UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: | 811-04024 | |
Exact name of registrant as specified in charter: | Prudential Investment Portfolios 6 f/k/a Dryden California Municipal Fund | |
Address of principal executive offices: | Gateway Center 3, 100 Mulberry Street, Newark, New Jersey 07102 | |
Name and address of agent for service: | Deborah A. Docs Gateway Center 3, 100 Mulberry Street, Newark, New Jersey 07102 | |
Registrant’s telephone number, including area code: | 800-225-1852 | |
Date of fiscal year end: | 8/31/2010 | |
Date of reporting period: | 2/28/2010 |
Item 1 – Reports to Stockholders
SEMIANNUAL REPORT | FEBRUARY 28, 2010 |
Prudential California Muni Income Fund
(Formerly known as the Dryden California Municipal Fund/California Income Series)
Fund Type Municipal bond
Objective Maximize current income that is exempt from California state and federal income taxes, consistent with the preservation of capital | This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of February 28, 2010, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Prudential Investments, Prudential Financial, and the Rock Prudential logo are registered service marks of The Prudential Insurance Company of America, Newark, NJ, and its affiliates. |
To enroll in e-delivery, go to www.prudentialfunds.com/edelivery |
April 15, 2010
Dear Shareholder:
Recently we announced the renaming of JennisonDryden, Prudential Financial’s mutual fund family, to Prudential Investments. As a result of this change, each of our funds has been renamed to feature “Prudential” as part of its new name. The name of your fund has changed from the Dryden California Municipal Fund/California Income Series to the Prudential California Muni Income Fund.
While the name of your fund has changed, its investment objectives and portfolio management team remain the same. No action is required on your part. If you participate in an automatic investment plan, your account continues to be invested in the Fund under its new name.
Featuring the Prudential name in our funds creates an immediate connection to the experience and heritage of Prudential, a name recognized by millions for helping people grow and protect their wealth.
On the following pages, you will find your fund’s semiannual report, including a table showing fund performance over the first half of the fiscal year and for longer periods. The report also contains a listing of the fund’s holdings at period-end. If you have questions about your fund or the renaming of our mutual fund family, please contact your financial professional or visit our website at www.prudentialfunds.com.
Sincerely,
Judy A. Rice, President
Prudential California Muni Income Fund
Prudential California Muni Income Fund | 1 |
Your Fund’s Performance
Fund objective
The investment objective of the Prudential California Muni Income Fund is to maximize current income that is exempt from California state and federal income taxes, consistent with the preservation of capital. There can be no assurance that the Fund will achieve its investment objective.
Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.prudentialfunds.com or by calling (800) 225-1852. The maximum initial sales charge is 4.00% (Class A shares). Gross operating expenses: Class A, 0.95%; Class B, 1.15%; Class C, 1.65%; Class Z, 0.65%. Net operating expenses apply to: Class A, 0.90%; Class B, 1.15%; Class C, 1.40%; Class Z, 0.65%, after contractual reduction through 12/31/2010.
Cumulative Total Returns as of 2/28/10 | ||||||||||||
Six Months | One Year | Five Years | Ten Years | |||||||||
Class A | 4.97 | % | 11.28 | % | 20.78 | % | 67.20 | % | ||||
Class B | 4.84 | 11.01 | 19.28 | 63.10 | ||||||||
Class C | 4.72 | 10.74 | 17.85 | 59.14 | ||||||||
Class Z | 5.12 | 11.59 | 22.36 | 71.51 | ||||||||
Barclays Capital Municipal Bond Index1 | 4.13 | 9.98 | 24.63 | 76.25 | ||||||||
Lipper California (CA) Muni Debt Funds Avg.2 | 5.39 | 12.61 | 15.45 | 59.01 | ||||||||
Average Annual Total Returns3 as of 3/31/10 | ||||||||||||
One Year | Five Years | Ten Years | ||||||||||
Class A | 7.60 | % | 3.14 | % | 4.55 | % | ||||||
Class B | 6.81 | 3.56 | 4.72 | |||||||||
Class C | 10.54 | 3.47 | 4.46 | |||||||||
Class Z | 12.40 | 4.25 | 5.24 | |||||||||
Barclays Capital Municipal Bond Index1 | 9.69 | 4.58 | 5.58 | |||||||||
Lipper California (CA) Muni Debt Funds Avg.2 | 13.83 | 3.02 | 4.46 |
2 | Visit our website at www.prudentialfunds.com |
Distributions and Yields as of 2/28/10 | ||||||||||||
Total Distributions Paid for Six Months | 30-Day SEC Yield | Taxable Equivalent 30-Day Yield4 at Federal Tax Rates of | ||||||||||
33% | 35% | |||||||||||
Class A | $ | 0.29 | 3.61 | % | 5.94 | % | 6.12 | % | ||||
Class B | 0.28 | 3.51 | 5.78 | 5.95 | ||||||||
Class C | 0.27 | 3.26 | 5.36 | 5.53 | ||||||||
Class Z | 0.31 | 4.01 | 6.60 | 6.80 |
The cumulative total returns do not reflect the deduction of applicable sales charges. If reflected, the applicable sales charges would reduce the cumulative total returns performance quoted. Class A shares are subject to a maximum front-end sales charge of 4.00%. Under certain circumstances, Class A shares may be subject to a contingent deferred sales charge (CDSC) of 1%. Class B and Class C shares are subject to a maximum CDSC of 5% and 1%, respectively. Class Z shares are not subject to a sales charge.
Source: Prudential Investments LLC and Lipper Inc. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of such fee waivers and/or expense reimbursements, total returns would be lower.
1The Barclays Capital Municipal Bond Index is an unmanaged index of over 39,000 long-term investment-grade municipal bonds. It gives a broad look at how long-term investment-grade municipal bonds have performed.
2The Lipper CA Muni Debt Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper CA Muni Debt Funds category for the periods noted. Funds in the Lipper Average limit their assets to those securities that are exempt from taxation in California.
3The average annual total returns take into account applicable sales charges. Class A, Class B, and Class C shares are subject to an annual distribution and service (12b-1) fee of up to 0.30%, 0.50%, and 1.00%, respectively. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Class Z shares are not subject to a 12b-1 fee. The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares.
4Taxable equivalent yields reflect federal and applicable state tax rates.
Investors cannot invest directly in an index. The returns for the Barclays Capital Municipal Bond Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
Prudential California Muni Income Fund | 3 |
Your Fund’s Performance (continued)
Five Largest Issues expressed as a percentage of net assets as of 2/28/10 | |||
Southern California Pub. Pwr. Auth. Rev., Palo Verde Proj., Ser. C, 7/01/16, 2.590% | 6.6 | % | |
Orange Cnty. Loc. Trans. Auth., Sales Tax Rev., 2/14/11, 6.200% | 2.1 | ||
Sacramento City Fin. Auth., Tax Alloc. Comb. Proj., Ser. B, 11/01/16, 5.150% | 1.9 | ||
Sacramento City Fin. Auth., Ser. B, 11/01/17, 5.510% | 1.8 | ||
California Hsg. Fin. Agy. Rev., Home Mtge. –83, Ser. A, 2/01/15, 5.000% | 1.7 |
Issues are subject to change.
Credit Quality* expressed as a percentage of net assets as of 2/28/10 | |||
Aaa | 2.5 | % | |
Aa | 30.8 | ||
A | 29.3 | ||
Baa | 26.4 | ||
Not Rated | 10.2 | ||
Total Investments | 99.2 | ||
Other assets in excess of liabilities | 0.8 | ||
Net Assets | 100.0 | % | |
*Source: Moody’s rating, defaulting to S&P when not rated by Moody’s.
Credit quality is subject to change.
