Prudential
Securities
COMMAND
Account ---
- -----------
- -------
COMMAND
Money Fund
COMMAND
Government
Fund
COMMAND Tax-
Free Fund
SEMI-ANNUAL
REPORT
December
31, 1997
(LOGO)
<PAGE>
Letter to
Shareholder
s
February 2,
1998
Dear
Shareholder
:
U.S. short-term interest rates
fluctuated sharply over the six
months ended
December 31, 1997, as concern about
potential inflationary pressures in
the
United States gave way in the fall to
worries about severe economic
difficulties in Asia. Your COMMAND
Money, COMMAND Government and COMMAND
Tax-Free Funds produced solid yields
during the reporting period by acting
quickly to lock in higher yields when
available. For the seven-day period
ended December 31, the COMMAND Tax-
Free Fund provided income equivalent
to a
5.60% yield for investors in the
39.6% tax bracket.
FUND FACTS
As of 12/31/97
<TABLE>
<CAPTION>
7 Day
Net Asset Weighted
Total Net
Current Yld.
Value(NAV Avg. Mat. (WAM)
Assets (mil.) <S> <C>
<C>
<C> <C>
Command Money 5.39%
$1.00
57 days $ 7,156.8
IBC Financial Data 5.07%
$1.00
60 days N/A
Money Fund Avg.
(All Taxable)1
Command 5.25%
$1.00
63 days $ 538.2
Government
IBC Financial Data 4.97%
$1.00
49 days N/A
Total Government
Universe2
Command 3.38%
$1.00
57 days $ 1,079.2
Tax-Free3
IBC Financial Data 3.34%
$1.00 50 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 each 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. IBC Financial Data reports a seven-
day current yield, WAM and NAV on
Tuesdays. This is the average seven-
day current yield, NAV and WAM of all
funds in the International Business
Communications Financial Data all
taxable
money market fund category as of
December 30, 1997, which was the
closest date
to our reporting period end.
2. IBC Financial Data reports a seven-
day current yield, WAM and NAV on
Tuesdays. This is the average seven-
day current yield NAV and WAM of all
funds
in the International Business
Communications Financial Data total
government
universe as of December 30, 1997,
which was the closest date to our
reporting
period end.
3. Some investors may be subject to
the federal alternative minimum tax.
4. IBC Financial Data reports a seven-
day current yield WAM and NAV on
Tuesdays. This is the average seven-
day current yield, NAV and WAM of all
funds in the International Business
Communications Financial Data's
stockbroker and general purpose tax-
free money fund category as of
December
30, 1997, which was the closest date
to our reporting period end.
-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
maintenance of liquidity and
preservation
of capital. 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
U.S. Economy On A Roll
Robust consumer spending and
increased investment by businesses
helped the
U.S. economy race ahead during the
summer. While U.S. central bankers had
raised the federal funds rate (what
banks charge each other for overnight
loans) in March to slow economic
growth, the quarter percentage point
increase
had a negligible impact.
Meanwhile, news that the economy had
created
more than 300,000 jobs in July
jolted the money market, driving
prices of shortterm securities lower
(and
yields higher). Investors feared that
strong economic growth was finally
going
to ignite higher inflation. Some money
managers shortened their funds'
weighted
average maturities (WAMs) so that they
would have quick access to cash to buy
any higher yielding securities that
would have been issued if the federal
funds rate rose in August or
September. Monetary policy, however,
remained
unchanged amid unusually subdued
inflation.
Although brisk economic growth has
historically
sparked higher inflation, a
strong U.S. dollar, and heated global
and domestic competition helped keep
the
lid on prices. Inflation, therefore,
remained nearly dormant in 1997, with
the
consumer price index inching up only
1.7%, its smallest gain in 11 years.
Nevertheless, concern about the
potential for mounting inflationary
pressures
did not fade completely in 1997
because the economy expanded at its
fastest
pace in nine years.
Indeed, inflation jitters resurfaced
in early
autumn after a report showed a
surprisingly large increase in prices
paid to U.S. factories and other
-2-
<PAGE>
producers. Fearing that a second
change in monetary policy was
imminent,
investors once again pushed up yields
on money market securities. Then
short-term yields suddenly fell in
late October as investors fleeing an
Asian
economic crisis sought the relative
safety of U.S. Treasury securities.
Investors also realized the Federal
Reserve would not increase the federal
funds rate in November until the scope
of the Asian economic crisis was fully
understood.
As the year wound down, yields climbed
as many
companies borrowed cash in the
money market. In the municipal market,
yields on tax-exempt money market
securities rose as portfolio managers
sold securities to meet investor
redemptions.
What Went Well
A Smart Move
By late October, we extended the
COMMAND Money
Fund's WAM as yields rose in
anticipation of a possible increase in
the federal funds rate in November.
Lengthening the WAM by purchasing
attractively priced three- and six-
month
securities proved to be a smart move
since yields dropped a few days later
when investors were surprised by news
of severe economic difficulties in
Asia.
Financial sector problems that had
been simmering in Southeast Asia
boiled
over, engulfing global financial
markets. On October 27, the Dow Jones
Industrial Average plunged a record
554 points as investors sold stocks
and
sought refuge in Treasuries. Yields on
other money market securities
initially
fell with Treasuries.
As the year drew to a close, Asian
economic
difficulties helped push up
yields on corporate money market
securities. This, coupled with the
typical
year-end rise in yields, created good
buying opportunities. So from
mid-November through December, we
enhanced the Fund's return by
purchasing
attractively priced securities
maturing in one to three months that
extended
the WAM to longer than that of the
average comparable fund.
October's rise in yields also
benefited the
COMMAND Government Fund as we
bought one-year federal agency
securities, which were attractively
priced in
order to compensate investors for the
risk that higher yielding securities
would be issued after a federal funds
rate rise in November. Of course, we
were really pleased with our purchases
when surging demand pushed down the
yield on one-year Treasury bills to
5.21% on October 27, its lowest level
of
the year. Then, the Federal Reserve's
decision to leave monetary policy
unchanged in November provided further
reason to applaud our October
investment selections.
-3-
<PAGE>
Fortified Against The "July Effect"
Every summer, an imbalance in the
supply and
demand of tax-exempt money
market securities, called the "July
Effect," drives prices sharply higher
(and yields lower). This occurs as a
flood of municipal money market
securities mature between late June
and mid-July, causing billions of
dollars
of securities to leave the market. At
the same time, many long-term
municipal
bonds pay interest at the beginning of
July. Bondholders often invest these
interest payments temporarily in the
tax-exempt money market, further
exacerbating the dearth of short-term
securities and the drop in yields.
While the "July Effect" can
undermine a portfolio's performance,
the COMMAND
Tax-Free Fund was well insulated from
this effect. Locking in higher yields
available during the April tax season
and buying attractively priced six-
and
nine-month securities in late June
left the WAM significantly longer than
its
competition as the reporting period
began in July. So your Fund was well
fortified against the sharply lower
yields that usually occur in July.
And Not So Well
Missed Opportunities
Had we known the federal funds rate
increase in
March would be the only
change in 1997, we would have kept the
WAMs for the COMMAND Money Fund and
the
COMMAND Government Fund significantly
longer than its competition throughout
the entire six-month reporting period.
Adopting such an aggressive strategy
would have enabled us to take better
advantage of the attractive yields
available during the summer. Instead,
we missed opportunities to lock in
higher yields.
In early November, the COMMAND Tax-
Free Fund's
WAM was slightly shorter than
its competition because we thought
U.S. central bankers would move again
later
in the month. After the federal funds
rate remained at 5.50%, we looked for
longer-term money market securities in
order to extend the WAM. While yields
typically rise toward the end of the
year, the supply of attractively
priced
securities was rather limited, so we
could only lengthen the WAM a modest
amount. Our inability to extend the
WAM further detracted from your Fund's
performance.
Looking Ahead
Yields on money market securities have
tumbled in the new year because many
investors believe Asian economic
problems will slow U.S. economic
growth
enough to require one or more federal
funds rate cuts to jump-start the
economy. Certainly the U.S. economy
will lose steam as the struggling
Asian
countries buy fewer exports from the
U.S., while our market gets flooded
-4-
<PAGE>
with attractively priced imports from
Asia. Still, some analysts estimate
the
reduction in U.S. gross domestic
product (the total value of goods and
services produced by the U.S.
economy), due to the Asian debacle,
could only
amount to a small fraction of a
percentage point. In the near term,
even if
U.S. economic growth moderates, the
Federal Reserve will probably be
reluctant
to cut short-term interest rates and
will certainly not lower the federal
funds rate to levels anticipated by
many market participants.
Sincerely,
Michelle Errico Gonnella Bernard D.
