<PAGE>
ANNUAL REPORT June 30, 1996
Prudential Securities
Command Account
---------------------
Commany Money Fund
Command Government Fund
Command Tax-Free Fund
(LOGO)
<PAGE>
Letter to Shareholders
August 5, 1996
Dear Shareholder:
The past 12 months were a time of change for the country's money markets.
In 1995, investors watched and coped as short-term interest rates gradually
fell. During the past six months, opinions swung wildly on where interest
rates were headed. As 1996 began, conventional wisdom was that dramatically
lower short-term interest rates were on the way. By summer, it was equally
as certain that higher rates were coming. Throughout the 12-month
reporting period the Command Money and Command Government funds offered
competitive yields and the Command Tax-Free Fund produced attractive
tax-free income, which for the 7-day period ended June 30, 1996, was
equivalent to 4.93% taxable yield for those in the 39.6% income tax bracket.
<TABLE>
FUND FACTS
As of 6/30/96
<CAPTION>
7 Day Net Asset Weighted Total
Net
Current Yld. Value Avg. Mat. Assets
(mil.)
<S> <C> <C> <C> <C>
Command Money 4.91% $1.00 55 days $ 5,310
IBC Financial Data 4.78% $1.00 52 days N/A
Money Fund Avg.
(All Taxable)1
Command 4.80% $1.00 51 days $ 488
Government
IBC Financial Data 4.60% $1.00 50 days N/A
Total Government
Universe2
Command 2.98% $1.00 77 days $
1,157
Tax-Free3
IBC Financial Data 2.88% $1.00 46 days N/A
General Purpose Tax-Free
Money Funds4
</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 U.S. government and there can
be no assurance that the Fund will be able to maintain a stable net
asset value.
1 This the average 7-day current yield, NAV and WAM of 814 funds in
the International Business Communications Financial Data all taxable
money market fund category for June 28, 1996.
2 This is the average 7-day current yield, NAV and WAM of 231 funds
in IBC Financial Data's total government universe fund category for
June 28, 1996.
3 Some investors may be subject to the federal alternative minimum tax.
4 This is the average 7-day current yield, NAV and WAM of 137 funds in
IBC Financial Data's stockbroker & general purpose tax-free money
fund category for June 28, 1996.
1
<PAGE>
Fund Objectives.
The Command Money Fund seeks high current income, preservation of capital
and maintenance of liquidity by investing in a diversified portfolio of
money market instruments maturing in 13 months or less.
The Command Government Fund seeks high current income, preservation
of capital and maintenance of liquidity by investing in a portfolio
of U.S. government securities maturing in 13 months or less.
The Command Tax-Free Fund seeks high current income that is exempt
from federal income taxes, consistent with the preservation of capital
and maintenance of liquidity. The Fund invests in a diversified
portfolio of short-term, tax-exempt securities with maturities of
13 months or less that are issued by states, municipalities and
their agencies (or authorities). Some securities may be subject
to the federal alternative minimum tax (AMT).
There can be no assurance that any of the Funds will achieve their
respective investment objectives.
Strategy Session.
When we last wrote to you six months ago, short-term interest rates
(the Federal Funds rate) stood at 5.25%. Many investors believed
that the Federal Reserve would continue to lower rates in an aggressive
fashion. However, we felt that yields had fallen too far, too fast.
We believed the Federal Reserve would most likely follow a "go-slow"
policy of gently lowering rates to help stimulate a sluggish U.S. economy.
Our instincts were right.
In March, financial opinion swung dramatically in the opposite direction
after the federal government released its February jobs report, which
revealed that businesses were creating far more new jobs than anyone
anticipated. This implied the economy was growing faster than forecast
and suggested that higher levels of inflation might be around the corner.
Inflation fears intensified later that spring with reports of increased
home and auto sales as well as by steadily rising energy and commodity
prices. Instead of lower interest rates, money fund managers now faced
the prospect that the Federal Reserve would raise interest rates. As
a result, short-term yields were bid up in anticipation of the central
bank aggressively raising short-term interest rates to slow economic
growth and to keep inflation in check.
A Voice of Moderation.
Anticipating moves by the central bank is one key to preserving
competitive yields for a money fund. We believe that there's a
possibility that the Federal Reserve may raise interest rates
sometime before the end of this year. Unlike others, however,
we believe that the central bank will gradually raise rates if
necessary, just as they did when lowering them in 1995.
2
<PAGE>
As we went to press, the Command Money Fund and Command Government
Fund were invested in shorter term securities (one month or less),
high quality variable rate securities and longer term securities (up
to one year). We liked the higher yields available in the one-year
range and believed that they adequately compensated investors should
the Federal Reserve raise rates down the road. The shorter term
securities, meanwhile, allowed us to stay flexible just in case
market conditions changed.
A Different Market.
For the Command Tax-Free Fund anticipating moves by the Federal Reserve
is one of the keys to preserving competitive yields. And we agree that
the Federal Reserve will probably raise rates later this year. But
being a tax-free money fund, our investment strategy is also driven
by many technical and economic factors including seasonal shareholder
demands for cash as well as supply and demand conditions. For example,
your Fund was invested in longer term securities to help preserve
yields while short-term, tax-free interest rates dropped in mid-June
and early July 1996. Short-term municipal markets experienced large
cash infusions during this time temporarily depressing rates. This
is a seasonal occurrence resulting from maturity and call proceeds
as well as coupon payments. Rates usually recover by late July and
early August.
What Went Well.
We Did Not Follow The Crowd.
In January and February most people thought that the Federal Reserve
would aggressively lower short-term rates. We did not follow the
crowd. We shortened our weighted average maturity and waited as
rates eventually rose. It was a good move.
Our longer term holdings included high quality Treasury and/or
agency securities. These are highly liquid securities which can
be traded easily for higher yielding securities if interest rates rise.
Command Tax-Free Fund. At the beginning of the year, your Fund
began purchasing securities whose income, for a few shareholders,
may be subject to the federal alternative minimum tax or AMT.
Purchasing AMT securities was a good move for two reasons: 1) AMT
paper carries higher coupons, sometimes yielding as much as 15
basis points, which equates to an increase of three basis points
for the Fund on an annual basis (a basis point is 1/100th of a
percentage point); and 2) it brings your Fund's investments
in-line with other tax-free money funds, most of which actively
purchase AMT securities. Your Fund is permitted to invest up to
20% of total net assets in AMT securities.
3
<PAGE>
And Not So Well.
Caught Off-Guard.
We were caught off-guard in March when the U.S. government released
its February jobs report which showed that businesses nationwide had
created far more new positions than anticipated. While this was good
news to many (especially those who found work), signs of economic
strength can raise fears of inflation which always makes bond
investors skittish. Looking back, we could have been more prepared
for this occurrence by maintaining our defensive posture for a
couple of more weeks until the report's release. We then would
have been in a better position to take advantage of the rising
yields that accompanied this strong economic news.
Looking Ahead.
The Federal Reserve wants to promote steady, non-inflationary
growth -- but there are many signs pointing to an economy that may
be growing too fast. In theory when operating at full capacity,
the faster an economy grows, the more likely that inflation levels
will rise. If the current economic boomlet shows staying power,
we would not be surprised to see the Federal Reserve raise short-term
interest rates (the Federal Funds rate) by 25 basis points to 5.50%
sometime before fall (a basis point is 1/100th of a percentage point).
Given the Federal Reserve's history of taking measured steps, however,
we think any moves will be modest.
Sincerely,
Robert N. Felice Michelle Errico Gonnella Richard S. Lynes
Portfolio Manager Portfolio Manager Portfolio Manager
Command Money Fund Command Government Fund Command Tax-Free Fund
Richard A. Redeker
President
4
<PAGE>
COMMAND MONEY FUND Portfolio of Investments
June 30, 1996
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Bank Notes--3.9%
American Express Centurion
Bank
$ 18,000(a) 5.45047%, 7/15/96.......... $ 17,996,738
20,000(a) 5.46609%, 7/15/96.......... 19,996,844
22,000(a) 5.43484%, 7/19/96.......... 21,996,946
Bank of America, Illinois
17,000 5.80%, 5/13/97............. 16,995,640
Bank of New York
8,000 4.95%, 8/16/96............. 7,994,986
FCC National Bank
5,000 5.03%, 7/2/96.............. 4,999,982
33,000 5.77%, 4/15/97............. 32,985,028
First National Bank of
Chicago
20,000 5.50%, 10/3/96............. 20,000,000
Huntington National Bank
7,000 4.48%, 10/14/96............ 6,973,946
Nationsbank Texas
6,000 5.50%, 7/10/96............. 6,000,038
NBD Bank, Michigan
20,000 5.32%, 7/29/96............. 19,999,143
United States National
Bank of Oregon
31,000 5.32%, 7/30/96............. 30,998,702
--------------
Total Bank Notes
(amortized cost
$206,937,993)............ 206,937,993
--------------
Certificates of Deposit--Domestic--0.2%
Barnett Bank of South
Florida
13,088 5.39%, 7/8/96
(amortized cost
$13,087,814)............. 13,087,814
--------------
Certificates of Deposit--Eurodollar--1.8%
Bayerische Hypotheken-und
Weschel-Bank
10,000 5.34%, 9/18/96............. 9,998,649
Bayerische Landesbank
Girozentrale
$ 9,000 5.10%, 7/5/96.............. $ 8,999,683
10,000 5.43%, 10/18/96............ 10,000,295
Bayerische Vereinsbank
15,000 5.34%, 9/26/96............. 14,997,655
5,000 5.41%, 10/2/96............. 5,000,115
Morgan Guaranty Trust Co.
