(ICON)
Prudential
Tax-Free
Money Fund,
Inc.
SEMI
ANNUAL
REPORT
June 30, 1997
(LOGO)
<PAGE>
Prudential Tax-Free Money Fund, Inc.
Performance At A Glance.
As the U.S. economy first bolted ahead then slowed to grow at a more
sustainable pace, investors drove taxable interest rates higher and lower in
an effort to gauge how the Federal Reserve would respond to an expanding
economy. Fluctuations in short-term, tax-free rates partially reflected shifts
in economic momentum as well as seasonal supply and demand factors. Throughout
the period, the Prudential Tax-Free Money Fund offered attractive, tax-exempt
income, while maintaining its high credit quality and a stable $1 net asset
value. On June 30, 1997, the Prudential Tax-Free Money Fund's 7-day current
yield stood at 3.32%, which was equivalent to a 5.50% taxable yield for
persons in the 39.6% income tax bracket.
Fund Facts As of 6/30/97
<TABLE>
<CAPTION>
7-Day Net Asset Taxable Equivalent Yield* Weighted Avg. Total Net
Current Yld. Value @31% @36% @39.6% Maturity Assets (mil.)
<S> <C> <C> <C> <C> <C> <C> <C>
Tax-Free
Money Fund 3.32% $1 4.81% 5.19% 5.50% 72 Days $330.2
IBC Financial Data
Tax-Free Money
Fund Avg.** 3.43 $1 4.97 5.35 5.67 68 Days N/A
</TABLE>
Note: Yields will fluctuate from time to time and past performance is not
indicative of future results. An investment in the Fund is neither insured nor
guaranteed by the United States government and there can be no assurance that
the Fund will be able to maintain a stable net asset value.
*Some investors may be subject to the federal alternative minimum tax (AMT).
Income may be subject to state and local taxes.
**This is the average seven-day current yield, NAV and WAM of all funds in the
IBC Financial Data tax-free money fund category as of July 1, 1997.
Tax-Free Money Fund Yields Fell Then Rose.
(CHART)
How Investments Compared.
(As of 6/30/97)
(CHART)
Source: Lipper Analytical Services. Financial markets change, so a mutual
fund's past performance should never be used to predict future results. The
risks to each of the investments listed above are different -- we provide
12-month total returns for several Lipper mutual fund categories to show you
that reaching for higher returns means tolerating more risk. The greater the
risk, the larger the potential reward or loss. In addition, we've included
historical 20-year average annual returns. These returns assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors have received higher
historical total returns from stocks than from most other investments. Smaller
capitalization stocks offer greater potential for long-term growth but may be
more volatile than larger capitalization stocks.
General Bond Funds provide more income than stock funds, which can help smooth
out their total returns year by year. But their prices still fluctuate
(sometimes significantly) and their returns have been historically lower than
those of stock funds.
General Municipal Debt Funds invest in bonds issued by state governments, state
agencies and/or municipalities. This investment provides income that is usually
exempt from federal and state income taxes.
Tax-Exempt Money Funds attempt to preserve a constant share value; they don't
fluctuate much in price but, historically, their returns have been generally
among the lowest of the major investment categories.
*19 years for tax-exempt money funds.
<PAGE>
Richard S. Lynes, Fund Manager
(PHOTO)
Portfolio
Manager's Report
The Prudential Tax-Free Money Fund seeks high current income that is exempt
from federal income taxes, consistent with the stability of capital and the
maintenance of liquidity. The Fund invests in a diversified portfolio of high
quality, short-term municipal bonds issued by state and local governments,
territories and possessions of the United States and by the District of
Columbia. Maturities can range from one day to a maximum of 13 months. We
purchase only securities rated in one of the two highest ratings categories by
at least two major rating agencies or, if not rated, deemed to be of equivalent
quality by our credit research staff. There can be no assurance that the Fund
will achieve its investment objective.
A Word About Quality.
As of June 30, 1997, 100% of the portfolio's investments were rated at least
"Aa" or "Prime 2" by Moody's Investors Service or "AA" or "A-2" by Standard &
Poor's with the remainder deemed to be of equivalent quality. Although there
is never a guarantee that the share price of the Prudential Tax-Free Money
Fund will remain at $1, we emphasize a conservative, quality-oriented
investment approach.
