ANNUAL REPORT December 31,1994
Prudential
Tax-Free
Money Fund
(ICON)
(LOGO)
<PAGE>
Letter to Shareholders
February 1, 1995
Dear Shareholder:
Short-term tax-free interest rates rose in 1994, following significant
increases in the taxable market. As a result, the yield on your Prudential
Tax-Free Money Fund finished 1994 more than a percentage point higher than
a year ago.
Fund Update:
Beginning in February 1995, Class B shareholders should begin to notice a
change in their fund holdings. That's when Class B shares will begin to
convert to Class A shares, on a quarterly basis, approximately seven years
after purchase. As you may know, Class A shares generally carry lower annual
distribution expenses than Class B shares. Accordingly, after conversion,
you will earn higher total returns on your investment than you would have
as a Class B shareholder. This conversion will be processed automatically
and won't require any further action on your part.
<TABLE>
FUND PERFORMANCE
As of December 31, 1994
<CAPTION>
7-Day Weighted
Net Current Tax Equivalent Yield Average
Assets (mil.) Yield @31% @36% @39.6% Maturity
<S> <C> <C> <C> <C> <C> <C>
Tax-Free
Money Fund $487 3.71% 5.38% 5.80% 6.14% 65 days
Donoghue N/A 4.01 5.81 6.27 6.64 47 days
General Purpose
Tax-Exempt Funds*
Note: Yields will fluctuate from time to time and past performance is no
guarantee of future results. An investment in the Fund is neither insured
nor guaranteed by the U.S. government and there can be no assurance that
the Fund will be able to maintain a stable net asset value.
* This is the average of 131 funds for the week ending January 3, 1995.
Fund Overview.
The Prudential Tax-Free Money Fund seeks high current income that is
exempt from federal income taxes and is consistent with the preservation
of principal and liquidity by investing in a diversified portfolio of
short-term municipal securities
The Fund's credit quality remained consistently high during the period,
with 99% of its holdings rated in the highest category, or if unrated,
deemed to be of comparable quality by our credit staff.
-1-
<PAGE>
The Federal Reserve Tightens.
In 1994, the U.S. economy grew at a robust annual rate approximating 4%,
a pace stronger than many had anticipated as the year began. As a result,
the Federal Reserve raised short-term interest rates six times during the
year by increasing the federal funds interest rate (the interbank overnight
lending rate) by 2.5 percentage points to 5.5%. Although interest rates in
the tax-free market are lower than those of taxable investments because
they are tax-exempt, they do tend to follow significant changes in taxable
interest rates.
The Federal Reserve moved because they believed that the economy was
growing so fast it could re-ignite inflation. The bond market also
feared that inflation would rise, so long-term interest rates rose as
well. Yet inflation was actually quite well behaved in 1994. The Consumer
Price Index grew by less than 3%. But inflation is a lagging barometer of
economic activity and there are telltale signs that inflation might increase
to 3.5% in 1995. For example, commodity prices have been rising.
Furthermore, employment growth has been extraordinary -- approximately
three million people found jobs in 1994 and the unemployment rate sunk
to a four-year low. Consumer confidence has also hit a four-year high.
The economy grew so rapidly in 1994 that not even six interest rate
increases by the Federal Reserve could produce consistent evidence that
it was slowing down. Gross Domestic Product, the measure of goods produced
and services delivered, was projected to hit 4% or 5% in the fourth quarter,
far more than the 2.5% to 3% that the central bank would like. So we expect
the Federal Reserve will continue to raise interest rates until economic
statistics begin to signal that the economy is slowing sufficiently to
prevent the threat of rising inflation.
Seasonal Factors Affect The Municipal Market, Too.
While this rising interest rate activity in the taxable market affects
the tax-free market, it takes time before the impact is felt. In addition,
the municipal market is more sensitive to seasonal supply and demand factors
that cause volatility in short-term, tax-exempt rates.
For example, 7-day securities in the tax-free market at the end of December
yielded almost 6% on an annualized basis, as people withdrew money around
the holidays. But by mid January, short-term, tax-free rates usually fall
quickly, as assets flow again into tax-exempt funds.
There are other similar cyclical periods in the short-term, tax-exempt
market around income tax filing time and around June 30, the end of the
fiscal year for many government entities.