5,000 5.18%, 9/4/96.............. 4,997,145
Rabobank Nederland
8,000 5.12%, 9/3/96.............. 7,995,608
Societe Generale
4,000 5.21%, 7/31/96............. 3,999,197
Toronto Dominion Bank
11,000 5.34%, 7/31/96............. 10,999,406
20,000 5.34%, 8/28/96............. 19,997,758
--------------
Total Certificates of
Deposit--Eurodollar
(amortized cost
$96,985,511)............. 96,985,511
--------------
Certificates of Deposit--Yankee--4.7%
Commerzbank
57,000 5.31%, 7/1/96.............. 57,000,000
Deutsche Bank
45,000 5.53%, 4/2/97.............. 44,896,381
Dresdner Bank
6,000 5.13%, 11/22/96............ 5,989,472
Landesbank Hessen-Thuringen
Girozentrale
35,000 5.70%, 4/29/97............. 34,960,143
Societe Generale
34,000 5.34%, 7/1/96.............. 34,000,000
70,500 5.34%, 7/2/96.............. 70,500,034
--------------
Total Certificates of
Deposit--Yankee
(amortized cost
$247,346,030)............ 247,346,030
--------------
</TABLE>
-5-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Commercial Paper--62.2%
A. H. Robins Co., Inc.
$ 30,000 5.32%, 7/23/96............. $ 29,902,467
ABN-Amro N.A. Finance, Inc.
11,000 5.30%, 8/26/96............. 10,909,311
American Brands, Inc.
6,960 5.35%, 7/29/96............. 6,931,039
American Express Credit
Corp.
50,000 5.28%, 7/15/96............. 49,897,333
American Honda Finance
Corp.
10,000 5.35%, 7/8/96.............. 9,989,597
7,000 5.50%, 7/9/96.............. 6,991,444
17,000 5.35%, 7/10/96............. 16,977,263
6,000 5.34%, 7/23/96............. 5,980,420
24,000 5.48%, 8/26/96............. 23,795,413
Aristar, Inc.
12,387 5.40%, 7/8/96.............. 12,373,994
4,000 5.40%, 7/9/96.............. 3,995,200
Associates Corp. of North
America
37,000 5.30%, 7/9/96.............. 36,956,422
50,000 5.30%, 7/12/96............. 49,919,028
45,000 5.40%, 7/29/96............. 44,811,000
75,000 5.38%, 8/19/96............. 74,450,792
Avco Financial Services,
Inc.
50,000 5.35%, 7/10/96............. 49,933,125
BankAmerica Corp.
150,000 5.31%, 8/19/96............. 148,915,875
Barnett Bank, Inc.
11,000 5.42%, 7/9/96.............. 10,986,751
Bell Atlantic Network
Funding Corp.
6,536 5.40%, 7/12/96............. 6,525,216
BellSouth
Telecommunications, Inc.,
16,000 5.32%, 7/8/96.............. 15,983,449
Beneficial Corp.
$ 50,000 5.38%, 8/20/96............. $ 49,626,389
25,000 5.38%, 8/21/96............. 24,809,458
BHF Finance, Inc.
6,000 5.25%, 7/26/96............. 5,978,125
Bradford & Bingley
Building Society
22,000 5.35%, 7/12/96............. 21,964,036
Caterpillar Inc.
7,000 5.32%, 8/15/96............. 6,953,450
Caterpillar Financial
Services Corp.
8,000 5.25%, 9/19/96............. 7,906,667
6,000 5.35%, 10/10/96............ 5,909,942
6,000 5.33%, 11/7/96............. 5,885,405
Ciesco, L.P.
46,000 5.38%, 8/8/96.............. 45,738,771
CIT Group Holdings, Inc.
66,000 5.28%, 7/16/96............. 65,854,800
23,000 5.33%, 8/12/96............. 22,856,978
45,000 5.33%, 8/13/96............. 44,713,513
35,000 5.38%, 8/22/96............. 34,728,011
50,000 5.38%, 8/23/96............. 49,603,972
Coca-Cola Enterprises, Inc.
9,000 5.40%, 7/16/96............. 8,979,750
Corporate Asset Funding
Co., Inc.
9,000 5.30%, 7/18/96............. 8,977,475
Corporate Receivables Corp.
15,000 5.29%, 7/23/96............. 14,951,508
25,000 5.29%, 7/24/96............. 24,915,507
21,800 5.32%, 7/25/96............. 21,722,683
27,100 5.30%, 8/19/96............. 26,904,504
Countrywide Home Loan, Inc.
5,150 5.42%, 7/18/96............. 5,136,819
31,000 5.40%, 7/23/96............. 30,897,700
9,000 5.42%, 7/25/96............. 8,967,480
9,700 5.42%, 7/26/96............. 9,663,490
24,000 5.43%, 8/20/96............. 23,819,000
19,000 5.43%, 8/22/96............. 18,850,977
</TABLE>
-6-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Commercial Paper--(cont'd)
CXC, Inc.
$ 24,400 5.29%, 7/9/96.............. $ 24,371,316
7,581 5.35%, 7/11/96............. 7,569,734
25,000 5.29%, 7/17/96............. 24,941,222
25,000 5.35%, 7/18/96............. 24,936,840
16,000 5.34%, 7/19/96............. 15,957,280
Enterprise Funding Corp.
5,067 5.32%, 7/1/96.............. 5,067,000
13,000 5.37%, 7/25/96............. 12,953,460
10,100 5.40%, 7/31/96............. 10,054,550
6,053 5.41%, 8/8/96.............. 6,018,434
6,447 5.41%, 8/12/96............. 6,406,309
Falcon Asset Securitization
Corp.
5,000 5.38%, 7/22/96............. 4,984,308
Finova Capital Corp.
10,490 5.42%, 7/9/96.............. 10,477,365
8,000 5.45%, 7/16/96............. 7,981,833
4,500 5.45%, 7/17/96............. 4,489,100
26,000 5.43%, 7/22/96............. 25,917,645
7,800 5.47%, 7/22/96............. 7,775,112
4,000 5.45%, 7/23/96............. 3,986,678
9,000 5.37%, 7/30/96............. 8,961,068
33,000 5.47%, 8/19/96............. 32,754,306
First Data Corp.
17,569 5.45%, 7/30/96............. 17,491,867
Ford Motor Credit Co.
59,000 5.30%, 7/9/96.............. 58,930,511
65,000 5.31%, 7/12/96............. 64,894,537
96,000 5.38%, 8/19/96............. 95,297,013
28,000 5.38%, 8/22/96............. 27,782,409
General Electric Capital
Corp.
35,000 5.33%, 8/12/96............. 34,782,358
69,000 5.33%, 8/16/96............. 68,530,072
60,000 5.39%, 8/27/96............. 59,487,950
General Motors Acceptance
Corp.
78,000 5.34%, 9/13/96............. 77,143,820
78,000 5.34%, 9/16/96............. 77,109,110
GTE Corp.
$ 17,000 5.39%, 7/15/96............. $ 16,964,366
18,000 5.42%, 7/26/96............. 17,932,250
19,000 5.43%, 7/30/96............. 18,916,891
Heller Financial, Inc.
10,000 5.46%, 7/8/96.............. 9,989,383
34,000 5.48%, 7/16/96............. 33,922,367
6,000 5.44%, 7/22/96............. 5,980,960
16,000 5.49%, 7/29/96............. 15,931,680
Household Finance Corp.
38,000 5.38%, 8/20/96............. 37,716,056
IBM Credit Corp.
37,000 5.29%, 7/10/96............. 36,951,068
ITT Industries, Inc.
7,000 5.35%, 7/8/96.............. 6,992,718
9,000 5.37%, 7/9/96.............. 8,989,260
12,000 5.35%, 7/15/96............. 11,975,033
Lehman Brothers Holdings,
Inc.
139,295 5.55%, 7/8/96.............. 139,144,677
Merrill Lynch & Co., Inc.
80,000 5.40%, 7/15/96............. 79,832,000
Mitsubishi International
Corp.
27,000 5.46%, 7/18/96............. 26,930,385
Morgan Stanley Group, Inc.
93,000 5.30%, 7/8/96.............. 92,904,158
39,071 5.29%, 7/9/96.............. 39,025,070
Newell Company
5,000 5.42%, 7/22/96............. 4,984,192
Nomura Holdings America,
Inc.
47,000 5.67%, 7/1/96.............. 47,000,000
Norwest Financial, Inc.
12,000 5.35%, 7/10/96............. 11,983,950
11,000 5.34%, 7/11/96............. 10,983,683
NYNEX Corp.