Strategy Session.
- -------------------------------------------------------------------------------
The Waiting Game.
Investors spent much of the past year waiting for the Federal Reserve to
increase the Federal Funds rate (what banks charge each other for overnight
loans). Correctly anticipating changes in this rate is one way your Fund seeks
to enhance yield. The central bank typically raises the Federal Funds rate to
temper an economy it believes is expanding too rapidly and is causing
inflationary pressures to build. In a sense, the Federal Reserve prefers the
economy to operate at the same temperature that Goldilocks liked her
porridge -- not too hot and not too cold.
Thus investors had ample reasons to expect the central bank to act when the
economy expanded at a 6.0% annualized pace in the second quarter of 1996.
Beginning in March of that year, investors pushed up short-term interest rates
when data indicated the economy was growing too rapidly then drove them lower
when the Federal Funds rate was left unchanged. Rate increase expectations
shriveled when a government report revealed that real gross domestic product
(GDP is the total value of goods and services produced by the economy) rose at
a modest 1% yearly pace in the third quarter. Yet subsequent data showed the
economy heated up again to expand at an annualized 4.3% in the final quarter of
1996. Furthermore, signs began to emerge that the economy got off to a stronger
start in the new year. More than 500,000 non-farm jobs were created in the
first two months and sales at retailers soared as the economy raced along at a
4.9% yearly pace in the first quarter of 1997.
We were among those investors who correctly surmised in the first quarter that
the central bank would move at its meeting on March 25. In early March, we
shortened your Fund's weighted average maturity (WAM) by heavily investing in
floating-rate tax-free securities that provided quick access to cash to
purchase any higher yielding securities issued after the Federal Funds rate
increase. Federal Reserve policymakers voted to raise the overnight bank
lending rate by a quarter percentage point to 5.5%, the first increase in
two years.
As the second quarter got underway, many investors (ourselves included)
expected a second increase in rates at the central bank meeting on May 20.
However, weak retail sales in April and May slowed economic growth from its
breakneck pace in the first quarter. It was soon apparent that the Federal
Reserve did not need to act again in May.
<PAGE>
What Went Well.
- -------------------------------------------
Every Cloud Has A
Silver Lining.
Imbalances in the supply and demand of tax-free securities can challenge a
portfolio's performance, but your Fund fared well despite such aberrations. In
January, cash quickly flowed back into tax-free funds as consumers reinvested
income received from municipal securities that paid interest at the beginning
of the year. Therefore, portfolio managers rushed to purchase high-quality,
short-term tax-exempt securities that were available, pushing yields sharply
lower. Your Fund endured this seasonal occurrence well, because we had already
extended our WAM in late December by loading up on longer term attractively
priced securities that were available during the final days of 1996.
Your Fund also benefitted as we took advantage of the usual supply-and-demand
pressures that emerged in the municipal securities market during the April tax
season. Portfolio managers sold short-term tax-free securities in order to
provide investors with cash to pay their taxes. As a result, yields surged as
the market was temporarily inundated with a supply of tax-exempt securities.
We aggressively lengthened the Fund's WAM in late April to longer than that of
our competition by snapping up these cheaply priced six-month and one-year
securities, thus locking in higher yields for your Fund. When the overnight
bank lending rate was left unchanged in May, we were awfully glad we went
bargain hunting in April.
And Not So Well.
- -------------------------------------------
Not Short Enough?
Although we reduced your Fund's WAM to about 51 days in early March before the
central bank raised the Federal Funds rate, our competitors tended to cut
theirs even more. The shorter the WAM, the more cash on hand to purchase
higher yielding securities that became available after the interest rate
increase. Your Fund's performance would have been better had we cut the WAM
shorter.
Looking Ahead.
- -------------------------------------------
While we think the Federal Reserve will leave interest rates unchanged for the
time being, the U.S. economy will likely grow fast enough to prompt the central
bank to increase the overnight bank lending rate by another quarter percentage
point before the end of the year. The jobs market remains quite healthy and
sales at retailers could easily pick up again. Therefore, we will be cautious,
maintaining our investment flexibility while seeking competitive yields as they
become available in the short-term municipal securities marketplace.
Weighted Average Maturity Compared
To The Average Fund.