Whitsett, II Richard S. Lynes
Portfolio Manager Portfolio
Manager Portfolio Manager
COMMAND Money Fund COMMAND
Government Fund COMMAND Tax-Free Fund
Richard A. Redeker
President
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description (Note
1)
<C> <S> <C>
Bank Notes--5.4%
American Express
Centurion Bank
$ 13,000(a) 5.93875%,
1/5/98........... $
13,000,336
12,000(a) 5.94047%,
1/13/98..........
11,998,975
14,000(a) 6.03875%,
1/23/98..........
14,003,363
Bank of America,
Illinois 10,000 5.85%,
3/13/98.............
9,997,131
Comerica Bank of
Detroit 20,000(a) 5.90%,
1/5/98..............
19,998,795
83,000(a) 5.895%,
1/11/98............
82,993,695
First Bank N.A.
41,000(a) 5.88094%,
1/21/98..........
40,995,673
First USA Bank
10,000(a) 6.01875%,
1/9/98...........
10,025,696
U.S. Bank N.A.
103,000(a) 5.86094%,
1/21/98..........
102,953,189
Wachovia Bank,
N.A.
80,000 6.14%,
6/1/98..............
80,000,000
-------------
385,966,853
-------------
Certificates of Deposit -
Domestic-1.5%
Chase Manhattan Bank
45,000 5.75%,
2/10/98.............
45,000,000
Corestates Bank
N.A. 8,000(a) 5.7825%,
1/23/98...........
8,000,000
Morgan Guaranty
Trust Company
54,000 5.87%,
8/6/98..............
53,990,787
-------------
106,990,787
-------------
Certificates of Deposit -
Eurodollar-2.4%
Banco De Santander SA
25,000 5.65%,
1/30/98.............
25,000,199
Bayerische
Landesbank
Girozentrale
50,000 5.63%,
1/30/98.............
49,998,199
Toronto
Dominion Bank 50,000
5.62%,
1/30/98.............
50,000,000
Westdeutsche
Landesbank
Girozentrale
$ 48,000 5.82%,
8/3/98.............. $
47,978,198
-------------
172,976,596
-------------
Certificates of Deposit -
Yankee-18.8%
Abbey National Treasury
Services PLC
300,000 5.81%,
3/3/98..............
300,000,000
Bank of Montreal
117,000 5.64%,
1/29/98.............
117,000,000
Bayerische
Hypotheken
und Weschel
Bank
23,000 5.94%,
10/22/98............
22,989,376
Canadian
Imperial Bank
of Commerce
200,000 5.81%,
3/17/98.............
200,000,000
11,000 5.94%,
3/17/98.............
11,001,034
145,000 5.80%,
3/23/98.............
145,000,000
Commerzbank
U.S. Finance,
Inc.
25,000 6.075%,
5/27/98............
24,996,658
Credit Agricole
Indosuez 82,000
5.87%,
8/10/98.............
81,976,263
50,000 5.90%,
10/19/98............
49,980,947
20,000 5.95%,
10/21/98............
19,992,328
Deutsche Bank
10,000 5.94%,
10/23/98............
9,995,365
Dresdner Bank
AG
6,000 5.76%,
7/31/98.............
5,995,194
Landesbank
Hessen-
Thuringen
Girozentrale
25,000 6.13%,
4/7/98..............
25,007,529
73,000 5.94%,
6/19/98.............
72,980,618
National
Westminster
Bank PLC
46,000 6.06%,
5/26/98.............
45,991,281
44,000 6.09%,
5/27/98.............
43,996,639
5,000 5.92%,
6/23/98.............
5,000,282
</TABLE>
- -6-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description (Note
1)
<C> <S> <C>
Certificates of Deposit -
Yankee-(cont'd.)
Societe Generale
$ 10,000 6.19%,
5/6/98.............. $
9,997,970
13,000 6.01%,
6/16/98.............
12,998,306
50,000 5.97%,
9/15/98.............
49,983,180
Swiss Bank Corp.
90,000 5.98%,
3/19/98.............
89,994,453
-------------
1,344,877,423
-------------
Commercial Paper--50.8%
AC Acquisition Holding Co.
30,000 5.61%,
1/29/98.............
29,869,100
American General Finance
Corp.
38,000 5.57%,
1/23/98.............
37,870,652
Aon Corp.
25,000 5.87%,
1/26/98.............
24,898,090
25,000 5.79%,
3/30/98.............
24,646,167
Aristar, Inc.
12,200 5.84%,
1/23/98.............
12,156,460
18,000 5.84%,
1/29/98.............
17,918,240
9,000 5.95%,
2/12/98.............
8,937,525
Associates Corp. of North
America
50,000 5.57%,
1/21/98.............
49,845,278
125,000 5.61%,
1/28/98.............
124,474,062
Associates First Capital
Corp.
50,000 5.70%,
1/16/98.............
49,881,250
Bank Austria Finance, Inc.
100,000 5.72%,
3/17/98.............
98,808,333
Bank of New
York Co., Inc. 35,000
5.72%,
3/6/98..............
34,644,089
Barnett Bank,
Inc.
100,000 5.88%,
1/16/98.............
99,755,000
100,000 6.00%,
1/27/98.............
99,566,667
Barton Capital
Corp.
$ 35,000 5.95%,
2/9/98.............. $
34,774,396
Carnival Corp.
35,000 5.83%,
1/30/98.............
34,835,626
Caterpillar
Financial
Services Corp.
6,000 5.95%,
1/27/98.............
5,974,217
Centric Capital
Corp.
24,000 6.10%,
1/22/98.............
23,914,600
23,000 6.00%,
1/26/98.............
22,904,167
Chrysler
Financial Corp. 91,000
5.79%,
2/9/98..............
90,429,202
CIT Group
Holdings, Inc. 47,000
5.56%,
2/24/98.............
46,608,020
Coca-Cola
Enterprises, Inc. 9,000
5.85%,
2/27/98.............
8,916,638
Corestates
Capital Corp. 40,000(a)
5.92875%,
1/2/98...........
40,000,000
Duke Capital
Corp.
36,000 5.90%,
1/21/98.............
35,882,000
53,000 5.90%,
1/23/98.............
52,808,906
Eiger Capital
Corp.
15,000 5.85%,
1/26/98.............
14,939,062
Enterprise
Funding Corp. 7,000
5.90%,
1/27/98.............
6,970,172
Falcon Asset
Securitizatio
n Corp.
29,025 5.90%,
1/21/98.............
28,929,862
First Chicago
Financial
Corp.
30,000 5.72%,
2/13/98.............
29,795,033
33,000 5.73%,
2/26/98.............
32,705,860
Ford Motor
Credit Co. 81,000
5.57%,
1/22/98.............
80,736,817
51,890 5.78%,
1/29/98.............
51,656,726
Fortune Brands,
Inc.
20,000 5.85%,
1/22/98.............
19,931,750
</TABLE>
- -7-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description
(Note
1)
<C> <S>
<C>
Commercial Paper--(cont'd.)
General Electric Capital
Corp.
$ 100,000 5.70%,
1/12/98............. $
99,825,833
13,000 5.70%,
1/13/98.............
12,975,300
15,621 5.57%,
1/23/98.............
15,567,828
74,000 5.62%,
2/19/98.............
73,433,941
100,000 5.74%,
3/13/98.............
98,867,944
38,000 5.52%,
6/12/98.............
37,056,080
General Motors Acceptance
Corp.
295,000 5.76%,
2/9/98..............
293,159,200
General Signal Corp.
10,000 6.75%,
1/15/98.............
9,973,750
9,000 6.75%,
1/16/98.............
8,974,688
Johnson
Controls, Inc. 25,000
5.82%,
1/23/98.............
24,911,083
39,000 5.80%,
2/13/98.............
38,729,817
Market Street
Funding Corp. 23,938
7.00%,
1/8/98..............
23,905,418
75,474 6.35%,
1/20/98.............
75,221,057
48,494 5.83%,
2/6/98..............
48,211,280
Martin Marietta
Material 13,000
5.875%,
2/5/98.............
12,925,747
Merrill Lynch &
Co., Inc. 27,000
5.62%,
2/5/98..............
26,852,475
Mont Blanc
Capital Corp. 42,360
5.88%,
1/28/98.............
42,173,192
9,490 5.92%,
1/28/98.............
9,447,864
59,000 5.82%,
2/13/98.............
58,589,852
National Rural
Utilities 45,000
5.56%,
1/26/98.............
44,826,250
Nationwide
Building Society 150,000
5.74%,
3/4/98..............
148,517,167
Old Line
Funding Corp. 29,000
5.875%,
1/20/98............
28,910,080
28,000 5.90%,
1/21/98.............
27,908,222
31,444 5.875%,
1/30/98............
31,295,187
42,537 6.00%,
2/17/98.............
42,203,793
Receivables
Capital Corp.