-2-
<PAGE>
Still, The Fed's Moves Offered Opportunities.
Anticipating that interest rates would rise, we maintained a shorter
weighted average maturity so that we could take advantage of higher
rates as they became available. Once the Federal Reserve moved, we
selectively extended the maturity of the portfolio.
Generally, our weighted average maturity (WAM) was longer than that of
our peers. For example, at year-end, our WAM was 18 days longer than
the Donoghue average, because we wanted to lock in the higher year-end
rates, knowing that January would bring a seasonal shift to lower rates.
We have structured the portfolio so that about 50% of assets are in
floating-rate securities whose interest rates change daily or weekly
and the other 50% of assets are in six-month to one-year securities.
We believe this structure allows us to take advantage of the best of
both worlds. When interest rates are rising, this system permits the
Fund to realize higher interest rates on the floating rate securities.
Of course, if interest rates fall, the yields on floaters will fall too.
But the effect upon the Fund's yield will tend to be cushioned by the
higher yields of the longer-term securities held in the portfolio.
On the Hill:
In 1995, Congress is set to consider an initiative that would restore
full income tax deductibility for individual retirement account contributions
for middle-income wage earners. In addition, Congress will also debate
creation of a new tax-deferred savings account, called "the American Dream
Savings Account." Prudential Mutual Funds supports both of these proposals,
and we urge you to share your own opinion with your Congressional
representatives.
A Word About Quality And California.
No doubt you have read that Orange County, California filed for protection
under Chapter 9 of the federal bankruptcy code in December. We are pleased
to note that the Fund did not nor does it own any Orange County securities.
The Outlook.
The economy has not yet slowed sufficiently to prevent the threat of
rising inflation. We expect short-term interest rates will continue to
rise until the Federal Reserve is satisfied that this risk has subsided.
We anticipate that there will be further credit tightening in 1995.
As always, it is a pleasure to work for you.
Sincerely,
Lawrence C. McQuade
President
Richard S. Lynes
Portfolio Manager
-3-
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND Portfolio of Investments
December 31, 1994
</TABLE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
ALASKA--2.7%
Valdez Alaska Marine
Term. Rev. Arco
Trans. Proj.,
T.E.C.P.,
3.65%, 1/17/95, Ser.
A-1* $ 13,000 94A.................. $ 13,000,000
------------
ARIZONA--2.1%
Maricopa Cnty. Ind.
Dev. Auth., Grand
Canyon
University, F.R.W.D.,
SP1+* 10,000 5.55%, 1/5/95.......... 10,000,000
------------
CALIFORNIA--5.4%
California Higher Ed.
Ln . Auth. Inc.,
Student
Ln. Rev., A.N.N.M.T.
3.60%, 5/1/95, Ser.
VMIG1 15,750 87A.................. 15,750,000
California St. R.A.W.,
F.R.W.D.S.,
5.78%, 1/5/95, Ser.
VMIG1 2,200 94A.................. 2,200,000
5.73%, 1/5/95, Ser.
SP1* 8,126 94C-10............... 8,125,941
------------
26,075,941
------------
COLORADO--5.6%
Colorado Hlth. Facs.
Auth. Rev.
Frasier Meadows Manor,
F.R.W.D.,
5.55%, 1/5/95, Ser.
NR 10,000 94................... 10,000,000
Colorado Hsg. Fin.
Auth.,
Eagle Trust,
F.R.W.D.S.,
5.73%, 1/5/95, Ser.
A-1* 17,335 94C.................. 17,335,000
------------
27,335,000
------------
CONNECTICUT--5.8%
Connecticut St. Hsg.
Fin. Auth.,
Hsg. Mtg. Fin. Auth.
Prog., A.N.N.M.T.,
4.40%, 11/15/95, Ser.
VMIG1 $ 7,100 93E-1................ $ 7,096,907
4.40%, 11/15/95, Ser.
VMIG1 10,000 94E-1................ 10,000,000
Connecticut St. Spec.
Assmt.,
Unemployment
Compensation Rev.,
A.N.N.M.T.,
3.85%, 7/1/95, Ser.
VMIG1 11,000 93C.................. 11,000,000
------------
28,096,907
------------
DISTRICT OF COLUMBIA--1.8%
Dist. of Columbia Hsg.
Fin. Agcy.,
Carmel Plaza, F.R.W.D.,
5.50%, 1/5/95, Ser.
