PRUDENT IALMUTUAL FUNDS

2001 TAX SEASON

SURVIVALGUIDE

Prudential website www.prudential.com

Online Account Access www.online.prudential.com/myaccess

IRS website www.irs.gov

Social Security Administration websitewww.ssa.gov

Prudential Mutual Fund Service Center(800) 225-1852 from 8 a.m. to 8 p.m. ET(800) 654-7637 (TDD)

IRS (800) 829-1040

IRS 24-hour recorded information service (800) 829-4477(800) 829-4059 (TDD)

IRS order tax forms (800) TAX-FORM (829-3676)

This publication has been prepared solely for shareholders of mutual funds distributed and managed by Prudential Investment Management Services LLC (PIMS). It is provided with the understanding that it does not constitute legal, accounting, or tax advice. Since neither Prudential nor its representatives can give legal or accounting advice, you should consult your personal tax adviser in regard to your particular situation.

FOR YOUR INFORMATION…VISIT OUR TAX CENTER AT WWW.PRUDENTIAL.COM

Important Dates to Remember

Monday, December 31, 2001Last day to contribute to Education IRALast day for sale of mutual fund shares to realize gain or loss

Week of January 2, 2002Prudential begins mailing year-end statements

Week of January 21, 2002Prudential begins mailing tax forms 1099-DIV, 1099-B, 1099-R, and Form 5498 (Education, Date of Death)

Monday, April 15, 2002Last day to establish and contribute to a 2001 traditional IRA or Roth IRA

Monday, April 15, 2002Last day to file federal tax return (without extensions)

May 2002Prudential mails remaining Forms 5498 (traditional, Roth, SEP)

Last day to establish or fund a SEP for 2001Due date of employer’s tax return, including extensions, which in 2002may be as late as October 15.

USE DIRECT DEPOSIT TOINVEST YOUR REFUND FASTER

If you are expecting a tax refund, you can have the IRS automatically deposit it in your mutual fund

account. This direct deposit option can be used with all Prudential or Strategic Partners mutual

funds—as long as they are not part of a qualified retirement account, such as an IRA or 401(k) plan.

To elect direct deposit, complete lines 68b, c, and d on Form 1040 as follows:

Line 68b: Enter the routing number for State Street Bank, 011000028.

Line 68c: Mark the box labeled Checking.

Line 68d: Enter mutual fund prefix PR70, the last three digits of the fund you choose, and the last 10

digits of your account number. For example, if the fund number is 0095 and the account number is

01234567890, your entry on line 68d would be: PR700951234567890.

Double-check your work

Double-check your tax return to make sure all appropriate information is provided. Prudential

mutual funds is not responsible if the IRS does not deposit your refund in accordance with your

wishes. If the IRS cannot understand your instructions, it will mail the refund to the address

entered on the front of Form 1040. For more information, please contact your local IRS office.

Page

Surviving the tax season—we’re here to help you . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Frequently asked questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Form 1099-DIV—Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Form 1099-B—Proceeds from Broker and Barter Exchange Transactionswith Average Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Form 1099-R—Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Form 5498—IRA, SEP, or SIMPLE Retirement Plan Information . . . . . . . . . . . . . . . . . . . . . . 12

How to determine capital gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Average cost Q & A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

10 tax-wise strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Take full advantage of retirement savings vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

2001 Taxable Income Brackets; Tax Forms or Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Before you file… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Need more information? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

CONTENTS

3

SURVIVING THE TAX SEASON—WE’RE HERE TO HELP YOU

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Very few of us enjoy preparing taxes, and we welcome any support that can make the job

go easier. That’s why we developed this Tax Season Survival Guide, which shows you the

type of forms you may be receiving from us in the coming weeks and how to use them in

preparing your taxes. We also include tax term definitions, explanations, and a listing of

other resources that may prove useful to you.

There’s something new on the tax scene this year—the Tax Relief Act of 2001. Besides

lowering the tax rates for many individuals, the new law also encourages saving for retire-

ment and education, increases the child credit, reduces estate taxes, and more. For additional

information about the Tax Relief Act of 2001 and how it can affect you, please visit our

online Tax Center at www.prudential.com and read “Plan Now for a Decade of Tax Relief.”

You can also access your account information and manage your investments by using

Prudential Online Account Access. If you haven’t enrolled yet, just log on to

www.online.prudential.com/myaccess.

While the Tax Season Survival Guide is designed to facilitate your tax preparation, it is not

meant as a substitute for the services of a professional tax adviser.

4

FREQUENTLY ASKED QUESTIONS

Q. When are tax forms mailed, and do I receiveone every year?

A. We generally mail all tax forms by January31. The type of account you have and theactivity in your account will determinewhich tax forms, if any, you will receive. A tax form will be generated if you make a transaction or if you receive more than$10 in dividends and/or capital gain distributions.

Q. When will I receive a tax form to report myIRA contribution?

A. A Form 5498 will be mailed by January 31 if you make a contribution into a CoverdellEducation Savings Account, formerly calledan Education IRA, by December 31, 2001. If you made a contribution into a traditionalIRA, Roth IRA, or SEP, Form 5498 will bemailed by May 31.

Q. I received a Form 1099-DIV for my non-IRA investments, but not for my IRA. Why is that?

A. The Form 1099-DIV is used to report taxable dividends and capital gains paidon non-retirement accounts. Since capitalgains and dividends paid to IRA accountsare tax deferred, they do not generatereporting. A Form 1099-R will be mailedto you only when you take a cash distrib-ution from your IRA(s).

Q. How can I receive a duplicate of a tax formthat was mailed to me?

A. You can request a duplicate tax form bycalling the Prudential Mutual Fund ServiceCenter at (800) 225-1852. You can alsoobtain duplicate tax forms online if you are enrolled for Online Account Access.

Q. How should I report the amounts from the tax forms on my personal income tax form?

A. We have included helpful hints throughoutthis guide referring you to the lines on IRS Form 1040 where the information weprovide you should be reported. For moreassistance, we suggest that you seek theadvice of your financial professional or taxadviser. You can also contact the InternalRevenue Service at (800) 829-1040.

Q. I contributed funds to my IRA with theintention of attributing them to the prioryear. Why was this not done?

A. We assume that your contribution was forthe current year, unless you inform us thatit was intended for the prior year.

