services LLC ("Distributor") and
_________________ ("Dealer") have agreed that Dealer will participate in the
distribution of shares ("Shares") of all the funds and series thereof (as they
may exist from time to time) comprising the Prudential Mutual Fund Family (each
a "Fund" and collectively the "Funds") and any classes thereof for which
Distributor now or in the future serves as principal underwriter and
distributor, subject to the terms of this Dealer Agreement ("Agreement"). Any
such additional Funds will be included in this Agreement upon Distributor's
written notification to Dealer.

1. Licensing

a. Dealer represents and warrants that it is: (i) a broker-dealer
registered with the Securities and Exchange Commission ("SEC"); (ii) a member in
good standing of the National Association of Securities Dealers, Inc. ("NASD");
and (iii) licensed by the appropriate regulatory agency of each state or other
jurisdiction in which Dealer will offer and sell Shares of the Funds, to the
extent necessary to perform the duties and activities contemplated by this
Agreement.

b. Dealer represents and warrants that each of its partners, directors,
officers, employees, and agents who will be utilized by Dealer with respect to
its duties and activities under this Agreement is either appropriately licensed
or exempt from such licensing requirements by the appropriate regulatory agency
of each state or other jurisdiction in which Dealer will offer and sell Shares
of the Funds.

c. Dealer agrees that: (i) termination or suspension of its
registration with the SEC; (ii) termination or suspension of its membership with
the NASD; or (iii) termination or suspension of its license to do business by
any state or other jurisdiction or federal regulatory agency shall immediately
cause the termination of this Agreement. Dealer further agrees to immediately
notify Distributor in writing of any such action or event.

d. Dealer agrees that this Agreement is in all respects subject to the
Conduct Rules of the NASD and such Conduct Rules shall control any provision to
the contrary in this Agreement.

e. Dealer agrees to be bound by and to comply with all applicable state
and federal laws and all rules and regulations promulgated thereunder generally
affecting the sale or distribution of mutual fund shares.

2. Orders

a. Dealer agrees to offer and sell Shares of the Funds (including those
of each of its classes) only at the regular public offering price applicable to
such Shares and in effect at the time of each transaction. The procedures
relating to all orders and the handling of each order (including the manner of
computing the net asset value of Shares and the effective time of orders

A-1

<PAGE>

received from Dealer) are subject to: (i) the terms of the then current
prospectus and statement of additional information (including any supplements,
stickers or amendments thereto) relating to each Fund, as filed with the SEC
("Prospectus"); (ii) the new account application for each Fund, as supplemented
or amended from time to time; and (iii) Distributor's written instructions and
multiple class pricing procedures and guidelines, as provided to Dealer from
time to time. To the extent that the Prospectus contains provisions that are
inconsistent with this Agreement or any other document, the terms of the
Prospectus shall be controlling.

b. Distributor reserves the right at any time, and without notice to
Dealer, to suspend the sale of Shares or to withdraw or limit the offering of
Shares. Distributor reserves the unqualified right not to accept any specific
order for the purchase or sale of Shares.

c. In all offers and sales of the Shares to the public, Dealer is not
authorized to act as broker or agent for, or employee of, Distributor, any Fund
or any other dealer, and Dealer shall not in any manner represent to any third
party that Dealer has such authority or is acting in such capacity. Rather,
Dealer agrees that it is acting as principal for Dealer's own account or as
agent on behalf of Dealer's customers in all transactions in Shares, except as
provided in Section 3.i. hereof. Dealer acknowledges that it is solely
responsible for all suitability determinations with respect to sales of Shares
of the Funds to Dealer's customers and that Distributor has no responsibility
for the manner of Dealer's performance of, or for Dealer's acts or omissions in
connection with, the duties and activities Dealer provides under this Agreement.

d. All orders are subject to acceptance by Distributor in its sole
discretion and become effective only upon confirmation by Distributor.

e. Distributor agrees that it will accept from Dealer orders placed
through a remote terminal or otherwise electronically transmitted via the
National Securities Clearing Corporation ("NSCC") Fund/Serv Networking program,
provided, however, that appropriate documentation thereof and agreements
relating thereto are executed by both parties to this Agreement, including in
particular the standard NSCC Networking Agreement and any other related
agreements between Distributor and Dealer deemed appropriate by Distributor, and
that all accounts opened or maintained pursuant to that program will be governed
by applicable NSCC rules and procedures. Both parties further agree that, if the
NSCC Fund/Serv Networking program is used to place orders, the standard NSCC
Networking Agreement will control insofar as there is any conflict between any
provision of the Dealer Agreement and the standard NSCC Networking Agreement.

3. Duties of Dealer

a. Dealer agrees to purchase Shares only from Distributor or from
Dealer's customers.

b. Dealer agrees to enter orders for the purchase of Shares only from
Distributor and only for the purpose of covering purchase orders Dealer has
already received from its customers or for Dealer's own bona fide investment.

A-2

<PAGE>

c. Dealer agrees to date and time stamp all orders received by Dealer
and promptly, upon receipt of any and all orders, to transmit to Distributor all
orders received prior to the time described in the Prospectus for the
calculation of each Fund's net asset value so as to permit Distributor to
process all orders at the price next determined after receipt by Dealer, in
accordance with the Prospectus. Dealer agrees not to withhold placing orders for
Shares with Distributor so as to profit itself as a result of such inaction.

d. Dealer agrees to maintain records of all purchases and sales of
Shares made through Dealer and to furnish Distributor or regulatory authorities
with copies of such records upon request. In that regard, Dealer agrees that,
unless Dealer holds Shares as nominee for its customers or participates in the
NSCC Fund/Serv Networking program, at certain matrix levels, it will provide
Distributor with all necessary information to comply properly with all federal,
state and local reporting requirements and backup and nonresident alien
withholding requirements for its customer accounts including, without
limitation, those requirements that apply by treating Shares issued by the Funds
as readily tradable instruments. Dealer represents and agrees that all Taxpayer
Identification Numbers ("TINs") provided are certified, and that no account that
requires a certified TIN will be established without such certified TIN. With
respect to all other accounts, including Shares held by Dealer in omnibus
accounts and Shares purchased or sold through the NSCC Fund/Serv Networking
program, at certain matrix levels, Dealer agrees to perform all federal, state
and local tax reporting with respect to such accounts, including without
limitation redemptions and exchanges.

e. Dealer agrees to distribute or cause to be delivered to its
customers Prospectuses, proxy solicitation materials and related information and
proxy cards, semi-annual and annual shareholder reports and any other materials
in compliance with applicable legal requirements, except to the extent that
Distributor expressly undertakes to do so in writing.

f. Dealer agrees that if any Share is repurchased by any Fund or is
tendered for redemption within seven (7) business days after confirmation by
Distributor of the original purchase order from Dealer, Dealer shall forfeit its
right to any concession or commission received by Dealer with respect to such
Share and shall forthwith refund to Distributor the full concession allowed to
Dealer or commission paid to Dealer on the original sale. Distributor agrees to
notify Dealer of such repurchase or redemption within a reasonable time after
settlement. Termination or cancellation of this Agreement shall not relieve
Dealer from its obligation under this provision.

g. Dealer agrees that payment for Shares ordered from Distributor shall
be in Fed Funds, New York clearinghouse or other immediately available funds and
that such funds shall be received by Distributor by the earlier of: (i) the end
of the third (3rd) business day following Dealer's receipt of the customer's
order to purchase such Shares; or (ii) the settlement date established in
accordance with Rule 15c6-1 under the Securities Exchange Act of 1934, as
amended. If such payment is not received by Distributor by such date, Dealer
shall forfeit its right to any concession or commission with respect to such
order, and Distributor reserves the right, without notice, forthwith to cancel
the sale, or, at its option, to sell the Shares ordered back to the Fund, in
which case Distributor may hold Dealer responsible for any loss, including loss
of profit, suffered by Distributor resulting from Dealer's failure to make
payment as aforesaid. If a purchase is made by check, the purchase is deemed
made upon conversion of the purchase instrument into Fed Funds, New York
clearinghouse or other immediately available funds.

A-3

<PAGE>

h. Dealer agrees that it: (i) shall assume responsibility for any loss
to the Fund caused by a correction to any order placed by Dealer that is made
subsequent to the trade date for the order, provided such order correction was
not based on any negligence on Distributor's part; and (ii) will immediately pay
such loss to the Fund upon notification.

i. Dealer agrees that in connection with orders for the purchase of
Shares on behalf of any IRAs, 401(k) plans or other retirement plan accounts, by
mail, telephone, or wire, Dealer shall act as agent for the custodian or trustee
of such plans (solely with respect to the time of receipt of the application and
payments), and Dealer shall not place such an order with Distributor until it
has received from its customer payment for such purchase and, if such purchase
represents the first contribution to such a retirement plan account, the
completed documents necessary to establish the retirement plan. Dealer agrees to
indemnify Distributor and its affiliates for any claim, loss, or liability
resulting from incorrect investment instructions received by Distributor from
Dealer.

j. Dealer agrees that it will not make any conditional orders for the
purchase or redemption of Shares and acknowledges that Distributor will not
accept conditional orders for Shares.

k. Dealer agrees that all out-of-pocket expenses incurred by it in
connection with its activities under this Agreement will be borne by Dealer.

l. Dealer agrees that it will keep in force appropriate broker's
blanket bond insurance policies covering any and all acts of Dealer's partners,
directors, officers, employees, and agents adequate to reasonably protect and
indemnify the Distributor and the Funds against any loss which any party may
suffer or incur, directly or indirectly, as a result of any action by Dealer or
Dealer's partners, directors, officers, employees, and agents.

m. Dealer agrees that it will maintain the required net capital as
specified by the rules and regulations of the SEC, NASD and other regulatory
authorities.