(CHART)
1
<PAGE>
President's Letter August 4, 1997
(PHOTO)
- -------------------------------------------------------------------------------
Dear Shareholder:
With the midpoint of 1997 behind us, I'm pleased to report that the recent news
from the financial markets has been decidedly upbeat. The Dow Jones Industrial
Average has gained more than 20% through the end of June, while lower long-term
interest rates have made bonds an attractive investment.
This stands in contrast to April when the Dow fell 10% from a record high on
fears of higher interest rates and surging inflation. Interest rates have since
fallen as the economy slowed and the Dow has reached several new highs.
The market swings we've seen this year illustrate the importance of "staying
the course" to your financial goal. We realize that maintaining investment
discipline when faced with market uncertainty isn't easy. Here are some
thoughts that may help:
- - Keep Your Expectations Realistic. The best investors know that financial
markets rise and fall -- and so too, will the value of their investments.
Over time, however, stocks have been shown to produce very attractive
returns that were well ahead of inflation. And where income is the primary
goal, bonds have also provided attractive returns.
- - Remember Your Time Horizon. If your investment goals are long term (several
years or more), so should your time horizon. During this period, it's not
unusual for stocks and bonds to experience several periods of market
uncertainty.
- - We're On Your Side. Your Prudential Securities Financial Advisor or Pruco
Securities Registered Representative can help you understand what's happening
in the financial markets. They can assist you in making informed decisions
based upon a thorough knowledge of your financial needs and long-term goals.
Call him or her today.
Thank you for your continued confidence in Prudential mutual funds. We'll do
everything we can to keep you informed and to earn your trust.
Sincerely,
Brian M. Storms
President, Prudential Mutual Funds & Annuities
2
<PAGE>
Portfolio of Investments as of
June 30, 1997 (Unaudited) PRUDENTIAL TAX-FREE MONEY FUND, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a) Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Arizona--5.1%
Maricopa Cnty. Ind. Dev. Auth., Grand Canyon Univ., F.R.W.D. SP-1+* 4.20% 7/03/97 $ 9,700 $ 9,700,000
Pima Cnty. Ind. Dev. Auth. Rev., F.R.W.D., Ser. 96A A-1+* 4.35 7/03/97 7,045 7,045,000
------------
16,745,000
- ------------------------------------------------------------------------------------------------------------------------------
Arkansas--1.6%
Arkansas Dev. Fin. Auth., Single Family Mtg. Rev., Ser. 96I A-1+* 3.80 11/05/97 5,200 5,199,175
- ------------------------------------------------------------------------------------------------------------------------------
California--1.4%
California Higher Ed. Ln. Auth., Student Ln. Rev.,
A.N.N.M.T.,
Ser. 87A VMIG1 4.00 7/01/98 4,600 4,600,000
- ------------------------------------------------------------------------------------------------------------------------------
Colorado--4.4%
Colorado Hsg. Fin. Auth., Eagle Trust, F.R.W.D.S., Ser. 94C A-1* 4.30 7/03/97 10,000 10,000,000
Denver City & Cnty, Airport Sys. Rev., F.R.W.D., Ser. 91B VMIG1 4.45 7/02/97 4,600 4,600,000
------------
14,600,000
- ------------------------------------------------------------------------------------------------------------------------------
Delaware--0.9%
Delaware St. Econ. Dev. Auth. Star Enterprise, F.R.W.D., Ser.
96A A-1+* 4.25 7/02/97 3,100 3,100,000
- ------------------------------------------------------------------------------------------------------------------------------
District Of Columbia--2.6%
District of Columbia G.O. Var. Rate,
F.R.D.D. Ser. 92A-4 VMIG1 4.30 7/01/97 5,000 5,000,000
F.R.D.D. Ser. 92A-6 VMIG1 4.30 7/01/97 3,500 3,500,000
------------
8,500,000
- ------------------------------------------------------------------------------------------------------------------------------
Florida--1.1%
Pinellas Cnty. Hsg. Fin. Auth. Single Family Mtg. Rev.,
A.N.N.M.T.,
Ser. 97B VMIG1 3.80 2/01/98 3,500 3,500,000
- ------------------------------------------------------------------------------------------------------------------------------
Georgia--11.2%
Burke Cnty. Dev. Auth. Poll., Adj. Oglethorpe Pwr. Corp.,
S.E.M.O.T., Ser. 96 NR 3.875 10/31/97 10,000 10,000,000
Cobb Cnty. Dev. Auth., Inst. of Nuclear Pwr., F.R.W.D., Ser.