$ 35,000 6.00%,
1/26/98............. $
34,854,167
78,751 5.89%,
1/30/98.............
78,377,348
Safeco Corp.
83,000 5.70%,
1/23/98.............
82,710,883
20,000 5.83%,
2/26/98.............
19,818,622
43,000 5.77%,
3/12/98.............
42,517,564
Sears Roebuck
Acceptance
Corp.
6,000 5.59%,
1/22/98.............
5,980,435
13,000 5.75%,
2/12/98.............
12,912,792
50,000 5.75%,
2/13/98.............
49,656,597
Smith Barney Inc.
79,880 5.62%,
1/21/98.............
79,630,597
26,000 5.62%,
1/27/98.............
25,894,469
93,120 5.62%,
1/28/98.............
92,727,499
Societe Generale
17,000 5.735%,
3/16/98............
16,799,594
Special Purpose
Accounts
Recreation
Cooperative
Corp.
34,000 5.84%,
2/20/98.............
33,724,222
5,000 5.86%,
2/20/98.............
4,959,306
8,000 5.82%,
2/27/98.............
7,926,280
14,000 5.80%,
3/26/98.............
13,810,533
Triple A One
Funding Corp. 37,000
5.90%,
1/16/98.............
36,909,042
TRW, Inc.
40,000 6.00%,
1/28/98.............
39,820,000
Variable
Funding
Capital Corp.
9,372 5.91%,
1/12/98.............
9,355,076
61,927 5.89%,
1/27/98.............
61,663,569
7,888 5.88%,
1/29/98.............
7,851,926
29,274 5.81%,
2/17/98.............
29,051,949
Windmill Funding Corp.
93,000 5.89%,
1/29/98.............
92,573,957
5,222 6.00%,
1/29/98.............
5,197,631
Xerox Capital (Europe)
PLC 1,664 6.85%,
1/2/98..............
1,663,683
</TABLE>
-8
See Notes to Financial
Statements appearing on page 29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description (Note
1)
<C> <S> <C>
Commercial Paper--(cont'd.)
Xerox Overseas Holdings PLC
$ 37,000 5.79%,
2/12/98............. $
36,750,065
-------------
3,633,584,821
-------------
Loan Participations--0.6%
Bell Atlantic Network
Funding Corp.
13,000 6.33%,
1/23/98.............
13,000,000
Countrywide
Home Loan, Inc. 29,000
6.25%,
1/30/98.............
29,000,000
-------------
42,000,000
-------------
Other Corporate
Obligations--19.8% Abbey
National Treasury
Services PLC
15,000 6.185%,
4/7/98.............
14,997,554
CIT Group Holdings, Inc.
7,000 6.20%,
4/15/98.............
7,000,441
General Motors Acceptance
Corp.
41,000(a) 5.73%,
2/2/98.............. 40,998,686
Goldman Sachs Group L.P.
268,000(a) 6.03125%,
4/22/98.......... 268,000,001
Liquid Asset
Backed
Securities
Trust
108,000(a) 5.96875%,
1/22/98..........
108,000,000
Merrill Lynch &
Co., Inc. 47,000(a)
5.96%,
1/8/98..............
46,996,473
61,000(a) 5.90141%,
1/26/98..........
60,996,293
Morgan Stanley
Dean Witter
Discover &
Co., Inc.
$ 18,000 a)(b) 5.88281%,
1/15/98.......... $
18,000,000
33,000 a)(b) 6.07031%,
2/13/98..........
33,000,000
PNC Student Loan
Trust
5,401(a) 5.90875%,
1/26/98..........
5,401,284
Restructured Asset
Securities
172,000(a) 5.99%,
1/28/98.............
172,000,000
Short Term
Repackaged Asset
Trust
94,000(a) 6.00247%,
1/15/98..........
94,000,000
Short-Term Card
Account
Trust
227,000(a) 6.00047%,
1/15/98..........
227,000,000
SMM Trust Notes 1997-
X 127,000(a) 6.00%,
1/12/98.............
127,000,000
Strategic Money
Market
Trust 1997-A
195,000(a) 5.90625%,
3/23/98.......... 195,000,000
-------------
1,418,390,732
-------------
Total Investments--99.3%
(amortized cost
$7,104,787,212)........
..
7,104,787,212
Other assets in excess of
liabilities--
0.7%........
51,978,512
-------------
Net Assets--100%...........
$7,156,765,724
-------------
-------------
</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) Indicates a security restricted as
to resale.
- -9-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
<TABLE>
The industry classification of
portfolio holdings and other assets in
excess of
liabilities shown as a percentage of
net assets as of December 31, 1997 was
as
follows:
<S> <C>
Commercial
Banks............................
42.2%
Asset Backed
Securities.....................
15.9
Security Brokers &
Dealers..................
9.1
Short-Term Business
Credit..................
8.9
Fire & Marine Casualty
Insurance............
5.2
Finance
Lessors.............................
4.7
Personal Credit
Institutions................
4.2
Bank Holding Companies -
Domestic...........
1.4
Motor Vehicle
Parts.........................
1.3
Electrical
Services.........................
1.2
Regulating
Controls.........................
0.9
Accidental & Health
Insurance...............
0.7
Guided Missiles &
Space.....................
0.6
Photographic
Equipment......................
0.5
Water
Transportation........................
0.5
Pharmaceuticals.......................
......
0.4
Mortgage
Banks..............................
0.4
Cigarettes............................
......
0.3
Computer & Electrical
Equipment.............
0.3
Telephone &
Communications..................
0.2
Mining &
Quarry.............................
0.2
Beverages.............................
......
0.1
Construction Machine &
Equipment............
0.1
----
99.3
Other assets in excess of
liabilities.......
0.7
----
100.0%
----
----
</TABLE>
- -10-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
COMMAND MONEY FUND
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
Assets
December 31, 1997
- -----------------
<S>
<C>
Investments, at amortized cost which
approximates market
value........................ $
7,104,787,212
Receivable for Fund shares
sold..................................
............ .........
195,880,215
Interest
receivable............................
............
...........................
37,850,217 Prepaid
expenses..............................
............
............................
144,101
- -----------------
Total
assets................................
............
............................
7,338,661,745
- -----------------
Liabilities
Payable for Fund shares
repurchased...........................
............ ............
177,816,905
Management fee
payable...............................
............ .....................
2,352,754
Accrued expenses and other
liabilities...........................
............ .........
1,294,312
Distribution fee
payable...............................
............ ...................
432,050
- -----------------
Total
liabilities...........................
............
............................
181,896,021
- -----------------
Net
Assets................................
............
................................ $
7,156,765,724
- -----------------
- -----------------
Net assets were comprised of:
Shares of beneficial interest, at
par...................................
............ $
71,567,657
Paid-in capital in excess of
par...................................
............ ..... 7,085,198,067
- -----------------
Net assets, December 31,
1997..................................
............ ........... $
7,156,765,724
- -----------------
- -----------------
Net asset value, offering price and
redemption price per share
($7,156,765,724 /
7,156,765,724 shares of beneficial
interest (.01
par value) issued and
outstanding)..........................
............
..................................
$1.00
- -----------------
- -----------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
- -11-
<PAGE>
COMMAND MONEY FUND
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
Net Investment Income
1997
<S> <C>
Income
Interest.............................
$
210,649,430
-----------------
Expenses
Management
fee.......................
13,474,002
Distribution
fee.....................
4,587,095
Transfer agent's fees and
expenses...
1,300,000
Registration
fees....................
145,000
Reports to
shareholders..............
95,000
Custodian's fees and
expenses........
73,000
Insurance
expense....................
50,000
Trustees'
fees.......................
25,000
Audit
fee............................
15,000
Legal fees and
expenses..............
14,000
Miscellaneous........................
3,262
-----------------
Total
expenses.....................
19,781,359
-----------------
Net investment
income.................. 190,868,071
-----------------
Realized Gain on Investments
Net realized gain on investment
transactions........................
.
4,315
-----------------
Net Increase in Net Assets
Resulting from
Operations.............. $
190,872,386
-----------------
-----------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
COMMAND MONEY FUND
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year
Ended
Increase (Decrease) December 31, June
30,
in Net Assets 1997
1997
<S> <C> <C>
Operations
Net investment
income........... $ 190,868,071
$
301,906,638
Net realized gain on investment
transactions..... 4,315
168,167
---------------- ---------
- -------
Net increase in net
assets resulting
from
operations....... 190,872,386
302,074,805
---------------- ---------
- -------
Dividends and
distributions to
shareholders (Note
1)...................
(190,872,386) (302,074,805)
---------------- ---------
- -------
Fund share
transactions (at $1
per share)
Net proceeds from
shares
subscribed.......
18,297,823,707
30,172,770,064
Net asset value of
shares issued in
reinvestment of
dividends and
distributions.... 190,872,386
302,074,805
Cost of shares
reacquired.......