3,783 5.34%, 7/22/96............. 3,771,216
15,000 5.40%, 7/22/96............. 14,952,750
21,000 5.42%, 7/22/96............. 20,933,605
20,000 5.44%, 7/22/96............. 19,936,533
</TABLE>
-7-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Commercial Paper--(cont'd)
Philip Morris Cos., Inc.
$ 14,000 5.30%, 7/19/96............. $ 13,962,900
20,000 5.39%, 7/25/96............. 19,928,133
38,000 5.38%, 8/20/96............. 37,716,056
PNC Funding Corp.
28,000 5.40%, 7/11/96............. 27,958,000
Preferred Receivables
Funding Corp.
19,175 5.35%, 7/12/96............. 19,143,654
40,000 5.37%, 7/15/96............. 39,916,467
21,875 5.35%, 7/18/96............. 21,819,735
42,000 5.37%, 7/24/96............. 41,855,905
8,225 5.37%, 8/15/96............. 8,169,790
17,050 5.30%, 8/22/96............. 16,919,473
Rank Xerox Capital (Europe)
PLC
4,138 5.30%, 7/1/96.............. 4,138,000
Riverwoods Funding Corp.
17,000 5.28%, 7/8/96.............. 16,982,547
Sears Roebuck Acceptance
Corp.
16,000 5.40%, 7/25/96............. 15,942,400
Smith Barney, Inc.
15,000 5.36%, 7/2/96.............. 14,997,767
25,640 5.38%, 7/11/96............. 25,601,682
Sony Capital Corporation
7,000 5.32%, 7/9/96.............. 6,991,724
Special Purpose Accounts
Receivables Coop Corp.
10,000 5.40%, 7/9/96.............. 9,988,000
Transamerica Corp.
27,000 5.28%, 7/8/96.............. 26,972,280
Transamerica Finance Corp.
11,430 5.29%, 9/5/96.............. 11,319,148
Travelers/Aetna Property
Casualty Corp.
18,000 5.35%, 7/10/96............. 17,975,925
16,000 5.35%, 7/11/96............. 15,976,222
US West Communications,
Inc.
$ 5,000 5.40%, 7/2/96.............. $ 4,999,250
WCP Funding, Inc.
5,000 5.40%, 7/25/96............. 4,982,000
21,000 5.30%, 8/7/96.............. 20,885,608
Westpac Capital Corp.
34,000 5.35%, 7/2/96.............. 33,994,947
Whirlpool Financial Corp.
47,500 5.40%, 7/22/96............. 47,350,375
--------------
Total Commercial Paper
(amortized cost
$3,300,726,995).......... 3,300,726,995
--------------
Loan Participations--0.9%
Englehard Corp.
37,000 5.4275%, 7/8/96............ 37,000,000
Morgan Stanley Group, Inc.
11,000 5.42%, 7/15/96............. 11,000,000
--------------
Total Loan Participations
(amortized cost
$48,000,000)............. 48,000,000
--------------
Other Corporate Obligations--14.1%
Associates Corp. of North
America
3,100 9.70%, 5/1/97.............. 3,198,806
Ford Motor Credit Co.,
5,000 9.10%, 7/5/96.............. 5,001,890
10,000 14.00%, 7/5/96............. 10,008,262
4,000 9.05%, 7/23/96............. 4,007,657
General Motors Acceptance
Corp.
38,000(a) 5.44%, 7/1/96.............. 37,994,188
2,500 8.80%, 7/3/96.............. 2,500,346
4,000 8.625%, 7/15/96............ 4,003,805
6,000 8.25%, 8/1/96.............. 6,010,753
39,000(a) 5.50438%, 8/2/96........... 38,997,061
11,000(a) 5.5161%, 8/21/96........... 10,999,543
5,000 8.20%, 9/13/96............. 5,022,605
5,000 7.65%, 2/3/97.............. 5,072,811
9,000 6.10%, 3/31/97............. 9,026,564
</TABLE>
-8-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Other Corporate Obligations--(cont'd)
Goldman, Sachs Group, L.P.
$ 52,000(a)(c) 5.625%, 8/23/96............ $ 52,000,000
216,000(a)(c) 5.70703%, 11/22/96......... 216,000,000
International Lease Finance
Corp.
4,250 8.75%, 8/15/96............. 4,263,980
5,600 5.875%, 2/1/97............. 5,617,710
Merrill Lynch & Co., Inc.
72,000(a) 5.4375%, 7/2/96............ 71,994,678
10,000(a) 5.48875%, 7/24/96.......... 9,999,434
Morgan Stanley Group, Inc.
18,000(a) 5.66016%, 7/15/96.......... 18,000,000
33,000(a) 5.625%, 8/15/96............ 33,000,000
Philip Morris Cos., Inc.
9,000 8.875%, 7/1/96............. 9,000,000
SMM Trust Notes 1995-O
10,910(a) 5.49609%, 7/15/96.......... 10,909,486
SMM Trust Notes 1995-Q
174,000(a) 5.49609%, 7/15/96.......... 173,991,478
--------------
Total Other Corporate
Obligations
(amortized cost
$746,621,057)............ 746,621,057
--------------
U.S. Government Agencies--8.5%
Federal Farm Credit Bank
19,585 5.75%, 8/1/96.............. 19,582,220
Federal National Mortgage
Association
82,000(a) 5.495%, 7/1/96............. 82,000,000
67,000(a) 5.495%, 7/1/96............. 66,978,262
50,000 5.48%, 4/24/97............. 49,874,089
United States Treasury
Notes
110,000 6.875%, 2/28/97............ 111,218,741
50,000 6.625%, 3/31/97............ 50,490,116
50,000 6.875%, 3/31/97............ 50,615,338
20,000 6.125%, 5/31/97............ 20,051,789
--------------
Total U.S. Government
Agencies
(amortized cost
$450,810,555)............ $ 450,810,555
--------------
Repurchase Agreements(b)--3.7%
$ 75,201 Goldman Sachs & Co.,
5.55%, dated 6/28/96, due
7/2/96 in the amount of
$75,247,374 (cost
$75,201,000) value of the
collateral including
accrued
interest--$76,705,020)... 75,201,000
124,329 Morgan Stanley & Co.,
5.41%, dated 6/24/96, due
7/1/96 in the amount of
$124,459,787 (cost
$124,329,000) value of
the
collateral including
accrued
interest--$127,633,487)... 124,329,000
--------------
Total Repurchase
Agreements
(amortized cost
$199,530,000)............ 199,530,000
--------------
Total Investments--100.0%
(amortized cost
$5,310,045,955).......... 5,310,045,955
Liabilities in excess of
other assets............. (204,045)
--------------
Net Assets--100%........... $5,309,841,910
--------------
--------------
</TABLE>
- ---------------
(a) The maturity date presented for these instruments is 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.
(b) Repurchase agreements are collateralized by U.S. Treasury or Federal agency
obligations.
(c) Indicates a security restricted as to resale.
-9-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND MONEY FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets
June 30, 1996
--------------
<S>
<C>
Investments, at amortized cost which approximates market
value.......................... $5,310,045,955
Cash.........................................................................
........... 17,195
Receivable for Fund shares
sold......................................................... 99,132,844
Interest
receivable.....................................................................
22,232,249
Prepaid
expenses........................................................................
181,076
--------------
Total
assets..........................................................................
5,431,609,319
--------------
Liabilities
Payable for Fund shares
repurchased.....................................................
118,302,308
Management fee
payable..................................................................
1,644,045
Accrued expenses and other
liabilities.................................................. 959,626
Distribution fee
payable................................................................
861,430
--------------
Total
liabilities.....................................................................
121,767,409
--------------
Net Assets
Applicable to 5,309,841,910 shares of beneficial interest ($.01 par value)
issued and
outstanding;
unlimited number of shares
authorized................................................. $5,309,841,910
--------------
--------------
Net asset value, offering price and redemption price per share ($5,309,841,910
/
5,309,841,910
shares).................................................................
$1.00
--------------
--------------
</TABLE>
See Notes to Financial Statements appearing on page 27.