92 NR 4.20 7/02/97 13,805 13,805,000
Fulton Cnty. Dev. Auth.,
Atlanta Jewish Federation, Ser. 96 VMIG1 4.20 7/03/97 5,345 5,345,000
Siemen's Energy Inc., F.R.W.D., Ser. 94 VMIG1 4.25 7/03/97 7,750 7,750,000
------------
36,900,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as of
June 30, 1997 (Unaudited) PRUDENTIAL TAX-FREE MONEY FUND, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a) Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Illinois--15.6%
Chicago G.O., A.N.N.M.T., Ser. 97 VMIG1 3.65% 2/05/98 $11,000 $ 11,000,000
Illinois Dev. Fin. Auth. Rev.,
Adventist Hlth Sys., F.R.W.D., Ser. 97A VMIG1 4.20 7/03/97 15,500 15,500,000
Multifamily Hsg. Rev., Orleans Proj. F.R.W.D., Ser.92 A-1* 4.50 7/04/97 10,120 10,120,000
Illinois Hlth. Fac. Auth.,
Evanston Hsp., A.N.N.M.T., Ser. 92 VMIG1 3.70 12/01/97 8,000 8,000,000
Evanston Hsp., A.N.N.M.T., Ser. 95 VMIG1 4.00 5/15/98 7,000 7,000,000
------------
51,620,000
- ------------------------------------------------------------------------------------------------------------------------------
Indiana--1.5%
Indiana St. Dev. Fin. Auth., Covenant Christian High Sch.,
F.R.W.D., Ser. 96 NR 4.20 7/03/97 5,000 5,000,000
- ------------------------------------------------------------------------------------------------------------------------------
Kentucky--1.5%
Clark Cnty. Poll. Ctrl. Rev., Eastn. Kentucky Pwr.,
S.E.M.O.T., Ser. J2 A-1+* 3.75 10/15/97 5,000 5,000,000
- ------------------------------------------------------------------------------------------------------------------------------
Maryland--1.4%
Maryland Econ. Dev. Corp., F.R.W.D., Ser. 95 A-1* 4.20 7/03/97 4,600 4,600,000
- ------------------------------------------------------------------------------------------------------------------------------
Massachusetts--1.5%
Massachusetts Bay Trans. Auth., Ser. 97A MIG2 4.25 2/27/98 5,000 5,007,079
- ------------------------------------------------------------------------------------------------------------------------------
Michigan--5.7%
Detroit City Sch. Dist., G.O., Ser. 97 SP-1+* 4.50 5/01/98 5,000 5,024,200
Grand Rapids Econ. Dev. Corp., Ind. Dev. Rev., F.R.W.D., Ser.
92 NR 4.20 7/03/97 7,500 7,500,000
Michigan St. Strategic Fd., Dow Chemical Co. Proj., T.E.C.P.,
Ser. 87 P-1 3.80 8/08/97 6,350 6,350,000
------------
18,874,200
- ------------------------------------------------------------------------------------------------------------------------------
New Hampshire--0.7%
New Hampshire St. Bus. Fin. Auth., New England Pwr. Co.
Proj., T.E.C.P., Ser. 90B VMIG1 3.75 10/01/97 2,500 2,500,000
- ------------------------------------------------------------------------------------------------------------------------------
North Carolina--2.2%
Rockingham Cnty. Ind. Facs., Phillip Morris Proj., F.R.W.D. P-1 4.40 7/02/97 7,200 7,200,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as of
June 30, 1997 (Unaudited) PRUDENTIAL TAX-FREE MONEY FUND, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a) Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Ohio--5.4%
EastLake Indl. Dev. Rev., Astro Model Dev. Corp., F.R.W.D.,
Ser. 96 NR 4.30% 7/03/97 $ 6,500 $ 6,500,000
Medina Cnty. Hsg. Rev., Oaks At Medina Proj., F.R.W.D. NR 4.20 7/03/97 4,100 4,100,000
Ohio Wtr. Dev. Auth., Ohio Edison Co. Proj., A.N.N.O.T., Ser.