(17,961,832,941) (29,154,784,207)
---------------- ---------
- -------
Net increase in net
assets from Fund
share
transactions..... 526,863,152
1,320,060,662
---------------- ---------
- -------
Total increase....... 526,863,152
1,320,060,662
Net Assets
Beginning of
period............... 6,629,902,572
5,309,841,910
---------------- ---------
- -------
End of period........ $ 7,156,765,724 $
6,629,902,572
---------------- ---------
- -------
---------------- ---------
- -------
</TABLE>
See Notes to Financial
Statements appearing on page 29.
- -12-
<PAGE>
COMMAND MONEY FUND
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30,
December 31, ----
- --------------------------------------------------------------
1997 1997
1996 1995 1994
1993
----------- -----
- ----- ---------- ------------------- ----------
<S> <C>
<C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period... $
1.000 $ 1.000 $ 1.000
$ 1.000
$ 1.000 $ 1.000
Net investment income and net realized
gains...............................
.
0.026 0.049 0.052 0.050
0.029 0.030
Dividends and distributions to
shareholders........................
.
(0.026) (0.049) (0.052) (0.050)
(0.029) (0.030)
----------- -----
- ----- ---------- ------------------- ----------
Net asset value, end of
period......... $
1.000 $ 1.000 $ 1.000
$ 1.000
$ 1.000 $ 1.000
----------- -----
- ----- ---------- ------------------- ----------
----------- -----
- ----- ---------- ------------------- ----------
TOTAL
RETURN(a):.......................
2.65% 5.06% 5.30% 5.13%
2.98% 3.01%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)........ $
7,156,766 $6,629,903 $5,309,842
$4,055,700 $2,448,201
$2,436,672
Average net assets
(000)............... $
7,279,520 $6,078,525
$4,896,794 $3,072,284 $2,570,195
$2,275,532
Ratios to average net assets:
Expenses, including distribution
fees..............................
...
.54%(a) .57% .58% .59%
.59% .61%
Expenses, excluding distribution
fees..............................
...
.41%(a) .44% .46% .47%
.47% .48%
Net investment
income................
5.20%(a) 4.97% 5.15% 5.09%
2.92% 2.90%
</TABLE>
- ---------------
(a) Annualized.
(b) 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 less than a full year are
not annualized.
See Notes to Financial Statements
appearing on page 29.
- -13-
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description
(Note 1)
<C> <S> <C>
U.S. Government Agencies-
-63.5% Federal Farm
Credit Bank--5.4%
$ 29,000 5.70%,
9/2/98................. $
28,984,538
-----------
Federal Home Loan Bank--
20.7%
20,000 5.80375%,
1/2/98..............
19,999,960
27,500(a) 5.849%,
1/6/98................
27,497,174
22,500(a) 5.879%,
1/6/98................
22,488,996
725 7.93%,
1/20/98................
725,814
2,000 5.80%,
1/28/98................
1,999,659
4,600 5.99%,
2/9/98.................
4,600,998
2,290 6.04%,
5/6/98.................
2,290,252
1,215 5.87%,
6/17/98................
1,215,552
2,725 5.90%,
9/16/98................
2,725,000
6,000 5.80%,
10/27/98...............
5,997,641
17,000 5.81%,
11/4/98................
16,992,180
4,900 6.00%,
12/30/98...............
4,900,000
-----------
111,433,226
-----------
Federal Home Loan
Mortgage Corporation--
11.4%
4,375 5.62%,
1/9/98.................
4,369,536
34,872 5.70%,
1/14/98................
34,800,222
10,000 5.75%,
1/22/98................
9,966,459
12,000 5.60%,
1/23/98................
11,958,933
-----------
61,095,150
-----------
Federal National Mortgage
Association--23.4%
25,000(a) 5.894%,
1/6/98................
24,991,300
5,000 5.52%,
1/15/98................
4,999,722
25,000(a) 5.76047%,
1/15/98.............
24,987,652
15,850 5.70%,
1/21/98................
15,799,808
11,520 5.63%,
1/23/98................
11,517,957
10,000 5.40%,
2/5/98.................
9,947,500
$ 1,400 7.56%,
2/6/98................. $
1,402,249
5,000 6.00%,
4/17/98................
5,004,778
10,000 5.89%,
5/21/98................
9,995,871
7,000 12.00%,
6/26/98...............
7,203,591
10,000 5.63%,
8/14/98................
9,986,993
-----------
125,837,421
-----------
Student Loan Marketing
Association-1.7%
5,000(a) 5.779%,
1/6/98................
4,997,064
3,280 5.535%,
2/25/98...............
3,279,172
1,000 5.65%,
3/17/98................
999,577
-----------
9,275,813
-----------
United States Treasury
Note--0.9% 5,000 5.875%,
4/30/98...............
5,005,082
-----------
Total U.S. Government
Agencies (amortized
cost
$341,631,230)..........
.....
341,631,230
-----------
Repurchase
Agreements(b)--
36.3% Chase
Manhattan Bank, 6.15%,
dated 12/31/97,
due 1/7/98
in the amount of
$21,025,113, value of
collateral including
accrued interest--
$21,451,219.......
21,000,000
21,000
Chase Manhattan Bank,
5.83%,
dated 12/15/97, due
1/14/98 in the amount
of $15,072,875, value
of collateral
including accrued
interest--
$15,443,240.......
15,000,000
15,000
Chase Manhattan Bank,
5.80%,
dated 12/30/97, due
1/29/98 in the amount
of $16,694,301, value
of collateral
including accrued
interest--
$17,158,147.......
16,614,000
16,614
</TABLE>
-14
See Notes to Financial
Statements appearing on page 29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description
(Note 1)
<C> <S> <C>
Repurchase Agreements--
(cont'd.) Credit Suisse
First Boston
Corp., Inc., 6.30%,
dated 12/29/97, due
1/5/98 in the
amount of
$4,600,629, value
of collateral
including accrued
interest--$4,727,445........ $
4,595,000
$ 4,595
Credit Suisse First
Boston
Corp., 6.30%, dated
12/31/97, due
1/5/98 in the
amount of
$32,430,352, value
of collateral
including accrued
interest--$33,120,351....... $
32,402,000
32,402
Morgan Stanley & Co.
Inc.,
6.27%, dated
12/26/97, due
1/2/98 in the
amount of
$7,509,144, value
of collateral
including accrued
interest--
$7,856,215........
7,500,000
7,500
Morgan Stanley & Co.
Inc., 5.81%, dated
12/5/97, due 1/5/98
in the amount of
$6,231,019, value
of collateral
including accrued
interest--
$6,494,471........
6,200,000
6,200
Morgan Stanley & Co.,
Inc., 6.40%, dated
12/31/97, due
1/5/98 in the
amount of
$9,008,000, value
of collateral
including accrued
interest--
$9,427,488........
9,000,000
9,000
Morgan Stanley & Co.,
Inc., 5.80%, dated
12/4/97, due 1/6/98
in the amount of
$30,308,287, value
of collateral
including accrued
interest--$31,579,861....... $
30,148,000
$ 30,148
UBS Securities LLC,
6.25%,
dated 12/26/97,
due 1/2/98 in
the amount of
$29,035,243,
value of
collateral
including
accrued interest-
-$29,580,362....
...
29,000,000
29,000
UBS Securities
LLC, 6.20%,
dated 12/30/97,
due 1/6/98 in
the amount of
$24,028,933
(cost
$24,000,000),
value of
collateral
including
accrued interest-
-$24,480,060....
...
24,000,000
24,000
-----------
Total Repurchase Agreements
(amortized cost
$195,459,000)..........
.....
195,459,000
-----------
Total Investments--99.8%
(amortized cost
$537,090,230)..........
.....
537,090,230
Other assets in excess of
liabilities--
0.2%...........
1,077,184
-----------
Net Assets--
100%.............. $538,167,414
-----------
-----------
</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.
- -15-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
COMMAND GOVERNMENT FUND
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
Assets
December 31, 1997
- -----------------
<S>
<C>
Investments, at amortized cost which
approximates market
value........................ $
537,090,230
Receivable for Fund shares
sold..................................
............ .........
34,742,413
Interest
receivable............................
............
...........................
3,043,855 Prepaid
expenses..............................
............
............................
12,480
- -----------------
Total
assets................................
............
............................
574,888,978
- -----------------
Liabilities
Payable for Fund shares
repurchased...........................
............ ............
36,164,936
Accrued expenses and other
liabilities...........................
............ .........
336,254
Management fee
payable...............................
............ .....................
188,402
Distribution fee
payable...............................
............ ...................
31,972
- -----------------
Total
liabilities...........................
............
............................
36,721,564
- -----------------
Net
Assets................................
............