-10-
<PAGE>
<PAGE>
COMMAND MONEY FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
June 30,
Net Investment Income 1996
--------------
<S> <C>
Income
Interest............................. $ 280,999,825
--------------
Expenses
Management fee....................... 18,388,779
Distribution fee..................... 6,120,993
Registration fees.................... 1,815,000
Transfer agent's fees and expenses... 1,700,000
Custodian's fees and expenses........ 220,000
Reports to shareholders.............. 150,000
Insurance expense.................... 93,000
Trustees' fees and expenses.......... 63,000
Audit fee and expenses............... 41,000
Legal fees and expenses.............. 15,000
Miscellaneous........................ 3,044
--------------
Total expenses..................... 28,609,816
--------------
Net investment income.................. 252,390,009
--------------
Realized gain on Investments
Net realized gain on investment
transactions......................... 125,755
--------------
Net Increase in Net Assets
Resulting from Operations.............. $ 252,515,764
--------------
--------------
</TABLE>
COMMAND MONEY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended June 30,
Increase in -----------------------------------
Net Assets 1996 1995
---------------- ----------------
<S> <C> <C>
Operations
Net investment
income............. $ 252,390,009 $ 156,370,915
Net realized gain
on investment
transactions..... 125,755 307,047
---------------- ----------------
Net increase in net
assets resulting
from
operations....... 252,515,764 156,677,962
---------------- ----------------
Dividends and
distributions to
shareholders....... (252,515,764) (156,677,962)
---------------- ----------------
Fund share
transactions (at $1
per share)
Net proceeds from
shares
subscribed....... 24,708,980,727 16,966,514,286
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions.... 252,515,764 156,677,962
Cost of shares
reacquired....... (23,707,354,464) (15,515,692,996)
---------------- ----------------
Net increase in net
assets from Fund
share
transactions..... 1,254,142,027 1,607,499,252
---------------- ----------------
Total increase....... 1,254,142,027 1,607,499,252
Net Assets
Beginning of year.... 4,055,699,883 2,448,200,631
---------------- ----------------
End of year.......... $ 5,309,841,910 $ 4,055,699,883
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to Financial Statements appearing on page 27.
-11-
<PAGE>
<PAGE>
COMMAND MONEY FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
- --------------------------------------------------------------
1996 1995
1994 1993 1992
---------- ----------
---------- ---------- ----------
<S> <C> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year..................... $ 1.000 $ 1.000
$ 1.000 $ 1.000 $ 1.000
Net investment income and net realized gains........... 0.052 0.050
0.029 0.030 0.046
Dividends and distributions to shareholders............ (0.052)
(0.050) (0.029) (0.030) (0.046)
---------- ----------
---------- ---------- ----------
Net asset value, end of year........................... $ 1.000 $ 1.000
$ 1.000 $ 1.000 $ 1.000
---------- ----------
---------- ---------- ----------
---------- ----------
---------- ---------- ----------
TOTAL RETURN(a):....................................... 5.30%
5.13% 2.98% 3.01% 4.71%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000).......................... $5,309,842 $4,055,700
$2,448,201 $2,436,672 $2,125,430
Average net assets (000)............................... $4,896,794 $3,072,284
$2,570,195 $2,275,532 $2,377,108
Ratios to average net assets:
Expenses, including distribution fees................ .58%
.59% .59% .61% .64%
Expenses, excluding distribution fees................ .46%
.47% .47% .48% .51%
Net investment income................................ 5.15%
5.09% 2.92% 2.90% 4.57%
</TABLE>
- ---------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes reinvestment
of dividends and distributions.
See Notes to Financial Statements appearing on page 27.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Command 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 Command Money Fund (the ``Fund'')
at June 30, 1996, 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 June
30, 1996 by correspondence with the custodian and brokers and the application
of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
August 9, 1996
-12-
<PAGE>
<PAGE>
COMMAND GOVERNMENT FUND Portfolio of Investments
June 30, 1996
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
U. S. Government Agencies--58.9%
Federal Farm Credit Bank
$ 10,000 5.19%, 7/10/96................ $ 9,987,025
4,000 5.75%, 8/1/96................. 3,999,432
------------
13,986,457
------------
Federal Home Loan Bank
15,000(a) 5.25%, 7/2/96................. 14,995,745
400 7.81%, 7/17/96................ 400,465
1,850 8.00%, 7/25/96................ 1,853,510
2,820 7.39%, 8/2/96................. 2,823,548
1,900 6.125%, 8/5/96................ 1,901,821
1,800 6.875%, 11/18/96.............. 1,811,328
------------
23,786,417
------------
Federal Home Loan Mortgage
Corporation
15,000 5.27%, 9/5/96................. 14,855,075
------------
Federal National Mortgage
Association
20,000(a) 5.25969%, 7/1/96.............. 19,982,919
21,600(a) 5.27%, 7/1/96................. 21,596,860
20,500(a) 5.2775%, 7/1/96............... 20,496,429
15,500(a) 5.495%, 7/1/96................ 15,498,378
2,870 5.59%, 7/1/96................. 2,870,000
13,245 8.00%, 7/10/96................ 13,252,946
5,000 5.02%, 7/24/96................ 4,983,964
2,050 4.94922%, 8/15/96............. 2,049,662
5,000(a) 4.325%, 9/4/96................ 4,988,758
10,000 5.26%, 9/9/96................. 9,897,722
1,000 8.625%, 9/10/96............... 1,005,622
7,000 5.60%, 11/1/96................ 6,996,365
16,250 5.71%, 5/20/97................ 16,235,351
------------
139,854,976
------------
Student Loan Marketing
Association
2,500(a) 5.37%, 7/1/96................. $ 2,498,207
8,000(a) 6.08%, 7/1/96................. 8,000,000
3,000(a) 5.39%, 7/2/96................. 2,999,390
2,525(a) 5.69%, 7/2/96................. 2,525,410
13,090 7.56%, 12/9/96................ 13,202,767
------------
29,225,774
------------
United States Treasury Notes
10,000 6.125%, 7/31/96............... 10,009,145
14,000 7.875%, 7/31/96............... 14,032,156
3,000 6.875%, 10/31/96.............. 3,011,186
5,000 6.875%, 2/28/97............... 5,055,397
10,000 6.625%, 3/31/97............... 10,089,355
5,000 6.50%, 4/30/97................ 5,031,147
18,000 6.50%, 5/15/97................ 18,118,345
------------
65,346,731
------------
Total U. S. Government
Agencies
(amortized cost
$287,055,430)............... 287,055,430
------------
Repurchase Agreements(b)--41.0%
45,655 CS First Boston Corp.,
5.40%, dated 06/24/96, due
07/01/96 in the amount of
$45,702,938 (cost
$45,655,000), value of
collateral including accrued
interest--$46,903,521....... 45,655,000
49,600 Morgan Stanley & Co.,
5.41%, dated 06/24/96, due
07/01/96 in the amount of
$49,652,176 (cost
$49,600,000), value of
collateral including accrued
interest--$50,610,662....... 49,600,000
</TABLE>
-13-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND GOVERNMENT FUND
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Repurchase Agreements--(cont'd)
$ 15,333 Nomura Securities
International, Inc.,
5.42%, dated 06/27/96, due
07/01/96 in the amount of
$15,342,234 (cost
$15,333,000),
value of collateral
including accrued
interest--$15,649,310....... $ 15,333,000
20,251 Bear, Stearns & Co.,
5.40%, dated 06/25/96, due
07/02/96 in the amount of
$20,272,264 (cost
$20,251,000), value of
collateral including accrued
interest--$20,856,278....... 20,251,000
15,000 Nomura Securities
International, Inc.,
5.40%, dated 06/25/96, due
07/02/96 in the amount of
$15,015,750 (cost
$15,000,000),
value of collateral
including accrued
interest--$15,309,441....... 15,000,000
1,437 Goldman Sachs & Co.,
5.55%, dated 06/28/96, due
07/02/96 in the amount of
$1,437,886 (cost
$1,437,000), value of
collateral including accrued
interest--$1,465,741........ 1,437,000
5,000 UBS Securities Inc.,
5.37%, dated 06/26/96, due
07/03/96 in the amount of
$5,005,221 (cost
$5,000,000), value of
collateral including accrued
interest--$5,102,166........ 5,000,000
$ 47,500 Smith Barney, Inc.,
5.32%, dated 06/03/96, due
07/08/96 in the amount of
$47,745,681 (cost
$47,500,000), value of
collateral including accrued
interest--$48,450,977....... $ 47,500,000
------------
Total Repurchase Agreements
(amortized cost
$199,776,000)............... 199,776,000
------------
Total Investments--99.9%
(amortized cost
$486,831,430)............... 486,831,430
Other assets in excess of
liabilities--0.1%........... 653,280
------------
Net Assets--100%.............. $487,484,710
------------
------------
</TABLE>
- ---------------
(a) The maturity date presented for these instruments is 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.
(b) Repurchase agreements are collateralized by U.S. Treasury or Federal agency
obligations.
-14-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND GOVERNMENT FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets
June 30, 1996
-------------
<S>
<C>
Investments, at amortized cost which approximates market
value............................ $ 486,831,430
Cash.........................................................................
............. 2,811
Recievable for Fund shares
sold........................................................... 5,186,549
Interest
receivable...................................................................
.... 4,275,050
Prepaid
expenses.....................................................................
..... 17,043
-------------
Total
assets.......................................................................
..... 496,312,883
-------------
Liabilities
Payable for Fund shares
repurchased.......................................................
8,188,869
Accrued expenses and other
liabilities.................................................... 395,544
Management fee
payable....................................................................
163,750
Distribution fee
payable..................................................................
80,010
-------------
Total
liabilities..................................................................
..... 8,828,173
-------------
Net Assets
Applicable to 487,484,710 shares of beneficial interest (.01 par value) issued
and
outstanding;
unlimited number of shares
authorized................................................... $ 487,484,710
-------------
-------------
Net asset value, offering price and redemption price per share ($487,484,710 /
487,484,710
shares)......................................................................