4 | Visit our website at www.prudentialfunds.com |
Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on September 1, 2009, at the beginning of the period, and held through the six-month period ended February 28, 2010. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of Prudential Investments funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and
Prudential California Muni Income Fund | 5 |
Fees and Expenses (continued)
expenses should not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Prudential California Muni Income Fund | Beginning Account Value September 1, 2009 | Ending Account Value February 28, 2010 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,049.70 | 0.90 | % | $ | 4.57 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,020.33 | 0.90 | % | $ | 4.51 | ||||||
Class B | Actual | $ | 1,000.00 | $ | 1,048.40 | 1.15 | % | $ | 5.84 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,019.09 | 1.15 | % | $ | 5.76 | ||||||
Class C | Actual | $ | 1,000.00 | $ | 1,047.20 | 1.40 | % | $ | 7.11 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,017.85 | 1.40 | % | $ | 7.00 | ||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,051.20 | 0.65 | % | $ | 3.31 | |||||
Hypothetical | $ | 1,000.00 | $ | 1,021.57 | 0.65 | % | $ | 3.26 |
* Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended February 28, 2010, and divided by the 365 days in the Fund’s fiscal year ending August 31, 2010 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
6 | Visit our website at www.prudentialfunds.com |
Portfolio of Investments
as of February 28, 2010 (Unaudited)
Description (a) | Moody’s Rating†* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
LONG-TERM INVESTMENTS 95.8% | ||||||||||||
Municipal Bonds | ||||||||||||
Abag Fin. Auth. For Nonprofit Corp. Rev., | ||||||||||||
San Diego Hosp. Assoc., Ser. C | A3 | 5.375% | 3/01/21 | $ | 1,665 | $ | 1,692,889 | |||||
Sharp Healthcare | A3 | 6.250 | 8/01/39 | 1,000 | 1,077,440 | |||||||
California County Tobacco Securitization Agy., Rev., | ||||||||||||
Convertible, C.A.B.S. (Converts to 5.25% on 12/01/10) | Baa3 | 1.350(h) | 6/01/21 | 1,000 | 859,560 | |||||||
Tobacco Conv. Bonds | NR | 5.100 | 6/01/28 | 1,035 | 878,332 | |||||||
California Edl. Facs. Auth. Rev., | ||||||||||||
Calif. Inst. of Technology | Aa1 | 5.000 | 11/01/39 | 2,000 | 2,124,440 | |||||||
Univ. Southern CA, Ser. A, Rfdg. | Aa1 | 5.250 | 10/01/38 | 1,500 | 1,597,020 | |||||||
Univ. Southern CA, Ser. A, Rfdg. | Aa1 | 5.000 | 10/01/38 | 2,000 | 2,073,440 | |||||||
California Health Facs. Fin. Auth. Rev., | ||||||||||||
Catholic Healthcare West, Ser. A | A2 | 6.000 | 7/01/39 | 2,000 | 2,090,000 | |||||||
Cedars Sinai Med. Ctr. Rfdg. | A2 | 5.000 | 11/15/21 | 2,000 | 2,069,160 | |||||||
Cedars Sinai Med. Ctr. | A2 | 5.000 | 8/15/39 | 750 | 701,798 | |||||||
Episcopal Home, Ser. B | A-(c) | 6.000 | 2/01/32 | 1,000 | 1,002,910 | |||||||
Providence Health Svcs., Ser. B | Aa2 | 5.500 | 10/01/39 | 1,500 | 1,570,515 | |||||||
Providence Health, Ser. C | Aa2 | 6.500 | 10/01/38 | 1,000 | 1,129,060 | |||||||
Scripps Health, Ser. A | A1 | 5.000 | 10/01/22 | 500 | 527,120 | |||||||
Scripps Health, Ser. A | A1 | 5.000 | 11/15/36 | 1,000 | 964,230 | |||||||
St. Joseph Health Sys., Ser. A | A1 | 5.750 | 7/01/39 | 1,000 | 1,032,010 | |||||||
California Hsg. Fin. Agy. Rev., Home Mtge.-83, Ser. A, C.A.B.S. | Aa3 | 5.000(h) | 2/01/15 | 5,095 | 3,538,478 | |||||||
California Infrastructure & Econ. Dev. Rev., | ||||||||||||
Bay Area Toll Brdgs. 1st Lien (Pre-refunded Date 1/01/28)(e)(f) | AAA(c) | 5.000 | 7/01/33 | 1,700 | 1,984,308 | |||||||
Bk. Rev. & Econ. Dev. Walt. Dis. Fam. Musm., Walt & Lilly Disney | A1 | 5.250 | 2/01/38 | 2,000 | 2,007,640 | |||||||
Scripps Research Inst., Ser. A | Aa3 | 5.750 | 7/01/30 | 1,500 | 1,505,010 | |||||||
California Municipal Fin. Auth. | ||||||||||||
Ctfs. Partn. Cmnty. Hosps. Cent. | Baa2 | 5.500 | 2/01/39 | 1,000 | 876,020 | |||||||
Ed. Rev. Amern. Heritage Ed. Foundation Proj., Ser. A | BBB-(c) | 5.250 | 6/01/26 | 1,100 | 978,274 |
See Notes to Financial Statements.
Prudential California Muni Income Fund | 7 |
Portfolio of Investments
as of February 28, 2010 (Unaudited) continued
Description (a) | Moody’s Rating†* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Municipal Bonds (cont’d.) | ||||||||||||
California Poll. Ctrl. Fin. Auth. | ||||||||||||
Pacific Gas-D-Rmkt. Rfdg., A.M.T., F.G.I.C. | A3 | 4.750% | 12/01/23 | $ | 2,500 | $ | 2,426,300 | |||||
Sld. Wste. Disp. Rev., Wste. Mgmt., Inc. Proj., Ser. B, A.M.T. | BBB(c) | 5.000 | 7/01/27 | 500 | 486,735 | |||||||
California Rural Home Mtge. Fin. Auth., Sngl. Fam. Mtge. Rev., Mtge. Bkd. Secs., Ser. D, F.N.M.A., G.N.M.A., A.M.T. | AAA(c) | 6.000 | 12/01/31 | 55 | 56,141 | |||||||
California St. Dept. Wtr. Res. Pwr. Rev., | ||||||||||||
Central VY Proj., Ser. A | Aa2 | 5.000 | 12/01/29 | 2,000 | 2,132,200 | |||||||
Central VY Proj., Ser. AF | Aa2 | 5.000 | 12/01/29 | 1,500 | 1,601,880 | |||||||
California St. Econ. Recovery, Ser. A, Rfdg. | A1 | 5.250 | 7/01/21 | 1,400 | 1,553,146 | |||||||
California St. Pub. Wks. Brd. Lease Rev., | ||||||||||||
Dept. General Service, Ser. J | Baa2 | 5.250 | 6/01/28 | 750 | 715,208 | |||||||
Var. Cap. Proj., Ser. G-1 | Baa2 | 5.750 | 10/01/30 | 750 | 746,370 | |||||||
Var. Cap. Proj., Sub. Ser. I-1 | Baa2 | 6.375 | 11/01/34 | 750 | 773,955 | |||||||
California St., F.G.I.C., T.C.R.S., GO | Baa1 | 4.750 | 9/01/23 | 1,000 | 999,000 | |||||||
California St., GO | Baa1 | 6.000 | 4/01/38 | 3,000 | 3,090,900 | |||||||
California St., GO Unrefunded Balance | Baa1 | 5.500 | 4/01/30 | 5 | 5,022 | |||||||
California St., Var. Purp., GO | Baa1 | 5.000 | 10/01/29 | 1,500 | 1,433,160 | |||||||
California St., Var. Purp., GO | Baa1 | 5.500 | 11/01/39 | 1,000 | 965,890 | |||||||
California St., Var. Purp., GO | Baa1 | 6.000 | 11/01/39 | 1,500 | 1,547,625 | |||||||
California Statewide Cmntys. Dev. Auth. Rev., | ||||||||||||
Drew Sch. | NR | 5.300 | 10/01/37 | 1,000 | 763,830 | |||||||
Irvine LLC, U.C.I. East Rfdg. | Baa2 | 5.000 | 5/15/32 | 2,000 | 1,810,660 | |||||||
John Muir Health | A1 | 5.125 | 7/01/39 | 750 | 715,508 | |||||||
Polytechnic Sch. | A1 | 5.000 | 12/01/34 | 2,000 | 1,960,860 | |||||||
Spl. Tax No. 97-1, C.A.B.S. | NR | 7.640(h) | 9/01/22 | 4,440 | 1,739,503 | |||||||
Sr. Living-Southn. Calif. Presbyterian Homes | BBB(c) | 7.250 | 11/15/41 | 500 | 531,455 | |||||||
St. Joseph F. Rmkt., F.S.A. | Aa3 | 5.250 | 7/01/21 | 2,500 | 2,717,925 | |||||||
Windrush Sch. | NR | 5.500 | 7/01/37 | 1,000 | 778,330 | |||||||
Chico Redev. Agcy. Tax Alloc., Chico Amended & Merged Redev., A.M.B.A.C. | A(c) | 5.000 | 4/01/30 | 1,445 | 1,324,819 |
See Notes to Financial Statements.
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Description (a) | Moody’s Rating†* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Municipal Bonds (cont’d.) | ||||||||||||
Chula Vista Calif. Indl. Dev. Rev., San Diego Gas-D-Rmkt. | Aa3 | 5.875% | 1/01/34 | $ | 1,000 | $ | 1,096,790 | |||||
Chula Vista Dev. Agcy. Rev., Rfdg. Tax Alloc. Sub. Bayfront, Ser. B | NR | 5.250 | 10/01/27 | 1,540 | 1,309,708 | |||||||
Chula Vista Ind. Dev. Rev., San Diego Gas, A.M.T. | Aa3 | 5.000 | 12/01/27 | 1,000 | 956,790 | |||||||
Coronado Cmnty. Dev. Agy. Tax Alloc., Dev. Proj., A.M.B.A.C. | A(c) | 5.000 | 9/01/24 | 2,000 | 1,983,700 | |||||||
Corona-Norco Uni. Sch. Dist. Spl. Tax, Cmnty. Facs. Dist. No. 98-1, N.A.T.L. | Baa1 | 5.000 | 9/01/22 | 1,060 | 1,094,312 | |||||||
El Dorado Cnty., Spl. Tax, Cmnty. Facs., | ||||||||||||
Dist. No. 92-1 | NR | 6.125 | 9/01/16 | 1,000 | 1,010,490 | |||||||
Dist. No. 92-1 | NR | 6.250 | 9/01/29 | 475 | 462,479 | |||||||
El Dorado Irr. Dist. Partn., Ser. A, C.O.P., Assured Gty. | BB | 5.750 | 8/01/39 | 1,000 | 1,039,090 | |||||||
Elsinore Valley Municipal Water Dist. C.O.P., B.H.A.C. | Aa1 | 5.000 | 7/01/29 | 750 | 792,923 | |||||||
Folsom Spl. Tax, Cmnty. Facs., Dist. No. 7, Broadstone | NR | 6.000 | 9/01/24 | 2,450 | 2,239,325 | |||||||
Folsom Spl. Tax, Unrefunded Balance, Facs. Dist. No. 10, Empire Ranch | NR | 6.875 | 9/01/19 | 1,230 | 1,237,232 | |||||||
Foothill/Eastern Trans. Corr. Agy. Rev., Toll Rd., Convertible C.A.B.S. | Baa3 | 5.875 | 1/15/28 | 2,890 | 2,804,283 | |||||||
Glendale Redev. Agy. Tax Alloc., Central Glendale Redev. Proj., N.A.T.L. | Baa1 | 5.250 | 12/01/19 | 3,275 | 3,342,858 | |||||||
Golden St. Tobacco Securitization Corp. Calif. Tobacco Settlement Rev., | ||||||||||||
Asset-Bkd, Sr. Ser. A-1 | Baa3 | 5.750 | 6/01/47 | 2,000 | 1,467,460 | |||||||
Enhanced Asset Bkd., Ser. A | Baa2 | 5.000 | 6/01/45 | 1,000 | 839,990 | |||||||
Golden St. Tobacco Securitization Rev., Asset-Bkd., | ||||||||||||
Ser. 2003-A-1 (Pre-refunded date 6/01/13)(e) | Aaa | 6.750 | 6/01/39 | 2,700 | 3,172,473 | |||||||
Ser. A, Convertible C.A.B.S., A.M.B.A.C. (Converts to 4.60% on 6/1/10) | Baa2 | 5.750(h) | 6/01/23 | 3,000 | 2,625,720 |
See Notes to Financial Statements.