................................ $
538,167,414
- -----------------
- -----------------
Net assets were comprised of:
Shares of beneficial interest, at
par...................................
............ $
5,381,674
Paid-in capital in excess of
par...................................
............ ..... 532,785,740
- -----------------
Net assets, December 31,
1997..................................
............ ........... $
538,167,414
- -----------------
- -----------------
Net asset value, offering price and
redemption price per share
($538,167,414 /
538,167,414 shares of beneficial
interest ($.01
par value) issued and
outstanding)..........................
............
..................................
$1.00
- -----------------
- -----------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
- -16-
<PAGE>
COMMAND GOVERNMENT FUND
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
Net Investment Income
1997
<S> <C>
Income
Interest.............................
$
15,478,872
-----------------
Expenses
Management
fee.......................
1,098,924
Distribution
fee.....................
343,414
Transfer agent's fees and
expenses...
48,000
Registration
fees....................
42,000
Reports to
shareholders..............
19,000
Audit
fee............................
14,000
Custodian's fees and
expenses........
13,000
Trustees'
fees.......................
11,000
Legal fees and
expenses..............
5,000
Insurance
expense....................
5,000
Miscellaneous........................
2,669
-----------------
Total
expenses.....................
1,602,007
-----------------
Net investment
income..................
13,876,865
-----------------
Realized Gain on Investments
Net realized gain on investment
transactions........................
.
43,343
-----------------
Net Increase in Net Assets
Resulting from
Operations.............. $
13,920,208
-----------------
-----------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
COMMAND GOVERNMENT FUND
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year
Ended
Increase December 31, June
30,
in Net Assets 1997
1997
<S> <C> <C>
Operations
Net investment
income............... $
13,876,865 $
25,896,199
Net realized gain on
investment
transactions.......
43,343
100,048
--------------
- - --------
- -------
Net increase in net assets resulting
from operations.... 13,920,208
25,996,247
--------------
- - --------
- -------
Dividends and
distributions to
shareholders (Note
1)...................
(13,920,208) (25,996,247)
--------------
- - --------
- -------
Fund share transactions
(at $1 per share)
Net proceeds from shares
subscribed.........
1,215,439,762
2,583,554,167
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions......
13,920,208
25,996,247
Cost of shares
reacquired...........
(1,219,662,041) (2,568,565,639)
--------------
- - --------
- -------
Net increase in net
assets from Fund
share
transactions.......
9,697,929
40,984,775
--------------
- - --------
- -------
Total increase.........
9,697,929
40,984,775
Net Assets
Beginning of period....
528,469,485 487,484,710
--------------
- - --------
- -------
End of period.......... $
538,167,414 $
528,469,485
--------------
- - --------
- -------
--------------
- - --------
- -------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
- -17-
<PAGE>
COMMAND GOVERNMENT FUND
Financia
l
Highligh
ts
(Unaudit
ed)
<TABLE>
<Caption
>
Six Months
Ended Year
Ended June
30,
December 31, ---------------------
- ------------
- ------------------------
1997 1997 1996 1995
1994 1993
-------- -------- --------
- -------- --------
<S>
<C> <C> <C> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period..........
$ 1.000 $ 1.000 $ 1.000 $ 1.000
$ 1.000 $ 1.000
Net investment income and net realized
gains...............................
........
0.025 0.049 0.050 0.048
0.028 0.028
Dividends and distributions to
shareholders... (0.025) (0.049) (0.050) (0.048)
(0.028) (0.028)
-------- -------- --------
- -------- --------
Net asset value, end of
period................
$ 1.000 $ 1.000 $ 1.000 $ 1.000
$ 1.000 $ 1.000
-------- -------- --------
- -------- --------
-------- -------- --------
- -------- --------
TOTAL
RETURN(b).............................
.. 2.58% 4.97% 5.12% 4.89%
2.86% 2.85%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)............... $538,167 $528,469 $487,485
$404,295
$325,257 $381,703
Average net assets
(000)...................... $544,983 $534,580 $477,168
$350,458
$376,159 $380,103
Ratios to average net assets:
Expenses, including distribution
fees....... .58%(a) .63% .68% .65%
.63% .65%
Expenses, excluding distribution
fees....... .46%(a) .51% .56% .53%
.51% .53%
Net investment
income.......................
5.05%(a) 4.84% 4.97% 4.81%
2.79% 2.74%
</TABLE>
- ---------------
(a) Annualized.
(b) 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 less than a full year are
not annualized.
See Notes to Financial Statements
appearing on page 29.
- -18-
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount
Value
Rating (000)
Description (a)
(Note 1)
<S> <C> <C>
<C>
ALABAMA--
0.9%
Mcintosh
Ind. Dev.
Bus., Ciba
Geigy
Corp,
F.R.W.D.,
3.70%,
1/7/98, Ser. A-1+* $ 10,100
90....................
$ 10,100,000
- --------------
ALASKA--0.6%
Valdez
Marine Air
Terminal,
Arco Rev.,
T.E.C.P.,
3.85%,
2/4/98, Ser.
VMIG1 7,000
94C...................
7,000,000
- --------------
ARIZONA--
2.5%
Maricopa
Co.,
Arizona
Pub. Serv., F.R.D.D.,
4.80%,
1/2/98, Ser.
P-1 2,400
94C...................
2,400,000
Salt River
Agr.
Proj.,
Imp. &
Pwr.,
T.E.C.P.,
3.85%,
2/20/98, Ser.
P-1 24,439
80....................
24,439,000
- --------------
26,839,000
- --------------
CALIFORNIA--
3.2%
California
Higher Ed.
Ln. Auth.,
Student
Ln. Rev., A.N.N.M.T.,
4.00%,
7/1/98, Ser. VMIG1 9,100
87A...................
9,100,000
California
Student Ln. Mktg.
Corp.,
Student
Ln. Rev., A.N.N.M.T.,
3.85%,
11/1/98, Ser. VMIG1 25,800
93A...................
25,800,000
- --------------
34,900,000
- --------------
COLORADO--
2.0%
Colorado
Hsg. Fin.
Auth.,
Eagle
Trust,
F.R.W.D.S.
,
4.27%,
1/2/98, Ser.
A-1* 21,700
94C...................
21,700,000
- --------------
DELAWARE--
1.1%
Delaware
Econ. Dev.
Auth.,
Star
Enterprise
,
F.R.W.D.,
3.75%,
1/7/98, Ser. A-1+* $ 11,600
97....................
$ 11,600,000
- --------------
DISTRICT OF
COLUMBIA-5.0%
Dist. of
Columbia
Hsg. Fin.
Agcy.,
Carmel
Plaza,
F.R.W.D.,
4.10%,
1/1/98, Ser. VMIG1 3,830
91....................
3,830,000
Dist. of
Columbia,
Gen.
Oblig.,
F.R.D.D.,
5.15%,
1/2/98, Ser.
VMIG1 2,400 92A-
1.................
2,400,000
5.15%,
1/2/98, Ser. VMIG1 1,400
92A-3.................
1,400,000
5.15%,
1/2/98, Ser. VMIG1 6,000
92A-6.................
6,000,000
T.R.A.N.,
4.50%,
9/30/98, Ser. MIG1 24,410
98B...................
24,409,676
Metro. Wash.
Airport
Rev.,
T.E.C.P.,
A-1* 15,500 3.92%,
1/16/98..........
15,500,000
- --------------
53,539,676
- --------------
GEORGIA--
6.7%
Cobb Cnty.
Hsg.
Auth.,
Terrell
Mill II
Assoc.,
F.R.W.D.,
4.30%,
1/2/98, Ser. A-1+* 10,600
93....................
10,600,000
Fulton Cnty.
Dev. Auth. Rev.,
Metro.
Atlanta YMCA Proj.,
F.R.W.D.,
CPS1 12,500 4.20%,
1/2/98...........
12,500,000
</TABLE>
- -19-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount
Value
Rating (000)
Description (a)
(Note 1)
<S> <C> <C>
<C>
GEORGIA--
(cont'd.)
Monroe Cnty.
Dev. Auth.
Poll.,
Oglethorpe
Pwr.
Corp.,
S.E.M.O.T.
,
3.90%,
5/1/98, Ser.
NR $ 11,000
96....................
$ 11,000,000
Municipal
Elec.
Auth.,
Proj. 1,
F.R.W.D.S.
,
4.20%,
1/2/98, Ser. VMIG1 12,000
39....................
12,000,000
Roswell Hsg.
Auth.,
Post
Canyon
Proj.,
F.R.W.D.,
3.80%,
1/7/98, Ser. A-1+* 9,345
96....................
9,345,000
Willacoochee
Dev.
Auth.,
Poll.
Ctrl.
Rev.,
Langboard
Inc.
Proj.,
F.R.W.D.,
Aa2 17,000 4.20%,
1/2/98...........