VMIG1 $ 8,830 91................... $ 8,830,000
------------
FLORIDA--2.6%
Putnam Cnty. Dev. Auth.
Seminole Electric
Proj., S.E.M.O.T.,
Ser. 84H-4
A-1* 12,500 3.75%, 3/15/95,........ 12,500,000
------------
GEORGIA--5.3%
Cobb Cnty. Dev. Auth.
Rev.,
Inst. of Nuclear Pwr.,
F.R.W.D.,
5.65%, 1/4/95, Ser.
NR 7,255 92................... 7,255,000
Fulton Cnty. Dev. Auth.
Ind.
Rev., Siemen's Energy
Inc.,
F.R.W.D.,
5.75%, 1/5/95, Ser.
VMIG1 7,750 94................... 7,750,000
Fulton Cnty. Dev. Auth.
Rev.,
Robert W. Woodruff Art
Ctr. Inc., F.R.W.D.,
5.70%, 1/5/95, Ser.
NR 10,700 93................... 10,700,000
------------
25,705,000
------------
</TABLE>
-4- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
IDAHO--2.1%
Idaho St., T.A.N.,
4.50%, 6/29/95, Ser.
MIG1 $ 10,000 94................... $ 10,032,110
------------
ILLINOIS--10.5%
Hazel Crest Vlg. Rev.,
Waterford Estates
Proj., F.R.W.D.,
5.65%, 1/6/95, Ser.
VMIG1 7,500 92A.................. 7,500,000
Illinois Dev. Fin.
Auth.,
Orleans Multifamily
Hsg. Rev., F.R.W.D.,
5.65%, 1/6/95, Ser.
A-1* 14,020 92................... 14,020,000
Illinois St. Gen.
Oblig. Cert.,
4.75%, 4/17/95, Ser.
MIG1 10,000 94................... 10,015,100
Wheeling Multifamily
Hsg.
Rev., Woodland Creek
II, F.R.W.D.,
5.55%, 1/6/95, Ser.
SP-1* 9,655 90................... 9,655,000
Woodridge Dupage
Cntys.,
Multifamily Hsg. Rev.
Rfdg., Hinsdale Terr.
Apts., F.R.W.D.,
5.65%, 1/6/95, Ser.
A-1+* 10,000 90................... 10,000,000
------------
51,190,100
------------
KANSAS--0.9%
Kansas City Poll. Ctrl.
Rev.,
General Motors Corp.
Proj., F.R.W.D.,
6.00%, 1/4/95, Ser.
VMIG2 4,350 85................... 4,350,000
------------
KENTUCKY--3.0%
Clark Cnty. Poll. Ctrl.
Rev.,
Eastern Kentucky Pwr.,
S.E.M.O.T.,
3.75%, 4/17/95, Ser.
A-1* 14,740 J2................... 14,737,854
------------
LOUISIANA--2.2%
East Baton Rouge Parish
Louisiana Poll. Ctrl.
Rev., Exxon Proj.,
T.E.C.P.,
3.70%, 1/30/95, Ser.
P1 10,900 89................... 10,900,000
------------
MAINE--4.3%
Biddeford Res. Rec.
Rev.,
Energy Rec. Co. Proj.,
F.R.M.D.,
3.70%, 1/3/95, Ser.
VMIG1 $ 21,000 85................... $ 21,000,000
------------
MICHIGAN--7.2%
Grand Rapids Econ. Dev.
Corp., Ind. Dev. Rev.
Rfdg., F.R.W.D.,
5.70%, 1/5/95, Ser.
NR 7,500 92................... 7,500,000
Michigan Mun. Bond
Auth.
Rev., R.A.N.,
4.25%, 5/5/95, Ser.
SP-1* 7,000 94A.................. 7,017,217
4.75%, 7/20/95, Ser.
SP-1* 20,700 94B.................. 20,781,777
------------
35,298,994
------------
MINNESOTA--5.7%
Minnesota Gen. Oblig.,
F.R.W.D.S.,
5.85%, 1/5/95, Ser.
NR 5,778 6.................... 5,778,316
Minnetonka Multifamily
Hsg.
Rev., Cliffs
Ridgedale Proj.,
F.R.W.D.,
5.55%, 1/6/95, Ser.