Prudential California Muni Income Fund | 9 |
Portfolio of Investments
as of February 28, 2010 (Unaudited) continued
Description (a) | Moody’s Rating†* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Municipal Bonds (cont’d.) | ||||||||||||
Golden West Sch. Fin. Auth., Rev., Rfdg. Ser. A., C.A.B.S., N.A.T.L. | Baa1 | 5.400%(h) | 2/01/19 | $ | 2,110 | $ | 1,319,172 | |||||
Guam Govt. Ltd. Oblig. Rev., Section 30, Ser. A | BBB-(c) | 5.750 | 12/01/34 | 500 | 506,285 | |||||||
La Mesa-Spring Valley Sch. Dist., GO., Election of 2002, Ser. B, C.A.B.S., N.A.T.L. | A1 | 5.840(h) | 8/01/23 | 2,000 | 922,900 | |||||||
La Quinta Redev. Agy. Tax Alloc., NATL, Rfdg. Proj. Area No. 1 | Baa1 | 7.300 | 9/01/11 | 1,000 | 1,076,150 | |||||||
Lincoln Impt. Bond Act of 1915, Pub. Rev., Fin. Auth., Twelve Bridges | NR | 6.200 | 9/02/25 | 2,535 | 2,541,490 | |||||||
Long Beach Hbr. Rev., Rfdg., Ser. A, A.M.T., N.A.T.L. | Aa2 | 6.000 | 5/15/19 | 3,000 | 3,443,670 | |||||||
Long Beach Redev. Agcy., Dist. No. 3, Spl. Tax Rev. Pine Ave. | NR | 6.375 | 9/01/23 | 2,775 | 2,744,087 | |||||||
Los Angeles Calif. Cmnty. College Dist., GO | Aa2 | 5.000 | 8/01/33 | 3,250 | 3,267,648 | |||||||
Los Angeles Calif. Cmnty. College Dist., 2008 Election, Ser. A, GO | Aa2 | 6.000 | 8/01/33 | 2,000 | 2,221,920 | |||||||
Los Angeles Calif. Dept. Arpts. Rev., Ser. A | Aa3 | 5.000 | 5/15/34 | 1,000 | 997,140 | |||||||
Los Angeles Dept. of Wtr. & Pwr. Rev., Ser. A | Aa3 | 5.000 | 7/01/39 | 1,000 | 1,025,820 | |||||||
Los Angeles Dept. of Wtr. & Pwr. Wtrwks. Rev.,Ser. A | Aa3 | 5.375 | 7/01/38 | 1,530 | 1,640,573 | |||||||
Metro. Wtr. Dist. of Southern Calif. Waterworks Rev., | ||||||||||||
Linked, S.A.V.R.S., R.I.B.S. | Aa2 | 5.750 | 8/10/18 | 2,000 | 2,360,460 | |||||||
Unrefunded. Balance Ser. A | Aa2 | 5.750 | 7/01/21 | 2,240 | 2,694,093 | |||||||
Metro. Wtr. Dist. Southn. Calif. Rfdg., Ser. C | Aa2 | 5.000 | 7/01/35 | 1,000 | 1,036,980 | |||||||
M-S-R Energy Auth. Calif., Ser. A | A(c) | 6.500 | 11/01/39 | 1,000 | 1,057,290 | |||||||
Ontario Special Assessment Impvt. Bond Act of 1915, Assmt. Dist. 100C, Cmnty. Ctr. III | NR | 8.000 | 9/02/11 | 215 | 225,180 | |||||||
Orange Cnty. Loc. Trans. Auth., Sales Tax Rev., Linked, S.A.V.R.S. & R.I.B.S., A.M.B.A.C., T.C.R.S. | Aa2 | 6.200 | 2/14/11 | 4,370 | 4,505,819 | |||||||
Spl. Tax Rev., Linked, S.A.V.R.S., R.I.B.S.(g) | Aa2 | 10.926(d) | 2/14/11 | 1,500 | 1,593,240 |
See Notes to Financial Statements.
10 | Visit our website at www.prudentialfunds.com |
Description (a) | Moody’s Rating†* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Municipal Bonds (cont’d.) | ||||||||||||
Perris Cmnty. Facs. Dist., Spec. Tax No. 01-2 Avalon, Ser. A | NR | 6.250% | 9/01/23 | $ | 2,000 | $ | 1,888,560 | |||||
Pico Rivera Wtr. Auth. Rev., Wtr. Sys. Proj., Ser. A, N.A.T.L. | Baa1 | 5.500 | 5/01/29 | 1,500 | 1,691,370 | |||||||
Pittsburg Redev. Agcy. Tax Alloc., Los Medanos Cmnty. Dev. Proj., | ||||||||||||
A.M.B.A.C., C.A.B.S. | NR | 6.510(h) | 8/01/26 | 1,375 | 488,400 | |||||||
Ser. B, F.S.A., A.M.T. (Pre-refunded Date 8/01/13)(e) | Aa3 | 5.800 | 8/01/34 | 2,700 | 3,198,987 | |||||||
Port Oakland, | ||||||||||||
Inter. Lien, Ser. A, N.A.T.L., A.M.T., Rfdg. | A3 | 5.000 | 11/01/29 | 3,000 | 2,717,010 | |||||||
Ser. K, A.M.T. (Pre-refunded Date 5/01/10)(e) | A2 | 5.750 | 11/01/16 | 25 | 25,216 | |||||||
Puerto Rico Comwlth. Rfdg. Pub Impt., Ser. C, GO | Baa3 | 6.000 | 7/01/39 | 400 | 410,608 | |||||||
Puerto Rico Pub. Bldgs. Auth. Rev., Gtd. Rfdg., Govt. Facs., Ser. P | Baa3 | 6.750 | 7/01/36 | 250 | 271,625 | |||||||
Puerto Rico Sales Tax Fing. Corp. Sales Tax Rev., | ||||||||||||
First Sub, Ser. A | A2 | 5.500 | 8/01/42 | 750 | 747,713 | |||||||
First Sub, Ser. A | A2 | 5.750 | 8/01/37 | 400 | 412,308 | |||||||
First Sub, Ser. A | A2 | 6.000 | 8/01/42 | 700 | 732,795 | |||||||
Rancho Mirage Jt. Pwrs. Fing. Auth. Rev., Eisenhower Med. Ctr., Ser. A | A3 | 5.000 | 7/01/47 | 2,500 | 2,189,925 | |||||||
Redding Elec. Sys. Rev., C.O.P., Linked S.A.V.R.S.& R.I.B.S., N.A.T.L. Partial E.T.M.(e) | Baa1 | 6.368 | 7/01/22 | 100 | 116,501 | |||||||
N.A.T.L., Partial E.T.M(e)(g) | Baa1 | 11.511(d) | 7/01/22 | 2,455 | 3,265,199 | |||||||
Rocklin Uni. Sch. Dist., Ser. C, GO., C.A.B.S., N.A.T.L. | Baa1 | 4.080(h) | 8/01/16 | 1,400 | 1,083,250 | |||||||
Sacramento City Fin. Auth., Ser. B, C.A.B.S., N.A.T.L. | Baa1 | 5.510(h) | 11/01/17 | 5,695 | 3,774,132 | |||||||
Sacramento City Fin. Auth., Tax Alloc. Comb. Proj., Ser. B, N.A.T.L., C.A.B.S. | Baa1 | 5.150(h) | 11/01/16 | 5,700 | 4,060,451 | |||||||
Sacramento Cnty. Santn. Dist. Fing. Auth. Rev., Var.-Regl., Ser. B, N.A.T.L. Fltg. | Aa3 | 0.701(i) | 12/01/35 | 1,000 | 750,750 | |||||||
San Bernardino Cmnty. College Dist., Election 2002, Ser. A, GO | Aa3 | 6.250 | 8/01/33 | 1,750 | 1,957,620 |
See Notes to Financial Statements.