88A VMIG1 4.10 5/01/98 7,280 7,280,000
------------
17,880,000
- ------------------------------------------------------------------------------------------------------------------------------
Oklahoma--2.5%
Tulsa Pkg. Auth. Rev., Williams Ctr. Proj., S.E.M.M.T., Ser.
87A VMIG1 3.90 11/15/97 8,210 8,210,000
- ------------------------------------------------------------------------------------------------------------------------------
Oregon--2.3%
Oregon St. Econ. Dev. Rev., KRC Western Inc. Proj., F.R.W.D.,
Ser. 178 Aa2 4.30 7/03/97 7,650 7,650,000
- ------------------------------------------------------------------------------------------------------------------------------
Pennsylvania--7.6%
Emmaus Gen. Auth. Rev., F.R.W.D., Ser. 96 A-1+* 4.45 7/02/97 5,000 5,000,000
Montgomery Cnty. Higher Ed. & Hlth. Auth. Rev., F.R.W.D.,
Ser. 96A A-1* 4.45 7/02/97 15,000 15,000,000
Northeastern PA Hosp. & Ed. Auth. Rev., Allhealth Pooled Fin.
Prog.,
F.R.W.D., Ser. 96 VMIG1 4.25 7/02/97 5,100 5,100,000
------------
25,100,000
- ------------------------------------------------------------------------------------------------------------------------------
South Carolina--2.9%
York Cnty. Natl. Rural CFC, North Carolina Elec. Proj.,
S.E.M.O.T.,
Ser. 84N-6 VMIG1 3.55 9/15/97 9,610 9,610,000
- ------------------------------------------------------------------------------------------------------------------------------
South Dakota--2.4%
South Dakota Hsg. Dev. Auth.,
Home Ownership, F.R.W.D.S., Ser. PT-85 A-1+* 4.40 7/03/97 3,000 3,000,000
Home Ownership Mtg., A.N.N.M.T., Ser. 97D VMIG1 3.85 3/26/98 4,810 4,810,000
------------
7,810,000
- ------------------------------------------------------------------------------------------------------------------------------
Tennessee--2.8%
Memphis Hlth. Edl. & Hsg., Wesley Hsg. Corp., F.R.W.D., Ser.
89 VMIG1 4.50 7/04/97 9,320 9,320,000
- ------------------------------------------------------------------------------------------------------------------------------
Texas--8.7%
Boatmen's St. Louis Grantor Trust, Port Arthur TX IDC, CTF
Part.,
F.R.W.D., Ser. 96A A-1* 4.35 7/02/97 3,570 3,570,000
Greater East Texas Higher Ed. Auth., Student Ln. Rev.,
A.N.N.O.T., Ser. 95A VMIG1 4.10 5/01/98 3,500 3,500,000
San Antonio Elec. & Gas, T.E.C.P., Ser. A P-1 3.75 8/20/97 8,000 8,000,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as of
June 30, 1997 (Unaudited) PRUDENTIAL TAX-FREE MONEY FUND, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a) Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Texas (cont'd.)
Southeast Texas Hsg. Fin. Corp., Banc One Tax Ex. Trust,
F.R.W.D.S., Ser. 91D Aaa 4.37% 7/03/97 $ 3,610 $ 3,610,000
Texas St. Water Dev. Bd., Multi Modal Rate Rev., F.R.D.D.,
Ser. 92A VMIG1 4.15 7/01/97 1,900 1,900,000
Texas St., T.R.A.N., Ser. 96 MIG1 4.75 8/29/97 8,000 8,009,699
------------
28,589,699
- ------------------------------------------------------------------------------------------------------------------------------
West Virginia--0.7%
Marshall Cnty. Poll. Ctl. Rev., Mountaineer Carbon Co. Proj.,
F.R.D.D., Ser. 85 P-1 4.15 7/01/97 2,300 2,300,000
- ------------------------------------------------------------------------------------------------------------------------------
Wisconsin--4.6%
Middleton Cross Plains Area Sch., T.R.A.N., Ser. 96 NR 4.25 8/27/97 5,500 5,502,142
Whitewater Ind. Dev. Rev., Trek Bicycle Proj., F.R.W.D., Ser.