4. Dealer Compensation

a. On each purchase of Shares by Dealer from Distributor, the total
sales charges and dealer concessions or commissions, if any, payable to Dealer
shall be as stated on Schedule A to this Agreement, which may be amended by
Distributor from time to time. Distributor reserves the right, without prior
notice, to suspend or eliminate such dealer concession or commissions by
amendment, sticker or supplement to the then current Prospectus for each Fund.
Such sales charges and dealer concessions or commissions, are subject to
reduction under a variety of circumstances as described in each Fund's then
current Prospectus. For an investor to obtain any reduction, Distributor must be
notified at the time of the sale that the sale qualifies for the reduced sales
charge. If Dealer fails to notify Distributor of the applicability of a
reduction in the sales charge at the time the trade is placed, neither
Distributor nor any Fund will be liable for amounts necessary to reimburse any
investor for the reduction that should have been effected. Dealer acknowledges
that no sales charge or concession or commission will be paid to Dealer on the
reinvestment of dividends or capital gains reinvestment or on Shares acquired in
exchange for Shares of another Fund, or class thereof, having the same sales
charge structure as the Fund, or class thereof, from which the exchange was
made, in accordance with the Prospectus.

A-4

<PAGE>

b. In accordance with the Funds' Prospectuses, Distributor or any
affiliate may, but is not obligated to, make payments to dealers from
Distributor's own resources as compensation for certain sales that are made at
net asset value ("Qualifying Sales"). If Dealer notifies Distributor of a
Qualifying Sale, Distributor may make a contingent advance payment up to the
maximum amount available for payment on the sale. If any of the Shares purchased
in a Qualifying Sale are redeemed within twelve (12) months of the end of the
month of purchase, Distributor shall be entitled to recover any advance payment
attributable to the redeemed Shares by reducing any account payable or other
monetary obligation Distributor may owe to Dealer or by making demand upon
Dealer for repayment in cash. Distributor reserves the right to withhold
advances to Dealer, if for any reason Distributor believes that it may not be
able to recover unearned advances from Dealer.

c. With respect to any Fund that offers Shares for which distribution
plans have been adopted under Rule 12b-1 under the Investment Company Act of
1940, as amended ("Rule 12b-1 Plans"), Distributor also is authorized to pay the
Dealer continuing distribution and/or service fees, as specified in Schedule A
and the relevant Fund Prospectus, with respect to Shares of any such Fund, to
the extent that Dealer provides distribution, marketing, administrative and
other services and activities regarding the promotion of such Shares and the
maintenance of related shareholder accounts.

d. In connection with the receipt of distribution fees and/or service
fees under Rule 12b-1 Plans applicable to Shares purchased by Dealer's
customers, Distributor directs Dealer to provide enhanced shareholder services
such as: processing purchase and redemption transactions; establishing
shareholder accounts; and providing certain information and assistance with
respect to the Funds. (Redemption levels of shareholder accounts assigned to
Dealer will be considered in evaluating Dealer's continued ability to receive
payments of distribution and/or service fees.) In addition, Dealer agrees to
support Distributor's marketing efforts by, among other things, granting
reasonable requests for visits to Dealer's office by Distributor's wholesalers
and marketing representatives, including all Funds covered by a Rule 12b-1 Plan
on Dealer's "approved," "preferred" or other similar product lists, if
applicable, and otherwise providing satisfactory product, marketing and sales
support. Further, Dealer agrees to provide Distributor with supporting
documentation concerning the shareholder services provided, as Distributor may
reasonably request from time to time.

e. All Rule 12b-1 Plan distribution and/or servicing fees shall be
based on the value of Shares attributable to Dealer's customers and eligible for
such payment, and shall be calculated on the basis of and at the rates set forth
in the compensation schedule then in effect. Without prior approval by a
majority of the outstanding shares of a Fund, the aggregate annual fees paid to
Dealer pursuant to any Rule 12b-1 Plan shall not exceed the amounts stated as
the "annual maximums" in each Fund's Prospectus, which amount shall be a
specified percent of the value of the Fund's net assets held in Dealer's
customers' accounts that are eligible for payment pursuant to the Rule 12b-1
Plans (determined in the same manner as each Fund uses to compute its net assets
as set forth in its then current Prospectus).

f. The provisions of any Rule 12b-1 Plan between the Funds and the
Distributor shall control over this Agreement in the event of any inconsistency.
Each Rule 12b-1 Plan in effect on the date of this Agreement is described in the
relevant Fund's Prospectus.

A-5

<PAGE>

Dealer hereby acknowledges that all payments under Rule 12b-1 Plans are subject
to limitations contained in such Rule 12b-1 Plans and may be varied or
discontinued at any time.

5. Redemptions, Repurchases and Exchanges

a. The Prospectus for each Fund describes the provisions whereby the
Fund, under all ordinary circumstances, will redeem Shares held by shareholders
on demand. Dealer agrees that it will not make any representations to
shareholders relating to the redemption of their Shares other than the
statements contained in the Prospectus and the underlying organizational
documents of the Fund, to which it refers, and that Dealer will pay as
redemption proceeds to shareholders the net asset value, minus any applicable
deferred sales charge or redemption fee, determined after receipt of the order
as discussed in the Prospectus.

b. Dealer agrees not to repurchase any Shares from its customers at a
price below that next quoted by the Fund for redemption or repurchase, i.e., at
the net asset value of such Shares, less any applicable deferred sales charge,
or redemption fee, in accordance with the Fund's Prospectus. Dealer shall,
however, be permitted to sell Shares for the account of the customer or record
owner to the Funds at the repurchase price then currently in effect for such
Shares and may charge the customer or record owner a fair service fee or
commission for handling the transaction, provided Dealer discloses the fee or
commission to the customer or record owner. Nevertheless, Dealer agrees that it
shall not under any circumstances maintain a secondary market in such
repurchased Shares.

c. Dealer agrees that, with respect to a redemption order it has made,
if instructions in proper form, including any outstanding certificates, are not
received by Distributor within the time customary or the time required by law,
the redemption may be canceled forthwith without any responsibility or liability
on Distributor's part or on the part of any Fund, or Distributor, at its option,
may buy the shares redeemed on behalf of the Fund, in which latter case
Distributor may hold Dealer responsible for any loss, including loss of profit,
suffered by Distributor resulting from Distributor's failure to settle the
redemption.

d. Dealer agrees that it will comply with any restrictions and
limitations on exchanges described in each Fund's Prospectus, including any
restrictions or prohibitions relating to frequent purchases and redemptions
(i.e., market timing).

6. Multiple Classes of Shares

Distributor may, from time to time, provide Dealer with written
guidelines or standards relating to the sale or distribution of Funds offering
multiple classes of Shares with different sales charges and distribution-related
operating expenses.

7. Fund Information

a. Dealer agrees that neither it nor any of its partners, directors,
officers, employees, and agents is authorized to give any information or make
any representations concerning Shares of any Fund except those contained in the
Fund's then current Prospectus or in materials provided by Distributor.

A-6

<PAGE>

b. Distributor will supply to Dealer Prospectuses, reasonable
quantities of sales literature, sales bulletins, and additional sales
information as provided by Distributor. Dealer agrees to use only advertising or
sales material relating to the Funds that: (i) is supplied by Distributor, or
(ii) conforms to the requirements of all applicable laws or regulations of any
government or authorized agency having jurisdiction over the offering or sale of
Shares of the Funds and is approved in writing by Distributor in advance of its
use. Such approval may be withdrawn by Distributor in whole or in part upon
written notice to Dealer, and Dealer shall, upon receipt of such notice,
immediately discontinue the use of such sales literature, sales bulletins and
advertising. Dealer is not authorized to modify or translate any such materials
without Distributor's prior written consent.

8. Shares

a. Distributor acts solely as agent for the Fund and Distributor shall
have no obligation or responsibility with respect to Dealer's right to purchase
or sell Shares in any state or jurisdiction.

b. Distributor shall periodically furnish Dealer with information
identifying the states or jurisdictions in which it is believed that all
necessary notice, registration or exemptive filings for Shares have been made
under applicable securities laws such that offers and sales of Shares may be
made in such states or jurisdictions. Distributor shall have no obligation to
make such notice, registration or exemptive filings with respect to Shares in
any state or jurisdiction.

c. Dealer agrees not to transact orders for Shares in states or
jurisdictions in which it has been informed that Shares may not be sold or in
which it and its personnel are not authorized to sell Shares.

d. Distributor shall have no responsibility, under the laws regulating
the sale of securities in the United States or any foreign jurisdiction, with
respect to the qualification or status of Dealer or Dealer's personnel selling
Fund Shares. Distributor shall not, in any event, be liable or responsible for
the issue, form, validity, enforceability and value of such Shares or for any
matter in connection therewith.

e. Dealer agrees that it will make no offers or sales of Shares in any
foreign jurisdiction, except with the express written consent of Distributor.

9. Indemnification

a. Dealer agrees to indemnify, defend and hold harmless Distributor and
the Funds and their predecessors, successors, and affiliates, each current or
former partner, officer, director, employee, shareholder or agent and each
person who controls or is controlled by Distributor from any and all losses,
claims, liabilities, costs, and expenses, including attorney fees, that may be
assessed against or suffered or incurred by any of them howsoever they arise,
and as they are incurred, which relate in any way to: (i) any alleged violation
of any statute or regulation (including without limitation the securities laws
and regulations of the United States or any state or foreign country) or any
alleged tort or breach of contract, related to the offer or sale by Dealer of
Shares of the Funds pursuant to this Agreement (except to the extent that
Distributor's negligence or failure to follow correct instructions received from
Dealer is the cause

A-7

<PAGE>

of such loss, claim, liability, cost or expense); (ii) any redemption or
exchange pursuant to instructions received from Dealer or its partners,
affiliates, officers, directors, employees or agents; or (iii) the breach by
Dealer of any of its representations and warranties specified herein or the
Dealer's failure to comply with the terms and conditions of this Agreement,
whether or not such action, failure, error, omission, misconduct or breach is
committed by Dealer or its predecessor, successor, or affiliate, each current or
former partner, officer, director, employee or agent and each person who
controls or is controlled by Dealer.

b. Distributor agrees to indemnify, defend and hold harmless Dealer and
its predecessors, successors and affiliates, each current or former partner,
officer, director, employee or agent, and each person who controls or is
controlled by Dealer from any and all losses, claims, liabilities, costs and
expenses, including attorney fees, that may be assessed against or suffered or
incurred by any of them which arise, and which relate to any untrue statement of
or omission to state a material fact contained in the Prospectus or any written
sales literature or other marketing materials provided by the Distributor to the
Dealer, required to be stated therein or necessary to make the statements
therein not misleading.

c. Dealer agrees to notify Distributor, within a reasonable time, of
any claim or complaint or any enforcement action or other proceeding with
respect to Shares offered hereunder against Dealer or its partners, affiliates,
officers, directors, employees or agents, or any person who controls Dealer,
within the meaning of Section 15 of the Securities Act of 1933, as amended.

d. Dealer further agrees promptly to send Distributor copies of (i) any
report filed pursuant to NASD Conduct Rule 3070, including, without limitation
quarterly reports filed pursuant to Rule 3070(c), (ii) reports filed with any
other self-regulatory organization in lieu of Rule 3070 reports pursuant to Rule
3070(e) and (iii) amendments to Dealer's Form BD.

e. Each party's obligations under these indemnification provisions
shall survive any termination of this Agreement.