5

Q. Can I use Form 1040A if I have capital gain distributions?

A. Yes, you still use Form 1040A. Line 10 ofthe Form 1040A can be used to report capital gain distributions.

Q. Am I eligible for the new lower capital gainstax rates?

A. Effective for 2001, the maximum capitalgains tax rates for assets held more thanfive years are 8% (for taxpayers in the15% or lower tax brackets) and 18% (for all others). The 18% rate only appliesto assets for which the holding periodbegan after December 31, 2000. An election is available to treat an asset heldon January 1, 2001 as having been sold forits Fair Market Value and as having beenreacquired for the same amount. Any gainwill be recognized and any loss disallowedunder the wash sale rules. You may wishto discuss this strategy, as well as otherrelated issues, with your tax adviser.

If you elect to treat the assets as sold andrepurchased, you will not be able to utilizethe cost basis information provided infuture years on your Form 1099-B state-ment. The statement numbers will continue to reflect your original cost.

Q. What is the Qualified 5-year gains column?

A. This is new for 2001. Assets held formore than five years are eligible for alower capital gains tax rate. This columnreflects the capital gains related to assetsheld by the fund for more than five years.Include this amount with all otherQualified 5-year gains.

Q. Why do I have a capital gains distributionwhen my fund value is down?

A. Realized capital gains must be distributedto mutual fund shareholders. Unrealizedlosses on assets held by the fund cannotoffset realized gains.

You must report and pay taxes on these distributions even if they were automatically reinvested to purchase additional fund shares.The “columns” noted in the following tax form sections correspond to the column headings on the forms that Prudential sends to you.

Ordinary DividendsThis column shows the amount of a distribu-tion taxable as ordinary income. It includestaxable dividends, interest, and short-termcapital gains. Include this amount on ScheduleB (Form 1040), line 5. Ordinary income totalsfrom Schedule B will be entered on Form 1040,line 9. Schedule B must be completed whenyour gross dividends from all sources aremore than $400. If you are not required tocomplete Schedule B, enter Total DividendIncome directly on Form 1040, line 9.

Total Capital Gain DistributionsThese are taxable long-term gains from yourmutual fund account. Profits from the sale ofstocks and bonds held for more than one yearare considered “long term” and are taxed morefavorably than investments held for one year orless. A capital gain is considered short or long

term depending on how long the mutual fundhas held the investment, not the shareholder.Include this amount on Part II of Schedule D. Youwould include this on line 10 of Form 1040A.

Qualified 5-Year GainThis is the gain on the sale of assets held by the fund for more than five years. If youare in the 15% or lower federal income taxbracket and eligible for the new 8% capitalgains tax rate, enter this information on theworksheet included in the instructions toSchedule D, which will flow through toSchedule D, line 29.

Unrecaptured Section 1250 GainThis column represents gains received by a mutual fund from Real Estate InvestmentTrusts (REITs) on the sale of depreciable real property. Enter this amount in Part IV of Schedule D.

Nontaxable DistributionsThis column shows the distribution of funds representing a return of cost basis.Refer to the instructions for Form 1040, line 9, for more information.

Federal Income Tax WithheldAn amount reported here represents backupwithholding. The rate for backup withhold-ing was 31% and was reduced to 30.5% onAugust 7, 2001. Backup withholding may beimposed when rules regarding taxpayer iden-tification numbers (usually a Social Securitynumber) are not met by the individual, orwhen we receive notice from the IRS. Thisrate is scheduled to be reduced slightly overthe next few years You can include this amount onForm 1040, line 59, to reduce your income tax due.

Foreign Tax Paid/Foreign Country or U.S. PossessionAny amount reported here shows foreigntaxes paid on your behalf by the fund. Youmay be able to claim a foreign tax deductionor credit on your federal tax return. Seeinstructions for Form 1040. You will also find the foreign country or U.S. possession per-taining to the amount. This information isincluded in the “Foreign Tax Credit” percent-age chart by country in the Supplementalbrochure that was enclosed with your mutualfund tax form package from Prudential.

6

FORM 1099-DIVDividends and DistributionsWhy you may receive this form: Your fund(s) paid taxable dividend and capital gain distributions totaling more than $10. A copy of Form 1099-DIV is sent to the IRS.

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2001Form 1099-DIV Dividends and Distributions OMB NO. 1545-0110

Prudential Mutual Fund Services LLC2001

Tax StatementIMPORTANT TAX INFORMATION

This is important tax information and is being furnished to theInternal Revenue Service. If you are required to file a return, anegligence penalty or other sanction may be imposed on you if thisincome is taxable and the IRS determines that it has not beenreported.

SSN/TIN: 123-45-6789 PERSONALACCOUNT NUMBER: 0000000000-1

Shareholder: John Doe

Copy BFor Recipient

1 2a 2c 2d 3 4 6Ordinary Total Capital Gain Qualified Unrecap. Sec. Nontaxable Federal Income Foreign Tax Paid/

(Payer’s) Fund Name Dividends Distributions 5-Year Gain 1250 Gain Distributions Tax Withheld Foreign Country or U.S. PossessionPayer’s TIN

PRUDENTIAL EQUITY FUND – 110.00 50.00 0.00 0.00 0.00 0.00 0.00CLASS A/13-3104589

PRUDENTIAL GLOBAL GROWTH 25.00 20.00 0.00 0.00 0.00 0.00 5.00FUND, INC. – CLASS B/13-3204887

A B C D E F G

Access your tax forms online at Prudential Online® Account Access.

8

For tax purposes, an exchange of shares fromone fund to another is treated as a sale of sharesfrom the first fund and a purchase of shares inthe second fund. These transactions may resultin long- or short-term capital gains or losses,which are reported on your income tax return.This form is not issued for IRAs, pension plans,profit-sharing plans, money market funds, certain financial institutions, and certain tax-exempt organizations.

Fund CUSIP NumberThis is the unique number assigned to your fund by the Committee on UniformSecurity Identification Procedures, anindustry standards group.

Date of SaleThis shows the trade date of each transaction.

Description/Shares This TransactionThis describes the type of transaction beingreported and the number of shares involved.

Gross Proceeds from Stocks, Bonds, Etc. These are the gross proceeds from eachtransaction, reduced by any applicabledeferred sales charges or fees.