Prudential California Muni Income Fund | 11 |
Portfolio of Investments
as of February 28, 2010 (Unaudited) continued
Description (a) | Moody’s Rating†* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Municipal Bonds (cont’d.) | ||||||||||||
San Diego Redev., Agcy., Tax Alloc., North Bay Redev. | Baa1 | 5.875% | 9/01/29 | $ | 3,000 | $ | 3,003,780 | |||||
San Diego Regl. Bldg. Auth. Lease Rev., Ctny. Operations Ctr. & Annex A | A1 | 5.375 | 2/01/36 | 1,000 | 1,041,330 | |||||||
San Diego Uni. Sch. Dist., Election of 1998, Ser. B, GO., N.A.T.L. | Aa2 | 6.000 | 7/01/19 | 1,000 | 1,216,490 | |||||||
San Francisco Calif. City & Cnty. Redev. Fing. Auth. Tax Alloc. Mission Bay North Redev., Ser. C | A-(c) | 6.500 | 8/01/39 | 1,000 | 1,050,990 | |||||||
San Jose Calif., Library & Park Proj. | Aa1 | 5.000 | 9/01/33 | 2,200 | 2,300,650 | |||||||
San Jose Evergreen Cmnty. College Dist. Election 2004, Ser. B, Assured Gty., GO | Aa2 | 4.030(h) | 9/01/17 | 1,000 | 743,320 | |||||||
San Leandro Cmnty. Facs., Spl. Tax, Dist. No.1 | NR | 6.500 | 9/01/25 | 2,160 | 2,080,447 | |||||||
San Mateo Cnty. Calif. Jt. Pwrs. Fin. Auth. | Aa3 | 5.000 | 7/15/33 | 1,000 | 1,011,560 | |||||||
Santa Margarita, Dana Point Auth., Impv. Rev., Dists., 3-3A-4 & 4A, Ser. B, N.A.T.L. | Baa1 | 7.250 | 8/01/14 | 2,000 | 2,373,140 | |||||||
Santa Maria Joint Union H.S. Dist., Election of 2004, C.A.B.S., GO., N.A.T.L. | A2 | 6.710(h) | 8/01/29 | 1,250 | 346,650 | |||||||
Santa Monica Cmnty. College Dist. Election 2002, Ser. A, GO., N.A.T.L., C.A.B.S. | Aa2 | 6.230(h) | 8/01/28 | 1,055 | 346,335 | |||||||
South Bayside Waste Mgmt. Auth. Calif. Solid Waste Enterprise Shoreway Environmental | A3 | 6.000 | 9/01/36 | 500 | 514,965 | |||||||
Southern California Pub. Pwr. Auth. Rev., | ||||||||||||
Palo Verde Proj., Ser. C, A.M.B.A.C., E.T.M., Rfdg., C.A.B.S.(e) | A1 | 2.590(h) | 7/01/16 | 16,325 | 13,869,229 | |||||||
PNC G.I.C. Proj. Rev. | A2 | 6.750 | 7/01/13 | 1,000 | 1,164,320 | |||||||
Sulphur Springs Uni. Sch. Dist., Ser. A, GO., N.A.T.L., C.A.B.S. | Baa1 | 1.430(h) | 9/01/11 | 3,000 | 2,936,670 | |||||||
Tobacco Securitization Auth. Northn. Calif. Rev., Asset-Bkd. Tobacco Settlement, Ser. A | Baa3 | 5.500 | 6/01/45 | 2,000 | 1,437,040 |
See Notes to Financial Statements.
12 | Visit our website at www.prudentialfunds.com |
Description (a) | Moody’s Rating†* | Interest Rate | Maturity Date | Principal Amount (000) | Value (Note 1) | |||||||
Municipal Bonds (cont’d.) | ||||||||||||
Torrance Hosp. Rev., Torrance Mem. Med. Ctr., Ser. A | A1 | 6.000% | 6/01/22 | $ | 2,000 | $ | 2,057,440 | |||||
Tuolumne Wind Proj. Auth. Calif. Rev., Tuolumne Co. Proj., Ser. A | A1 | 5.625 | 1/01/29 | 1,000 | 1,071,490 | |||||||
University Calif. Revs., Gen., Ser. Q | Aa1 | 5.000 | 5/15/34 | 1,000 | 1,040,240 | |||||||
Ser. O | Aa1 | 5.750 | 5/15/34 | 1,250 | 1,389,688 | |||||||
University of Calif. Revs., UCLA Med., Ctr., Ser. A, A.M.B.A.C., Unrefunded Bal. | NR | 5.250 | 5/15/30 | 1,000 | 997,450 | |||||||
Valley Health. Sys., Hosp. Rev., Impt. Proj., Ser. A(g) | C(c) | 6.500 | 5/15/25 | 130 | 71,487 | |||||||
Ventura Cnty. Calif. Cmnty. College, GO | Aa3 | 5.500 | 8/01/33 | 2,000 | 2,097,480 | |||||||
Vernon Calif. Elec. Sys. Rev., Ser. A | A3 | 5.125 | 8/01/21 | 1,500 | 1,582,320 | |||||||
Virgin Islands Pub. Fin. Auth. Rev., Matching Fd. Ln., Diago, Ser. A | Baa3 | 6.750 | 10/01/37 | 250 | 270,218 | |||||||
Total long-term investments | 201,608,765 | |||||||||||
SHORT-TERM INVESTMENTS 3.4% | ||||||||||||
Municipal Bonds | ||||||||||||
California Health. Facs. Fing. Auth. Rev., Hosp. Adventist, Rmkt., Ser. B, F.R.D.D.(b) | VMIG1 | 0.130 | 3/01/10 | 600 | 600,000 | |||||||
California St. Dept. Wtr. Res. Pwr. Supply Rev., Sub. Ser. F-4, F.R.D.D.(b) | VMIG1 | 0.110 | 3/01/10 | 400 | 400,000 | |||||||
Sacramento Cnty. Santn. Dist. Auth. Rev., F.R.D.D.(b) | VMIG1 | 0.150 | 3/01/10 | 4,505 | 4,505,000 | |||||||
Sacramento Cnty. Santn. Dist. Auth. Rev., F.R.D.D.(b) | VMIG1 | 0.150 | 3/01/10 | 1,600 | 1,600,000 | |||||||
Total short-term investments | 7,105,000 | |||||||||||
Total Investments 99.2% | 208,713,765 | |||||||||||
Other assets in excess of liabilities(j) 0.8% | 1,705,762 | |||||||||||
Net Assets 100.0% | $ | 210,419,527 | ||||||||||
See Notes to Financial Statements.
Prudential California Muni Income Fund | 13 |
Portfolio of Investments
as of February 28, 2010 (Unaudited) continued
* | The ratings reflected are as of February 28, 2010. Ratings of certain bonds may have changed subsequent to that date. |
† | The Fund’s current Statement of Additional Information contains a description of Moody’s and Standard & Poor’s ratings. |
a) | The following abbreviations are used in the portfolio descriptions: |
A.M.B.A.C.—American Municipal Bond Assurance Corporation.
A.M.T.—Alternative Minimum Tax.
B.H.A.C.—Berkshire Hathaway Assurance Corp.
C.A.B.S.—Capital Appreciation Bonds.
C.O.P.—Certificates of Participation.
E.T.M.—Escrowed to Maturity.
F.G.I.C.—Financial Guaranty Insurance Company.
F.N.M.A.—Federal National Mortgage Association.
F.R.D.D.—Floating Rate (Daily) Demand Note.
F.S.A.—Financial Assurance Guaranty.
G.I.C.—Group Insurance Commission.
G.N.M.A.—Government National Mortgage Association.
GO—General Obligation.
N.A.T.L.—National Public Finance Guaranty Corp.
R.I.B.S.—Residual Interest Bearing Securities.
S.A.V.R.S.—Select Auction Variable Rate Securities.
T.C.R.S.—Transferable Custodial Receipts.
NR—Not Rated by Moody’s or Standard & Poor’s.
(b) | For purposes of amortized cost valuation, the maturity date of Floating Rate Demand Notes is considered to be the later of the next date on which the security can be redeemed at par, or the next date on which the rate of interest is adjusted. |
(c) | Standard & Poor’s rating. |
(d) | Inverse floating rate bond. The coupon is inversely indexed to a floating interest rate. The rate shown is the rate at February 28, 2010. |
(e) | All or partial escrowed to maturity and/or pre-refunded securities are secured by escrowed cash and/or U.S. guaranteed obligations. |
(f) | All or portion of security segregated as collateral for financial futures contracts. |
(g) | Indicates a security that has been deemed illiquid. |
(h) | Represents a zero coupon bond or step bond. Rate shown reflects the effective yield at February 28, 2010. |
(i) | Floating Rate Security. The interest rate shown reflects the rate in effect at February 28, 2010. |
(j) | Other assets in excess of liabilities include net unrealized depreciation on financial futures contracts as follows: |
Open futures contracts outstanding at February 28, 2010:
Number of Contracts | Type | Expiration Date | Value at Trade Date | Value at February 28, 2010 | Unrealized (Depreciation) | |||||||||
Short Position: | ||||||||||||||
73 | U.S. Treasury 10 Yr. Notes | Jun. 2010 | $ | 8,484,084 | $ | 8,576,359 | $ | (92,275 | ) | |||||
See Notes to Financial Statements.
14 | Visit our website at www.prudentialfunds.com |
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.
Level 1—quoted prices in active markets for identical securities
Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
The following is a summary of the inputs used as of February 28, 2010 in valuing the Fund’s assets carried at fair value:
Investments in Securities | Level 1 | Level 2 | Level 3 | |||||||
Municipal Bonds | $ | — | $ | 208,713,765 | $ | — | ||||
— | 208,713,765 | — | ||||||||
Other Financial Instruments* | (92,275 | ) | — | — | ||||||
Total | $ | (92,275 | ) | $ | 208,713,765 | $ | — | |||
* | Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instrument. |
As of August 31, 2009 and February 28, 2010, the Fund did not use any significant unobservable inputs (Level 3) in determining the value of investments.
The industry classification of portfolio holdings and other assets in excess of liabilities shown as a percentage of net assets as of February 28, 2010 was as follows:
Special Tax/Assessment District | 23.7 | % | |
General Obligation | 14.0 | ||
Pre-Refunded | 12.2 | ||
Healthcare | 11.4 | ||
Water & Sewer | 7.5 | ||
Education | 6.7 | ||
Transportation | 4.7 | ||
Short-Term Investments | 3.4 | ||
Lease Backed Certificates of Participation | 3.0 | ||
Power | 2.8 | ||
Corporate Backed IDB & PCR | 2.4 | ||
Tobacco | 2.2 |
See Notes to Financial Statements.
Prudential California Muni Income Fund | 15 |
Portfolio of Investments
as of February 28, 2010 (Unaudited) continued
Industry (cont’d.) | |||
Other | 1.7 | % | |
Housing | 1.7 | ||
Tobacco Appropriated | 1.6 | ||
Solid Waste/Resource Recovery | 0.2 | ||
99.2 | |||
Other assets in excess of liabilities | 0.8 | ||
Net Assets | 100.0 | % | |
Industry classification is subject to change.