10. Termination; Amendment

a. In addition to the automatic termination of this Agreement specified
in Section 1.c. of this Agreement, each party to this Agreement may unilaterally
cancel its participation in this Agreement by giving thirty (30) days prior
written notice to the other party. In addition, each party to this Agreement may
terminate this Agreement immediately by giving written notice to the other party
of that other party's material breach of this Agreement. Such notice shall be
deemed to have been given and to be effective on the date on which it was either
delivered personally to the other party or any officer or member thereof, or was
mailed postpaid or delivered to a telegraph office for transmission to the other
party's designated person at the addresses shown herein or in the most recent
NASD Manual.

b. This Agreement shall terminate immediately upon the appointment of a
Trustee under the Securities Investor Protection Act or any other act of
insolvency by Dealer.

c. The termination of this Agreement by any of the foregoing means
shall have no effect upon transactions entered into prior to the effective date
of termination and shall not relieve Dealer of its obligations, duties and
indemnities specified in this Agreement. A trade

A-8

<PAGE>

placed by Dealer subsequent to its voluntary termination of this Agreement will
not serve to reinstate the Agreement. Reinstatement, except in the case of a
temporary suspension of Dealer, will only be effective upon written notification
by Distributor.

d. This Agreement is not assignable or transferable and will terminate
automatically in the event of its "assignment," as defined in the Investment
Company Act of 1940, as amended and the rules, regulations and interpretations
thereunder. The Distributor may, however, transfer any of its duties under this
Agreement to any entity that controls or is under common control with
Distributor.

e. This Agreement may be amended by Distributor at any time by written
notice to Dealer. Dealer's placing of an order or accepting payment of any kind
after the effective date and receipt of notice of such amendment shall
constitute Dealer's acceptance of such amendment.

11. Distributor's Representations and Warranties

Distributor represents and warrants that:

a. It is a limited liability company duly organized and existing and in
good standing under the laws of the state of Delaware and is duly registered or
exempt from registration as a broker-dealer in all states and jurisdictions in
which it provides services as principal underwriter and distributor for the
Funds.

b. It is a member in good standing of the NASD.

c. It is empowered under applicable laws and by Distributor's charter
and by-laws to enter into this Agreement and perform all activities and services
of the Distributor provided for herein and that there are no impediments, prior
or existing, regulatory, self-regulatory, administrative, civil or criminal
matters affecting Distributor's ability to perform under this Agreement.

d. All requisite actions have been taken to authorize Distributor to
enter into and perform this Agreement.

12. Additional Dealer Representations and Warranties

In addition to the representations and warranties found elsewhere in
this Agreement, Dealer represents and warrants that:

a. It is duly organized and existing and in good standing under the
laws of the state, commonwealth or other jurisdiction in which Dealer is
organized and that Dealer will not offer Shares of any Fund for sale in any
state or jurisdiction where such Shares may not be legally sold or where Dealer
is not qualified to act as a broker-dealer.

A-9

<PAGE>

b. It is empowered under applicable laws and by Dealer's organizational
documents to enter into this Agreement and perform all activities and services
of the Dealer provided for herein and that there are no impediments, prior or
existing, regulatory, self-regulatory, administrative, civil or criminal matters
affecting Dealer's ability to perform under this Agreement.

c. All requisite actions have been taken to authorize Dealer to enter
into and perform this Agreement.

d. It is not, at the time of the execution of this Agreement, subject
to any enforcement or other proceeding with respect to its activities under
state or federal securities laws, rules or regulations.

13. Setoff; Dispute Resolution; Governing Law

a. Should any of Dealer's concession accounts with Distributor have a
debit balance, Distributor shall be permitted to offset and recover the amount
owed from any other account Dealer has with Distributor, without notice or
demand to Dealer.

b. In the event of a dispute concerning any provision of this
Agreement, either party may require the dispute to be submitted to binding
arbitration under the commercial arbitration rules and procedures of the NASD.
The parties agree that, to the extent permitted under such arbitration rules and
procedures, the arbitrators selected shall be from the securities industry.
Judgment upon any arbitration award may be entered by any state or federal court
having jurisdiction.

c. This Agreement shall be governed and construed in accordance with
the laws of the state of New Jersey, not including any provision which would
require the general application of the law of another jurisdiction.

14. Investigations and Proceedings

The parties to this Agreement agree to cooperate fully in any
securities regulatory investigation or proceeding or judicial proceeding with
respect to each's activities under this Agreement and promptly to notify the
other party of any such investigation or proceeding.

15. Captions

All captions used in this Agreement are for convenience only, are not a
party hereof, and are not to be used in construing or interpreting any aspect
hereof.

16. Entire Understanding

This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter contained herein and supersedes all previous
agreements. This Agreement shall be binding upon the parties hereto when signed
by Dealer and accepted by Distributor.

A-10

<PAGE>

17. Severability

Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
If, however, any provision of this Agreement is held under applicable law to be
invalid, illegal, or unenforceable in any respect, such provision shall be
ineffective only to the extent of such invalidity, and the validity, legality
and enforceability of the remaining provisions of this Agreement shall not be
affected or impaired in any way.

18. Entire Agreement

This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter contained herein and supersedes all previous
agreements and/or understandings of the parties. This Agreement shall be binding
upon the parties hereto when signed by Dealer and accepted by Distributor.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year set forth below.

PRUDENTIAL INVESTMENT MANAGEMENT
SERVICES LLC

By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------

Date:
-----------------------------------

DEALER:
---------------------------------

By:
-------------------------------------
(Signature)
Name:
-----------------------------------
Title:
----------------------------------
Address:
--------------------------------

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

Telephone:
------------------------------
NASD CRD #
------------------------------
Prudential Dealer #
---------------------
(Internal Use Only)

Date:
-----------------------------------

A-11

<PAGE>

Exhibit (g)

CUSTODIAN CONTRACT

Between

EACH OF THE PARTIES INDICATED ON APPENDIX A

and

STATE STREET BANK AND TRUST COMPANY

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page
----

<S> <C> <C>
1. Employment of Custodian and Property to be Held by It..................................................-1-

2. Duties to the Custodian with Respect to Property of The Fund Held By the
Custodian in the United States........................................................................-2-
2.1 Holding Securities............................................................................-2-
2.2 Delivery of Securities........................................................................-2-
2.3 Registration of Securities....................................................................-6-
2.4 Bank Accounts.................................................................................-7-
2.5 Availability of Federal Funds.................................................................-7-
2.6 Collection of Income..........................................................................-8-
2.7 Payment of Fund Monies........................................................................-8-
2.8 Liability for Payment in Advance of Receipt of Securities Purchased..........................-11-
2.9 Appointment of Agents........................................................................-11-
2.10 Deposit of Securities in Securities Systems..................................................-11-
2.10A Fund Assets Held in the Custodian's Direct Paper System......................................-13-
2.11 Segregated Account...........................................................................-14-
2.12 Ownership Certificates for Tax Purposes......................................................-15-
2.13 Proxies......................................................................................-16-
2.14 Communications Relating to Fund Portfolio Securities.........................................-16-
2.15 Reports to Fund by Independent Public Accountants............................................-16-

3. Duties of the Custodian with Respect to Property of the Fund Held Outside of the
United States.........................................................................................-17-
3.1 Appointment of Foreign Sub-Custodians........................................................-17-
3.2 Assets to be Held............................................................................-17-
3.3 Foreign Securities Depositories..............................................................-18-
3.4 Segregation of Securities....................................................................-18-
3.5 Agreements with Foreign Banking Institutions.................................................-18-
3.6 Access of Independent Accountants of the Fund................................................-19-
3.7 Reports by Custodian.........................................................................-19-
3.9 Liability of Foreign Sub-Custodians..........................................................-20-
3.10 Liability of Custodian.......................................................................-21-
3.11 Reimbursements for Advances..................................................................-21-
3.12 Monitoring Responsibilities..................................................................-22-
3.13 Branches of U.S. Banks.......................................................................-22-

4. Payments for Repurchases or Redemptions and Sales of Shares of the Fund...............................-23-
</TABLE>
i
<PAGE>

<S> <C> <C>
5. Proper Instructions...................................................................................-24-

6. Actions Permitted without Express Authority...........................................................-24-

7. Evidence of Authority.................................................................................-25-

8. Duties of Custodian with Respect to the Books of Account and Calculation of Net Asset Value and
Net Income............................................................................................-25-

9. Records...............................................................................................-26-

10. Opinion of Fund's Independent Accountant..............................................................-27-

11. Compensation of Custodian.............................................................................-27-

12. Responsibility of Custodian...........................................................................-27-

13. Effective Period, Termination and Amendment...........................................................-29-

14. Successor Custodian...................................................................................-30-

15. Interpretative and Additional Provisions..............................................................-32-

16. Massachusetts Law to Apply............................................................................-32-

17. Prior Contracts.......................................................................................-32-

18. The Parties...........................................................................................-32-

19. Limitation of Liability...............................................................................-33-
</TABLE>

<PAGE>

CUSTODIAN CONTRACT
------------------

This Contract between State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian", and each Fund listed on Appendix A which evidences its agreement to
be bound hereby by executing a copy of this Contract (each such Fund
individually hereinafter referred to as the "Fund").

WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:

1. Employment of Custodian and Property to be Held by It

The Fund hereby employs the Custodian as the custodian of its assets,
including securities it desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation/ Declaration of Trust. The Fund agrees to deliver to the Custodian
all securities and cash owned by it, and all payments of income, payments of
principal or capital distributions received by it with respect to all securities
owned by the Fund from time to time, and the cash consideration received by it
for such new or treasury shares of capital stock, ("Shares") of the Fund as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of the Fund held or received by the Fund and not delivered to the
Custodian.

Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall from time to time employ one or more sub-custodians
located in the United States, but only in accordance with an applicable vote by
the Board of Directors/ Trustees of the Fund, and

<PAGE>

provided that the Custodian shall have the same responsibility or liability to
the Fund on account of any actions or omissions of any sub-custodian so employed
as any such sub-custodian has to the Custodian, provided that the Custodian
agreement with any such domestic sub-custodian shall impose on such
sub-custodian responsibilities and liabilities similar in nature and scope to
those imposed by this Agreement with respect to the functions to be performed by
such sub-custodian. The Custodian may employ as sub-custodians for the Fund's
securities and other assets the foreign banking institutions and foreign
securities depositories designated in Schedule "A" hereto but only in accordance
with the provisions of Article 3.

2. Duties of the Custodian with Respect to Property of The Fund Held By
the Custodian in the United States.

2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of the Fund all non-cash property, to be held by it in
the United States, including all domestic securities owned by the Fund, other
than (a) securities which are maintained pursuant to Section 2.10 in a clearing
agency which acts as a securities depository or in a book-entry system
authorized by the U.S. Department of Treasury, collectively referred to herein
as "Securities System" and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("Direct Paper")
which is deposited and/or maintained in the Direct Paper System of the Custodian
pursuant to Section 2.10A.

2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian or in the Custodian's Direct Paper book-entry
system account ("Direct Paper System") only upon receipt of Proper Instructions,
which may be continuing instructions when deemed

2
<PAGE>

appropriate by the parties, and only in the following cases:

(1) Upon sale of such securities for the account of the
Fund and receipt of payment therefor;

(2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities
entered into by the Fund;

(3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section
2.10 hereof;

(4) To the depository agent in connection with tender or
other similar offers for portfolio securities of the
Fund;

(5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise
become payable; provided that, in any such case, the
cash or other consideration is to be delivered to the
Custodian;

(6) To the issuer thereof, or its agent, for transfer
into the name of the Fund or into the name of any
nominee or nominees of the Custodian or into the name
or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for
exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; provided
that, in any such case, the new securities are to be
delivered to the Custodian;

(7) Upon the sale of such securities for the account of
the Fund, to the broker or its clearing agent,
against a receipt, for examination in accordance with

3
<PAGE>

"street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of
such securities prior to receiving payment for such
securities except as may arise from the Custodian's
own negligence or willful misconduct;

(8) For exchange or conversation pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities
and cash, if any, are to be delivered to the
Custodian;

(9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of
such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities
for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be
delivered to the Custodian;

(10) For delivery in connection with any loans of
securities made by the Fund, but only against receipt
of adequate collateral as agreed upon from time to
time by the Custodian and the Fund, which may be in
the form of cash or obligations issued by the United
States government, its agencies or instrumentalities,
except that in connection with any loans for which
collateral is to be credited to the Custodian's
account in the book-entry

4
<PAGE>

system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or
responsible for the delivery of securities owned by
the Fund prior to the receipt of such collateral;

(11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets
by the Fund, but only against receipt of amounts
borrowed;

(12) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a
broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of
any registered national securities exchange, or of
any similar organization or organizations, regarding
escrow or other arrangements in connection with
transactions by the Fund;

(13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a
Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with
the rules of the Commodity Futures Trading Commission
and/or any Contract Market, or any similar
organization or organizations, regarding account
deposits in connection with transactions by the Fund;

(14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in

5
<PAGE>

connection with distributions in kind, as may be
described from time to time in the Fund's currently
effective prospectus and statement of additional
information ("prospectus"), in satisfaction of
requests by holders of Shares for repurchase or
redemption; and

(15) For any other proper business purpose, but only upon
receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of
Directors/Trustees or of the Executive Committee
signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, specifying the
securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such
purpose to be a proper business purpose, and naming
the person or persons to whom delivery of such
securities shall be made.

2.3 Registration of Securities. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the name of the
Fund or in the name of any nominees of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund, unless the
Fund has authorized in writing the appointment of a nominee to be used in common
with other registered investment companies having the same investment adviser as
the Fund, or in the name or nominee name of any agent appointed pursuant to
Section 2.9 or in the name or nominee name of any sub-custodian appointed
pursuant to Article 1. All securities accepted by the Custodian on behalf of the
Fund under the terms of this Contract shall be in "street name" or other good
delivery form. If, however, the Fund directs the Custodian to maintain
securities in "street name", the Custodian shall utilize its best efforts to
timely collect

6
<PAGE>

income due the Fund on such securities and to notify the Fund on a best efforts
basis of relevant corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.

2.4 Bank Accounts. The Custodian shall open and maintain a separate
bank account or accounts in the United States in the name of the Fund, subject
only to draft or order by the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the Fund, other than
cash maintained by the Fund, other than cash maintained by the Fund in a bank
account established and used in accordance with Rule 17f-3 under the Investment
Company Act of 1940. Funds held by the Custodian for the Fund may be deposited
by it to its credit as Custodian in the Banking Department of the Custodian or
in such other banks or trust companies as it may in its discretion deem
necessary or desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be approved by
vote of a majority of the Board of Directors/Trustees of the Fund. Such funds
shall be deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.

2.5 Availability of Federal Funds. Upon mutual agreement between the
Fund and the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to the Fund as of specified times
agreed upon from time to time by the Fund and the Custodian in the amount of
checks received in payment for Shares of the Fund which are deposited into the
Fund's account.

7
<PAGE>

2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments with
respect to registered securities held hereunder to which the Fund shall be
entitled either by law or pursuant to custom in the securities business, and
shall collect on a timely basis all income and other payments with respect to
bearer securities if, on the date of payment by the issuer, such securities are
held by the Custodian or its agent thereof and shall credit such income, as
collected, to the Fund's custodian account. Without limiting the generality of
the foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due and
shall collect interest when due on securities held hereunder. Income due the
Fund on securities loaned pursuant to the provisions of Section 2.2 (10) shall
be the responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund with such
information or data as may be necessary to assist the Fund in arranging for the
timely delivery to the Custodian of the income to which the Fund is properly
entitled.

2.7 Payment of Fund Monies. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:

(1) Upon the purchase of securities held domestically,
options, futures contracts or options on futures
contracts for the account of the Fund but only (a)
against the delivery of such securities, or evidence
of title to such options, futures contracts or
options on futures contracts, to the Custodian (or
any bank, banking firm or trust company doing
business in the United

8
<PAGE>

States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as
a custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name
of the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in
accordance with the conditions set forth in Section
2.10 hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the
conditions set forth in Section 2.10A; (d) in the
case of repurchase agreements entered into between
the Fund and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificate form
or through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities or
(ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the
Custodian along with written evidence of the
agreement by the Custodian to repurchase such
securities from the Fund or (e) for transfer to a
time deposit account of the Fund in any bank, whether
domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker
and/or the applicable bank pursuant to Proper
Instructions from the Fund as defined in Article 5;

(2) In connection with conversion, exchange or surrender
of securities owned by the Fund as set forth in
Section 2.2 hereof;

9
<PAGE>

(3) For the redemption or repurchase of Shares issued by
the Fund as set forth in Article 4 hereof;

(4) For the payment of any expense or liability incurred
by the Fund, including but not limited to the
following payments for the account of the Fund:
interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the
Fund whether or not such expenses are to be in whole
or part capitalized or treated as deferred expenses;

(5) For the payment of any dividends declared pursuant to
the governing documents of the Fund;

(6) For payment of the amount of dividends received in
respect of securities sold short;

(7) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions, a certified
copy of a resolution of Board of Directors/Trustees
or of the Executive Committee of the Fund signed by
an officer of the Fund and certified by its Secretary
or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which
such payment is to be made, declaring such purpose to
be a proper purpose, and naming the person or persons
to whom such payment is to be made.

2.8 Liability for Payment in Advance of Receipt of Securities
Purchased. Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of securities for the account of the Fund
is made by the Custodian in advance of receipt of the

10
<PAGE>

securities purchased in the absence of specific written instructions from the
Fund to so pay in advance, the Custodian shall be absolutely liable to the Fund
for such securities to the same extent as if the securities had been received by
the Custodian.

2.9 Appointment of Agents. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry out such of the provisions
of this Article 2 as the Custodian may from time to time direct; provided,
however, that the appointment of any agent shall not relieve the Custodian of
its responsibilities or liabilities hereunder.

2.10 Deposit of Securities in Securities Systems. The Custodian may
deposit and/or maintain domestic securities owned by the Fund in a clearing
agency registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the Treasury
and certain federal agencies, collectively referred to herein as "Securities
System" in accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to the following
provisions:

(1) The Custodian may keep domestic securities of the
Fund in a Securities System provided that such
securities are represented in an account ("Account")
of the Custodian in the Securities System which shall
not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise
for customers;

(2) The records of the Custodian with respect to domestic
securities of the

11
<PAGE>

Fund which are maintained in a Securities System
shall identify by book-entry those securities
belonging to the Fund;

(3) The Custodian shall pay for domestic securities
purchased for the account of the Fund upon (i)
receipt of advice from the Securities System that
such securities have been transferred to the Account,
and (i.) the making of an entry on the records of the
Custodian to reflect such payment and transfer for
the account of the Fund. The Custodian shall transfer
domestic securities sold for the account of the Fund
upon (i) receipt of advice from the Securities System
that payment for such securities has been transferred
to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of
all advices from the Securities System of transfers
of domestic securities for the account of the Fund
shall identify the Fund, be maintained for the Fund
by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish
the Fund confirmation of each transfer to or from the
account of the Fund in the form of a written advice
or notice and shall furnish promptly to the Fund
copies of daily transaction sheets reflecting each
day's transactions in the Securities System for the
account of the Fund.