Federal Income Tax WithheldAn amount reported here represents backup withholding. The rate for backupwithholding was 31% and was reduced to 30.5% on August 7, 2001. It may beimposed when rules regarding taxpayeridentification numbers, (usually a SocialSecurity number) are not met by the indi-vidual, or when we receive notice from theIRS to withhold on payments to that indi-vidual. This rate is scheduled to be reducedslightly over the next few years. You caninclude this amount on Form 1040, line 59, to reduce your income tax due.

If you use the average cost method to computecapital gains or losses, and your Form 1099-Bshows average cost, items F and G apply toyou. The information in Columns F and G isnot reported to the IRS. You should bear inmind it’s for your information only.

Average Cost Basis This amount is your total average cost of the shares sold. If you use average cost to calculate your gains and losses, you can usethe amount reported in Column F to completeSchedule D (Form 1040).

Gain/(Loss)The amount reported is the reportable gainor loss resulting from the redemption pro-ceeds. This number is arrived at by takingthe difference between the gross proceedsand average cost basis. For more information,see pages 14 and 15 or IRS Publication 564.

FORM 1099-BProceeds from Broker and Barter Exchange Transactions/with Average CostsWhy you may receive this form: You redeemed or exchanged mutual fund shares. A copy of this form is sent to the IRS.

You may receive a combined Form 1099-DIV and 1099-B

Depending on the number of funds andtransactions in your account, Prudential maycombine IRS Forms 1099-DIV and 1099-B.The upper section of the combined form is Form 1099-DIV, and the lower section isForm 1099-B.

Key Point

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9

2001Form 1099-B Proceeds from Broker and Barter Exchange Transactions OMB NO. 1545-0715

Prudential Mutual Fund Services LLC2001

Tax StatementIMPORTANT TAX INFORMATION

This is important tax information and is being furnished to theInternal Revenue Service. If you are required to file a return, anegligence penalty or other sanction may be imposed on you if thisincome is taxable and the IRS determines that it has not beenreported.

SSN/TIN: 123-45-6789 PERSONALACCOUNT NUMBER: 0000000000-1

Shareholder: John Doe

Copy BFor Recipient

1a 5 5 2 4 THE INFORMATION(Payer’s) Fund Name/Redeemed/Exchanged Date of Description Shares Gross Proceeds Federal Income BELOW IS NOT BEING(Payer’s) TIN and CUSIP Number Sale of Sale Redeemed/ from Stocks, Bonds, Tax Withheld REPORTED TO THE IRS

Exchanged Etc.(*)

PRUDENTIAL SMALL COMPANY 5/18/01 REDEMPTION 1000.0000 50,000.00 0.00 47,050.00 2,950.00FUND, INC. – CLASS A/743968109 13-3040042 (1b)

PRUDENTIAL UTILITY FUND, INC. – 11/2/01 EXCHANGE 100.0000 5,000.00 0.00 4,999.99 .01CLASS A/743911208 13-3071974

Average Cost Gain/Basis (Loss)

A

B C D E F G

Please note: Average cost basis cannot be reported on every Form 1099-B due to certain system limitations. If you have questions about reporting gains or losses, please consult your tax adviser.

Enroll for online account access by visiting www.prudential.com and click “Account Access.”

10

If you have more than one retirement accountwith a taxable distribution, you will receive aForm 1099-R for each account. A copy of thisform is sent to the IRS.

Gross DistributionThis box shows your total distributionsbefore taxes and other deductions, such as a direct rollover, conversion to a Roth IRA,or a lump-sum distribution. You would reportthis amount on Form 1040, line 15a for IRAs,or line 16a for pensions. See Form 1040instructions for specific reporting require-ments for your distribution.

Taxable AmountThis is generally the part of your distributionthat is taxable. If the taxable amount of yourdistribution is not calculated, please refer toForm 1040 for instructions on how to do the cal-culation. Enter the amount you calculate on Form1040, line 15b for IRAs, or 16b for pensions. Ifthe total distribution box is checked on 2b,the account has been closed. Please note: The final determination of the actual taxableportion is made by you and your tax adviser.

Federal Income Tax WithheldThis box shows any amount withheld fromyour distribution for federal income taxes.Include this amount on Form 1040, line 59.If you would like to change your withholdingelection for future distributions, completeForm W-4P (Withholding Certificate forPension or Annuity Payments) and returnthe form to Prudential Mutual FundServices LLC.

Distribution CodeThis code identifies the type of distribution you received. The code affects the tax treatment of the distribution.

State Tax WithheldThis box indicates the amount of state taxeswithheld, which you would include on yourstate income tax return. You may be able touse this amount as an itemized deduction onSchedule A of your federal income tax return.

State DistributionThis amount represents the portion of the distribution that is taxable in the stateshown in Box 11.

FORM 1099-R Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.Why you may receive this form: Because you received a distribution of $10 or more from a tax-advantaged account.

Prudential does not report exchangesbetween mutual funds that are held in thesame retirement plan or IRA account.

Key Point

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11

Prudential Mutual Fund Services LLC

Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

For recipient’s recordsThis information is being furnished to the Internal Revenue Service

2001Form

1099-R

PAYER’S Name, Street Address, City, State, and ZIP codePrudential Value Fund-Class B

CORRECTED (if checked)

RECIPIENT’S Name, Street Address (including apt. no.), City, State, and ZIP codePrudential Bank and Trust C/FJohn Doe

COPY C OMB NO. 1545-0119

FORM 1099-R

Department of the Treasury – Internal Revenue Service

(Keep for your records)

Fund Account Number Payer’s Federal Identification Number

RECIPIENT’S Identification Number 1 Gross Distribution

2a Taxable Amount 2b Taxable amount not determinedTotal distribution

4 Federal income tax withheld 7 Distribution Code

9a Your percentage of total 10 State tax withhelddistribution

11 State/Payer’s State No. 12 State distribution

IRA/SEP/SIMPLE

019/0000000000 13-336646

25,000.00

25,000.00

25,000.00

250.00

2,500.00 7 X

A

B

C

E

F

D

Access your tax forms online at Prudential Online® Account Access.

Fair Market ValueThis is the value of your account, providedit is still active, as of December 31,2001.

Type of IRAThis shows whether this form is for your traditional IRA, Roth IRA, Education IRA,or SEP.

SEP ContributionsThe amount of all contributions made into a SEP for you by your employer (or your-self, if self-employed) would appear here.