A-1* 6,900 85A.................. 6,900,000
St Louis Hlth. Care
Facs.
Trust Cert.,
F.R.W.D.S.,
5.65%, 1/6/95, Ser.
NR 15,000 93................... 15,000,000
------------
27,678,316
------------
MISSOURI--1.6%
St. Louis Land
Clearance Auth.
Redev. Auth. Pkg.
Facs., Rev.,
S.E.M.M.T.,
3.75%, 3/15/95, Ser.
VMIG1 8,000 89................... 8,000,000
------------
NEBRASKA--1.8%
Nebraska Invest. Fin.
Auth.,
Briarhurst Candletree
Proj.,
S.E.M.M.T.,
4.10%, 4/1/95, Ser.
A-1* 8,995 85................... 8,995,000
------------
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
NEW YORK--0.5%
New York St. Gen.
Oblig., T.E.C.P.,
3.85%, 2/16/95, Ser.
P-1 $ 2,500 P.................... $ 2,500,000
------------
NORTH CAROLINA--1.5%
Rockingham Cnty. Ind.
Facs.,
Poll. Ctrl. Rev.,
Phillip
Morris Proj.,
F.R.W.D.,
P1 7,200 5.65%, 1/4/95.......... 7,200,000
------------
OHIO--2.6%
Ohio St. Wtr. Dev.
Auth. Rev.,
Gen. Motors Corp.
Proj., F.R.W.D.,
5.95%, 1/4/95, Ser.
VMIG2 4,160 85................... 4,160,000
Toledo-Lucas Cnty.,
Convntn. & Visitors
Bureau, M.T.H.O.T.,
3.90%, 1/1/95, Ser.
VMIG1 8,300 88................... 8,300,000
------------
12,460,000
------------
OKLAHOMA--6.8%
Oklahoma Cnty. Ind.
Auth. Rev., Baptist
Gen. Conv.,
S.E.M.M.T.,
VMIG1 15,000 4.00%, 3/1/95.......... 15,000,000
Oklahoma Sch. Dist.
Cash Mgmt.,
5.30%, 6/30/95, Ser.
NR 9,000 94................... 9,042,756
Tulsa Pkg. Auth. Rev.,
Williams Ctr. Proj.,
S.E.M.M.T.,
4.35%, 5/15/95, Ser.
VMIG1 9,265 87A.................. 9,265,000
------------
33,307,756
------------
OREGON--1.8%
Klamath Falls Elec.
Rev.,
Salt Caves
Hydroelectric,
A.N.N.M.T.,
3.75%, 5/2/95, Ser.
SP-1+* 8,800 86C.................. 8,800,000
------------
PENNSYLVANIA--2.7%
Philadelphia T.R.A.N.,
4.75%, 6/15/95, Ser.
MIG1 $ 7,000 94-95B............... $ 7,025,928
Southeastern
Pennsylvania Trans.
Auth. Rev.,
4.60%, 6/1/95, Ser.
Aa3 6,000 94................... 6,000,000
------------
13,025,928
------------
TENNESSEE--1.9%
Memphis Hlth. Edl. &
Hsg. Fac. Brd.,
Multifamily Hsg. Rev.,
F.R.W.D.,
5.65%, 1/6/95, Ser.
VMIG2 9,320 89................... 9,320,000
------------
TEXAS--6.9%
Gulf Coast Wst. Disp.
Auth.
Poll. Ctrl. Rev., Exxon
Corp. Proj.,
T.E.C.P.,
3.55%, 1/23/95, Ser.
P1 14,700 89................... 14,700,000
San Antonio Elec. & Gas
Rev., T.E.C.P.,
3.55%, 1/18/95, Ser.
P-1 6,000 A.................... 6,000,000
3.65%, 3/6/95, Ser.
P-1 5,600 A.................... 5,600,000
Southeast Texas Hsg.
Fin. Corp., Banc One,
Tax Exempt
Trust, F.R.W.D.S.,
5.65%, 1/5/95, Ser.
Aaa 7,395 91D.................. 7,395,000
------------
33,695,000
------------
VIRGINIA--1.3%
Chesterfield Cnty. Ind.
Dev. Auth., Phillip
Morris Proj.,
F.R.W.D.,
P-1 6,500 5.65%, 1/4/95.......... 6,500,000
------------
WASHINGTON--2.6%
Washington Public Pwr.