17,000,000
- --------------
72,445,000
- --------------
ILLINOIS--
17.2%
Chicago,
Gen.
Oblig.,
A.N.N.M.T.
,
3.65%,
2/5/98, Ser. VMIG1 37,000
77....................
37,000,000
3.80%,
12/3/98, Ser. VMIG1 14,000
97....................
14,000,000
Stockyards
Indl.
Proj.,
F.R.W.D.,
3.75%,
1/7/98, Ser. A-1+* 13,300
96A...................
13,300,000
Gurnee Ind.
Dev. Rev.,
Sterigenic
s Intl.
Proj.,
F.R.W.D.,
4.40%,
1/7/98, Ser.
A-1* 7,750
96....................
7,750,000
Illinois
Dev. Fin.
Auth.
Rev.,
Adventist
Hlth.
Sys.,
F.R.W.D.,
4.00%,
1/2/98, Ser. VMIG1 40,165
97A...................
40,165,000
Illinois
Hlth. Fac. Auth.,
Evanston
Hosp.
Corp.,
A.N.N.M.T.
,
4.00%,
5/15/98, Ser. VMIG1 $ 18,000
95....................
$ 18,000,000
Evanston
Hosp.
Corp.
Proj.,
A.N.N.M.T.
,
3.85%,
11/30/98, Ser. VMIG1 19,000
92....................
19,000,000
Servant Cor
Falcon II,
F.R.W.D.,
3.90%,
1/7/98, Ser. A-1+* 16,000
96A...................
16,000,000
Victory
Hlth.
Svcs.
Proj.,
T.E.C.P.,
3.75%,
1/30/98, Ser. VMIG1 11,000
91....................
11,000,000
Illinois
Hlth. Fac.
Dev.
Auth.,
Riverside
Hlth.
Sys.,
F.R.W.D.,
3.95%,
1/2/98, Ser. VMIG1 10,000
94....................
10,000,000
- --------------
186,215,000
- --------------
INDIANA--
0.8%
Indiana Ed.
Fac.
Auth.,
Wesleyan
Univ.,
F.R.W.D.,
4.15%,
1/2/98, Ser.
NR 9,150
93....................
9,150,000
- --------------
IOWA--1.3%
Iowa Fin.
Auth.,
Solid
Waste
Disp.,
Cedar
River
Paper Co.
Proj.,
F.R.D.D.,
5.10%,
1/2/98, Ser. A-1+* 5,000
96A...................
5,000,000
Sergeant
Bluff Dev.
Rev.,
Sioux City
Brick &
Tile
Proj.,
F.R.W.D.,
4.30%,
1/2/98, Ser.
NR 9,100
96....................
9,100,000
- --------------
14,100,000
- --------------
</TABLE>
- -20-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount
Value
Rating (000)
Description (a)
(Note 1)
<S> <C> <C>
<C>
KANSAS--0.2%
Butler
Cnty.,
Texaco
Refining
and Mktg.,
F.R.D.D.,
5.15%,
1/2/98, Ser. VMIG1 $ 1,900
94A...................
$ 1,900,000
- --------------
KENTUCKY--
6.0%
Louisville &
Jefferson
Cnty.,
Sewer &
Drainage
Sub.
Notes,
F.R.W.D.,
A-1* 50,000 4.30%,
1/2/98...........
50,000,000
Pendleton
Cnty.
Multi.
Cnty.,
Lease Rev.
Prog.,
T.E.C.P.,
3.75%,
3/6/98, Ser. A-1+* 15,000
89....................
15,000,000
- --------------
65,000,000
- --------------
LOUISIANA--
1.2%
Lake
Charles,
Harbor &
Conoco
Proj.,
F.R.D.D.,
P-1 1,500 5.00%,
1/2/98...........
1,500,000
Plaquemines
Parish
Environ.
Rev.,
British
Petroleum
Co.,
Exploratio
n & Oil
Proj.,
F.R.D.D.,
5.10%,
1/2/98, Ser.
P-1 1,300
94....................
1,300,000
West Baton
Rouge
Parish
Ind. Dist.
Pound3
Rev.,
Dow
Chemical
Co. Proj.,
F.R.D.D.,
5.15%,
1/2/98, Ser.
P-1 7,500
93....................
7,500,000
5.15%,
1/2/98, Ser.
P-1 2,600
95....................
2,600,000
- --------------
12,900,000
- --------------
MARYLAND--
0.8%
Gathersburg
Econ. Dev.
Rev.,
Asbury
Methodist
Village,
F.R.W.D.,
4.15%,
1/8/98, Ser.
Aaa $ 8,200
97A...................
$ 8,200,000
- --------------
MASSACHUSETT
S--1.7%
Massachusett
s Bay Trans.
Auth.,
4.25%,
2/27/98, Ser. MIG2 10,000
97A...................
10,003,349
Massachusetts Hsg. Fin. Agcy.,
Single
Family Hsg. Rev.,
Ser. 5-
Eagle
Trust,
Q.T.R.O.T.
S.,
3.80%,
3/1/98, Ser. A-1+* 8,000
96....................
8,000,000
- --------------
18,003,349
- --------------
MICHIGAN--
3.2%
Charter
Cnty. of
Wayne,
Detroit
Metro
Wayne Co.
Airport,
F.R.W.D.,
3.75%,
1/7/98, Ser. VMIG1 9,100
96A...................
9,100,000
Detroit City
Sch.
Dist., Tax
Gen.
Oblig.,
4.50%,
5/1/98, Ser. SP-1+* 25,000
97....................
25,048,525
- --------------
34,148,525
- --------------
MINNESOTA--
1.3%
Bloomington
Port Auth.
Tax Rev.,
F.R.W.D.,
4.20%,
1/2/98, Ser. VMIG1 14,000
95A...................
14,000,000
- --------------
</TABLE>
- -21-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount
Value
Rating (000)
Description (a)
(Note 1)
<S> <C> <C>
<C>
MISSISSIPPI-
-1.6%
Harrison
Cnty. Poll.
Ctrl. Rev.,
Mississippi Pwr. Co. Proj.,
F.R.W.D.,
4.20%,
1/7/98, Ser.
A-1* $ 16,750
92....................
$ 16,750,000
- --------------
MISSOURI--
2.9%
Missouri
Environ.
Impvt. &
Energy
Res.
Auth.,
Union
Elec. Co.,
A.N.N.O.T.
,
3.95%,
6/1/98, Ser.
P-1 7,120
84A...................
7,120,000
Missouri St.
Hlth. & Ed. Facs.,
Sisters of
Saint Mary's
Hlth.
Care,
T.E.C.P.,
3.85%,
1/8/98, Ser.
VMIG1 10,000
88C...................
10,000,000
St. Charles
Cnty. Ind.
Dev.
Auth.,
Cedar
Ridge
Apts.,
F.R.W.D.,
3.75%,
1/7/98, Ser. A-1+* 14,225
88A...................
14,225,000
- --------------
31,345,000
- --------------
NEVADA--2.3%
Clark Cnty.
Poll.
Ctrl.
Rev.,
Southern
California
Ed. Proj.,
T.E.C.P.,
3.80%,
1/5/98, Ser.
P-1 12,090
87A...................
12,090,000
Washoe Cnty.
Wtr. Facs. Rev.,
Sierra
Pac. Pwr. Co. Proj.,
F.R.D.D.,
5.10%,
1/2/98, Ser.
P-1 13,200
90....................
13,200,000
- --------------
25,290,000
- --------------
NEW
HAMPSHIRE--2.7%
New
Hampshire Bus. Fin. Auth.,
New
England
Pwr. Co.
Proj.,
T.E.C.P.,
3.80%,
1/28/98, Ser. VMIG1 $ 18,700
90B...................
$ 18,700,000
3.85%,
3/16/98, Ser. VMIG1 10,300
90B...................
10,300,000
- --------------
29,000,000
- --------------
NEW JERSEY--
0.7%
New Jersey
Econ. Dev.
Auth.
Rev.,
Newark
Recycling
Fac.,
A.N.N.M.T.
,
3.95%,
12/15/98, Ser. A-1+* 7,700
97....................
7,700,000
- --------------
NEW YORK--
2.2%
New York
City Wtr. Fin. Auth.,
T.E.C.P.,
3.80%,
4/7/98, Ser.
NR 7,200
94....................
7,200,000
New York
Med. Care
Facs. Fin.
Agcy.
Rev.,
Hosp. &
Nursing
Home
Proj.,
8.10%,
2/15/98, Ser.
Aaa 16,050
88B...................
16,449,820
- --------------
23,649,820
- --------------
NORTH
CAROLINA--
0.4% Halifax
Cnty. Ind.
Facs.
& Poll.
Ctrl.,
Westmorela
nd L.G. &
E.
Partners,
F.R.D.D.,
5.10%,
1/2/98, Ser. A-1+* 3,800
93....................