Roth IRA ContributionsThis shows the amount of the contributionsyou made into a Roth IRA between January1, 2001, and April 15, 2002, which are designated as 2001 contributions.

Education IRA ContributionsThis column shows the amount of 2001contributions made into an Education IRA between January 1, 2001, and December 31, 2001.

part, depending on your circumstances. Refer to IRS instructions for Form 1040, line 23, forIRA contributions. You are required to file Form8606 to report any nondeductible contribu-tions. You can order this form from the IRS or download it from the IRS website.

Rollover ContributionsThis column includes all contributionsrolled over from another retirement plan in 2001. It does not, however, includeamounts converted from a traditional IRA to a Roth IRA. That information appears in Column 3. For more information, see the instructions for Form1040.

Roth Conversion AmountIf you converted part or all of your traditionalIRA or SEP IRA to a Roth IRA, the amount of the conversion is shown in this column.

Recharacterized ContributionThis is the amount you recharacterized bytransferring any part of a contribution (plusearnings) from one type of IRA to another.

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This form summarizes the status of your individualretirement accounts. It is also used to report thefair market value as of December 31 for yourIndividual Retirement Account.

In many instances, a Form 5498 will not be sentuntil late May 2002, since you can make IRA con-tributions for the 2001 tax year through April 15,2002. Contributions to a SEP can be made up tothe due date of the employer’s tax return (includingextensions). The information on Form 5498 is alsoprovided to the IRS. For tax preparation purposes, you can refer to your year-end Prudential accountstatement for your IRA activity and year-endaccount balance through December 31, 2001. This information is for your records and does not have to be filed with your tax return.

IRA Contributions (other than amounts in Columns 2, 3, and 7–10)This column shows the amount of contributionsyou made into a traditional IRA betweenJanuary 1, 2001, and April 15, 2002, which aredesignated as 2001 contributions. You may beable to deduct your contributions in whole or in

FORM 5498IRA, SEP, or SIMPLE Retirement Plan InformationWhy you may receive this form: You contributed to a Prudential IRA, Roth IRA, SEP IRA, or Education IRA.1

A

B

C

D

E

F

G

H

I

1Education IRAs were officially changed to Coverdell Education Savings Account in August 2001. Because IRS forms this year continue to refer to the accounts as Education IRAs, all discussion here refers to Education IRAs.

13

2001IRA, SEP or SIMPLE

Retirement Plan Information

Shareholder: Prudential Bank and Trust C/F Shareholder PersonalJohn Doe SSN/TIN 123-45-6789 Account Number 9999999999

Copy BFor Recipient

1 2 3 4 5 7 8 10 11Traditional IRA Contributions Made Rollover Roth Conversion Recharacterized Fair Market Value Type SEP Roth IRA Ed. IRA in 2001 or Prior to 4/15/2002 for 2001 Contributions Amount Contributions of Account of IRA Contributions Contributions Contributions

2,000.00 0.00 0.00 0.00 14,986.35 IRA 0.00 0.00 0.000.00 9,000.00 0.00 0.00 23,986.35 IRA 0.00 0.00 0.00

2001 OMB NO. 1545-0747

Form IMPORTANT TAX INFORMATION5498 The information provided in 1 through 10 is being furnished to the Internal Revenue Service

IRA, SEP or SIMPLE Retirement Plan Information

TRUSTEE’s or ISSUER’s Name, Address, City, State, and ZIP Code

Trustee’s or Issuer’s Federal Identification Number XXXXXXXXXXXXX

A H I

The Form 5498 you receive in May will contain the same information, but may look different than the form reproduced here.

B C D E F G

Enroll for online account access by visiting www.prudential.com and click “Account Access.”

14

If you sold, redeemed, or exchanged shares during the past year, you will need to figure outthe gain or loss from the transaction for incometax purposes. This is done by comparing yourbasis in the shares sold (usually what you paidfor your shares) with the selling price.

Average Cost BasisWe use the Average Cost—Single Categorymethod to figure your cost basis on Form 1099-B,if you are eligible. There are other IRS-approvedapproaches that you may want to use instead (see page 15). But before making a decision, it’sbest to consult your tax adviser. Once you haveselected a method for computing your cost basis,you cannot change to another method withoutIRS approval.

We supply this information to help make preparing your tax return easier. We do not, however, report average cost information to the IRS, but we do report gross proceeds fromyour mutual fund transactions.

How Average Cost Is ComputedIf you decide to use the Average Cost method,the following information may help you andyour tax preparer report your gain or loss.

We have a complete history of the activity in your account since you opened it, including all purchases, dividend and capital gain rein-vestments, exchanges, and redemptions. At thetime of a sale, redemption, or exchange, theamount you paid for the shares (the cost of the shares) is divided by the number of sharesin your account to determine the average cost (the average price you paid). The average costper share is then multiplied by the number ofshares sold, redeemed, or exchanged to deter-mine the total cost of the shares. This is theamount shown under the “Average Cost Basis”column on your Form 1099-B. When thisamount is subtracted from the “Gross Proceeds”from the sale, the result is the “gain or loss” onthat transaction. This is the amount you reporton Form 1040 (Schedule D).

HOW TO DETERMINE CAPITAL GAINS AND LOSSES

Capital GainsHow a capital gain is computed using the Average Cost Basis methodMutual Fund Purchases3/15/95 purchase 15 shares @ $20 = $30010/2/95 purchase 10 shares @ $15 = $1502/12/96 purchase 15 shares @ $20 = $30011/9/97 purchase 10 shares @ $25 = $250Total 50 shares = $1,000

Average Cost per Share($1,000/50 shares) = $20

Mutual fund redemption 11/9/0120 shares @ $30 = $600

The gain or loss from the redemption is determined by subtracting the average cost per share of 20 sharesfrom the redemption proceeds

Redemption proceeds $600

Average cost x 20 shares($20 x 20 shares) – $400

Capital Gain = $200(reported on Form 1040, Schedule D)

15

Q. What are my other choices for identifyingshares sold besides Average Cost—SingleCategory?

A. There are three other methods: Average Cost—Double Category; First-In, First-Out;and Specific Identification.

Average Cost—Double CategoryThis is similar to Average Cost—SingleCategory, except that you divide all the shares you own at the time of a sale into two categories: long term and short term. You then calculate an average cost for eachcategory. You may specify at the time of salefrom which category you wish to sell shares. If you don’t make a specification, you must first charge shares against the long-term category, and then any remaining sharesagainst the short-term category.