(4) The Custodian shall provide the Fund with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and
procedures for safeguarding securities deposited
in

12
<PAGE>

the Securities System;

(5) The Custodian shall have received the initial or
annual certificate, as the case may be, required by
Article 13 hereof;

(6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Fund for any loss or damage to the Fund resulting
from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or
any such agent to enforce effectively such rights as
it may have against the Securities System; at the
election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with
respect to any claim against the Securities System or
any other person which the Custodian may have as a
consequence of any such loss or damage if and to the
extent that the Fund has not been made whole for any
such loss or damage.

2.10A Fund Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by the Fund in the Direct Paper
System of the Custodian subject to the following provisions:

(1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of
Proper Instructions;

(2) The Custodian may keep securities of the Fund in the
Direct Paper System only if such securities are
represented in an account ("Account") of the
Custodian in the Direct Paper System which shall not
include any assets of

13
<PAGE>

the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;

(3) The records of the Custodian with respect to
securities of the Fund which are maintained in the
Direct Paper System shall identify by book-entry
those securities belonging to the Fund;

(4) The Custodian shall pay for securities purchased for
the account of the Fund upon the making of an entry
on the records of the Custodian to reflect such
payment and transfer of securities to the account of
the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon the making of
an entry on the records of the Custodian to reflect
such transfer and receipt of payment for the account
of the Fund;

(5) The Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund, in
the form of a written advice or notice, of Direct
Paper on the next business day following such
transfer and shall furnish to the Fund copies of
daily transaction sheets reflecting each day's
transaction in the Direct Paper System for the
account of the Fund;

(6) The Custodian shall provide the Fund with any report
on its system of internal accounting control as the
Fund may reasonably request from time to time;

2.11 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts for and on
behalf of the Fund, into which account or accounts may be transferred cash
and/or securities, including securities maintained in

14
<PAGE>

an account by the Custodian pursuant to Section 2.10 hereof, (i) in accordance
with the provisions of any agreement among the Fund, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund, (ii) for purposes of segregating cash, government
securities or liquid, high-grade debt obligations in connection with options
purchased, sold or written by the Fund or commodity futures contracts or options
thereon purchased or sold by the Fund, (iii) for the purposes of compliance by
the Fund with the procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by registered
investment companies and (iv) for other proper corporate purposes, but only, in
the case of clause (iv), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Directors/Trustees or of the
Executive Committee signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or purposes of
such segregated account and declaring such purposes to be proper corporate
purposes.

2.12 Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other payments with
respect to domestic securities of the Fund held by it and in connection with
transfers of such securities.

15
<PAGE>

2.13 Proxies. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise than in
the name of the Fund or a nominee of the Fund, all proxies, without indication
of the manner in which such proxies are to be voted, and shall promptly deliver
to the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.

2.14 Communications Relating to Fund Portfolio Securities. Subject to
the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund
all written information (including, without limitation, pendency of calls and
maturities of securities held domestically and expirations of rights in
connection therewith and notices of exercise of call and put options written by
the Fund and the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the securities being held for the
Fund. With respect to tender or exchange offers, the Custodian shall transmit
promptly to the Fund all written information received by the Custodian from
issuers of the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian at least three business days
prior to the date of which the Custodian is to take such action.

2.15 Reports to Fund by Independent Public Accountants. The Custodian
shall provide the Fund, at such times as the Fund may reasonably require, with
reports by independent public accountants on the accounting system, internal
accounting control and procedures for safeguarding securities, futures contracts
and options on futures contracts, including securities

16
<PAGE>

deposited and/or maintained in a Securities System, relating to the services
provided by the Custodian under this Contract; such reports shall be of
sufficient scope and in sufficient detail, as may reasonably be required by the
Fund to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.

3. Duties of the Custodian with Respect to Property of the Fund Held Outside of
the United States

3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes
and instructs the Custodian to employ as sub-custodians for the Fund's
securities and other assets maintained outside the United States the foreign
banking institutions and foreign securities depositories designated on Schedule
A hereto ("foreign sub-custodians"). Upon receipt of "Proper Instructions", as
defined in Section 5 of this Contract, together with a certified resolution of
the Fund's Board of Directors/Trustees, the Custodian and the Fund may agree to
amend Schedule A hereto from time to time to designate additional foreign
banking institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Proper Instructions, the Fund may instruct the
Custodian to cease the employment of any one or more such sub-custodians for
maintaining custody of the Fund's assets.

3.2 Assets to be Held. The Custodian shall limit the securities and
other assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under the
Investment Company Act of 1940, and (b) cash and cash equivalents in such
amounts as the Custodian or the Fund may determine to be reasonably necessary to
effect the Fund's foreign securities transactions.

17
<PAGE>

3.3 Foreign Securities Depositories. Except as may otherwise be agreed
upon in writing by the Custodian and the Fund, assets of the Fund shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as sub-custodians
pursuant to the terms hereof. Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5 hereof.

3.4 Segregation of Securities. The Custodian shall identify on its
books as belonging to the Fund, the foreign securities of the Fund held by each
foreign sub-custodian. Each agreement pursuant to which the Custodian employs a
foreign banking institution shall require that such institution establish a
custody account for the Custodian on behalf of the Fund and physically segregate
in that account, securities and other assets of the Fund, and, in the event that
such institution deposits the Fund's securities in a foreign securities
depository, that it shall identify on its books as belonging to the Custodian,
as agent for the Fund, the securities so deposited.

3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set forth in
Exhibit I hereto and shall provide that (a) the Fund's assets will not be
subject to any right, charge, security interest, lien or claim of any kind in
favor of the foreign banking institution or its creditors or agent, except a
claim of payment for their safe custody or administration; (b) beneficial
ownership of the Fund's assets will be freely transferable without the payment
of money or value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to the Fund; (d) officers
of or auditors employed by, or other representatives of the Custodian,

18
<PAGE>

including to the extent permitted under applicable law the independent public
accountants for the Fund, will be given access to the books and records of the
foreign banking institution relating to its actions under its agreement with the
Custodian; and (e) assets of the Fund held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents.

3.6 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of any
foreign banking institution employed as a foreign sub-custodian insofar as such
books and records relate to the performance of such foreign banking institution
under its agreement with the Custodian.

3.7 Reports by Custodian. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of the securities
and other assets of the Fund held by foreign sub-custodians, including but not
limited to an identification of entities having possession of the Fund's
securities and other assets and advices or notifications of any transfers of
securities to or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of the Fund indicating, as to securities
acquired for the Fund, the identity of the entity having physical possession of
such securities.

3.8 Transactions in Foreign Custody Account

(a) Except as otherwise provided in paragraph (b) of this
Section 3.8, the provision of Sections 2.2 and 2.7 of this Contract shall apply,
in their entirety to the foreign securities of the Fund held outside the United
States by foreign sub-custodians.

(b) Notwithstanding any provision of this Contract to the
contrary, settlement

19
<PAGE>

and payment for securities received for the account of the Fund and delivery of
securities maintained for the account of the Fund may be effected in accordance
with the customary established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering securities to the purchaser
thereof or to a dealer therefore (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later payment for such
securities from such purchaser or dealer.

(c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee to the same
extent as set forth in Section 2.3 of this Contract, and the Fund agrees to hold
any such nominee harmless from any liability as a holder of record of such
securities.

3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the Custodian and
each Fund from and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the institution's performance of such
obligations. At the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claims against a foreign
banking institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund has not been made whole
for any such loss, damage, cost, expense, liability or claim.

3.10 Liability of Custodian. The Custodian shall be liable for the acts
or omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians

20
<PAGE>

generally in this Contract and, regardless of whether assets are maintained in
the custody of a foreign banking institution, a foreign securities depository or
a branch of a U.S. bank as contemplated by paragraph 3.13 hereof, the Custodian
shall not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or acts of
war or terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this paragraph
3.10, in delegating custody duties to State Street London Ltd., the Custodian
shall not be relieved of any responsibility to the Fund for any loss due to such
delegation, except such loss as may result from (a) political risk (including,
but not limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or (b) other
losses (excluding a bankruptcy or insolvency of State Street London Ltd. not
caused by political risk) due to Acts of God, nuclear incident or other losses
under circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.

3.11 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose including the purchase or sale of
foreign exchange or of contracts for foreign exchange, or in the event that the
Custodian or its nominees shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Contract, except such as amy arise from its or its nominee's own
negligent action, negligent failure to act or wilful misconduct, any property at
any time held for the account of the Fund shall be security therefor and should
the Fund fail to repay the Custodian promptly, the Custodian shall be entitled
to utilize available cash and to dispose of the Fund assets to the extent
necessary to obtain reimbursement.

21
<PAGE>

3.12 Monitoring Responsibilities. The Custodian shall furnish annually
to the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be similar in
kind and scope to that furnished to the Fund in connection with the initial
approval of this Contract. In addition, the Custodian will promptly inform the
Fund in the event that the Custodian learns of a material adverse change in the
financial condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not the subject
of an exemptive order from the Securities and Exchange Commission is notified by
such foreign sub-custodian that there appears to be a substantial likelihood
that its shareholders equity will decline below $200 million (U.S. dollars or
the equivalent thereof) or that its shareholders equity has declined below $200
million (in each case computed in accordance with generally accepted U.S.
accounting principles).