The Fund invested in derivative instruments during the reporting period. The primary types of risk associated with derivative instruments are commodity risk, credit risk, equity risk, foreign exchange risk and interest rate risk.
The effect of such derivative instruments on the Fund’s financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.
Fair values of derivative Instruments as of February 28, 2010 as presented in the Statement of Assets and Liabilities:
Derivatives not designated as | Asset Derivatives | Liability Derivatives | ||||||||
Balance Sheet Location | Fair Value | Balance | Fair Value | |||||||
Interest rate contracts | — | — | Due to broker - Variation Margin | $ | 92,275 | * |
* | Includes cumulative appreciation/depreciation on futures contracts as reported in Portfolio of Investments. Only unsettled variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
The effects of derivative instruments on the Statement of Operations for the six months ended February 28, 2010 are as follows:
Amount of Realized Gain (Loss) on Derivatives Recognized | ||||
Derivatives not designated as hedging instruments, carried at fair value | Futures | |||
Interest rate contracts | $ | (194,788 | ) |
See Notes to Financial Statements.
16 | Visit our website at www.prudentialfunds.com |
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||
Derivatives not designated as hedging instruments, carried at fair value | Futures | |||
Interest rate contracts | $ | (29,378 | ) |
For the six months ended February 28, 2010, the Portfolio’s average value at trade date for short positions on futures contracts was $8,606,683.
See Notes to Financial Statements.
Prudential California Muni Income Fund | 17 |
Statement of Assets and Liabilities
as of February 28, 2010 (Unaudited)
Assets | |||
Unaffiliated investments, at value (cost $200,847,653) | $ | 208,713,765 | |
Cash | 75,409 | ||
Interest receivable | 2,343,342 | ||
Receivable for Fund shares sold | 54,507 | ||
Prepaid expenses | 2,340 | ||
Total assets | 211,189,363 | ||
Liabilities | |||
Payable for Fund shares reacquired | 414,342 | ||
Accrued expenses | 98,159 | ||
Management fee payable | 80,325 | ||
Dividends payable | 75,365 | ||
Distribution fee payable | 45,168 | ||
Deferred trustees’ fees | 25,452 | ||
Due to broker—variation margin | 25,094 | ||
Affiliated transfer agent fee payable | 5,931 | ||
Total liabilities | 769,836 | ||
Net Assets | $ | 210,419,527 | |
Net assets were comprised of: | |||
Shares of beneficial interest, at par | $ | 203,320 | |
Paid-in capital in excess of par | 201,178,815 | ||
201,382,135 | |||
Undistributed net investment income | 77,425 | ||
Accumulated net realized gain on investment and financial futures transactions | 1,186,130 | ||
Net unrealized appreciation on investments and financial futures | 7,773,837 | ||
Net assets, February 28, 2010 | $ | 210,419,527 | |
See Notes to Financial Statements.
18 | Visit our website at www.prudentialfunds.com |
Class A | |||
Net asset value and redemption price per share | $ | 10.35 | |
Maximum sales charge (4.00% of offering price) | 0.43 | ||
Maximum offering price to public | $ | 10.78 | |
Class B | |||
Net asset value, offering price and redemption price per share | $ | 10.35 | |
Class C | |||
Net asset value, offering price and redemption price per share | $ | 10.35 | |
Class Z | |||
Net asset value, offering price and redemption price per share | $ | 10.35 | |
See Notes to Financial Statements.
Prudential California Muni Income Fund | 19 |
Statement of Operations
Six Months Ended February 28, 2010 (Unaudited)
Net Investment Income | ||||
Income | ||||
Unaffiliated interest | $ | 5,799,505 | ||
Expenses | ||||
Management fee | 522,143 | |||
Distribution fee—Class A | 215,880 | |||
Distribution fee—Class B | 20,605 | |||
Distribution fee—Class C | 57,762 | |||
Custodian’s fees and expenses | 36,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $16,700) (Note 3) | 32,000 | |||
Registration fees | 27,000 | |||
Reports to shareholders | 16,000 | |||
Audit fee | 14,000 | |||
Legal fees and expenses | 12,000 | |||
Trustees’ fees | 10,000 | |||
Insurance expense | 3,000 | |||
Miscellaneous | 4,100 | |||
Total expenses | 970,490 | |||
Less: Custodian fee credit (Note 1) | (231 | ) | ||
Net expenses | 970,259 | |||
Net investment income | 4,829,246 | |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 680,416 | |||
Financial futures transactions | (194,788 | ) | ||
485,628 | ||||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 4,783,106 | |||
Financial futures contracts | (29,378 | ) | ||
4,753,728 | ||||
Net gain on investments | 5,239,356 | |||
Net Increase In Net Assets Resulting From Operations | $ | 10,068,602 | ||
See Notes to Financial Statements.
20 | Visit our website at www.prudentialfunds.com |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended February 28, 2010 | Year Ended August 31, 2009 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 4,829,246 | $ | 9,658,396 | ||||
Net realized gain on investment and financial futures transactions | 485,628 | 1,609,151 | ||||||
Net change in unrealized appreciation (depreciation) on investments and financial futures | 4,753,728 | (6,528,811 | ) | |||||
Net increase in net assets resulting from operations | 10,068,602 | 4,738,736 | ||||||
Dividends and distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (3,984,918 | ) | (8,032,676 | ) | ||||
Class B | (179,926 | ) | (443,331 | ) | ||||
Class C | (316,876 | ) | (555,760 | ) | ||||
Class Z | (304,416 | ) | (427,986 | ) | ||||
(4,786,136 | ) | (9,459,753 | ) | |||||
Distributions from net realized gains | ||||||||
Class A | (912,308 | ) | (735,441 | ) | ||||
Class B | (45,987 | ) | (47,423 | ) | ||||
Class C | (77,403 | ) | (51,917 | ) | ||||
Class Z | (56,061 | ) | (35,930 | ) | ||||
(1,091,759 | ) | (870,711 | ) | |||||
Fund share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 18,587,848 | 19,655,481 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 4,480,192 | 5,748,249 | ||||||
Cost of shares reacquired | (21,618,008 | ) | (40,335,338 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | 1,450,032 | (14,931,608 | ) | |||||
Total increase (decrease) | 5,640,739 | (20,523,336 | ) | |||||
Net Assets | ||||||||
Beginning of period | 204,778,788 | 225,302,124 | ||||||
End of period(a) | $ | 210,419,527 | $ | 204,778,788 | ||||
(a) Includes undistributed net investment income of: | $ | 77,425 | $ | 34,315 | ||||
See Notes to Financial Statements.
Prudential California Muni Income Fund | 21 |
Notes to Financial Statements
(Unaudited)
Prudential California Muni Income Fund (formerly Dryden California Municipal Fund—California Income Series) (the “Fund”), is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund was organized as a Massachusetts business trust on May 18, 1984. The Fund commenced investment operations on December 3, 1990. The Fund is diversified and seeks to achieve its investment objective of obtaining the maximum amount of income exempt from federal and California state income taxes with the minimum of risk consistent with the preservation of capital. The Fund will invest primarily in investment grade municipal obligations but may also invest a portion of its assets in lower-quality municipal obligations or in non-rated securities which are of comparable quality. The ability of the issuers of the securities held by the Fund to meet their obligations may be affected by economic developments in a specific state, industry or region.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in preparation of its financial statements.
Securities Valuations: The Fund values municipal securities (including commitments to purchase such securities on a “when-issued” basis) as of the close of trading on the New York Stock Exchange, on the basis of prices provided by a pricing service which uses information with respect to transactions in comparable securities and various relationships between securities in determining values. Certain fixed income securities for which daily market quotations are not readily available may be valued with reference to fixed income securities whose prices are more readily available, pursuant to guidelines established by Board of Trustees. Prices may be obtained from independent pricing services which use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Securities for which reliable market quotations are not readily available, or for which the pricing service does not provide a valuation methodology, or does not present fair value, are valued at fair value in accordance with Board of Trustees’ approved fair valuation procedures. Options on securities and indices traded on an exchange are valued at their last sale price as of the close of trading on an applicable exchange, or if there was no sale, at the mean between the most recently quoted bid and asked prices on such exchanges. Futures contracts and options thereon traded on an exchange or board of trade are valued at the last sale
22 | Visit our website at www.prudentialfunds.com |
price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable exchange or board of trade on such day, at the mean between the most recently quoted prices on such exchange or board of trade or at the last bid price in the absence of an asked price.
When determining the fair valuation of securities some of the factors influencing the valuation include, the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
Investments in mutual funds are valued at their net asset value as of the close of the New York Stock Exchange on the date of valuation.
Short-term debt securities, which mature in sixty days or less are valued at amortized cost, which approximates market value. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost. Short-term debt securities which mature in more than sixty days are valued at current market quotations.
Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the “initial margin.”
Subsequent payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain or loss and is presented in the Statement of Assets and Liabilities. When the contract expires or is closed, the gain or loss is realized and is presented in the Statement of Operations as net realized gain or loss on financial futures transactions.
The Fund invests in financial futures contracts in order to hedge its existing portfolio securities or securities the Fund intends to purchase, against fluctuations in value
Prudential California Muni Income Fund | 23 |
Notes to Financial Statements
(Unaudited) continued
caused by changes in prevailing interest rates, value of equities or foreign currency exchange rates. Should interest rates move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets.
Financial future contracts, involve element of market risk in excess of the amounts reflected in the Statement of Assets and Liabilities.