First-In, First-Out (FIFO)With this method, shares are sold in theorder in which they were purchased. If youdo not specify your cost basis method, theIRS will assume that you are using FIFO.

Specific IdentificationThis method enables you to specify exactlywhich shares you are selling at the time ofthe sale. While this approach gives you themost control and choice, it also requires thatyou keep careful records of all your mutualfund share transactions.

Be sure to consult your tax adviser to determine which method makes the mostsense for you.

Q. When I redeemed my account in full, my shareswere in Class A, but my original purchase wasmade in Class B. How does a full conversionfrom Class B to Class A affect the cost basis on my full redemption in Class A?

A. Before the conversion, our records wouldshow your complete cost basis, whichwould include all purchases, dividend reinvestments, exchanges, redemptions, and any adjustments to your original cost basis. On the conversion date, thecumulative average cost basis in Class B is automatically carried to Class A. Sincethe conversion from Class B to Class A is

considered a nontaxable event, no gain orloss is realized on the conversion. If a fullredemption is done in Class A after theconversion, the redemption would be considered a taxable event. At that time theaverage cost basis in Class A is subtractedfrom the Gross Proceeds. The difference isthe gain or loss on that redemption.

Q. How does a partial conversion from Class B to Class A affect a full or partial redemption in each class of shares?

A. When there is a partial conversion, a proportionate amount of the average costbasis is allocated from Class B to Class A.The average cost basis that is carried toClass A is subtracted from the average costbasis previously in Class B, and the resultis the new adjusted average cost basis in Class B. In the future, when you redeemfrom either Class A or Class B, the adjustedaverage cost basis will be subtracted fromthe gross proceeds in each class, and theresult will be the gain or loss in each class.

AVERAGE COST Q & A

from federal income tax (see instructions onForm 1040, line 8b). Earnings from tax-exemptbond funds may impact the taxation of SocialSecurity benefits and may have alternative minimum tax consequences.

3. Save on state and local taxes by investing in U.S. obligations. Interest earned on federal obligations, such as U.S. Treasury bond funds,is subject to federal income tax, but is generallyexempt from state and local taxes. This type of investment may be right for you if you live in a high-tax state.

Here are some tips that may help you reduceyour taxes in the future.

1. Make tax-deferred investments. Take full advan-tage of tax-deferred investment opportunities, suchas an employer-sponsored retirement plan like a401(k) plan or an IRA, particularly if you expect tobe in a lower tax bracket when you retire. If it isright for you, consider converting your traditionalIRA into a Roth IRA to continue tax-deferredgrowth. (Note: You must first take your minimumrequired distribution upon reaching age 701⁄2.) Thereare no minimum required distributions imposed onRoth IRAs, which means your assets can continue togrow tax deferred and potentially tax free until theowner’s death. You can also continue making contri-butions into a Roth IRA as long as you have earnedincome and certain income limitations are met.Please note, however, that when you convert from a traditional IRA to a Roth IRA, the conversionamount is fully taxable in the year the conversion is made. The solution may be to convert only a portion of your IRA each year.

2. Consider tax-exempt municipal bond funds.For those in higher tax brackets (27% and upin 2002), investing in a municipal bond fund

Taxable Versus Tax-Exempt Yields (2002)Tax-Exempt Equivalent Taxable Yield

Yield for a Tax Rate of: 27% 30% 35% 38.6%

4.0% 5.56 5.80 6.25 6.624.5 6.25 6.52 7.03 7.455.0 6.94 7.25 7.81 8.285.5 7.64 7.97 8.59 9.116.0 8.33 8.70 9.38 9.936.5 9.03 9.42 10.16 10.767.0 9.72 10.14 10.94 11.597.5 10.42 10.87 11.72 12.42

This table shows how the yield on a tax-exempt municipal bond compares with theyield on a fully taxable investment in your taxbracket. Use the tax table on page 23 to esti-mate your tax bracket. Income tax brackets in2002 will be 0.5% lower in 2002 than 2001.(State taxes are not considered in this table.)

Tax-exempt bond funds can generate taxable gainsCapital gain distributions from tax-exemptbond funds generally are treated the same as distributions from a regular mutual fund. As a result, any capital gains generated bythe fund (which occur when the fund sellsbonds in its portfolio) are subject to tax.Only the exempt interest dividends are notsubject to federal income tax. Any gains yourealize on the sale of shares in a tax-exemptbond fund are also subject to tax.

Key Point

10 TAX-WISE STRATEGIES

may pay off at tax time. Most dividends frommunicipal funds are federally tax exempt. Inmost cases, they’re also exempt from state taxesfor investors living in the issuing state. (Manystates tax the dividends of municipal bondsissued in other states.) You are required toreport municipal bond fund dividends on yourfederal tax return, even though they are exempt

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4. Invest in a tax-managed fund. These funds generally hold on to stocks long enough to qualify for the more favorable capital gains taxrates. They tend to have lower-than-averageturnover (buying and selling of stocks) in theirportfolio, which may result in less taxable distributions to investors.

5. Manage losses strategically. Capital losses arefully deductible against capital gains. Remaininglosses can offset only a maximum of $3,000 ofordinary income (salary, dividends, and interest)a year. Capital losses above $3,000 can be car-ried forward to future years. You should gener-ally try to hold on to your investments for atleast one year to qualify for the lower capitalgains tax rates.

6. Consider opening a Uniform Gifts to Minors Act(UGMA) account. This is a custodial accountopened in a child’s name. The funds you placeinto this account are permanent gifts to a child.In certain circumstances, you gain a tax benefitbecause some or all of the income from thisaccount may be taxed at a child’s potentiallylower tax rate. In some states, this type ofaccount is called a Uniform Transfers to MinorsAct (UTMA) account.

7. Don’t shortchange your cost basis. Make sureyou count any reinvested dividends and capitalgains in your mutual fund as part of your costbasis when you redeem fund shares. They werealready taxed to you when they were reinvested.

8. Avoid dividends on new investments. Delay late-year mutual fund investments until after thefund’s ex-dividend date. Otherwise, the mostrecently declared dividend will be credited andtaxable to you. In effect, part of the money youinvested will be returned to you immediately astaxable income.