Supply,
F.R.W.D.S.,
5.85%, 1/5/95, Ser.
NR 12,631 5.................... 12,631,332
------------
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
WISCONSIN--1.6%
Wisconsin Hsg. & Econ.
Dev.
Auth., Home Ownership
Rev., Q.T.R.O.T.,
3.95%, 3/1/95, Ser.
Aaa $ 7,970 87B.................. $ 7,970,000
------------
Total Investments--100.8%
(amortized cost
$491,135,238; Note
1)................... 491,135,238
Liabilities in excess
of other
assets--(0.8%)....... (3,844,788)
------------
Net Assets--100%....... $487,290,450
------------
------------
</TABLE>
(a) The following abbreviations are used in portfolio descriptions:
A.N.N.M.T.--Annual Mandatory Tender
F.R.M.D.--Floating Rate (Monthly) Demand Note**
F.R.W.D.--Floating Rate (Weekly) Demand Note**
F.R.W.D.S.--Floating Rate (Weekly) Demand Note Synthetic
M.T.H.O.T.--Monthly Optional Tender
R.A.N.--Revenue Anticipation Note
R.A.W.--Revenue Anticipation Warrant
S.E.M.M.T.--Semi-Annual Mandatory Tender
S.E.M.O.T.--Semi-Monthly Tender Offer
T.A.N.--Tax Anticipation Note
T.E.C.P.--Tax-Exempt Commercial Paper
T.R.A.N.--Tax & Revenue Anticipation Note
Q.T.R.O.T.--Quarterly Tax & Reserve Optional Tender
* Standard & Poor's Rating.
** For purposes of amortized cost valuation, the maturity date of these
instruments 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.
NR--Not Rated by Moody's or Standard & Poor's.
The Fund's current Statement of Additional Information contains a description
of Moody's and Standard and Poor's ratings.
-7- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets December 31, 1994
-----------------
<S> <C>
Investments, at value................................................................. $ 491,135,238
Receivable for investments sold....................................................... 13,695,199
Receivable for Fund shares sold....................................................... 8,308,888
Interest receivable................................................................... 4,274,530
Prepaid expenses...................................................................... 12,191
-----------------
Total assets...................................................................... 517,426,046
-----------------
Liabilities
Payable for investments purchased..................................................... 16,215,208
Payable for Fund shares reacquired.................................................... 13,117,717
Dividends payable..................................................................... 250,617
Due to Manager........................................................................ 236,591
Accrued expenses...................................................................... 181,439
Bank overdraft........................................................................ 102,923
Due to Distributor.................................................................... 31,101
-----------------
Total liabilities................................................................. 30,135,596
-----------------
Net Assets............................................................................ $ 487,290,450
-----------------
-----------------
Net assets were comprised of:
Common stock, $.01 par value........................................................ $ 4,873,717
Paid-in capital in excess of par.................................................... 482,416,733
-----------------
Net assets, December 31, 1994....................................................... $ 487,290,450
-----------------
-----------------
Net asset value, offering price and redemption price per share ($487,290,450 /
487,384,729 shares of common stock issued and outstanding;
3 billion shares authorized)....................................................... $1.00
-----------------
-----------------
</TABLE>
See Notes to Financial Statements.