3,800,000
- --------------
OHIO--1.9%
Medina Cnty.
Hsg. Rev.,
Oaks At
Medina
Proj.,
F.R.W.D.,
NR 9,650 4.15%,
1/2/98...........
9,650,000
</TABLE>
- -22-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount
Value
Rating (000)
Description (a)
(Note 1)
<S> <C> <C>
<C>
OHIO--
(cont'd.)
Ohio Wtr.
Dev. Auth.
Poll.
Ctrl.
Facs.,
Ohio
Edison Co.
Proj.,
A.N.N.O.T.
,
4.10%,
5/1/98, Ser. VMIG1 $ 10,480
88A...................
$ 10,480,000
- --------------
20,130,000
- --------------
OKLAHOMA--
0.5%
Muskogee
Ind.
Trust,
Muskogee
Mall
Proj.,
F.R.W.D.,
4.20%,
1/7/98, Ser. VMIG1 5,400
85....................
5,400,000
- --------------
PENNSYLVANIA-
-4.7%
Dauphin
Cnty. Gen.
Auth.
Rev.,
Ed. &
Hlth.
Prog.,
F.R.W.D.,
4.20%,
1/2/98, Ser. VMIG1 18,700
97....................
18,700,000
Emmaus Gen.
Auth.,
F.R.W.D.,
4.00%,
1/7/98, Ser. A-1+* 3,030
96....................
3,030,000
Montgomery
Cnty.,
Higher Ed.
& Hlth.
Auth.
Rev.,
F.R.W.D.,
4.00%,
1/7/98, Ser.
A-1* 15,600
96A...................
15,600,000
Philadelphia
Water &
Waste
Proj.,
A.N.N.M.T.
,
VMIG1 12,900 3.82%,
8/5/98...........
12,899,695
- --------------
50,229,695
- --------------
RHODE ISLAND-
- -0.9%
Rhode Island
Student
Ln. Auth.,
Student
Loan Pgrm.
Rev.
Proj.,
F.R.W.D.,
3.80%,
1/7/98, Ser. A-1+* 10,000
96-2..................
10,000,000
- --------------
SOUTH DAKOTA-
-5.0%
Brookings
Sch. Dist.,
Cert. of
Part.,
Q.T.R.M.T.
,
NR $ 12,210
$ 12,210,000
South Dakota
Ed. Lns. Inc.
Corp.,
Student
Ln. Rev., Q.T.R.M.T.,
3.85%,
2/4/98, Ser.
NR 14,500
97A...................
14,500,000
South Dakota
Hlth. &
Ed. Fac.
Auth.,
Sioux
Valley
Hosp &
Hlth.
Rev.,
F.R.W.D.,
4.20%,
1/2/98, Ser. VMIG1 9,860
97....................
9,860,000
South Dakota
Hsg. Dev. Auth.,
Homeowners
hip Mtg.,
A.N.N.M.T.
,
3.85%,
3/26/98, Ser. VMIG1 9,180
97C...................
9,180,000
MIG1 8,000 3.95%,
8/13/98..........
8,000,000
- --------------
53,750,000
- --------------
TENNESSEE--
2.5%
Nashville &
Davidson
Co.,
Crossing
Multifam.
Hsg.
Proj.,
F.R.W.D.,
A-1+* 3,540 4.20%,
1/2/98, Ser. A...
3,540,000
Dickson
Cnty.,
Renaissanc
e Learning
Cent.
Rev.,
F.R.W.D.,
4.20%,
1/7/98, Ser.
Aa3 9,000
97....................
9,000,000
</TABLE>
- -23-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount
Value
Rating (000)
Description (a)
(Note 1)
<S> <C> <C>
<C>
TENNESSEE--
(cont'd.)
Montgomery
Cnty. Tax
Pub.
Auth.,
Montgomery
Loan Fin.
Proj.,
F.R.W.D.,
4.20%,
1/2/98, Ser. A-1+* $ 14,600
95....................
$ 14,600,000
- --------------
27,140,000
- --------------
TEXAS--10.4%
Brazos River
Auth. Poll
Ctrl.
Rev.,
Texas
Util. Co.,
F.R.D.D.,
5.10%,
1/2/98, Ser. VMIG1 1,200
95A...................
1,200,000
5.10%,
1/2/98, Ser. VMIG1 5,800
95C...................
5,800,000
5.10%,
1/2/98, Ser. VMIG1 2,000
97A...................
2,000,000
Brazos River
Harbor
Nav. Dist.
Rev.,
BASF Corp.
Proj.,
F.R.D.D.,
5.10%,
1/2/98, Ser.
P-1 1,700
96....................
1,700,000
Dow Chemical
Co.,
F.R.D.D.,
5.15%,
1/2/98, Ser.
P-1 1,400
97....................
1,400,000
Dow Chemical
Co. Proj.,
T.E.C.P.,
3.80%,
1/8/98, Ser.
NR 16,100
91....................
16,100,000
Collin Cnty.
Hsg. Fin.
Corp.,
Huntington
Apts
Proj.,
F.R.W.D.,
4.25%,
1/2/98, Ser.
A-1* 6,155
96....................
6,155,000
DeSoto Ind.
Dev.
Auth.,
Nat'l.
Svc. Inds.
Inc.
Proj.,
F.R.W.D.,
4.20%,
1/2/98, Ser.
CPS1 $ 7,150
91....................
$ 7,150,000
Greater East
Texas
Student
Ln. Rev.,
A.N.N.O.T.
,
4.10%,
5/1/98, Ser. VMIG1 10,500
95A...................
10,500,000
Guadalupe
Blanco River Auth.,
BOC Group
Inc., F.R.W.D.,
CPS1 13,800 4.20%,
1/1/98...........
13,800,000
Houston, Gen
Oblig., T.E.C.P.,
3.80%,
3/13/98, Ser.
P-1 16,700
B.....................
16,700,000
Houston,
Gen.
Oblig.,
Water &
Sewer
Proj.,
3.85%,
1/15/98, Ser.
P-1 8,700
A.....................
8,700,000
Houston
Water & Swr. Sys.,
Eagle
Trust Proj., F.R.W.D.S.,
A-1+* 13,400 4.27%,
1/1/98...........
13,400,000
Waller Cnty.
Ind. Dev.
Corp.,
MckKesson
Water
Prod.,
F.R.W.D.,
4.15%,
1/7/98, Ser.
A-1* 6,000
96....................
6,000,000
West Side
Calhoun
Cnty. Nav.
Dist.,
Swr. &
Solid
Waste.
Disp. Rev.
Proj.,
F.R.D.D.,
5.10%,
1/2/98, Ser.
Aa3 1,300
96....................
1,300,000
- --------------
111,905,000
- --------------
UTAH--0.9%
Intermountai
n Pwr.
Agy.,
T.E.C.P.,
A-1* 10,000 3.80%,
2/3/98...........
10,000,000
- --------------
</TABLE>
- -24-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount
Value
Rating (000)
Description (a)
(Note 1)
<S> <C> <C>
<C>
VIRGINIA--
1.7%
Harrisonburg
Redev. &
Hsg.
Auth.,
Multifamly
Hsg. Rev.,
F.R.W.D.,
4.10%,
1/2/98, Ser. VMIG1 $ 18,555
91A...................
$ 18,555,000
- --------------
WASHINGTON--
3.1%
Pierce Cnty.
Econ. Dev.
Corp.,
Sealand
Inc.,
F.R.W.D.,
4.20%,
1/2/98, Ser.
CPS1 10,000
96....................
10,000,000
Seattle Hsg.
Auth.
Rev.,
Holly Park
Proj.,
F.R.W.D.,
Aa2 10,000 4.10%,
1/7/98...........
10,000,000
Washington
Hsg. Fin.
Commission
,
Anchor
Village
Apts.
Proj.,
F.R.W.D.,
4.35%,
1/2/98, Ser. A-1+* 10,750
97....................
10,750,000
Canyon Lakes
II Proj.,
F.R.D.D.,
5.00%,
1/2/98, Ser. VMIG1 1,000
94....................
1,000,000
Wandering
Creek
Proj.,
F.R.D.D.,
5.25%,
1/2/98, Ser. VMIG1 1,700
95....................
1,700,000
- --------------
33,450,000
- --------------
WEST
VIRGINIA--0.8%
West
Virginia Public Energy
Auth.
Rev.,
Morgantown
Energy, T.E.C.P.,
3.85%,
5/1/98, Ser. A-1+* $ 9,000
89A...................
$ 9,000,000
- --------------
Total
Investments-100.9%
(cost
$1,088,835,065)... 1,088,835,065
Liabilities
in excess
of other
assets--
(0.9%)....
....
(9,673,960)
- --------------
Net Assets--
100%........ $1,079,161,105
- --------------
- --------------
</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.