9. Avoid short-term tax rates on long-term holdings.If you plan to redeem mutual fund shares thathave gone up in value, do so before any upcom-ing dividend payment. If you’ve owned theshares long enough, you’ll pay tax on your gainsat the more favorable long-term capital gainsrate and avoid paying tax on the dividends atthe higher ordinary tax rates.

10. Look for available tax credits. Deductions loweryour taxable income, but tax credits are even better, since they offset income taxes dollar for dollar. You may be eligible for the HopeScholarship Credit and Lifetime Learning Credit,which are education-related tax breaks. You mayalso be able to claim a credit for your child’sdependent care expenses. Other credits includethe credit for excess Social Security withholding,the child tax credit, and foreign tax credits.

Deduct to the maxYou probably know you can reduce your taxableincome by taking deductions for such items asproperty taxes, state and local income taxes,mortgage interest and some financing costs (or points), medical expenses that exceed 7.5%of your adjusted gross income, and charitablecontributions. Here are some often overlookeddeductions:• Home equity loan interest

(up to certain limits)• Out-of-pocket expenses incurred when

providing volunteer services• Unreimbursed employee business expenses• Education expenses• Home office expenses• Job search expenses• Safe deposit box rent• Depreciation of home computer if used

for business purposes• Tax preparation fees• Gambling losses up to the amount

of winnings• Investment fees and expenses• Union dues and expenses

This list is by no means complete. See your taxadviser to determine your eligibility for these and other deductions.

Key Point

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Contributing to a qualified retirement plan orother tax-favored vehicle can help you build amore secure retirement and reduce your currentor future income taxes.

Employer-sponsored plans. If you participate in a retirement plan at work, try to contribute asmuch as you can, especially if your contributionis matched by your employer. In 2002, you maybe able to contribute up to $11,000 before taxesinto a 401(k) or 403(b) plan (other limits mayapply). Also beginning in 2002, individuals age50 or over can make “catch-up” contributions.The catch-up contribution limit is $1,000. If your company has a Savings Incentive MatchPlan for Employees (SIMPLE), the maximumcontribution is $7,000 in 2002, with a catch-upcontribution amount of $500 for an individualage 50 and over.

Individual Retirement Accounts (IRAs). You may be able to make deductible contributions to an Individual Retirement Account (IRA). See the chart on page 19 for qualification rules.Investment earnings in a traditional IRA com-pound on a tax-deferred basis even when the initial contribution was not deductible in whole

or in part. You pay tax on your earnings and anydeductible contributions only when you with-draw money from your account.

You may decide to take advantage of a RothIRA. Contributions into a Roth IRA are notdeductible, but account earnings accumulate taxdeferred, and will be tax free when withdrawnas long as certain requirements are met. Marriedcouples can make full contributions into a RothIRA (the lesser of $2,000 for 2001 or 100% ofearned income for each spouse) if the adjustedgross income (AGI) on their joint return is$150,000 or less; partial contributions are per-mitted up to an AGI of $160,000. Individualsreporting an AGI of $95,000 or less can make amaximum $2,000 for 2001 contribution into aRoth IRA; partial contributions are permitted upto an AGI of $110,000. IRA and Roth IRA con-tribution limits increase to $3,000 for 2002,with a catch-up contribution limit of $500 forindividuals age 50 and over. You are eligible toconvert an existing IRA into a Roth IRA if yourAGI is $100,000 or less (single or married filingjointly). You must convert prior to December31 to include the conversion in this tax year.

Taxpayers have until April 15, 2002, to makecontributions into an IRA for 2001. The $2,000individual limit ($4,000 for couples filing a jointreturn) is a combined limit for contributions toboth traditional (whether or not deductible)and Roth IRAs. Speak with your financial pro-fessional about the pros and cons of contribut-ing into a traditional IRA versus a Roth IRA,and whether to convert an existing traditionalIRA into a Roth IRA.

Individual nonqualified annuities. Take advantageof tax-deferred growth by purchasing an individual annuity contract. Tax deferral meansyou do not pay taxes on the earnings in yourannuity until they’re withdrawn. Tax-deferredassets can grow much faster than similar taxable investments.

Retirement plan distributions. You have a choiceof several options when you retire or changejobs and are eligible to receive distributionsfrom your qualified retirement plan. Choosingthe right distribution option upon retirement orchanging jobs can be very complicated, depend-ing on your income needs and tax situation. Thedecisions you make will have a major impact on

TAKE FULL ADVANTAGE OF RETIREMENT SAVINGS VEHICLES

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your retirement lifestyle, so it’s best to consultyour financial professional before you settle ona distribution strategy.

Some distribution options• Distribution from employer plan. You will

generally be able to choose between receivingyour retirement account balance in periodicpayments or as a lump-sum payout. This decision may have a significant impact on yourtaxes. If you receive a lump-sum distributionand meet certain requirements, you may be ableto use 10-year income averaging if you wereborn before January 1, 1936. Be aware that youmay lose the ability to use 10-year income aver-aging if you roll over or directly roll over qual-ified plan assets into an IRA. Your distributionwill be subject to a mandatory 20% federalincome tax withholding if it is eligible to berolled over to another plan.

• Rollover. You can take the distribution from a qualified retirement plan or a Section 403(b)plan and roll over all or part of the taxable portion into an IRA or other eligible vehicle.Beginning in 2002, you can roll over fundsbetween IRAs, 401(k), 403(b), and 457 plans. To avoid immediate taxation, the rollover mustbe done within 60 days of receipt of the assets.This type of rollover is subject to a mandatory20% federal income tax withholding and the10% federal income tax penalty if you areunder age 591/2 (and no exception applies).

• Direct rollover. To avoid the 20% federalincome tax withholding and the 10% federalincome tax penalty if you are under age 591⁄2,you can instruct your employer to roll overyour distribution directly into an IRA or other qualified plan. Consult your financialprofessional to determine what types of qualified plans are permitted to acceptrollovers from your retirement plan.

• Remaining in the same employer plan. You maybe able to leave your distribution in your former employer’s plan even after you leavethe company. Please check with your plansponsor to determine if this alternative isavailable to you.

2001 IRA RulesThe extent to which you can make tax-deductible contributions into an IRA depends on youradjusted gross income (AGI) and whether you, your spouse, or both have a qualified retirementplan at work.