3.13 Branches of U.S. Banks

(a) Except as otherwise set forth in this Contract, the
provisions of Article 3 shall not apply where the custody of the Fund assets are
maintained in a foreign branch of a banking institution which is a "bank" as
defined by Section 2(a)(5) of the Investment Company Act of 1940 meeting the
qualification set forth in Section 26(a) of said Act. The appointment of any
such branch as a sub-custodian shall be governed by paragraph 1 of this
Contract.

(b) Cash held for the Fund in the United Kingdom shall
be maintained in an interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject to the direction of
the Custodian, State Street London Ltd. or both.

4. Payments for Repurchases or Redemptions and Sales of Shares of the
Fund.

From such funds as may be available for the purpose but subject to the
limitations of the

22
<PAGE>

Articles of Incorporation/Declaration of Trust and any applicable votes of the
Board of Directors/Trustees of the Fund pursuant thereto, the Custodian shall,
upon receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.

The Custodian shall receive from the distributor for the Fund's Shares or
from the Transfer Agent of the Fund and deposit into the Fund's account such
payments as are received for Shares of the Fund issued or sold from time to
time by the Fund. The Custodian will provide timely notification to the Fund
and the Transfer Agent of any receipt by it of payments for Shares of the
Fund.

5. Proper Instructions.

Proper Instructions as used herein means a writing signed or initialled
by one or more person or persons as the officers of the Fund shall have from
time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved, including a specific

23
<PAGE>

statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. It is understood and agreed that the Board of
Directors/Directors/Trustees has authorized (i) Prudential Mutual Fund
Management, Inc., as Manager of the Fund, and (ii) The Prudential Investment
Corporation (or Prudential-Bache Securities Inc.), as Subadviser to the Fund, to
deliver proper instructions with respect to all matters for which proper
instructions are required by this Article 5. The Custodian may rely upon the
certificate of an officer of the Manager or Subadviser, as the case may be, with
respect to the person or persons authorized on behalf of the Manager and
Subadviser, respectively, to sign, initial or give proper instructions for the
purpose of this Article 5. Proper Instructions may include communications
effected directly between electro-mechanical or electronic devices provided that
the Fund and the Custodian are satisfied that such procedures afford adequate
safeguards for the Fund's assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.11.

6. Actions Permitted without Express Authority.

The Custodian may in its discretion, without express authority from the
Fund:
(1) make payments to itself or others for minor expenses
of handling securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to the Fund;

(2) surrender securities in temporary form for securities
in definitive form;

24
<PAGE>

(3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and

(4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as otherwise
directed by the Board of Directors/Trustees of the Fund.

7. Evidence of Authority

The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a certified copy of a vote of the Board of
Directors/Trustees of the Fund as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any determination or of
any action by the Board of Directors/ Trustees pursuant to the Articles of
Incorporation/Declaration of Trust as described in such vote, and such vote may
be considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.

8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.

The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Directors/Trustees of the Fund
to keep the books of account of the Fund and/or compute the net asset value per
share of the outstanding shares of the Fund or, if directed in writing to do so
by the Fund, shall itself keep such books of account and/or compute such net
asset value per share. If so directed, the Custodian shall also calculate daily
the net

25
<PAGE>

income of the Fund as described in the Fund's currently effective prospectus and
shall advise the Fund and the Transfer Agent daily of the total amounts of such
net income and, if instructed in writing by an office of the Fund to do so,
shall advise the Transfer Agent periodically of the division of such net income
among its various components. The calculations of the net asset value per share
and the daily income of the Fund shall be made at the time or times described
from time to time in the Fund's currently effective prospectus.

9. Records

The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.

10. Opinion of Fund's Independent Accountant

The Custodian shall take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1A, Form N-2 (in the case
of a closed end Fund) and Form N-SAR or other periodic reports to

26
<PAGE>

the Securities and Exchange Commission and with respect to any other
requirements of such Commission.

11. Compensation of Custodian

The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund and the Custodian.

12. Responsibility of Custodian

So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. Notwithstanding the
foregoing, the responsibility of the Custodian with respect to redemptions
effected by check shall be in accordance with a separate Agreement entered into
between the Custodian and the Fund.

The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States and, regardless of whether

27
<PAGE>

assets are maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated by paragraph
3.11 hereof, the Custodian shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from, or caused by, the direction of or
authorization by the Fund to maintain custody or any securities or cash of the
Fund in a foreign country including, but not limited to, losses resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism.

If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.

If the Fund requires the Custodian to advance cash or securities for
any purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or wilful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the Fund
assets to the extent necessary to obtain reimbursement provided, however that,
prior to disposing of Fund assets hereunder, the Custodian shall give the Fund
notice of its intention to dispose of assets identifying such assets and the
Fund shall have one business day from receipt of such notice to notify the
Custodian if

28
<PAGE>

the Fund wishes the Custodian to dispose of Fund assets of equal value other
than those identified in such notice.

13. Effective Period, Termination and Amendment

This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.10 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors/Trustees of the Fund has approved the
initial use of a particular Securities System and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that the Board of
Directors/Trustees has reviewed the use by the Fund of such Securities System,
as required in each case by Rule 17f-4 under the Investment Company Act of 1940,
as amended and that the Custodian shall not act under Section 2.10A hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors/Trustees has approved the
initial use of the Direct Paper System and the receipt of an annual certificate
of the Secretary or an Assistant Secretary that the Board of Directors/Trustees
has reviewed the use by the Fund of the Direct Paper System; provided further,
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Articles of Incorporation/Declaration of Trust, and further, provided,
that the Fund may at any time by action of its Board of Directors/Trustees (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to

29
<PAGE>

the Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.

Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.

14. Successor Custodian

If a successor custodian shall be appointed by the Board of
Directors/Trustees of the Fund, the Custodian shall, upon termination, deliver
to such successor custodian at the office of the Custodian, duly endorsed and in
the form for transfer, all securities then held by it hereunder and shall
transfer to an account of the successor custodian all of the Fund's securities
held in a Securities System.

If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Directors/Trustees of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with such
vote.

In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors/Trustees shall have been
delivered to the Custodian on or before the date when such termination shall
become effective, then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the Investment Company Act of
1940, doing business in Boston, Massachusetts, of its own selection, having an
aggregate

30
<PAGE>

capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
the Custodian and all instruments held by the Custodian relative thereto and all
other property held by it under this Contract and to transfer to an account of
such successor custodian all of the Fund's securities held in any Securities
System. Thereafter, such bank or trust company shall be the successor of the
Custodian under this Contract.

In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors/Trustees to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations of
the Custodian shall remain in full force and effect.

15. Interpretative and Additional Provisions

In connection with the operation of this Contract, the Custodian and
the Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretative or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Articles of Incorporation/ Declaration of Trust of the Fund. No
interpretative or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.

31
<PAGE>

16. Massachusetts Law to Apply

This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of the Commonwealth of Massachusetts.

17. Prior Contracts

This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund and the Custodian relating to the custody of
the Fund's assets.

18. The Parties

All references herein to the "Fund" are to each of the Funds listed on
Appendix A individually, as if this Contract were between such individual Fund
and the Custodian. With respect to any Fund listed on Appendix A which is
organized as a Massachusetts Business Trust, references to Board of Directors
and Articles of Incorporation shall be deemed a reference to Board of
Directors/Trustees and Articles of Incorporation/Declaration of Trust
respectively and reference to shares of capital stock shall be deemed a
reference to shares of beneficial interest.

19. Limitation of Liability

Each Fund listed on Appendix A that is referenced as a Massachusetts
Business Trust is the designation of the Directors/Trustees under a Articles of
Incorporation/Declaration of Trust, dated (see Appendix A) and all persons
dealing with the Fund must look solely to the property of the Fund for the
enforcement of any claims against the Fund as neither the Directors/Trustees,
officers, agents or shareholders assume any personal liability for obligations
entered into on behalf of the Fund.

32
<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the dates set forth on Appendix A.

ATTEST STATE STREET BANK AND TRUST COMPANY

/s/ Robert C. Rosselot By: /s/ Scott Johnson
- - ---------------------- -----------------
Assistant Secretary Scott Johnson

ATTEST EACH OF THE FUNDS LISTED ON APPENDIX A

/s/ S. Jane Rose By: /s/ Robert F. Gunia
- - ---------------- --------------------
S. Jane Rose Robert F. Gunia
Secretary Executive Vice President

33
<PAGE>

AMENDMENT TO CUSTODIAN CONTRACT

Agreement made by and between State Street Bank and Trust Company ( the
"Custodian") and (the "Fund").

WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated December 12, 1997 (the "Custodian Contract") governing the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Fund; and

WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions under which the Custodian maintains the Fund's securities and other
non-cash property in the custody of certain foreign sub-custodians in conformity
with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as
amended;

NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and provisions;

1. Notwithstanding any provisions to the contrary set forth in the
Custodian Contract, the Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided, however, that (i) the
records of the Custodian with respect to securities and other non-cash property
of the Fund which are maintained in such account shall identify by bookentry
those securities and other non-cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-cash property so held by
the foreign sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.

2. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.

IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed as a sealed instrument in its name and behalf by its duly authorized
representative this 12th day of December, 1997.

By:
----------------------------
Title:

STATE STREET BANK AND TRUST COMPANY

By:
----------------------------
Title:

<PAGE>

Exhibit (h)

TRANSFER AGENCY AND SERVICE AGREEMENT

between

CASH ACCUMULATION TRUST

and

PRUDENTIAL MUTUAL FUND SERVICES LLC

<PAGE>

TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Article 1 Terms of Appointment; Duties of the Agent ....................1

Article 2 Fees and Expenses.............................................5

Article 3 Representations and Warranties of PMFS........................5

Article 4 Representations of Warranties of the Fund.....................7

Article 5 Duty of Care and Indemnification..............................7

Article 6 Documents and Covenants of the Fund and PMFS.................10

Article 7 Termination of Agreement.....................................11

Article 8 Assignment...................................................12

Article 9 Affiliations.................................................12

Article 10 Amendment....................................................13

Article 11 Applicable Law...............................................13

Article 12 Miscellaneous................................................13

Article 13 Merger of Agreement..........................................15

</TABLE>

<PAGE>

TRANSFER AGENCY AND SERVICE AGREEMENT

AGREEMENT made as of the 12th day of December, 1997 by and between
CASH ACCUMULATION TRUST, a Massachusetts business trust, having its principal
office and place of business at Gateway Center Three, 100 Mulberry Street,
Newark, New Jersey 07102 (the Fund), and PRUDENTIAL MUTUAL FUND SERVICES LLC, a
New Jersey limited liability corporation, having its principal office and place
of business at Raritan Plaza One, Edison, New Jersey 08837 (the Agent or PMFS).