Inverse Floaters: The Fund invests in variable rate securities commonly called “inverse floaters”. The interest rates on these securities have an inverse relationship to the interest rate of other securities or the value of an index. Changes in interest rates on the other security or index inversely affect the rate paid on the inverse floater, and the inverse floater’s price will be more volatile than that of a fixed-rate bond. Additionally, some of these securities contain a “leverage factor” whereby the interest rate moves inversely by a “factor” to the benchmark rate. Certain interest rate movements and other market factors can substantially affect the liquidity of inverse floating rate notes.
Floating-Rate Notes Issued in Conjunction with Securities Held: The Fund may invest in inverse floating rate securities (“inverse floaters”) that pay interest at a rate that varies inversely with short-term interest rates. Certain of these securities may be leveraged, whereby the interest rate varies inversely at a multiple of the change in short-term rates. As interest rates rise, inverse floaters produce less current income. The price of such securities is more volatile than comparable fixed rate securities.
When the Fund enters into agreements to create inverse floaters and floater note securities (also known as Tender Option Bond Transactions), the Fund transfers a fixed rate bond to a broker for cash. At the same time the Fund buys (receives) a residual interest in a trust (the “trust”) set up by the broker, often referred to as an inverse floating rate obligation (inverse floaters). Generally, the broker deposits a fixed rate bond (the “fixed rate bond”) into the trust with the same CUSIP number as the fixed rate bond sold to the broker by the Fund. The “trust” also issues floating rate notes (“floating rate notes”), which are sold to third parties. The floating rate notes have interest rates that reset weekly. The inverse floater held by the Fund gives the Fund the right (1) to cause the holders of the floating rate notes to tender their notes at par, and (2) to have the broker transfer the fixed rate bond held by the trust to the Fund thereby collapsing the trust. The Fund accounts for the transaction described
24 | Visit our website at www.prudentialfunds.com |
above as funded leverage by including the fixed rate bond in its Portfolio of Investments, and accounts for the floating rate notes as a liability under the caption “payable for floating rate notes issued” in the Fund’s “Statement of Assets and Liabilities.” Interest expense related to the Fund’s liability in connection with the floating rate notes held by third parties is recorded as incurred. The interest expense is under the caption “interest expenses related to inverse floaters” in the Fund’s “Statement of Operations” and is also included in the Fund’s expense ratio. For the six months ended February 28, 2010, the Fund did not enter into any Tender Option Bond Transactions.
The Fund’s investment policies and restrictions permit investments in inverse floating rate securities. Inverse floaters held by the Fund are securities exempt from registration under Rule 144A of the Securities Act of 1933.
The Fund may also invest in inverse floaters without transferring a fixed rate bond into a trust, which is not accounted for as funded leverage.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses on sales of securities are calculated on the identified cost basis. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. Expenses are recorded on the accrual basis, which may require the use of certain estimates by management. The Fund amortizes premiums and accretes discounts on purchases of debt securities as adjustments to interest income.
Net investment income or loss (other than distribution fees which are charged directly to the respective class) and unrealized and realized gains or losses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Dividends and Distributions: The Fund declares daily dividends from net investment income and pay monthly. Distributions of net capital gains, if any, are made at least annually.
Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulation and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst net investment income, accumulated net realized gain or loss and paid-in-capital in excess of par, as appropriate.
Prudential California Muni Income Fund | 25 |
Notes to Financial Statements
(Unaudited) continued
Custody Fee Credits: The Fund has an arrangement with its custodian bank, whereby uninvested monies earn credits which reduce the fees charged by the custodian. Such custody fee credits are presented as a reduction of gross expenses in the accompanying Statement of Operations.
Taxes: For federal income tax purposes, it is the Fund’s policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net income and capital gains, if any, to shareholders. Therefore, no federal income tax provision is required.
Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments LLC (“PI”). Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PI has entered into a subadvisory agreement with The Prudential Investment Management, Inc. (“PIM”). The subadvisory agreement provides that PIM furnishes investment advisory services in connection with the management of the Fund. In connection therewith, PIM is obligated to keep certain books and records of the Fund. PI pays for the services of PIM, the cost of compensation of officers of the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
The management fee paid to PI is accrued daily and payable monthly, at an annual rate of 0.50% of the Fund’s average daily net assets up to and including $1 billion and 0.45% of the Fund’s average daily net assets in excess of $1 billion. The effective management fee rate was 0.50% of the Fund’s average daily net assets for the six months ended February 28, 2010.
The Fund has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class B, Class C and Class Z shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A, Class B and Class C shares, pursuant to plans of distribution (the “Class A, B and C Plans”), regardless of expenses actually incurred by PIMS. The distribution fees for Class A, Class B and Class C shares are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z shares of the Fund.
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Pursuant to the Class A, Class B and Class C Plans, the Fund compensates PIMS for distribution-related activities at an annual rate of up to 0.30%, 0.50% and 1% of the average daily net assets of the Class A, B and C shares, respectively. PIMS has contractually agreed to limit such fees to 0.25% and 0.75% of the Class A and Class C shares, respectively for the six months ended February 28, 2010.
PIMS has advised the Fund that it received approximately $73,808 in front-end sales charges resulting from sales of Class A shares, during the six months ended February 28, 2010. From these fees, PIMS paid a substantial part of such sales charges to affiliated broker-dealers which in turn paid commissions to sales persons and incurred other distribution costs.
PIMS has advised the Fund that, for the six months ended February 28, 2010, it received approximately $2,975 and $1,859 in contingent deferred sales charges imposed upon redemptions by certain Class B and Class C shareholders, respectively.
PI, PIMS and PIM are indirect wholly owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
The Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with two banks. The SCA provides for a commitment of $500 million. Interest on any borrowings under the SCA is incurred at contracted market rates and a commitment fee for the unused amount is accrued daily and paid quarterly. The Funds pay a commitment fee of 0.15% of the unused portion of the renewed SCA. The expiration date of the SCA will be October 20, 2010. For the period from October 24, 2008 through October 21, 2009, the Funds paid a Commitment fee of 0.13% of the unused portion of the agreement. The purpose of the SCA is to provide as an alternative source of temporary funding for capital share redemptions.
The Fund did not borrow any amounts pursuant to the SCA during the six months ended February 28, 2010.
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect wholly owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to nonaffiliates.
Prudential California Muni Income Fund | 27 |
Notes to Financial Statements
(Unaudited) continued
The Fund pays networking fees to affiliated and unaffiliated broker/dealers, including fees relating to the services of First Clearing, LLC (“First Clearing”) and Wells Fargo Advisors, LLC (“Wells Fargo”) affiliates of PI through December 31, 2009. These networking fees are payments made to broker/dealers that clear mutual fund transactions through a national clearing system. For the six months ended February 28, 2010, the Fund incurred approximately $21,500 in total networking fees, of which approximately $700 was paid to First Clearing and $4,500 was paid to Wells Fargo, respectively, through December 31, 2009. These amounts are included in transfer agent’s fees and expenses in the Statement of Operations.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities of the Fund excluding short-term investments, for the six months ended February 28, 2010 were $19,250,248 and $28,029,151, respectively.
Note 5. Tax Information
Distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accounting principles, are recorded on the ex-dividend date.
The United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of February 28, 2010 were as follows:
Tax Basis | Appreciation | Depreciation | Net Unrealized | |||
$200,041,684 | $13,614,361 | $(4,942,280) | $8,672,081 |
The difference between book basis and tax basis was primarily attributable to the difference in the treatment of accreting market discount for book and tax purposes.
Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years and has concluded that as of February 28, 2010, no provision for income tax would be required in the Fund’s financial statements. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
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Note 6. Capital
The Fund offers Class A, Class B, Class C and Class Z shares. Class A shares are subject to a maximum front-end sales charge of 4%. All investors who purchase Class A shares in an amount of $1 million or more are not subject to an initial sales charge but are subject to a contingent deferred sales charge (CDSC) of 1%, if they sell these shares within 12 months of purchase, including investors who purchase their shares through broker-dealers affiliated with Prudential Financial, Inc. Class B shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class C shares sold within 12 months of purchase are subject to a CDSC of 1%. Class B shares automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. A special exchange privilege is also available for shareholders who qualify to purchase Class A shares at net asset value. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
The Fund has authorized an unlimited number of shares of beneficial interest for each class at $.01 par value per share.