........... $1.00
-------------
-------------
</TABLE>
See Notes to Financial Statements appearing on page 27.
-15-
<PAGE>
<PAGE>
COMMAND GOVERNMENT FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
June 30,
Net Investment Income 1996
-------------
<S> <C>
Income
Interest.............................. $ 27,002,532
-------------
Expenses
Management fee........................ 1,908,673
Distribution fee...................... 596,460
Registration fees..................... 428,000
Custodian's fees and expenses......... 100,000
Transfer agent's fees and expenses.... 80,000
Trustee's fees and expenses........... 49,000
Reports to shareholders............... 45,000
Audit fee and expenses................ 36,000
Legal fees and expenses............... 20,000
Insurance expense..................... 10,200
Miscellaneous......................... 6,726
-------------
Total expenses...................... 3,280,059
-------------
Net investment income................... 23,722,473
-------------
Realized gain on Investments
Net realized gain on investment
transactions.......................... 60,771
-------------
Net Increase in Net Assets
Resulting from Operations............... $ 23,783,244
-------------
-------------
</TABLE>
COMMAND GOVERNMENT FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended June 30,
Increase in ---------------------------------
Net Assets 1996 1995
--------------- ---------------
<S> <C> <C>
Operations
Net investment
income............... $ 23,722,473 $ 16,865,588
Net realized gain on
investment
transactions....... 60,771 49,296
--------------- ---------------
Net increase in net
assets resulting
from operations.... 23,783,244 16,914,884
--------------- ---------------
Dividends and
distributions to
shareholders......... (23,783,244) (16,914,884)
--------------- ---------------
Fund share transactions
(at $1 per share)
Net proceeds from
shares
subscribed......... 2,100,249,743 1,851,317,527
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions...... 23,783,244 16,914,884
Cost of shares
reacquired........... (2,040,843,422) (1,789,194,124)
--------------- ---------------
Net increase in net
assets from Fund
share
transactions....... 83,189,565 79,038,287
--------------- ---------------
Total increase......... 83,189,565 79,038,287
Net Assets
Beginning of year...... 404,295,145 325,256,858
--------------- ---------------
End of year............ $ 487,484,710 $ 404,295,145
--------------- ---------------
--------------- ---------------
</TABLE>
See Notes to Financial Statements appearing on page 27.
-16-
<PAGE>
<PAGE>
COMMAND GOVERNMENT FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
- ----------------------------------------------------
1996
1995 1994 1993 1992
--------
- -------- -------- -------- --------
<S> <C> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............................ $ 1.000 $
1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net realized gains.................. .050
.048 0.028 0.028 0.045
Dividends and distributions to shareholders................... (.050)
(.048) (0.028) (0.028) (0.045)
--------
- -------- -------- -------- --------
Net asset value, end of year.................................. $ 1.000 $
1.000 $ 1.000 $ 1.000 $ 1.000
--------
- -------- -------- -------- --------
--------
- -------- -------- -------- --------
TOTAL RETURN(a)............................................... 5.12%
4.89% 2.86% 2.85% 4.56%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)................................. $487,485
$404,295 $325,257 $381,703 $372,988
Average net assets (000)...................................... $477,168
$350,458 $376,159 $380,103 $422,639
Ratios to average net assets:
Expenses, including distribution fees....................... .68%
.65% .63% .65% .69%
Expenses, excluding distribution fees....................... .56%
.53% .51% .53% .57%
Net investment income....................................... 4.97%
4.81% 2.79% 2.74% 4.38%
</TABLE>
- ---------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes reinvestment
of dividends and distributions.
See Notes to Financial Statements appearing on page 27.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Command Government 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 Command Government Fund (the
``Fund'') at June 30, 1996, 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 June
30, 1996 by correspondence with the custodian and brokers and the application
of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
August 9, 1996
-17-
<PAGE>
<PAGE>
COMMAND TAX-FREE FUND Portfolio of Investments
June 30, 1996
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
ARIZONA--1.3%
Pima Cnty. Ind. Dev.
Auth.,
F.R.W.D.,
3.65%, 7/5/96, Ser.
A-1+* $ 14,945 96B................... $ 14,945,000
--------------
ARKANSAS--0.7%
Arkansas Dev. Fin.
Auth., Sngl. Family
Mtge. Rev.,
A.N.N.O.T.,
3.80%, 2/28/97, Ser.
A-1+* 7,585 96D................... 7,585,000
--------------
CALIFORNIA--3.1%
California Higher Ed.
Ln. Auth. Inc.,
Student Ln. Rev.,
A.N.N.M.T.,
3.95%, 7/1/97, Ser.
VIMG1 25,000 87A................... 25,000,000
California Student Ln.
Marketing Corp.,
Student Ln. Rev.
Rfdg., A.N.N.M.T.,
3.90%, 11/1/96, Ser.
VMIG1 10,800 93A................... 10,800,000
--------------
35,800,000
--------------
COLORADO--4.3%
Avon Cnty. Ind. Dev.
Rev., Beaver Creek
Proj., F.R.M.D.,
3.90%, 7/15/96, Ser.
P-1 9,000 84.................... 9,000,000
Colorado Hsg. Fin.
Auth., Eagle Trust,
F.R.W.D.S.,
3.49%, 7/5/96, Ser.
A-1* 19,700 94C................... 19,700,000
Colorado Student Oblig.
Bond
Auth., Student Ln.
Rev., F.R.W.D.,
3.40%, 7/3/96, Ser.
VMIG1 10,500 90A................... 10,500,000
Denver City & Cnty.
Airport Rev.,
F.R.W.D.,
3.85%, 7/3/96, Ser.
VMIG1 11,000 91B................... 11,000,000
--------------
50,200,000
--------------
CONNECTICUT--1.8%
Connecticut Hsg. Fin.
Auth., A.N.N.M.T.,
VMIG1 $ 15,000 3.60%, 4/10/97.......... $ 14,995,322
Connecticut Spec.
Assmt., A.N.N.M.T.,
3.90%, 7/1/97, Ser.
VMIG1 5,500 93C................... 5,500,000
--------------
20,495,322
--------------
DISTRICT OF COLUMBIA--1.4%
Dist. of Columbia Hsg.
Fin. Agcy., Carmel
Plaza, F.R.W.D.,
3.35%, 7/4/96, Ser.
VMIG1 8,830 91.................... 8,830,000
Dist. of Columbia Rev.,
Gen. Oblig. F.R.D.D.,
3.80%, 7/1/96, Ser.
VMIG1 7,100 92A-5................. 7,100,000
--------------
15,930,000
--------------
FLORIDA--1.6%
Miami Hlth. Facs. Auth.
Rev., Miami Jewish
Home & Hosp.,
F.R.W.D.,
3.35%, 7/3/96, Ser.
CPS1 6,600 92.................... 6,600,000
Putnam Cnty. Dev. Auth.,
Seminole Elec. Proj.,
S.E.M.O.T.,
3.25%, 9/15/96, Ser.
P-1 11,755 84H-4................. 11,755,000
--------------
18,355,000
--------------
GEORGIA--5.7%
Burke Cnty. Dev. Auth.,
Oglethorpe Pwr. Corp.,
3.85%, 12/26/96, Ser.
NR 13,070 95.................... 13,070,000
</TABLE>
-18-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
GEORGIA--(cont'd)
Clayton Cnty. Hsg.
Auth., Multifamily
Hsg. Rev., F.R.W.D.,
3.55%, 7/3/96, Ser.
A-1* $ 6,655 89.................... $ 6,655,000
Fulton Cnty. Dev. Auth.
Rev., Robert W.
Woodruff Art Center,
F.R.W.D.,
3.40%, 7/4/96, Ser.
CPS1 22,500 93.................... 22,500,000
Georgia Oblig. Bond,
A.N.N.O.T.3,
3.60%, 4/1/97, Ser.
AAA 15,900 95C................... 15,900,000
Roswell Hsg. Auth., Post
Canyon Proj.,
F.R.W.D.,
3.25%, 7/3/96, Ser.
A-1+* 7,500 96.................... 7,500,000
--------------
65,625,000
--------------
ILLINOIS--13.3%
Cook Cnty. Cap. Equip.
Proj., S.E.M.M.T.,
VMIG1 15,750 3.40%, 8/6/96, Ser. B... 15,750,000
Cook Cnty., Public
Safety, S.E.M.M.T.,
VMIG1 35,400 3.40%, 8/6/96, Ser. B... 35,400,000
Gurnee Ind. Dev. Rev.,
Sterigenics Intl.
Proj., F.R.W.D.,
3.75%, 7/3/96, Ser.
A-1* 7,750 96.................... 7,750,000
Illinois Dev. Fin. Auth.
Poll., Commonwealth
Edison Co., F.R.W.D.,
3.35%, 7/3/96, Ser.
P-1 10,000 94C................... 10,000,000
Illinois Dev. Fin. Auth.
Rev.,
Multifamily Hsg.,
F.R.W.D.,
4.00%, 7/5/96, Ser.