95 NR 4.30 7/03/97 4,235 4,235,000
Wisconsin Hsg & Econ. Dev. Auth., Eagle Tax Ex. Trust,
Q.T.R.O.T., Ser. 4901 A-1+* 3.70 9/01/97 5,500 5,500,000
------------
15,237,142
------------
Total Investments--98.3%
(cost $324,652,295(c)) 324,652,295
Other assets in excess of liabilities--1.7% 5,557,318
------------
Net Assets--100% $330,209,613
------------
------------
</TABLE>
- ---------------
(a) The following abbreviations are used in portfolio descriptions:
A.N.N.M.T.--Annual Mandatory Tender(b)
A.N.N.O.T.--Annual Optional Tender(b)
F.R.D.D.--Floating Rate (Daily) Demand Note(b)
F.R.W.D.--Floating Rate (Weekly) Demand Note(b)
F.R.W.D.S.--Floating Rate (Weekly) Demand Note Synthetic(b)
G.O.--General Obligation(b)
Q.T.R.O.T.--Quarterly Tax & Reserve Optional Tender(b)
S.E.M.M.T.--Semi-Annual Mandatory Tender(b)
S.E.M.O.T.--Semi-Monthly Optional Tender Offer(b)
T.E.C.P.--Tax-Exempt Commercial Paper
T.R.A.N.--Tax & Revenue Anticipation Note
(b) 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.
(c) The cost of securities for federal income tax purposes is substantially the
same as for financial reporting purposes.
* Standard & Poor's Rating.
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.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
Statement of Assets and Liabilities
(Unaudited) PRUDENTIAL TAX-FREE MONEY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets June 30, 1997
-------------
<S> <C>
Investments, at amortized cost which approximates market value.............................................. $324,652,295
Cash........................................................................................................ 3,330,151
Receivable for Fund shares sold............................................................................. 7,488,529
Receivable for investments sold............................................................................. 5,000,000
Interest receivable......................................................................................... 2,604,040
Prepaid expenses............................................................................................ 11,293
-------------
Total assets............................................................................................. 343,086,308
-------------
Liabilities
Payable for investments purchased........................................................................... 9,624,200
Payable for Fund shares reacquired.......................................................................... 2,784,144
Dividends payable........................................................................................... 213,221
Management fee payable...................................................................................... 134,694
Accrued expenses............................................................................................ 102,594
Distribution fee payable.................................................................................... 17,842
-------------
Total liabilities........................................................................................ 12,876,695
-------------
Net Assets.................................................................................................. $330,209,613
-------------
-------------
Net assets were comprised of:
Common Stock, $.01 par value............................................................................. $ 3,302,096
Paid-in capital in excess of par......................................................................... 326,907,517
-------------
Net assets, June 30, 1997................................................................................... $330,209,613
-------------
-------------
Net asset value, offering price and redemption price
per share ($330,209,613 / 330,209,613)................................................................... $1.00
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income June 30, 1997
<S> <C>
Income
Interest................................... $ 6,369,242
-------------
Expenses
Management fee............................. 855,878
Distribution fee........................... 213,970
Transfer agent's fees and expenses......... 160,000
Custodian's fees and expenses.............. 40,000
Reports to shareholders.................... 33,000
Audit fee and expenses..................... 13,000
Registration fees.......................... 11,000
Directors' fees and expenses............... 8,000
Legal fees and expenses.................... 6,000
Insurance.................................. 4,500
Miscellaneous.............................. 3,432
-------------
Total expenses.......................... 1,348,780
Less: custodian fee credit................. (3,744)
-------------
Net expenses............................ 1,345,036
-------------
Net investment income......................... 5,024,206
-------------
Net Increase in Net Assets
Resulting from Operations..................... $ 5,024,206
-------------
-------------
</TABLE>
PRUDENTIAL TAX-FREE MONEY FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) June 30, December 31,
in Net Assets 1997 1996
<S> <C> <C>
Operations
Net investment income....... $ 5,024,206 $ 11,419,707
Net realized gain on
investment
transactions............. -- 2,446
------------- -----------------
Net increase in net assets
resulting from
operations............... 5,024,206 11,422,153
------------- -----------------
Dividends and distributions to
shareholders................ (5,024,206) (11,422,153)
------------- -----------------
Fund share transactions
(at $1 per share)
Proceeds from shares
subscribed............... 511,501,583 1,087,199,969
Net asset value of shares
issued to shareholders in
reinvestment of dividends
and distributions........ 4,828,735 10,887,534
Cost of shares reacquired... (519,929,393) (1,151,929,658)
------------- -----------------
Net decrease in net assets
from Fund share
transactions............. (3,599,075) (53,842,155)
------------- -----------------
Total decrease................. (3,599,075) (53,842,155)
Net Assets
Beginning of period............ 333,808,688 387,650,843
------------- -----------------
End of period.................. $ 330,209,613 $ 333,808,688
------------- -----------------
------------- -----------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL TAX-FREE MONEY FUND, INC.