Neither spouse covered by an employer retirement plan Each can make fully deductible contributions

One spouse covered, Covered spouse: Fully deductible up to joint AGI of $53,000.the other not covered Partial deduction between $53,000 and $63,000by employer plan Noncovered spouse: Fully deductible up to joint AGI of

$150,000. Partial deduction between $150,000 and $160,000

Both spouses covered Fully deductible up to joint AGI of $53,000.by employer plan Partial deduction between $53,000 and $63,000

Single individual not coveredby employer plan Contributions fully deductible

Single individual covered Fully deductible up to AGI of $33,000. Partialby employer plan deduction between $33,000 and $43,000

Visit us at www.prudential.com/retirement

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GLOSSARY

Alternative Minimum Tax (AMT): Alternative minimum tax (AMT) rules ensure that at least aminimum amount of tax is paid by all individuals.For 2001, there is a two-tiered minimum tax: a 26% rate on the first $175,000 of a taxpayer’sAMT income and a 28% AMT rate in excess of $175,000.

Backup Withholding: Backup withholding ismandatory withholding that may be imposedwhen rules regarding taxpayer identification numbers (usually a Social Security number) arenot met by the individual, or when a notice isissued by the IRS to withhold on payments tothat individual. Backup withholding may beclaimed as a credit by taxpayers on their federalincome tax return. See pages 6 and 8.

Capital Gains: Capital gains are realized by a mutual fund portfolio through the sale of securities, such as stocks and bonds, which have gone up in value. Shareholders can alsohave capital gains when they sell mutual fundshares at a higher price than what they paid. See pages 6, 8, and 14.

Capital Gain Distribution: The result from sales bya mutual fund of stocks and securities within the fund that have generated long-term capitalgain. Shareholders report the gain in the year inwhich it is received, regardless of how long the shareholder has owned the shares in the mutualfund. See pages 6, 7, and 14.

Coverdell Education Savings Account (formerlycalled the Education IRA): A tax-favored savingsvehicle designed for those saving for a child’spost-secondary school education.2

Direct Rollover: This is when an eligible qualifiedretirement plan distribution, Section 403(b) distribution, or IRA distribution is transferreddirectly from the retirement plan into an individual’s IRA or another qualified retirementplan. The individual’s employer will not have towithhold 20% for federal income taxes from adirect rollover.

Distributions: These can be capital gains, dividends and return of capital that are made bya mutual fund to shareholders and reported onIRS Form 1099-DIV. Distributions also includefund withdrawals from annuities and retirementplans, which would be reported on Form 1099-R.See pages 6, 10, and 11.

Dividends: Dividends are paid by corporations on stocks held by a mutual fund portfolio. The mutual fund company distributes these dividends to their shareholders, who mustreport the distributions on their income taxreturn even if the dividends are automaticallyreinvested in the fund to buy additional shares.

Employer Plan or Qualified Plan: As used in thisguide, it is a tax-qualified retirement plan anemployer establishes to benefit his employees.Permissible contributions will depend on thetype of plan (such as a defined benefit plan or a profit-sharing plan, including a Section 401(k)plan) and on what the particular employerelects. These plans are highly regulated and subject to significant restrictions under theInternal Revenue Code.

2 Beginning in 2002, the Education IRA name will be changed to the Coverdell Education Savings Account.

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Excess Contributions to an IRA: An excess IRAcontribution is one that exceeds the combineddeductible and nondeductible limits establishedby the IRS. If an excess contribution is notremoved prior to the tax return due date (includ-ing extensions) by the contributing individual,the excess contribution is subject to the 6%excise tax in the year of contribution. The excesswill be carried over and subject to excise taxeach year thereafter until it is removed. It is theresponsibility of the client to file Form 5329 tocalculate his or her penalty.

Exchange: This is the sale of shares in one mutualfund to purchase shares in another mutual fundin the same family at market value on that busi-ness day. An exchange is considered a sale fortax purposes. See page 8.

Foreign Tax Credit: If a mutual fund has more than50% of the value of its assets invested in securi-ties of foreign corporations, the fund may passthe benefit of the foreign tax credit to its share-holders. A mutual fund that distributes a foreigntax credit must notify its shareholders of theirshare of foreign taxes paid by the fund and theportion of the dividends that represents foreignincome. See page 6.

Individual Retirement Account (IRA): An IRA is a tax-advantaged personal savings plan that lets an individual set aside money for retirement. All or part of the participant’s contributions maybe tax deductible, depending on the type of IRA chosen and the investor’s personal financialcircumstances. Distributions from manyemployer-sponsored retirement plans may beeligible to be rolled into an IRA to continuetax-deferred growth until the funds are needed.See page 18.

Municipal Bond Funds: These are mutual funds that invest in bonds issued by states, cities, andother local government agencies. They raisecapital for needs such as hospitals, schools, androads. Income is generally exempt from federalincome tax, and may also be exempt from stateor local taxes, or both, if the investor lives in thestate that issued the bonds. See page 16.

Mutual Fund: A mutual fund is a professionallymanaged investment company that pools moneyfrom shareholders and invests in a variety of securities, such as stocks, bonds, and moneymarket instruments.

Nonresident Alien (NRA): A person who is not a citizen of the United States or does not main-tain a tax residence within the country. NRAs aresubject to special tax consideration. NRAs alsoinclude foreign fiduciaries, foreign partnerships,and foreign corporations. Form W-8 (BEN, ECI,EXP, IMY) has to be obtained from all personsclaiming NRA status.

Payments to properly documented NRAs are generally exempt from IRS Form 1099 report-ing and backup withholding rules. However,the tax law requires a 30% NRA withholdingrate. Special Internal Revenue Code provisionsor income tax treaties may reduce or eliminatethis withholding.

Note: The old IRS Form W-8 expires onDecember 31, 2001. You must file a new formW-8 (BEN, ECI, EXP, IMY) before January 1,2002 to be treated as an NRA.

Realized vs. Unrealized Capital Gain (Loss): A capitalgain (or loss) is realized once the shareholderredeems or exchanges his or her mutual fundshares. Gains (or losses) are not realized whilethey are still being held in an account.

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Recharacterization: After making your contributionfor the year to one type of IRA, you choose totransfer this contribution (plus earnings) toanother type of IRA (i.e., traditional to Roth or Roth to traditional).

Redemption: A redemption is the sale of mutualfund shares. The shareholder sells the sharesback to the fund at the net asset value of theshares redeemed (less any contingent deferredsales charge, when applicable). See page 8.