A-1* 18,900 92.................... 18,900,000
Illinois Hlth. Fac.
Auth. Rev., Servant
Cor. Falcon II,
F.R.W.D.,
3.70%, 7/3/96, Ser.
A-1+* $ 13,500 96A................... $ 13,500,000
Evanston Hosp. Corp.
Proj., S.E.M.M.T.,
3.35%, 12/2/96, Ser.
VMIG1 12,000 92.................... 12,000,000
Evanston Hosp. Corp.
Prog., A.N.N.M.T.,
3.75%, 5/15/97, Ser.
VMIG1 18,000 95.................... 18,000,000
Illinois Hlth. Facs.
Auth. Rev., Children's
Mem. Hosp.,
S.E.M.M.T.,
3.60%, 8/20/96, Ser.
VMIG1 15,000 90A................... 15,000,000
Wheeling Multifamily
Hsg. Rev., Woodland
Creek II, F.R.W.D.,
3.45%, 7/5/96, Ser.
SP-1+* 8,000 90.................... 8,000,000
--------------
154,300,000
--------------
INDIANA--1.5%
Indiana Ed. Fac. Auth.,
Wesleyan Univ.
F.R.W.D.,
3.40%, 7/4/96, Ser.
NR 10,000 93.................... 10,000,000
Indiana Hlth. Fac. Fin.
Auth. Rev., Baptist
Homes of Indiana,
F.R.W.D.,
3.40%, 7/4/96, Ser.
NR 7,825 95.................... 7,825,000
--------------
17,825,000
--------------
IOWA--2.5%
Louisa Cnty. Poll. Ctrl.
Rev., Mid-American
Energy, F.R.W.D.,
3.50%, 7/3/96, Ser.
VMIG1 20,000 85.................... 20,000,000
</TABLE>
-19-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
IOWA--(cont'd)
Sergeant Bluff Ind. Dev.
Rev., Sioux City Brick
& Tile Proj.,
F.R.W.D.,
3.60%, 7/4/96, Ser.
NR $ 9,100 96.................... $ 9,100,000
--------------
29,100,000
--------------
KENTUCKY--2.2%
Louisville & Jefferson
Cnty., F.R.W.D.,
3.65%, 7/5/96, Ser.
A-1* 26,000 96A................... 26,000,000
--------------
LOUISIANA--3.7%
Calcasieu Parish Ind.
Dev. Board, Citgo
Corp., F.R.D.D.,
3.80%, 7/1/96, Ser.
VMIG1 2,000 94.................... 2,000,000
Louisiana Hsg. Fin.
Agcy. Rev., Sngl.
Family, A.N.N.M.T.,
MIG1 12,000 3.80%, 4/15/97.......... 12,000,000
Louisiana Pub. Facs.
Auth., Hosp. Equip.
Rev., F.R.W.D.,
3.60%, 7/3/96, Ser.
VMIG1 6,900 85A................... 6,900,000
West Baton Rouge Parish
Ind. Dist. #3 Rev.,
Dow Chemical Co.
Proj., F.R.D.D.,
3.80%, 7/1/96, Ser.
P-1 10,500 93.................... 10,500,000
3.80%, 7/1/96, Ser.
P-1 6,000 94A................... 6,000,000
3.80%, 7/1/96, Ser.
P-1 5,600 95.................... 5,600,000
--------------
43,000,000
--------------
MARYLAND--0.6%
Maryland Econ. Dev.
Corp., F.R.W.D.,
3.35%, 7/4/96, Ser.
A-1* 7,500 95.................... 7,500,000
--------------
MASSACHUSETTS--4.3%
Massachusetts Bay
Transit. Auth.,
3.75%, 2/28/97, Ser.
MIG2 $ 17,000 A..................... $ 17,016,821
Massachusetts Hsg.
Fin. Agcy.,
Sngl. Family Hsg. Rev.,
Q.T.R.O.T.3,
AAA 11,245 3.60%, 9/1/96, Ser. 5... 11,245,000
Revere Hsg. Auth.,
Waters Edge Proj.,
F.R.W.D.,
4.00%, 7/5/96, Ser.
A-1* 22,000 91C................... 22,000,000
--------------
50,261,821
--------------
MICHIGAN--1.5%
Michigan Strategic Fund
Poll.,
General Motors Proj.,
F.R.W.D.,
3.55%, 7/2/96, Ser.
VMIG2 16,825 85.................... 16,825,000
--------------
MINNESOTA--2.2%
Bloomington Comm. Dev.
Rev., Fltg. Rate 94th
Street Assoc. Proj.
F.R.W.D.,
3.45%, 7/5/96, Ser.
A-1+* 6,300 85.................... 6,300,000
Bloomington Port Auth.
Tax Rev., F.R.W.D.,
3.45%, 7/5/96, Ser.
VMIG1 15,000 95A................... 15,000,000
Minnesota Hsg. Fin.
Agcy., A.N.N.M.T.,
3.50%, 12/12/96, Ser.
VMIG1 3,600 95M................... 3,600,000
--------------
24,900,000
--------------
MISSISSIPPI--0.7%
Harrison Cnty. Poll.
Ctrl. Rev.,
Mississippi Pwr. Co.
Proj., F.R.W.D.,
3.35%, 7/3/96, Ser.
A-1* 8,000 92.................... 8,000,000
--------------
</TABLE>
-20-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
MISSOURI--3.4%
Missouri Environ. Impvt.
& Energy Res. Auth.,
Union Elec. Co.,
A.N.N.O.T.,
3.65%, 6/1/97, Ser.
P1 $ 6,095 84A................... $ 6,086,799
Missouri Hlth. Ed. Schl.
Dist.,
4.50%, 8/19/96, Ser.
SP-1+* 25,000 95H................... 25,017,635
St. Charles Cnty. Ind.
Dev. Auth., Cedar
Ridge Apts., F.R.W.D.,
3.35%, 7/3/96, Ser.
A-1+* 8,595 88A................... 8,595,000
--------------
39,699,434
--------------
NEBRASKA--0.9%
Nebraska Pub. Pwr. Dist.
Rev., T.E.C.P.,
3.70%, 8/29/96, Ser.
P-1 10,000 B..................... 10,000,000
--------------
NEW HAMPSHIRE--0.9%
New Hampshire Fin. Auth.
Poll. Ctrl., New
England Pwr. Co.,
T.E.C.P.,
3.55%, 9/3/96, Ser.
VMIG1 10,000 90B................... 10,000,000
--------------
NEW JERSEY--2.5%
Jersey City, B.A.N.,
SP-1* 4,000 4.25%, 9/27/96.......... 4,003,810
Jersey City, New Jersey
School Promissory
Notes
SP-1+* 24,400 3.75%, 3/7/97........... 24,472,440
--------------
28,476,250
--------------
NEW YORK--4.8%
Nassau County, B.A.N.,
4.00%, 8/15/96, Ser.
MIG1 22,770 95H................... 22,787,496
New York City Gen.
Oblig., T.E.C.P.,
3.40%, 8/14/96, Ser.
VMIG1 13,000 94H-2................. 13,000,000
New York City Unltd.
Tax, JPM Putters-DERV,
F.R.W.D.S.,
3.50%, 7/4/96, Ser.
VMIG1 $ 19,800 33.................... $ 19,800,000
--------------
55,587,496
--------------
NORTH CAROLINA--1.1%
Cabarrus Cnty. Ind.
Facs. Auth., Poll.
Ctrl. Rev., Philip
Morris Proj.,
F.R.W.D.,
3.35%, 7/3/96, Ser.
P-1 5,000 92.................... 5,000,000
North Carolina Eastern
Mun. Pwr., Catawba
Proj., T.E.C.P.,
P-1 7,561 3.70%, 7/15/96.......... 7,561,000
--------------
12,561,000
--------------
OHIO--1.9%
Ohio Hsg. Agcy. Res.
Mtg. Rev., A.N.N.M.T.,
3.40%, 3/3/97, Ser.
A-1+* 14,000 96A-3................. 14,000,000
Toledo-Lucas Cnty.,
Convntn. & Visitors
Bureau, M.T.H.O.T.,
3.55%, 8/1/96, Ser.
VMIG1 8,215 88.................... 8,215,000
--------------
22,215,000
--------------
OKLAHOMA--0.5%
Muskogee Mall Proj.,
F.R.W.D.,
3.70%, 7/3/96, Ser.
VMIG1 5,600 85.................... 5,600,000
--------------
OREGON--1.7%
Oregon Hsg. & Comm.
Svcs. Dept.,
Sngl. Family Mtg.
Prog., A.N.N.M.T.,
3.85%, 5/15/97, Ser.
MIG1 5,000 96C................... 5,000,000
</TABLE>
-21-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
OREGON--(cont'd)
Oregon Peace Hlth. Hsg.
Ed. & Cult., F.R.W.D.,
3.30%, 7/5/96, Ser.
A-1+* $ 14,500 95.................... $ 14,500,000
--------------
19,500,000
--------------
PENNSYLVANIA--1.3%
Pennsylvania Higher Ed.
Auth., Student Ln.