- --------------------------------------------------------------------------------
Prudential Tax-Free Money Fund, Inc. (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 Policies
The following is a summary of significant accounting policies 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 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. Expenses are
recorded on the accrual basis which may require the use of certain estimates by
management.
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, no federal income tax provision is required.
Dividends: The Fund declares dividends daily from net investment income. Payment
of dividends is made monthly.
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.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with Prudential
Investment Corporation ('PIC'); PIC furnishes investment advisory services in
connection with the management of the Fund. PIFM 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 PIFM 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 Securities Incorporated
('PSI'). The Fund compensated PSI for distributing and servicing the Fund's
shares pursuant to the plan of distribution at an annual rate of .125% of 1% of
the Fund's average daily net assets. The distribution fee is accrued daily and
payable monthly.
PSI, PIFM and PIC are indirect, wholly-owned subsidiaries of The Prudential
Insurance Company of America.
- ------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly-owned subsidiary of PIFM,
serves as the Fund's transfer agent and during the six months ended June 30,
1997, the Fund incurred fees of $132,000 for the services of PMFS. As of June
30, 1997, approximately $22,000 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.
- --------------------------------------------------------------------------------
9
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL TAX-FREE MONEY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
June 30, ----------------------------------
1997 1996 1995 1994
<S> <C> <C> <C> <C>
---------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income and realized gains.................................... .015 .028 .031 .023
Dividends and distributions to shareholders................................. (.015) (.028) (.031) (.023)
---------- -------- -------- --------
Net asset value, end of period.............................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- -------- --------
---------- -------- -------- --------
TOTAL RETURN(a):............................................................ 1.46% 2.84% 3.15% 2.31%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)............................................... $330,210 $333,808 $387,651 $487,290
Average net assets (000).................................................... $345,189 $403,230 $470,370 $644,481
Ratios to average net assets:
Expenses, including distribution fee..................................... .79%(b) .80% .85% .75%
Expenses, excluding distribution fee..................................... .66%(b) .67% .72% .63%
Net investment income.................................................... 2.91%(b) 2.83% 3.14% 2.26%
<CAPTION>
1993 1992
<S> <C> <C>
-------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................................ $ 1.00 $ 1.00
Net investment income and realized gains.................................... .018 .026
Dividends and distributions to shareholders................................. (.018) (.026)
-------- --------
Net asset value, end of period.............................................. $ 1.00 $ 1.00
-------- --------
-------- --------
TOTAL RETURN(a):............................................................ 1.86% 2.63%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)............................................... $601,622 $614,333
Average net assets (000).................................................... $726,571 $669,588
Ratios to average net assets:
Expenses, including distribution fee..................................... .74% .74%
Expenses, excluding distribution fee..................................... .62% .62%
Net investment income.................................................... 1.84% 2.60%
</TABLE>
- ---------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes
reinvestment of dividends and distributions. Total returns for periods
less than a full year are not annualized.
(b) Annualized
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 10
<PAGE>
Getting
The Most
From Your
Prudential
Mutual Fund.
How many times have you read these letters -- or other financial materials --
and stumbled across a word that you don't understand?
Many shareholders have run into the same problem. We'd like to help. So we'll
use this space from time to time to explain some of the words you might have
read, but not understood. And if you have a favorite word that no one can
explain to your satisfaction, please write to us.
Basis Point: One 1/100th of 1%. For example, one half of one percentage point
is 50 basis points.
Call Option: A contract giving the holder a right to buy stocks or bonds at a
predetermined price (called the strike price) before a predetermined
expiration date. A buyer of a call option generally expects to benefit from
a rise in the price of the stock or bond.