Prudential California Muni Income Fund | 29 |
Notes to Financial Statements
(Unaudited) continued
Transactions in shares of beneficial interest for the six months ended February 28, 2010 and fiscal year ended August 31, 2009 were as follows:
Class A | Shares | Amount | |||||
Six months ended February 28, 2010: | |||||||
Shares sold | 623,531 | $ | 6,485,368 | ||||
Shares issued in reinvestment of dividends and distributions | 362,804 | 3,750,440 | |||||
Shares reacquired | (1,326,480 | ) | (13,718,845 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (340,145 | ) | (3,483,037 | ) | |||
Shares issued upon conversion from Class B | 66,797 | 691,323 | |||||
Net increase (decrease) in shares outstanding | (273,348 | ) | $ | (2,791,714 | ) | ||
Year ended August 31, 2009: | |||||||
Shares sold | 834,365 | $ | 8,135,981 | ||||
Shares issued in reinvestment of dividends and distributions | 486,700 | 4,741,688 | |||||
Shares reacquired | (3,225,392 | ) | (31,423,539 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (1,904,327 | ) | (18,545,870 | ) | |||
Shares issued upon conversion from Class B | 415,797 | 4,048,404 | |||||
Net increase (decrease) in shares outstanding | (1,488,530 | ) | $ | (14,497,466 | ) | ||
Class B | |||||||
Six months ended February 28, 2010: | |||||||
Shares sold | 62,457 | $ | 647,529 | ||||
Shares issued in reinvestment of dividends and distributions | 17,628 | 182,337 | |||||
Shares reacquired | (127,574 | ) | (1,315,062 | ) | |||
Net increase (decrease) in shares outstanding before conversion | (47,489 | ) | (485,196 | ) | |||
Shares issued upon conversion into Class A | (66,764 | ) | (691,323 | ) | |||
Net increase (decrease) in shares outstanding | (114,253 | ) | $ | (1,176,519 | ) | ||
Year ended August 31, 2009: | |||||||
Shares sold | 168,490 | $ | 1,655,747 | ||||
Shares issued in reinvestment of dividends and distributions | 30,803 | 300,049 | |||||
Shares reacquired | (191,182 | ) | (1,852,282 | ) | |||
Net increase (decrease) in shares outstanding before conversion | 8,111 | 103,514 | |||||
Shares issued upon conversion from Class B | (415,524 | ) | (4,048,404 | ) | |||
Net increase (decrease) in shares outstanding | (407,413 | ) | $ | (3,944,890 | ) | ||
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Class C | Shares | Amount | |||||
Six months ended February 28, 2010: | |||||||
Shares sold | 309,337 | $ | 3,196,867 | ||||
Shares issued in reinvestment of dividends and distributions | 28,655 | 296,362 | |||||
Shares reacquired | (225,645 | ) | (2,329,861 | ) | |||
Net increase (decrease) in shares outstanding | 112,347 | $ | 1,163,368 | ||||
Year ended August 31, 2009: | |||||||
Shares sold | 502,832 | $ | 4,891,852 | ||||
Shares issued in reinvestment of dividends and distributions | 40,102 | 390,999 | |||||
Shares reacquired | (249,642 | ) | (2,435,067 | ) | |||
Net increase (decrease) in shares outstanding | 293,292 | $ | 2,847,784 | ||||
Class Z | |||||||
Six months ended February 28, 2010: | |||||||
Shares sold | 799,355 | $ | 8,258,084 | ||||
Shares issued in reinvestment of dividends and distributions | 24,263 | 251,053 | |||||
Shares reacquired | (412,140 | ) | (4,254,240 | ) | |||
Net increase (decrease) in shares outstanding | 411,478 | $ | 4,254,897 | ||||
Year ended August 31, 2009: | |||||||
Shares sold | 505,959 | $ | 4,971,901 | ||||
Shares issued in reinvestment of dividends and distributions | 32,334 | 315,513 | |||||
Shares reacquired | (474,418 | ) | (4,624,450 | ) | |||
Net increase (decrease) in shares outstanding | 63,875 | $ | 662,964 | ||||
Note 7. New Accounting Pronouncement
In January 2010, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2010-06 “Improving Disclosures about Fair Value Measurements”. ASU 2010-06 will require reporting entities to make new disclosures about amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements, which are effective for interim and annual reporting periods beginning after December 15, 2010. At this time, management is evaluating the implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Prudential California Muni Income Fund | 31 |
Notes to Financial Statements
(Unaudited) continued
Note 8. Subsequent Events
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements are issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
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Financial Highlights
FEBRUARY 28, 2010 | SEMIANNUAL REPORT |
Prudential California Muni Income Fund
Financial Highlights
(Unaudited)
Class A | ||||
Six Months Ended February 28, 2010 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.14 | ||
Income (loss) from investment operations: | ||||
Net investment income | .24 | |||
Net realized and unrealized gain (loss) on investments and financial futures | .26 | |||
Total from investment operations | .50 | |||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.24 | ) | ||
Distributions from net realized gains | (.05 | ) | ||
Total dividends and distributions | (.29 | ) | ||
Net asset value, end of period | $ | 10.35 | ||
Total Return(a): | 4.97 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 172,066 | ||
Average net assets (000) | $ | 174,136 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(b) | .90 | %(e) | ||
Expenses, excluding distribution and service (12b-1) fees | .65 | %(e) | ||
Net investment income | 4.66 | %(e) | ||
For Class A, B, C, and Z shares: | ||||
Portfolio turnover rate | 9 | %(d)(f) |
(a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized. |
(b) | The distributor of the Fund has contractually agreed to limit its distribution and service (12b-1) fees to .25% of the average daily net assets of the Class A shares. |
(c) | The expense ratio reflects the interest and fees expenses related to the liability for the floating rate notes issued in conjunction with the inverse floater securities. The total expense ratio excluding interest expense and fees is .87% and .89% and the expense ratio excluding 12b-1 and interest expense and fees is .62% and .64% for the years ended August 31, 2008 and 2007, respectively. |
(d) | The portfolio turnover rate including variable rate demand notes was 22% and 53% for the six months ended February 28, 2010 and for the year ended August 31, 2009, respectively. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
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Class A | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||
$ | 10.37 | $ | 10.55 | $ | 10.94 | $ | 11.14 | $ | 10.95 | |||||||||
.47 | .45 | .47 | .48 | .46 | ||||||||||||||
(.20 | ) | (.10 | ) | (.30 | ) | (.14 | ) | .19 | ||||||||||
.27 | .35 | .17 | .34 | .65 | ||||||||||||||
(.46 | ) | (.47 | ) | (.46 | ) | (.47 | ) | (.46 | ) | |||||||||
(.04 | ) | (.06 | ) | (.10 | ) | (.07 | ) | — | ||||||||||
(.50 | ) | (.53 | ) | (.56 | ) | (.54 | ) | (.46 | ) | |||||||||
$ | 10.14 | $ | 10.37 | $ | 10.55 | $ | 10.94 | $ | 11.14 | |||||||||
2.94 | % | 3.31 | % | 1.55 | % | 3.18 | % | 6.02 | % | |||||||||
$ | 171,357 | $ | 190,613 | $ | 195,617 | $ | 136,509 | $ | 141,564 | |||||||||
$ | 170,257 | $ | 192,969 | $ | 183,767 | $ | 140,306 | $ | 141,287 | |||||||||
.89 | % | .87 | %(c) | .92 | %(c) | .94 | % | .93 | % | |||||||||
.64 | % | .62 | %(c) | .67 | %(c) | .69 | % | .68 | % | |||||||||
4.82 | % | 4.23 | % | 4.40 | % | 4.33 | % | 4.15 | % | |||||||||
30 | %(d) | 41 | % | 43 | % | 40 | % | 11 | % |
See Notes to Financial Statements.
Prudential California Muni Income Fund | 35 |
Financial Highlights
(Unaudited) continued
Class B | ||||
Six Months Ended February 28, 2010 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.14 | ||
Income (loss) from investment operations: | ||||
Net investment income | .23 | |||
Net realized and unrealized gain (loss) on investments and financial futures | .26 | |||
Total from investment operations | .49 | |||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.23 | ) | ||
Distributions from net realized gains | (.05 | ) | ||
Total dividends and distributions | (.28 | ) | ||
Net asset value, end of period | $ | 10.35 | ||
Total Return(a): | 4.84 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 7,863 | ||
Average net assets (000) | $ | 8,310 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | 1.15 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .65 | %(c) | ||
Net investment income | 4.40 | %(c) |
(a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized. |
(b) | The expense ratio reflects the interest and fees expenses related to the liability for the floating rate notes issued in conjunction with the inverse floater securities. The total expense ratio excluding interest expense and fees is 1.12% and 1.14% and the expense ratio excluding 12b-1 and interest expense and fees is .62% and .64% for the years ended August 31, 2008 and 2007, respectively. |
(c) | Annualized. |
See Notes to Financial Statements.
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Class B | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||
$ | 10.37 | $ | 10.55 | $ | 10.94 | $ | 11.14 | $ | 10.95 | |||||||||
.45 | .42 | .45 | .45 | .43 | ||||||||||||||
(.20 | ) | (.10 | ) | (.30 | ) | (.14 | ) | .19 | ||||||||||
.25 | .32 | .15 | .31 | .62 | ||||||||||||||
(.44 | ) | (.44 | ) | (.44 | ) | (.44 | ) | (.43 | ) | |||||||||
(.04 | ) | (.06 | ) | (.10 | ) | (.07 | ) | — | ||||||||||
(.48 | ) | (.50 | ) | (.54 | ) | (.51 | ) | (.43 | ) | |||||||||
$ | 10.14 | $ | 10.37 | $ | 10.55 | $ | 10.94 | $ | 11.14 | |||||||||
2.69 | % | 3.06 | % | 1.29 | % | 2.92 | % | 5.76 | % | |||||||||
$ | 8,861 | $ | 13,283 | $ | 19,291 | $ | 21,264 | $ | 35,061 | |||||||||
$ | 9,922 | $ | 15,408 | $ | 20,405 | $ | 25,830 | $ | 40,894 | |||||||||
1.14 | % | 1.12 | %(b) | 1.17 | %(b) | 1.19 | % | 1.18 | % | |||||||||
.64 | % | .62 | %(b) | .67 | %(b) | .69 | % | .68 | % | |||||||||
4.57 | % | 3.98 | % | 4.13 | % | 4.08 | % | 3.90 | % |
See Notes to Financial Statements.
Prudential California Muni Income Fund | 37 |
Financial Highlights
(Unaudited) continued
Class C | ||||
Six Months Ended February 28, 2010 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.14 | ||
Income (loss) from investment operations: | ||||
Net investment income | .21 | |||
Net realized and unrealized gain (loss) on investments and financial futures | .27 | |||
Total from investment operations | .48 | |||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.22 | ) | ||
Distributions from net realized gains | (.05 | ) | ||
Total dividends and distributions | (.27 | ) | ||
Net asset value, end of period | $ | 10.35 | ||
Total Return(a): | 4.72 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 16,272 | ||
Average net assets (000) | $ | 15,531 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees(b) | 1.40 | %(d) | ||
Expenses, excluding distribution and service (12b-1) fees | .65 | %(d) | ||
Net investment income | 4.16 | %(d) |
(a) | Total investment return does not consider the effects of sales loads. Total investment return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized. |
(b) | The distributor of the Fund has contractually agreed to limit its distribution and service (12b-1) fees to .75% of the average daily net assets of the Class C shares. |
(c) | The expense ratio reflects the interest and fees expenses related to the liability for the floating rate notes issued in conjunction with the inverse floater securities. The total expense ratio excluding interest expense and fees is 1.37% and 1.39% and the expense ratio excluding 12b-1 and interest expense and fees is .62% and .64% for the years ended August 31, 2008 and 2007, respectively. |
(d) | Annualized. |
See Notes to Financial Statements.