Rev. F.R.W.D.,
3.40%, 7/3/96, Ser.
VMIG1 14,750 95A................... 14,750,000
--------------
RHODE ISLAND--1.7%
Rhode Island Student Ln.
Auth., F.R.W.D.,
3.45%, 7/3/96, Ser.
A-1+* 20,000 96-2.................. 20,000,000
--------------
SOUTH CAROLINA--1.2%
York Cnty. Poll. Ctrl.
Rev., Electric Proj.,
S.E.M.O.T.,
3.25%, 9/15/96, Ser.
VMIG1 14,120 84N-6................. 14,120,000
--------------
TENNESSEE--0.9%
Montgomery Cnty. Pub.
Bldg., F.R.W.D.,
3.35%, 7/4/96, Ser.
A-1* 11,000 95.................... 11,000,000
--------------
TEXAS--9.8%
Bexar County Hsg. Fin.
Corp.,
Windridge Apts.,
F.R.W.D.,
3.35%, 7/4/96, Ser.
A-1+* 6,270 95.................... 6,270,000
City of Houston Texas
Water Sewer T.E.C.P.,
3.75%, 9/12/96, Ser.
P-1 10,000 A..................... 10,000,000
DeSoto Ind. Dev. Auth.,
Nat'l. Svc. Inds. Inc.
Proj., F.R.W.D.,
3.40%, 7/4/96, Ser.
CPS1 7,150 91.................... 7,150,000
Greater East Texas
Student Ln. Rev.,
A.N.N.O.T.,
3.85%, 5/1/97, Ser.
VMIG1 $ 11,650 95A................... $ 11,650,000
Houston Gen. Oblig.,
T.E.C.P.,
3.60%, 10/10/96, Ser.
P-1 10,100 A..................... 10,100,000
San Antonio Elec. & Gas
Rev., T.E.C.P.,
P-1 19,100 3.60%, 8/7/96, Ser. A... 19,100,000
P-1 15,000 3.25%, 8/8/96, Ser. A... 15,000,000
P-1 13,000 3.45%, 8/8/96, Ser. A... 13,000,000
Texas Public Fin. Auth.
Rev.,
T.E.C.P.,
3.70%, 11/14/96, Ser.
P-1 11,000 B..................... 11,000,000
Trinity River Auth.
Poll. Coll. Util.,
Texas Elec. Util. Co.,
F.R.D.D.,
VMIG1 10,500 3.80%, 7/1/96, Ser.
96A................... 10,500,000
--------------
113,770,000
--------------
UTAH--6.7%
Davies Cnty., T.R.A.N.,
4.50%, 12/31/96, Ser.
NR 6,000 96.................... 6,022,078
Intermountain Pwr. Auth.
Supply Rev.,
A.N.N.O.T.,
3.93%, 6/16/97, Ser.
VMIG1 14,500 85E................... 14,500,000
Intermountain Pwr. Auth.
Supply Rev.,
S.E.M.O.T.,
3.35%, 9/16/96, Ser.
VMIG1 15,000 85E................... 15,000,000
Salt Lake City Rev.,
T.E.C.P.,
3.65%, 8/6/96, Ser.
VMIG1 17,100 90.................... 17,100,000
Utah Board Regents
Student Ln. Rev.,
F.R.W.D.,
3.40%, 7/3/96, Ser.
SP-1+* 20,100 96A................... 20,100,000
</TABLE>
-22-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
UTAH--(cont'd)
Utah Cnty., T.R.A.N.,
NR $ 5,000 4.50%, 12/31/96......... $ 5,018,392
--------------
77,740,470
--------------
VIRGINIA--3.8%
Chesterfield Cnty. Ind.
Dev. Auth., Philip
Morris Proj.,
F.R.W.D.,
P1 8,500 3.35%, 7/3/96........... 8,500,000
Harrisonburg Redev. &
Hsg. Auth., Multifamly
Hsg. Rev., F.R.W.D.,
3.35%, 7/4/96, Ser.
VMIG1 13,000 91A................... 13,000,000
King George Cnty.,
Birchwood Pwr. Proj.,
F.R.D.D.,
4.00%, 7/1/96, Ser.
A-1+* 5,200 94B................... 5,200,000
Virginia Elec. Pwr. Co.
Proj., T.E.C.P.,
3.70%, 8/5/96, Ser.
VMIG1 17,600 87A................... 17,600,000
--------------
44,300,000
--------------
WASHINGTON--0.3%
Washington Hsg. Fin.
Comm., Canyon Lakes II
Proj., F.R.D.D.,
3.90%, 7/1/96, Ser.
VMIG1 3,000 94.................... 3,000,000
--------------
WEST VIRGINIA--0.8%
West Virginia Public
Energy Auth. Rev.,
T.E.C.P.,
3.50%, 8/5/96, Ser.
A-1+* $ 9,000 89A................... $ 9,000,000
--------------
Total Investments--96.6%
(cost $1,117,966,793)... 1,117,966,793
Other assets in excess
of
liabilities--3.4%..... 38,968,644
--------------
Net Assets--100%........ $1,156,935,437
--------------
--------------
</TABLE>
- ---------------
(a) The following abbreviations are used in portfolio descriptions:
A.N.N.M.T.--Annual Mandatory Tender.
A.N.N.O.T.--Annual Optional Tender.
A.N.N.O.T.3--Annual Third Party Optional Tender.
B.A.N.--Bond Anticipation Note.
F.R.D.D.--Floating Rate (Daily) Demand Note(b).
F.R.M.D.--Floating Rate (Monthly) Demand Note(b).
F.R.W.D.--Floating Rate (Weekly) Demand Note(b).
F.R.W.D.S.--Floating Rate Weekly Demand--Synthetic Note(b).
M.T.H.O.T.--Monthly Optional Tender.
Q.T.R.O.T.3--Quarterly Third Party Optional Tender.
S.E.M.M.T.--Semi-Annual Mandatory Tender.
S.E.M.O.T.--Semi-Annual Optional Tender.
T.E.C.P.--Tax Exempt Commercial Paper.
T.R.A.N.--Tax and Revenue Anticipation Note.
(b) For purposes of amortized cost valuation, the maturity date of Floating Rate
Demand Notes is considered to be the later of the next date on which the
security can be redeemed at par or the next date on which the rate of
interest is adjusted.
* Standard & Poor's rating.
NR--Not Rated by Moody's or Standard & Poor's.
-23-
See Notes to Financial Statements appearing on page 27.
<PAGE>
<PAGE>
COMMAND TAX-FREE FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets
June 30, 1996
--------------
<S>
<C>
Investments, at amortized cost which approximates market
value.......................... $1,117,966,793
Cash.........................................................................
........... 53,070
Receivable for investments
sold......................................................... 47,002,436
Receivable for Fund shares
sold......................................................... 34,952,477
Interest
receivable.....................................................................
7,706,184
Prepaid
expenses........................................................................
39,250
--------------
Total
assets..........................................................................
1,207,720,210
--------------
Liabilities
Payable for investments
purchased.......................................................
30,500,000
Payable for Fund shares
repurchased.....................................................
19,113,736
Accrued expenses and other
liabilities.................................................. 547,006
Management fee
payable..................................................................
434,833
Distribution fee
payable................................................................
189,198
--------------
Total
liabilities.....................................................................
50,784,773
--------------
Net Assets
Applicable to 1,156,935,437 shares of beneficial interest ($.01 par value)
issued and
outstanding;
unlimited number of shares
authorized................................................. $1,156,935,437
--------------
--------------
Net asset value, offering price and redemption price per share ($1,156,935,437
/
1,156,935,437
shares).................................................................
$1.00
--------------
--------------
</TABLE>
See Notes to Financial Statements appearing on page 27.
-24-
<PAGE>
<PAGE>
COMMAND TAX-FREE FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
June 30,
Net Investment Income 1996
-------------
<S> <C>
Income
Interest............................ $ 42,209,382
-------------
Expenses
Management fee...................... 5,128,465
Distribution fee.................... 1,417,822
Registration fees................... 425,000
Transfer agent's fees and
expenses............................ 190,000
Custodian's fees and expenses....... 160,000
Trustees' fees and expenses......... 56,000
Audit fee and expenses.............. 41,000
Reports to shareholders............. 40,000
Insurance expense................... 25,800
Legal fees and expenses............. 20,000
Miscellaneous....................... 11,492
-------------
Total expenses.................... 7,515,579
Less: custodian fee credit........ (61,424)
-------------
Net expenses...................... 7,454,155
-------------
Net investment income................. 34,755,227
-------------
Realized gain on Investments
Net realized gain on investment
transactions........................ 14,814
-------------
Net Increase in Net Assets
Resulting from Operations............. $ 34,770,041
-------------
-------------
</TABLE>
COMMAND TAX-FREE FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended June 30,
Increase in ---------------------------------
Net Assets 1996 1995
--------------- ---------------
<S> <C> <C>
Operations
Net investment
income............... $ 34,755,227 $ 28,248,472
Net realized gain on
investment
transactions....... 14,814 45
--------------- ---------------
Net increase in net
assets resulting
from operations.... 34,770,041 28,248,517
--------------- ---------------
Dividends and
distributions to
shareholders......... (34,770,041) (28,248,517)
--------------- ---------------
Fund share transactions
(at $1 per share)
Net proceeds from
shares
subscribed......... 4,980,375,440 4,346,712,584
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions...... 34,770,041 28,248,517
Cost of shares
reacquired........... (4,913,777,690) (4,166,995,198)
--------------- ---------------
Net increase in net
assets from Fund
share
transactions....... 101,367,791 207,965,903
--------------- ---------------
Total increase......... 101,367,791 207,965,903
Net Assets
Beginning of year...... 1,055,567,646 847,601,743
--------------- ---------------
End of year............ $ 1,156,935,437 $ 1,055,567,646
--------------- ---------------
--------------- ---------------
</TABLE>
See Notes to Financial Statements appearing on page 27.