Capital Gain/Capital Loss: The difference between the cost of a capital asset
(for example, a stock, bond or mutual fund share) and its selling price. Under
current law the federal income tax rate for individuals on a long-term capital
gain is up to 28%.
Collateralized Mortgage Obligations (CMOs): Pools of mortgage-backed securities
sliced in maturity ranges that bear differing interest rates. These instruments
are sensitive to changes in interest rates and homeowner refinancing activity.
They are subject to prepayment and maturity extension risk.
Derivatives: Securities that derive their value from another security. The
rate of return of these financial products rises and falls -- sometimes very
suddenly -- in response to changes in some specific interest rate, currency,
stock or other variable.
Discount Rate: The interest rate charged by the Federal Reserve on loans to
banks and other depository institutions.
Federal Funds Rate: The interest rate charged by one bank to another on
overnight loans.
Futures Contract: An agreement to deliver a specific amount of a commodity or
financial instrument at a set price at a stipulated time in the future.
Leverage: The use of borrowed assets to enhance return on equity. The
expectation is that the interest rate charged will be lower than the return on
the investment. While leverage can increase profits, it can also magnify
losses.
Liquidity: The ease with which a financial instrument (or mutual fund) can be
bought or sold (converted into cash) in the financial markets.
Price/Earnings Ratio: The price of a share of stock divided by the earnings
per share for a 12-month period.
Option: An agreement to sell something, such as shares of stock, by a certain
time for a specified price. An option need not be exercised.
Spread: The difference between two values; most often used to describe the
difference between prices bid and asked for a security.
Yankee Bond: A bond denominated in U.S. dollars but sold by a foreign company
or government in the U.S. market.
<PAGE>
Getting
The Most
From Your
Prudential
Mutual
Fund.
- -------------------------------------------------------------------------------
Change Your Mind.
You can exchange your shares in most Prudential Mutual Funds for shares in
most other Prudential Mutual Funds, without charges. This may be most helpful
if your investment needs change.
- -------------------------------------------------------------------------------
Reinvest Dividends Free Of Charge.
Reinvest your dividends and/or capital gains distributions automatically --
without charge.
- -------------------------------------------------------------------------------
Invest For Retirement.
There is no minimum investment for an IRA. Plus, you defer taxes on your
investment earnings by investing in an IRA.
If you'd like, you can contribute up to $2,000 a year in an IRA. And if you are
married and not covered by a retirement plan at work, you and your spouse may
each contribute $2,000 a year to an IRA for a total of $4,000.
- -------------------------------------------------------------------------------
Change Your Job.
You can take your pension with you. Use a rollover IRA to manage your
company-sponsored retirement plan while retaining the special tax-deferred
advantages.
- -------------------------------------------------------------------------------
Invest In Your Children.
There's no fee to open a custodial account for a child's education or other
needs.
- -------------------------------------------------------------------------------
Take Income.
Would you like to receive monthly or quarterly checks in any amount from your
fund account? Just let us know. We'll take care of it. Of course, there are
minimum amounts. And shares redeemed may be subject to tax, and Class B and C
shares may be subject to contingent deferred sales charges. We'll gladly answer
your questions.
- -------------------------------------------------------------------------------
Keep Informed.
We want to keep you up-to-date. Of course, you receive account activity
statements every quarter. But you also receive annual and semi-annual fund
reports, as well as other important updates on events that affect your
investments, including tax information.
This material is only authorized for distribution when preceded or accompanied
by a current prospectus. Read the prospectus carefully before you invest or
send money.
<PAGE>
Prudential Mutual FundsGateway Center Three100 Mulberry Street
Newark, NJ 07102-4077
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
(LOGO)
Directors
Edward D. Beach
Stephen C. Eyre
Delayne Dedrick Gold
Robert F. Gunia
Don G. Hoff
Robert E. LaBlanc
Mendel A. Melzer
Richard A. Redeker
Robin B. Smith
Stephen Stoneburn
Nancy H. Teeters
Officers
Richard A. Redeker, President
Thomas A. Early, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential 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 LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
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 June 30, 1997 were not audited and,
accordingly, no opinion is expressed on them.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
BULK RATE
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