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Class C | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||
$ | 10.37 | $ | 10.55 | $ | 10.94 | $ | 11.14 | $ | 10.95 | |||||||||
.42 | .40 | .42 | .42 | .40 | ||||||||||||||
(.20 | ) | (.10 | ) | (.30 | ) | (.14 | ) | .19 | ||||||||||
.22 | .30 | .12 | .28 | .59 | ||||||||||||||
(.41 | ) | (.42 | ) | (.41 | ) | (.41 | ) | (.40 | ) | |||||||||
(.04 | ) | (.06 | ) | (.10 | ) | (.07 | ) | — | ||||||||||
(.45 | ) | (.48 | ) | (.51 | ) | (.48 | ) | (.40 | ) | |||||||||
$ | 10.14 | $ | 10.37 | $ | 10.55 | $ | 10.94 | $ | 11.14 | |||||||||
2.45 | % | 2.82 | % | 1.04 | % | 2.66 | % | 5.50 | % | |||||||||
$ | 14,804 | $ | 12,094 | $ | 8,488 | $ | 8,059 | $ | 8,251 | |||||||||
$ | 13,172 | $ | 9,567 | $ | 8,497 | $ | 8,182 | $ | 8,726 | |||||||||
1.39 | % | 1.37 | %(c) | 1.42 | %(c) | 1.44 | % | 1.43 | % | |||||||||
.64 | % | .62 | %(c) | .67 | %(c) | .69 | % | .68 | % | |||||||||
4.32 | % | 3.74 | % | 3.90 | % | 3.83 | % | 3.66 | % |
See Notes to Financial Statements.
Prudential California Muni Income Fund | 39 |
Financial Highlights
(Unaudited) continued
Class Z | ||||
Six Months Ended February 28, 2010 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $ | 10.14 | ||
Income (loss) from investment operations: | ||||
Net investment income | .25 | |||
Net realized and unrealized gain (loss) on investments and financial futures | .27 | |||
Total from investment operations | .52 | |||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.26 | ) | ||
Distributions from net realized gains | (.05 | ) | ||
Total dividends and distributions | (.31 | ) | ||
Net asset value, end of period | $ | 10.35 | ||
Total Return(a): | 5.12 | % | ||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $ | 14,219 | ||
Average net assets (000) | $ | 12,612 | ||
Ratios to average net assets: | ||||
Expenses, including distribution and service (12b-1) fees | .65 | %(c) | ||
Expenses, excluding distribution and service (12b-1) fees | .65 | %(c) | ||
Net investment income | 4.91 | %(c) |
(a) | Total investment return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized. |
(b) | The expense ratio reflects the interest and fees expenses related to the liability for the floating rate notes issued in conjunction with the inverse floater securities. The total expense ratio excluding interest expense and fees is .62% and .64% and the expense ratio excluding 12b-1 and interest expense and fees is .62% and .64% for the years ended August 31, 2008 and 2007, respectively. |
(c) | Annualized. |
See Notes to Financial Statements.
40 | Visit our website at www.prudentialfunds.com |
Class Z | ||||||||||||||||||
Year Ended August 31, | ||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||
$ | 10.37 | $ | 10.56 | $ | 10.95 | $ | 11.14 | $ | 10.95 | |||||||||
.50 | .48 | .50 | .50 | .48 | ||||||||||||||
(.20 | ) | (.11 | ) | (.30 | ) | (.12 | ) | .19 | ||||||||||
.30 | .37 | .20 | .38 | .67 | ||||||||||||||
(.49 | ) | (.50 | ) | (.49 | ) | (.50 | ) | (.48 | ) | |||||||||
(.04 | ) | (.06 | ) | (.10 | ) | (.07 | ) | — | ||||||||||
(.53 | ) | (.56 | ) | (.59 | ) | (.57 | ) | (.48 | ) | |||||||||
$ | 10.14 | $ | 10.37 | $ | 10.56 | $ | 10.95 | $ | 11.14 | |||||||||
3.21 | % | 3.49 | % | 1.80 | % | 3.53 | % | 6.29 | % | |||||||||
$ | 9,757 | $ | 9,312 | $ | 5,636 | $ | 4,985 | $ | 4,737 | |||||||||
$ | 8,616 | $ | 6,821 | $ | 5,566 | $ | 4,925 | $ | 5,101 | |||||||||
.64 | % | .62 | %(b) | .67 | %(b) | .69 | % | .68 | % | |||||||||
.64 | % | .62 | %(b) | .67 | %(b) | .69 | % | .68 | % | |||||||||
5.07 | % | 4.50 | % | 4.64 | % | 4.58 | % | 4.39 | % |
See Notes to Financial Statements.
Prudential California Muni Income Fund | 41 |
Results of Proxy Voting
(Unaudited)
At a special meeting of shareholders held on March 9, 2010, Fund shareholders approved a proposal to elect Trustees.
The individuals listed in the table below were elected as trustees of the Fund. All trustees, with the exception of Mr. Benjamin, served as trustees to the Fund prior to the shareholder meeting.
Trustee | For | Withheld | ||
Kevin J. Bannon | 17,671,781.071 | 220,766.311 | ||
Linda W. Bynoe | 17,651,742.722 | 240,804.660 | ||
Michael S. Hyland | 17,671,781.071 | 220,766.311 | ||
Douglas H. McCorkindale | 17,659,011.212 | 233,536.170 | ||
Stephen P. Munn | 17,671,781.071 | 220,766.311 | ||
Richard A. Redeker | 17,662,147.212 | 230,400.170 | ||
Robin B. Smith | 17,654,197.230 | 238,350.152 | ||
Stephen G. Stoneburn | 17,654,197.230 | 238,350.152 | ||
Judy A. Rice | 17,666,552.290 | 225,995.092 | ||
Scott E. Benjamin | 17,671,781.071 | 220,766.311 |
See Notes to Financial Statements.
42 | Visit our website at www.prudentialfunds.com |
n MAIL | n TELEPHONE | n WEBSITE | ||
Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | (800) 225-1852 | www.prudentialfunds.com |
PROXY VOTING |
The Board of Trustees of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Commission’s website. |
TRUSTEES |
Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Richard A. Redeker • Judy A. Rice • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Judy A. Rice, President • Scott E. Benjamin, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Kathryn L. Quirk, Chief Legal Officer • Deborah A. Docs, Secretary • Timothy J. Knierim, Chief Compliance Officer • Valerie M. Simpson, Deputy Chief Compliance Officer • Theresa C. Thompson, Deputy Chief Compliance Officer • Noreen M. Fierro, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • John P. Schwartz, Assistant Secretary • Andrew R. French, Assistant Secretary • M. Sadiq Peshimam, Assistant Treasurer • Peter Parrella, Assistant Treasurer |
MANAGER | Prudential Investments LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
| ||||
INVESTMENT SUBADVISER | Prudential Investment Management, Inc. | Gateway Center Two 100 Mulberry Street Newark, NJ 07102 | ||
| ||||
DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street | ||
| ||||
CUSTODIAN | The Bank of New York Mellon | One Wall Street New York, NY 10286 | ||
| ||||
TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
| ||||
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
| ||||
FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 |
An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus for the Fund contains this and other information about the Fund. An investor may obtain a prospectus by visiting our website at www.prudentialfunds.com or by calling (800) 225-1852. The prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents online, go to www.prudentialfunds.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via e-mail when new materials are available. You can cancel your enrollment or change your e-mail address at any time by visiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH TRUSTEES |
Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, Prudential California Muni Income Fund, Prudential Investments, Attn: Board of Trustees, 100 Mulberry Street, Gateway Center Three, Newark, NJ 07102. Shareholders can communicate directly with an individual Trustee by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (202) 551-8090. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each fiscal quarter. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
Prudential California Muni Income Fund | ||||||||||||
Share Class | A | B | C | Z | ||||||||
NASDAQ | PBCAX | PCAIX | PCICX | PCIZX | ||||||||
CUSIP | 74440X100 | 74440X209 | 74440X308 | 74440X407 | ||||||||
MF146E2 0176823-00001-00
Item 2 – Code of Ethics – Not required, as this is not an annual filing.
Item 3 – Audit Committee Financial Expert – Not required, as this is not an annual filing.
Item 4 – Principal Accountant Fees and Services – Not required, as this is not an annual filing.
Item 5 – Audit Committee of Listed Registrants – Not applicable.
Item 6 – Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not applicable.
Item 8 – Portfolio Managers of Closed-End Management Investment Companies – Not applicable.
Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not applicable.
Item 10 – Submission of Matters to a Vote of Security Holders – Not applicable.
Item 11 – Controls and Procedures
(a) | It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure. |
(b) | There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12 – Exhibits
(a) | (1) Code of Ethics – Not required, as this is not an annual filing. |
(2) | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.CERT. |
(3) | Any written solicitation to purchase securities under Rule 23c-1. – Not applicable. |
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Prudential Investment Portfolios 6
By: (Signature and Title) | /s/ Deborah A. Docs | |
Deborah A. Docs Secretary |
Date: April 28, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: (Signature and Title) | /s/ Judy A. Rice | |
Judy A. Rice President and Principal Executive Officer |
Date: April 28, 2010
By: (Signature and Title) | /s/ Grace C. Torres | |
Grace C. Torres Treasurer and Principal Financial Officer |
Date: April 28, 2010