-25-
<PAGE>
<PAGE>
COMMAND TAX-FREE FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
- ------------------------------------------------------------
1996 1995
1994 1993 1992
----------
- ---------- -------- -------- --------
<S> <C> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year...................... $ 1.000 $
1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net realized gains............ 0.031
0.032 0.020 0.022 0.035
Dividends and distributions to shareholders............. (0.031)
(0.032) (0.020) (0.022) (0.035)
----------
- ---------- -------- -------- --------
Net asset value, end of year............................ $ 1.000 $
1.000 $ 1.000 $ 1.000 $ 1.000
----------
- ---------- -------- -------- --------
----------
- ---------- -------- -------- --------
TOTAL RETURN(a)......................................... 3.12%
3.29% 1.98% 2.23% 3.53%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)........................... $1,156,935
$1,055,568 $847,602 $853,930 $729,122
Average net assets (000)................................ $1,134,257 $
926,888 $908,421 $823,517 $751,458
Ratios to average net assets:
Expenses, including distribution fees................. .66%
.66% .65% .68% .69%
Expenses, excluding distribution fees................. .54%
.54% .53% .55% .56%
Net investment income................................. 3.06%
3.05% 1.96% 2.09% 3.47%
</TABLE>
- ---------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes reinvestment
of dividends and distributions.
See Notes to Financial Statements appearing on page 27.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Command Tax-Free 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 Command Tax-Free Fund (the
``Fund'') at June 30, 1996, 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 June
30, 1996 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
August 9, 1996
-26-
<PAGE>
<PAGE>
COMMAND FUNDS
Notes to Financial Statements
Command Money Fund, Command Government Fund, and Command Tax-Free Fund (each
a ``Fund'' and collectively, the Funds ) are each registered under the
Investment Company Act of 1940 as an open-end, diversified management investment
company whose shares are offered exclusively to participants in the Prudential
Securities Command Account Program of Prudential Securities Incorporated
(Prudential Securities). The Command Money Fund seeks high current income,
preservation of capital and maintenance of liquidity by investing in a
diversified portfolio of money market instruments maturing in 13 months or less.
The Command Government Fund seeks high current income, preservation of capital
and maintenance of liquidity by investing in a portfolio of U.S. government
securities maturing in 13 months or less. The Command Tax-Free Fund seeks high
current income that is exempt from federal income taxes, consistent with the
preservation of capital and maintenance of liquidity. The Fund invests in a
diversified portfolio of short-term, tax-exempt securities with maturities of
13
months or less that are issued by states, municipalities and their agencies (or
authorities). Some securities may be subject to the federal alternative minimum
tax (AMT). The Funds invest in a portfolio of money market instruments maturing
in 13 months or less whose ratings are within the two highest ratings categories
by a nationally recognized statistical rating agency or, if not rated, are of
comparable quality. The ability of the issuers of the securities held by the
Funds to meet their obligations may be affected by economic and/or political
developments in a specific industry, state or region.
Note 1. Accounting The following is a summary
Policies of significant accounting poli-
cies followed by the Funds in the preparation of
their 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. If the amortized cost
method is determined not to represent fair value, the value shall be determined
by or under the direction of the Board of Trustees. All securities are valued
as
of 4:30 p.m., New York time.
In connection with transactions in repurchase agreements, it is the Funds'
policy that its custodian or designated subcustodians, as the case may be under
triparty repurchase agreements, take possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. If the seller defaults and the value
of
the collateral declines or if bankruptcy proceedings are commenced with respect
to the seller of the security, realization of the collateral by the Funds may
be
delayed or limited.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Interest income is recorded on the
accrual basis. Expenses are recorded on the accrual basis which may require the
use of certain estimates by management. The cost of portfolio securities for
federal income tax purposes is substantially the same as for financial reporting
purposes.
Federal Income Taxes: Each Fund intends to continue to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its net income to its shareholders.
Therefore, no federal income tax provision is required.
Dividends: Each Fund declares all of its net investment income as dividends
daily to its shareholders of record at the time of such declaration. Dividends
are reinvested daily into additional full and fractional shares of the
respective Fund at the net asset value per share determined on the date of
declaration. Net investment income for dividend purposes includes accrued
interest and amortization of premiums and discounts, plus or minus any gains or
losses realized on sales of portfolio securities, and less the estimated
expenses of the Fund applicable to the dividend period.
Custody Fee Credits: The Command Tax-Free Fund has an arrangement with its
custodian bank, whereby uninvested money earn credits which reduce the fees
charged by the custodian.
Note 2. Agreements Each Fund has a manage-
ment 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 the Prudential
Investment Corporation (PIC); PIC furnishes investment advisory services in
connection with the management of the Funds. PMF pays for the cost of the
subadvisor's services, the compensation of officers of the Funds, occupancy and
certain clerical and bookkeeping costs of the Funds. The Funds bear all other
costs and expenses.
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<PAGE>
<PAGE>
The management fee paid PMF is computed daily and payable monthly on the
following basis:
<TABLE>
<CAPTION>
Average Daily Command Command Command
Net Assets Money Government Tax-Free
- ------------------------------------ ------- ---------- -------
<S> <C> <C> <C>
First $500 million.................. .500% .400% .500%
Second $500 million................. .425% .400% .425%
Third $500 million.................. .375% .375% .375%
Excess of $1.5 billion.............. .350% .375% .375%
</TABLE>
Each Fund had a distribution agreement with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), which acted as the distributor of the shares of
each Fund through January 1, 1996. Effective January 2, 1996, Prudential
Securities Incorporated (``PSI'') became the distributor of the shares of each
Fund and is serving each Fund under the same terms and conditions as under the
arrangement with PMFD. The Funds compensated PMFD for distributing and servicing
each Fund's shares pursuant to a plan of distribution at an annual rate of .125
of 1% of each respective Fund's average daily net assets. The distribution fee
is accrued daily and paid monthly.
PMFD is a wholly-owned subsidiary of PMF; Prudential Securities, PMF and PIC
are (indirect) wholly-owned subsidiaries of The Prudential Insurance Company of
America.
Note 3. Other Prudential Mutual Fund Ser-
Transactions vices, Inc. (PMFS), a wholly-
with Affiliates owned subsidiary of PMF,
serves as the Funds' transfer agent. During the
year ended June 30, 1996 the Funds incurred fees for the services of PMFS of
approximately:
<TABLE>
<S> <C>
Command Money.................................. $1,648,000
Command Government............................. $ 78,000
Command Tax-Free............................... $ 183,000
</TABLE>
As of June 30, 1996, the following amounts were due to PMFS from the Funds:
<TABLE>
<S> <C>
Command Money.................................... $151,532
Command Government............................... $ 6,756
Command Tax-Free................................. $ 15,245
</TABLE>
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<PAGE>
<PAGE>
FEDERAL INCOME TAX INFORMATION
COMMAND TAX-FREE FUND:
We are required by the Internal Revenue Code to advise you within 60 days of
the Command Tax-Free Fund's fiscal year end (June 30, 1996) as to the federal
tax status of dividends and distributions paid by the Fund during such fiscal
year. Accordingly, we are advising you that for the year ended June 30, 1996,
dividends paid from net investment income totalling $.031 per share were all
federally tax-exempt interest dividends.
COMMAND GOVERNMENT FUND:
IMPORTANT NOTICE FOR CERTAIN SHAREHOLDERS
We are required by Massachusetts, Missouri and Oregon to inform you that
dividends which have been derived from interest on federal obligations are not
taxable to shareholders providing the mutual fund meets certain requirements
mandated by the respective state's taxing authorities. We are pleased to report
that 33.2% of the dividends paid by the Command Government Fund qualify for such
deduction.
For more detailed information regarding your state and local taxes, you
should contact your tax advisor or the state/local taxing authorities.
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<PAGE>
Trustees
Edward D. Beach
Delayne Dedrick Gold
Harry A. Jacobs, Jr.
Richard A. Redeker
Stanley E. Shirk
Langdon R. Stevenson
Stephen Stoneburn
Nancy H. Teeters
David S. Towner
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice President
Grace Torres, Treasurer
S. Jane Rose, 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
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, Inc.
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
Prudential Mutual FundsOne Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852
This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current
prospectus.
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