WHEREAS, the Fund desires to appoint PMFS as its transfer agent,
dividend disbursing agent and shareholder servicing agent in connection with
certain other activities, and PMFS desires to accept such appointment;

NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

Article 1 Terms of Appointment; Duties of PMFS

1.01 Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints PMFS to act as, and PMFS agrees
to act as, the transfer agent for the authorized and issued shares of the
beneficial interest of each series of the Fund, $.00001 par value (Shares),
dividend disbursing agent and shareholder servicing agent in connection with any
accumulation, open-account or similar plans provided to the shareholders of the
Fund or any series thereof (Shareholders) and set out in the currently effective
prospectus and statement of additional

<PAGE>

information (prospectus) of the Fund,
including without limitation any periodic investment plan or periodic withdrawal
program.

1.02 PMFS agrees that it will perform the following services:

(a) In accordance with procedures established from time to time by
agreement between the Fund and PMFS, PMFS shall:

(i) Receive for acceptance, orders for the purchase of Shares, and promptly
deliver payment and appropriate documentation therefor to the Custodian of the
Fund authorized pursuant to the Articles of Incorporation of the Fund (the
Custodian);

(ii) Pursuant to purchase orders, issue the appropriate number of Shares and
hold such Shares in the appropriate Shareholder account;

(iii) Receive for acceptance redemption requests and redemption directions
and deliver the appropriate documentation therefor to the Custodian;

(iv) At the appropriate time as and when it receives monies paid to it by
the Custodian with respect to any redemption, pay over or cause to be paid over
in the appropriate manner such monies as instructed by the redeeming
Shareholders;

(v) Effect transfers of Shares by the registered owners thereof upon receipt
of appropriate instructions;

(vi) Prepare and transmit payments for dividends and distributions declared
by the Fund;

(vii) Calculate any sales charges payable by a Shareholder on purchases
and/or redemptions of Shares of the Fund as such charges may be reflected in the
prospectus;

(viii) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and

<PAGE>

(ix) Record the issuance of Shares of the Fund and maintain pursuant to Rule
17Ad-10(e) under the Securities Exchange Act of 1934 (1934 Act) a record of the
total number of Shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. In case any issue of
Shares would result in an overissue, PMFS shall refuse to issue such Shares and
shall not countersign and issue any certificates requested for such Shares. When
recording the issuance of Shares, PMFS shall have no obligation to take
cognizance of any Blue Sky laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of the Fund.

(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), PMFS shall: (i) perform all of the customary services of a
transfer agent, dividend disbursing agent and, as relevant, shareholder
servicing agent in connection with accumulation, open-account or similar plans
(including without limitation any periodic investment plan or periodic
withdrawal program), including but not limited to, maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on non-resident alien accounts, preparing and
filing appropriate forms required with respect to dividends and distributions by
federal tax authorities for all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders and
providing Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each State or
other jurisdiction.

<PAGE>

(c) In addition, the Fund shall (i) identify to PMFS in writing those
transactions and assets to be treated as exempt from Blue Sky reporting for each
State and (ii) verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily activity for each
State. The responsibility of PMFS for the Fund's registration status under the
Blue Sky or securities laws of any State or other jurisdiction is solely limited
to the initial establishment of transactions subject to Blue Sky compliance by
the Fund and the reporting of such transactions to the Fund as provided above
and as agreed from time to time by the Fund and PMFS.

PMFS may also provide such additional services and functions not
specifically described herein as may be mutually agreed between PMFS and the
Fund and set forth in Schedule B hereto.

Procedures applicable to certain of these services may be
established from time to time by agreement between the Fund and PMFS.

Article 2 Fees and Expenses

2.01 For performance by PMFS pursuant to this Agreement, the Fund
agrees to pay PMFS, with respect to the National Money Market Fund series of the
Fund, an annual maintenance fee for each Shareholder account and certain
transactional fees as set out in the fee schedule attached hereto as Schedule A.
Such fees and out-of-pocket expenses and advances identified under Section 2.02
below may be changed from time to time subject to mutual written agreement
between the Fund and PMFS.

2.02 In addition to the fees paid under Section 2.01 above, the
Fund agrees to reimburse PMFS, with respect to the National Money Market Fund
series of the Fund, for out-of-pocket expenses or advances incurred by PMFS for
the items set

<PAGE>

out in Schedule A attached hereto. In addition, any other expenses incurred by
PMFS, with respect to the National Money Market Fund series of the Fund, at the
request or with the consent of the Fund will be reimbursed by the Fund. With
respect to the Liquid Assets Fund series of the Fund, the Fund agrees to
reimburse PMFS for direct costs, excluding profit and overhead, incurred by
PMFS.

2.03 The Fund agrees to pay all fees and reimbursable expenses
within a reasonable period of time following the mailing of the respective
billing notice. Postage for mailing of dividends, proxies, Fund reports and
other mailings to all Shareholder accounts shall be advanced to PMFS by the Fund
upon request prior to the mailing date of such materials.

Article 3 Representations and Warranties of PMFS

PMFS represents and warrants to the Fund that:

3.01 It is a corporation duly organized and existing and in good
standing under the laws of New Jersey and it is duly qualified to carry on its
business in New Jersey.

3.02 It is and will remain registered with the U.S. Securities and
Exchange Commission (SEC) as a Transfer Agent pursuant to the requirements of
Section 17A of the 1934 Act.

3.03 It is empowered under applicable laws and by its charter and
By-Laws to enter into and perform this Agreement.

3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.

3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.

<PAGE>

Article 4 Representations and Warranties of the Fund

The Fund represents and warrants to PMFS that:

4.01 It is a corporation duly organized and existing and in good
standing under the laws of Maryland.

4.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.

4.03 All corporate proceedings required by said Articles of
Incorporation and By-Laws have been taken to authorize it to enter into and
perform this Agreement.

4.04 It is an investment company registered with the SEC under the
Investment Company Act of 1940, as amended (the 1940 Act).

4.05 A registration statement under the Securities Act of 1933
(the 1933 Act) is currently effective and will remain effective, and appropriate
state securities law filings have been made and will continue to be made, with
respect to all Shares of the Fund being offered for sale.

Article 5 Duty of Care and Indemnification

5.01 PMFS shall not be responsible for, and the Fund shall
indemnify and hold PMFS harmless from and against, any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability arising out of or
attributable to:

(a) All actions of PMFS or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct.

(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.

<PAGE>

(c) The reliance on or use by PMFS or its agents or subcontractors of
information, records and documents which (I) are received by PMFS or its agents
or subcontractors and furnished to it by or on behalf of the Fund, and (ii) have
been prepared and/or maintained by the Fund or any other person or firm on
behalf of the Fund.

(d) The reliance on, or the carrying out by PMFS or its agents or
subcontractors of, any instructions or requests of the Fund.

(e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities or Blue Sky laws of
any State or other jurisdiction that such Shares be registered in such State or
other jurisdiction or in violation of any stop order or other determination or
ruling by any federal agency or any State or other jurisdiction with respect to
the offer or sale of such Shares in such State or other jurisdiction.

5.02 PMFS shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any action or failure
or omission to act by PMFS as a result of PMFS' lack of good faith, negligence
or willful misconduct.

5.03 At any time PMFS may apply to any officer of the Fund for
instructions, and may consult with legal counsel, with respect to any matter
arising in connection with the services to be performed by PMFS under this
Agreement, and PMFS and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. PMFS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the

<PAGE>

Fund, reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data, records or
documents provided to PMFS or its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by the Fund, and
shall not be held to have notice of any change of authority of any person, until
receipt of written notice thereof from the Fund. PMFS, its agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual or
facsimile signature of the officers of the Fund, and the proper countersignature
of any former transfer agent or registrar, or of a co-transfer agent or
co-registrar.

5.04 In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform or
otherwise from such causes.

5.05 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
act or failure to act hereunder.

5.06 In order that the indemnification provisions contained in
this Article 5 shall apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense

<PAGE>

of such claim. The party seeking indemnification shall in no case confess any
claim or make any compromise in any case in which the other party may be
required to indemnify it except with the other party's prior written consent.

Article 6 Documents and Covenants of the Fund and PMFS

6.01 The Fund shall promptly furnish to PMFS the following:

(a) A certified copy of the resolution of the Board of Trustees of the
Fund authorizing the appointment of PMFS and the execution and delivery of this
Agreement;

(b) A certified copy of the Articles of Incorporation and By-Laws of
the Fund and all amendments thereto;

(c) The current registration statements and any amendments and
supplements thereto filed with the SEC pursuant to the requirements of the 1933
Act and the 1940 Act;

(d) A specimen of the certificate for Shares of the Fund in the form
approved by the Board of Trustees, with a certificate of the Secretary of the
Fund as to such approval;

(e) All account application forms or other documents relating to
Shareholder accounts and/or relating to any plan program or service offered or
to be offered by the Fund; and

(f) Such other certificates, documents or opinions as the Agent deems
to be appropriate or necessary for the proper performance of its duties.

6.02 PMFS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.

<PAGE>

6.03 PMFS shall prepare and keep records relating to the services
to be performed hereunder, in the form and manner as it may deem advisable. To
the extent required by Section 31 of the 1940 Act, and the Rules and Regulations
thereunder, PMFS agrees that all such records prepared or maintained by PMFS
relating to the services to be performed by PMFS hereunder are the property of
the Fund and will be preserved, maintained and made available in accordance with
such Section 31 of the 1940 Act, and the Rules and Regulations thereunder, and
will be surrendered promptly to the Fund on and in accordance with its request.