-8-
<PAGE>
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
December 31,
Net Investment Income 1994
-----------
<S> <C>
Income
Interest............................. $19,409,932
-----------
Expenses
Management fee....................... 3,222,405
Distribution fee..................... 805,601
Transfer agent's fees and expenses... 405,000
Custodian's fees and expenses........ 100,000
Registration fees.................... 75,000
Franchise taxes...................... 70,000
Audit fee............................ 48,000
Reports to shareholders.............. 45,000
Directors' fees...................... 30,200
Insurance............................ 21,000
Legal fees........................... 20,000
Miscellaneous........................ 2,355
-----------
Total expenses..................... 4,844,561
-----------
Net investment income.................. 14,565,371
-----------
Net Increase in Net Assets
Resulting from Operations.............. $14,565,371
-----------
-----------
</TABLE>
PRUDENTIAL TAX-FREE MONEY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
Increase (Decrease) ----------------------------------
in Net Assets 1994 1993
--------------- ---------------
<S> <C> <C>
Operations
Net investment
income............. $ 14,565,371 $ 13,369,060
Net realized gain
on securities
transactions..... -- 237
--------------- ---------------
Net increase in net
assets resulting
from
operations....... 14,565,371 13,369,297
--------------- ---------------
Dividends to
shareholders....... (14,565,371) (13,369,297)
--------------- ---------------
Fund share
transactions (at
$1.00 per share)
Net proceeds from
shares
subscribed....... 1,984,509,938 2,398,092,847
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends........ 13,746,715 12,745,371
Cost of shares
reacquired....... (2,112,588,085) (2,423,549,007)
--------------- ---------------
Net decrease in net
assets from Fund
share
transactions....... (114,331,432) (12,710,789)
--------------- ---------------
Total decrease....... (114,331,432) (12,710,789)
Net Assets
Beginning of year.... 601,621,882 614,332,671
--------------- ---------------
End of year.......... $ 487,290,450 $ 601,621,882
--------------- ---------------
--------------- ---------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-9-
<PAGE>
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
Notes to Financial Statements
Prudential-Bache Tax-Free Money Fund, Inc., doing business as Prudential
Tax-Free Money Fund (the ``Fund''), is registered under the Investment Company
Act of 1940 as a diversified, open-end management investment company. The
investment objective of the Fund is to attain the highest level of current
income that is exempt from federal income taxes, consistent with liquidity and
preservation of capital. The Fund will invest in short-term tax-exempt debt
securities of state and local governments. The ability of the issuers of the
securities held by the Fund to meet their obligations may be affected by
economic or political developments in a specific state, industry or region.
Note 1. Accounting The following is a summary
Policies of significant accounting poli-
cies followed by the Fund in
the preparation of its financial statements.
Securities Valuation: Portfolio securities are valued at amortized cost, which
approximates market value. The amortized cost method of valuation involves
valuing a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of any discount or premium.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on an identified cost basis. Interest income is recorded on an
accrual basis. The cost of portfolio securities for federal income tax purposes
is substantially the same as for financial reporting purposes.
Federal Income Taxes: It is the Fund's policy to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its net income to its shareholders. For this
reason and because substantially all the Fund's gross income consists of
tax-exempt interest, no federal income tax provision is required.
Dividends: The Fund declares dividends daily from net investment income. Payment
of dividends is made monthly.
Note 2. Agreements The Fund has a management
agreement with Prudential Mutual Fund Management,
Inc. (``PMF''). Pursuant to this agreement PMF has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PMF has entered into a subadvisory agreement with Prudential
Investment Corporation (``PIC''); PIC furnishes investment advisory services in
connection with the management of the Fund. PMF pays for the cost of the
subadviser's services, the 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 PMF is computed daily and payable monthly, at an
annual rate of .50 of 1% of the Fund's average daily net assets up to $750
million, .425 of 1% of the next $750 million of average daily net assets and
.375 of 1% of average daily net assets in excess of $1.5 billion.
The Fund has a distribution agreement with Prudential Mutual Fund
Distributors, Inc. (``PMFD''). To reimburse PMFD for its expenses incurred
pursuant to a plan of distribution, the Fund pays PMFD a reimbursement, accrued
daily and payable monthly, at an annual rate of .125 of 1% of the Fund's average
daily net assets. PMFD pays various broker-dealers, including Prudential
Securities Incorporated (``PSI'') and Pruco Securities Corporation, affiliated
broker-dealers, for account servicing fees and other expenses incurred by such
broker-dealers. PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC are
(indirect) wholly-owned subsidiaries of The Prudential Insurance Company of
America.
Note 3. Other Prudential Mutual Fund Ser-
Transactions With vices, Inc. (``PMFS''), a
Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent and
during the year ended December 31, 1994, the Fund incurred fees of $369,953 for
the services of PMFS. As of December 31, 1994, approximately $59,600 of such
fees were due to PMFS. Transfer agent fees and expenses in the Statement of
Operations include certain out-of-pocket expenses paid to non-affiliates.