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-Synthetic
Note.(b)
Q.T.R.M.T.--Quarterly Monthly Tender.
Q.T.R.O.T.S.--Quarterly Optional
Tender--
Synthetic.(b)
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.
(c) Prerefunded issues are secured
by escrowed cash and/or direct
U.S.
guaranteed obligations.
* Standard & Poor's rating.
NR--Not Rated by Moody's or Standard &
P
o
o
r
'
s
.
-
2
5-
See Notes to
Financial Statements appearing on page
29.
<PAGE>
COMMAND TAX-FREE FUND
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
Assets
December 31, 1997
- -----------------
<S>
<C>
Investments, at amortized cost which
approximates market
value........................ $
1,088,835,065
Receivable for Fund shares
sold..................................
............ .........
14,459,325
Interest
receivable............................
............
...........................
7,356,414 Receivable for investments
sold..................................
............ .........
800,000
Prepaid
expenses..............................
............
............................
27,310
- -----------------
Total
assets................................
............
............................
1,111,478,114
- -----------------
Liabilities
Payable for Fund shares
repurchased...........................
............ ............
31,188,642
Accrued expenses and other
liabilities...........................
............ .........
601,237
Management fee
payable...............................
............ .....................
458,788
Distribution fee
payable...............................
............
................... 68,342
- -----------------
Total
liabilities...........................
............
............................
32,317,009
- -----------------
Net
Assets................................
............
................................ $
1,079,161,105
- -----------------
- -----------------
Net assets were comprised of:
Shares of beneficial interest, at
par...................................
............ $
10,791,611
Paid-in capital in excess of
par...................................
............ ..... 1,068,369,494
- -----------------
Net assets, December 31,
1997..................................
............ ........... $
1,079,161,105
- -----------------
- -----------------
Net asset value, offering price and
redemption price per share
($1,079,161,105 /
1,079,161,105 shares of beneficial
interest
($.01 par value) issued and
outstanding)..........................
............
..................................
$1.00
- -----------------
- -----------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
- -26-
<PAGE>
COMMAND TAX-FREE FUND
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
Net Investment Income
1997
<S> <C>
Income
Interest.............................
$
23,073,281
-----------------
Expenses
Management
fee.......................
2,736,587
Distribution
fee.....................
765,164
Transfer agent's fees and
expenses...
94,000
Custodian's fees and
expenses........
38,000
Registration
fees....................
20,000
Reports to
shareholders..............
18,000
Trustees'
fees.......................
14,000
Audit
fee............................
14,000
Insurance
expense....................
10,000
Legal fees and
expenses..............
8,000
Miscellaneous........................
962
-----------------
Total
expenses.....................
3,718,713
Less: custodian fee
credit.........
(40,842)
-----------------
Net
expenses.......................
3,677,871
-----------------
Net investment
income..................
19,395,410
-----------------
Realized Gain on Investments
Net realized gain on investment
transactions........................
.
6,522
-----------------
Net Increase in Net Assets
Resulting from
Operations.............. $
19,401,932
-----------------
-----------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
COMMAND TAX-FREE FUND
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year
Ended
Increase (Decrease) December 31, June
30,
in Net Assets 1997
1997
<S> <C> <C>
Operations
Net investment
income............... $
19,395,410 $
35,446,503
Net realized gain on
investment
transactions.......
6,522
8,700
--------------
- - --------
- -------
Net increase in net
assets resulting
from operations....
19,401,932
35,455,203
--------------
- - --------
- -------
Dividends and
distributions to
shareholders (Note
1).....................
(19,401,932) (35,455,203)
--------------
- - --------
- -------
Fund share transactions
(at $1 per share)
Net proceeds from
shares
subscribed.........
2,487,318,038 4,862,507,754
Net asset value of
shares issued in
reinvestment of
dividends and
distributions......
19,401,932
35,455,203
Cost of shares
reacquired...........
(2,557,071,914) (4,925,385,345)
--------------
- - --------
- -------
Net decrease in net
assets from Fund
share
transactions.......
(50,351,944) (27,422,388)
--------------
- - --------
- -------
Total decrease.........
(50,351,944) (27,422,388)
Net Assets
Beginning of period....
1,129,513,049 1,156,935,437
--------------
- - --------
- -------
End of period.......... $
1,079,161,105 $
1,129,513,049
--------------
- - --------------
--------------
- - --------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
- -27-
<PAGE>
COMMAND TAX-FREE FUND
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended
June 30,
December 31, ---------------------
- ------------
- ------------------------------
1997 1997 1996 1995
1994 1993
----------- ----
- ------ ---------- ----------
- -------- --------
<S> <C>
<C> <C> <C>
<C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period..... $
1.000 $ 1.000 $ 1.000
$ 1.000
$ 1.000 $ 1.000
Net investment income and net realized
gains...............................
...
0.016 0.030 0.031 0.032
0.020 0.022
Dividends and distributions to
shareholders........................
...
(0.016) (0.030) (0.031)
(0.032) (0.020) (0.022)
----------- ----
- ------ ---------- ----------
- -------- --------
Net asset value, end of
period...........
$
1.000 $ 1.000 $ 1.000
$ 1.000
$ 1.000 $ 1.000
----------- ----
- ------ ---------- ----------
- -------- --------
----------- ----
- ------ ---------- ----------
- -------- --------
TOTAL
RETURN(b)..........................
1.61% 3.05% 3.12% 3.29%
1.98% 2.23%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).......... $
1,079,161 $1,129,513
$1,156,935
$1,055,568 $847,602 $853,930
Average net assets
(000)................. $
1,214,281 $1,181,084
$1,134,257 $ 926,888
$908,421 $823,517
Ratios to average net assets:
Expenses, including distribution
fees...............................
....
.60%(a) .64% .66% .66%
.65% .68%
Expenses, excluding distribution
fees...............................
....
.48%(a) .51% .54% .54%
.53% .55%
Net investment
income.................. 3.17%(a)
3.00% 3.06% 3.05%
1.96% 2.09%
</TABLE>
- ---------------
(a) Annualized.
(b) 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 less than a full year are
not annualized.
See Notes to Financial Statements
appearing on page 29.
- -28-
<PAGE>
COMMAND FUNDS
Notes to Financial Statements
(Unaudited)
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
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 earns credits which reduce the
fees
charged by the custodian.
Note 2. Agreements Each
Fund has a
manage-
ment
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 the
Prudential
Investment Corporation (PIC); PIC
furnishes investment advisory services
in
connection with the management of the
Funds. PIFM pays for the cost
- -29-
<PAGE>
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.
The management fee paid PIFM 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 has a distribution
agreement with
Prudential Securities
Incorporated ('PSI'), which acts
as the distributor of the shares
of each Fund.
Each Fund compensates PSI for
distributing and servicing each Fund's
shares,
pursuant to the plan of distribution
at an annual rate of .125 of 1% of the
average daily net assets of each
Fund's shares. The distribution fees
for shares
are accrued daily and payable monthly.
Note 3. Other
Prudential Mutual
Fund Ser-
Transactions vices
LLC (PMFS), a
wholly
with Affiliates owned
subsidiary of
PIFM,
serves
as the Funds' transfer agent. During
the
six months ended December 31, 1997 the
Funds incurred fees for the services
of
PMFS of approximately:
<TABLE>
<S>
<C>
Command
Money.................................
. $1,289,400
Command
Government............................
. $ 45,600
Command Tax-
Free............................... $
91,500
</TABLE>
As of December 31, 1997, the following
amounts
were due to PMFS from the
Funds:
<TABLE>
<S>
<C>
Command
Money.................................
... $224,948
Command
Government............................
... $ 7,687
Command Tax-
Free.................................
$ 14,684
</TABLE>
- -30-
<PAGE>
FEDERAL
INCOME TAX INFORMATION
(UNAUDITED) 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, 1997) 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, 1997,
dividends paid from net investment
income totalling $.030 per share
were all
federally tax-exempt interest
dividends.
COMMAND GOVERNMENT FUND AND COMMAND
MONEY 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 20.2% and 1.8% of the dividends
paid by the Command Government Fund
and
Command Money Fund, respectively,
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.
- -31-
<PAGE>
Prudential Mutual Funds
Gateway
Center Three
100 Mulberry
Street
Newark, NJ
07102-4077
Toll free
(800) 222-
4324
(LOGO)
Trustees
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
Langdon
R.
Stevenso
n
Stephen
Stonebur
n Nancy
H.
Teeters
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice
President Grace Torres,
Treasurer
S. Jane Rose, Secretary
Manager
Prudential Investments Fund
Management LLC Gateway Center
Three
100
Mulberry
Street
Newark,
NJ 07102-
4077
Investmen
t 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 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 accompanying financial statements
as of December 31, 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.