6.04 PMFS and the Fund agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential and shall not be voluntarily disclosed to any other person
except as may be required by law or with the prior consent of PMFS and the Fund.

6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, PMFS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. PMFS reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person.

Article 7 Termination of Agreement

7.01 This Agreement may be terminated by either party upon one
hundred twenty (120) days written notice to the other.

7.02 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and other
materials will be borne by

<PAGE>

the Fund. Additionally, PMFS reserves the right to charge for any other
reasonable fees and expenses associated with such termination.

Article 8 Assignment

8.01 Except as provided in Section 8.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.

8.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.

8.03 PMFS may, in its sole discretion and without further consent
by the Fund, subcontract, in whole or in part, for the performance of its
obligations and duties hereunder with any person or entity including but not
limited to: (i) Prudential Securities Incorporated (Prudential Securities), a
registered broker-dealer, (ii) The Prudential Insurance Company of America
(Prudential), (iii) Pruco Securities Corporation, a registered broker-dealer,
(iv) any Prudential Securities or Prudential subsidiary or affiliate duly
registered as a broker-dealer and/or a transfer agent pursuant to the 1934 Act
or (v) any other Prudential Securities or Prudential affiliate or subsidiary;
provided, however, that PMFS shall be as fully responsible to the Fund for the
acts and omissions of any agent or subcontractor as it is for its own acts and
omissions.

Article 9 Affiliations

9.01 PMFS may now or hereafter, without the consent of or notice
to the Fund, function as Transfer Agent and/or Shareholder Servicing Agent for
any other investment company registered with the SEC under the 1940 Act,
including without

<PAGE>

limitation any investment company whose adviser, administrator, sponsor or
principal underwriter is or may become affiliated with Prudential Securities
and/or Prudential or any of its or their direct or indirect subsidiaries or
affiliates.

9.02 It is understood and agreed that the Trustees, officers,
employees, agents and Shareholders of the Fund, and the directors, officers,
employees, agents and shareholders of the Fund's investment adviser and/or
distributor, are or may be interested in the Agent as directors, officers,
employees, agents, shareholders or otherwise, and that the directors, officers,
employees, agents or shareholders of the Agent may be interested in the Fund as
Trustees, officers, employees, agents, Shareholders or otherwise, or in the
investment adviser and/or distributor as officers, directors, employees, agents,
shareholders or otherwise.

Article 10 Amendment

10.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Board of Trustees of the Fund.

Article 11 Applicable Law

11.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of New Jersey.

Article 12 Miscellaneous

12.01 In the event of an alleged loss or destruction of any Share
certificate, no new certificate shall be issued in lieu thereof, unless there
shall first be furnished to PMFS an affidavit of loss or non-receipt by the
holder of Shares with respect to which a certificate has been lost or destroyed,
supported by an appropriate bond satisfactory to PMFS and the Fund issued by a
surety company satisfactory to

<PAGE>

PMFS, except that PMFS may accept an affidavit of loss and indemnity agreement
executed by the registered holder (or legal representative) without surety in
such form as PMFS deems appropriate indemnifying PMFS and the Fund for the
issuance of a replacement certificate, in cases where the alleged loss is in the
amount of $1000 or less.

12.02 In the event that any check or other order for payment of
money on the account of any Shareholder or new investor is returned unpaid for
any reason, PMFS will (a) give prompt notification to the Fund's distributor
(Distributor) of such non-payment; and (b) take such other action, including
imposition of a reasonable processing or handling fee, as PMFS may, in its sole
discretion, deem appropriate or as the Fund and the Distributor may instruct
PMFS.

12.03 Any notice or other instrument authorized or required by
this Agreement to be given in writing to the Fund or to PMFS shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.

To the Fund:

CASH ACCUMULATION TRUST
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102
Attention: President

To PMFS:

Prudential Mutual Fund Services, Inc.
Raritan Plaza One
Edison, NJ 08837
Attention: President

<PAGE>

Article 13 Merger of Agreement

13.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first above
written.

CASH ACCUMULATION
TRUST

ATTEST:
-----------------
BY: /s/ Richard A. Redeker
------------------------
Richard A. Redeker
President

PRUDENTIAL MUTUAL FUND
SERVICES LLC

BY: /s/ Vincent Marra
-----------------------
Vincent Marra

ATTEST:
-----------------

<PAGE>

Schedule A

Prudential Mutual Fund Services LLC

Fee Schedule

Fee Information for Services as
Transfer Agent, Dividend Disbursing Agent
and Shareholder Servicing Agent

General -- Fees are based on an annual per shareholder account charge for
account maintenance plus out-of-pocket expenses. In addition, there is a one
time set-up charge per account for manually established accounts and a
monthly charge for inactive zero balance accounts. The effective period of
this fee schedule is December 12, 1997 and shall continue thereafter from
year to year, unless otherwise amended.

Annual Maintenance Charges -- The annual maintenance charge includes the
processing of all transactions and correspondence. The fee is billable on a
monthly basis at the rate of 1/12 of the annual fee. A charge is made for an
account in the month that an account opens or closes.
<TABLE>

<S> <C>
Annual Maintenance Per Account Fee $12.00

Other Charges
- - -------------

New Account Set-up Fee for Manually $ 2.00
Established Accounts

Monthly Inactive Zero Balance Account Fee $ .20

</TABLE>

Out-of -Pocket Expenses -- out-of-pocket expenses include but are not limited
to: postage, stationery and printing, allocable communication costs,
microfilm, microfiche, and expenses incurred at the specific direction of the
Fund.

Payment -- An invoice will be presented to the Fund on a monthly basis
assessing the Fund the appropriate fee and out-of-pocket expenses.

CASH ACCUMULATION PRUDENTIAL MUTUAL FUND
TRUST (National Money Market Fund) SERVICES LLC

NAME: /s/ Grace C. Torres NAME: /s/Vincent Marra
------------------------- -----------------------
Grace C. Torres Vincent Marra

TITLE: TITLE:
------------------------ ----------------------
Treasurer

DATE: DATE:
------------------------- -----------------------

<PAGE>

Exhibit (m)(ii)

Cash Accumulation Trust
(National Money Market Fund)

Amended and Restated
Distribution and Service Plan

Introduction

The Distribution and Service Plan (the Plan) set forth below which is
designed to conform to the requirements of Rule 12b-1 under the Investment
Company Act of 1940 (the Investment Company Act) and Rule 2830 of the Conduct
Rules of the National Association of Securities Dealers, Inc. (NASD) has been
adopted by Cash Accumulation Trust (the Fund) and by Prudential Investment
Management Services LLC, the Fund's distributor (the Distributor).

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

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

<PAGE>

Investment Company Act.

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

The Plan

The material aspects of the Plan are as follows:

1. Distribution Activities

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

2. Payment of Service Fee

The Fund shall reimburse the Distributor for costs incurred by it in
providing personal service and/or maintaining shareholder accounts at a rate not
to exceed .175 of 1% per annum of the average daily net assets of the shares
(service fee). The Fund shall calculate and accrue daily amounts reimbursable by
the shares of the Fund

<PAGE>

hereunder and shall pay such amounts monthly or at such other intervals as the
Board of Trustees may determine. Costs of the Distributor subject to
reimbursement hereunder include account servicing fees and indirect and overhead
costs associated with providing personal service and/or maintaining shareholder
accounts.

3. Payment for Distribution Activities

The Fund shall reimburse the Distributor for incurred by it in performing
Distribution Activities at a rate which, together with the service fee
(described in Section 2 hereof), shall not exceed .175 of 1% per annum of the
average daily net assets of the shares of the Fund. The Fund shall calculate and
accrue daily amounts reimbursable by the shares of the Fund hereunder and shall
pay such amounts monthly or at such other intervals as the Board of Trustees may
determine.

4. Quarterly Reports; Additional Information

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

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

<PAGE>

agreements with the Distributor.

5. Effectiveness; Continuation

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

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

6. Termination

This Plan may be terminated at any time, without the payment of any penalty,
by a majority of the Rule 12b-1 Trustees or by vote of a majority of the
outstanding voting securities (as defined in the Investment Company Act) of the
shares of the Fund, or by the Distributor, on sixty (60) days' written notice to
the other party. This Plan shall automatically terminate in the event of its
assignment.

7. Amendments

The Plan may not be amended to change the combined service and distribution
fees to be paid as provided for in Sections 2 and 3 hereof so as to increase
materially the amounts payable under this Plan unless such amendment shall be
approved by the vote of a majority of the outstanding voting securities (as
defined in the Investment Company Act) of the shares of the Fund. All material
amendments of the Plan shall be

<PAGE>

approved by a majority of the Board of Trustees of the Fund and a majority of
the Rule 12b-1 Trustees by votes cast in person at a meeting called for the
purpose of voting on the Plan.

8. Rule 12b-1 Trustees

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

9. Records

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

Dated: June 1, 1998

<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Cash Accumulation Trust annual report dated September 30, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> NATIONAL MONEY MARKET FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 671864968
<INVESTMENTS-AT-VALUE> 671864968
<RECEIVABLES> 57317059
<ASSETS-OTHER> 124240
<OTHER-ITEMS-ASSETS> 31543
<TOTAL-ASSETS> 729337810
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27335060
<TOTAL-LIABILITIES> 27335060
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 702002750
<SHARES-COMMON-STOCK> 702002750
<SHARES-COMMON-PRIOR> 652327431
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 702002750
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 38267809
<OTHER-INCOME> 0
<EXPENSES-NET> 4496152
<NET-INVESTMENT-INCOME> 33771657
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 33771657
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 33771657
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6248712913
<NUMBER-OF-SHARES-REDEEMED> 6231478119
<SHARES-REINVESTED> 32440525
<NET-CHANGE-IN-ASSETS> 49675319
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2886449
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4496152
<AVERAGE-NET-ASSETS> 690855000
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>