-10-
<PAGE>
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended December 31,
- ----------------------------------------------------------
1994 1993 1992 1991
1990
---------- -------- --------
- -------- --------
<S> <C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year......................... $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
Net investment income and realized gains................... .023 .018 .026
.041 .053
Dividends and distributions to shareholders................ (.023) (.018) (.026)
(.041) (.053)
---------- -------- --------
- -------- --------
Net asset value, end of year............................... $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
---------- -------- --------
- -------- --------
---------- -------- --------
- -------- --------
TOTAL RETURN:#............................................. 2.31% 1.86% 2.63%
4.22% 5.42%
Ratios/Supplemental Data:
Net assets, end of year (000).............................. $ 487,290 $601,622 $614,333
$616,867 $700,859
Average net assets (000)................................... $ 644,481 $726,571 $669,588
$725,844 $701,869
Ratios to average net assets:
Expenses, including distribution fee..................... .75% .74% .74%
.75% .74%
Expenses, excluding distribution fee..................... .63% .62% .62%
.63% .61%
Net investment income.................................... 2.26% 1.84% 2.60%
4.15% 5.30%
</TABLE>
- ---------------
# Total return is calculated assuming a purchase of shares on the first
day and a sale on the last day of each period reported and includes
reinvestment of dividends and distributions.
See Notes to Financial Statements.
-11-
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Prudential Tax-Free Money Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential Tax-Free Money Fund
(``the Fund'') at December 31, 1994, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
``financial statements'') are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1994 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 21, 1995
TAX INFORMATION
We are required by the Internal Revenue Code to advise you within 60 days of
the Fund's fiscal year end (December 31, 1994) as to the federally-exempt
interest dividends received by you during such fiscal year. Accordingly, we are
advising you that all dividends paid during the fiscal year were
federally-exempt interest dividends.
-12-
<PAGE>
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
ADDITIONAL TAX INFORMATION
(Unaudited)
IMPORTANT 1994 INFORMATION FOR POTENTIAL TAX SAVINGS
Dear Shareholder:
The following information is provided to assist you in the preparation of your
1994 federal and state income taxes. Dividends of net investment income paid by
Prudential Tax Free Money Fund are exempt from federal income tax to the extent
attributable to interest received on tax-exempt securities. In addition, you may
be exempt from state and local tax on the portion of dividends paid by the Fund
which is attributable to interest income from municipal bonds issued by your
state of residence.
Listed below is the percentage of interest received by the Fund on a
state-by-state basis for the calendar year 1994. To determine the amount of your
dividends that may be exempt from state and local tax, simply multiply your
total exempt dividends for the year by the percentage listed below.
<TABLE>
<CAPTION>
State Percentage
- ------------------- ----------------
<S> <C>
Alabama 1.45%
Alaska 3.13
Arizona 1.39
California 6.12
Colorado 4.55
Connecticut 1.85
Dist. of Columbia 1.44
Florida 2.40
Georgia 6.96
Hawaii 0.49
Idaho 0.91
Illinois* 14.54
Indiana 0.32
Iowa* 2.67
Kansas* 1.57
Kentucky 0.54
Louisiana 2.10
Maine 3.32
Maryland 2.29
Massachusetts 1.35
Michigan 4.99
Minnesota 3.57
Mississippi 0.05
<CAPTION>
State Percentage
- ------------------- ----------------
<S> <C>
Missouri 2.33%
Nebraska 1.54
Nevada 0.30
New Mexico 0.03
New York 1.67
North Carolina 2.00
Ohio 1.18
Oklahoma* 4.13
Oregon 1.09
Pennsylvania 3.79
South Carolina 1.74
South Dakota 0.24
Tennessee 0.42
Texas 3.99
Utah 0.60
Vermont 0.70
Virginia 1.57
Washington 3.41
Wisconsin* 1.23
Wyoming 0.04
--------
100.00%
</TABLE>
- ---------------
* May tax some or all of the interest on their own obligations.
Please consult your tax advisor or your state/local tax authorities to properly
report this information on your tax return.
-13-
<PAGE>
<PAGE>
Directors
Delayne Dedrick Gold
Arthur Hauspurg
Harry A. Jacobs, Jr.
Lawrence C. McQuade
Steven P. Munn
Louis A. Weil, III
Officers
Lawrence C. McQuade, President
David W. Drasnin, Vice President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Ronald Amblard, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributors
Prudential Mutual Fund Distributors, Inc.
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse LLP
1177 Avenue of Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852, Collect (908) 417-7555
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
MF 103E
74436P103 (LOGO) Cat #444003E