Retirement Plan Withholding: A distribution to an employee from an employer-sponsoredretirement plan is generally subject to a mandatory 20% withholding for federal incometaxes (unless the distribution is $200 or less).No withholding is necessary if the funds are directly rolled over into an IRA or other qualified retirement plan. Distributions not eligible for rollover are not subject to 20% withholdings. Other rules apply to periodic distributions. See pages 10, 18, and 19.

Return of Capital: A distribution that is not out ofearnings and profits is a return of the amount, or capital, that was invested in the mutual fund.Returns of capital are not taxed as ordinary dividends and are sometimes called tax-free dividends or nontaxable distributions.Distributions that are a return of capital reduceyour cost basis.

Real Estate Investment Trust (REIT): A REIT is a company that owns and manages many types of income-producing real estate, includingoffice and apartment buildings, shopping malls,and hospitals.

Reinvested Dividends: These are dividends thatare reinvested by a mutual fund to buy additionalshares. Reinvested dividends are fully taxable (listed on IRS Form 1099-DIV), even though they are not taken as a cash distribution. Theybecome part of your cost basis. See page 6.

Roth IRA: A special type of IRA under which distributions may be tax exempt. Individualsmay make nondeductible contributions into a Roth IRA if certain income requirements aremet. Qualified distributions from a Roth IRA are tax free. See pages 18 and 19.

Short-Term vs. Long-Term Capital Gain (Loss): A capital gain or loss is long term if the invest-ment was owned for more than one year. It isshort term if the investment was owned for oneyear or less.

Simplified Employee Pension (SEP): A simplifiedemployee pension is a written arrangement or program that allows an employer to contributetax-deductible dollars toward an employee’s retirement. A SEP may be established by a corporate or noncorporate employer. From an individual’s perspective, a SEP has the administrative simplicity of an IRA, but also allows the employer to make contributions on the employee’s behalf in addition to the employer’s annual contribution limit.

Uniform Gifts to Minors Act/Uniform Transfers to Minors Act (UGMA/UTMA): This allows giftingto the name and taxpayer identification numberof a minor. It may provide a tax benefit becausesome or all of the income produced by theinvestment may be taxed at the rate for theminor’s presumably lower income. See page 17.

2001 Taxable Income BracketsRates Married Filing Jointly Married(%) (Including Surviving Spouses) Head of Household Single Filing Separately15 $0 – 45,200 $0– 36,250 $0– 27,050 $0– 22,60027.5 45,201 – 109,250 36,251– 93,650 27,051– 65,550 22,601– 54,62530.5 109,251 – 166,500 93,651–151,650 65,551–135,750 54,626– 83,25035.5 166,501 – 297,350 151,651–297,350 135,751–297,350 83,251–148,67539.1 Over 297,350 Over 297,350 Over 297,350 Over 148,675

Tax Forms or PublicationsYou may order tax forms or publications from the IRS by calling (800) TAX-FORM (829-3676), or by downloading them from the IRS website, www.irs.gov. Some of the more popular publications are:

#1 Your Rights as a Taxpayer#17 Your Federal Income Tax for Individuals#505 Tax Withholding on Estimated Tax#514 Foreign Tax Credit for Individuals#515 Withholding of Tax on Non-Resident Aliens and Foreign Corporations#529 Miscellaneous Deductions#550 Investment Income and Expenses#560 Retirement Plans for Small Business#564 Mutual Fund Distributions#575 Pension and Annuity Income#590 Individual Retirement Arrangements (IRAs, including SEP IRAs and SIMPLE IRAs)#910 Guide to Free Tax Service#970 Tax Benefits for Higher Education

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Please note: The Economic Growth and Tax Relief Reconciliation Act of 2001 created a new 10% federal income taxbracket. For the year 2001, this reduced bracket is being handled as either a tax refund in 2001 or a tax credit on the 2001federal income tax return.

Thousands of tax returns are rejected by the IRS each year due to simple mistakes. The following suggestions may help you escape the aggravation of having to refile your return:

✔ Double-check all calculations.

✔ Make sure you have the correct Social Security or Tax Identification numbers.

✔ Verify the spelling of all names.

✔ Enclose all forms, schedules, and statements.

✔ Sign and date your return.

✔ Enclose a check or money order if you owe additional taxes.

✔ Affix sufficient postage.

✔ Retain a copy for your records, as well as all supporting documentation.

Are you satisfied with your tax bill?If preparing your annual tax return were easy, there would be no need for a guide like this. But now that you’re going through the process, you can see the impact your investment strategy has on your tax bill. If you think taxes are taking too large a bite out of your nest egg, your financialprofessional can work with you and your tax adviser on potential tax-saving investment strategiesthat may be right for you. After all, why shouldn’t you keep more of what you earn?

BEFORE YOU FILE…

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We’ve attempted in this guide to make filling out your tax forms easier. If you still have questions, there are many places to look for answers.

Call the Internal Revenue ServiceMany of your tax questions can be cleared up by calling the IRS at (800) 829-1040. You can also receive recorded information on 140 common tax topics. This free service is available 24 hours a day, 7 days a week at (800) 829-4477. (See Form 1040 or Publication 17 for a complete list of topics.)

Visit our Tax Center at www.prudential.comWe’ve expanded our Tax Center, and you’ll find a wealth of tax-related information, including:

• An overview of the Tax Relief Act of 2001• Direct links to IRS forms and publications• Quick access to state-specific tax information• Library of useful resources available from Prudential• Much, much more…

If you have questions about the tax information that we send you, call your financial professional or call the Prudential Mutual Fund Service Center at (800) 225-1852, Monday through Friday from 8 a.m. to 8 p.m. ET to speak with a customer service representative, or call us anytime (24 hours a day, 7 days a week) for automated phone service TDD (800) 654-7637.

NEED MORE INFORMATION?

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Securities products and services are distributed through Prudential Investment Management Services LLC (PIMS), 3 Gateway Center, 14th Floor, Newark, NJ 07102-4077. Mutual fundsare offered through Pruco Securities Corporation located at 751 Broad Street, Newark, NJ 07102. Both are Prudential companies. Prudential Financial is a service mark of The PrudentialInsurance Company of America, Newark, NJ, and its affiliates.

IFS-A067297PRU1157Ed. 12/01/2001

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