Prudential Securities
COMMAND Account
- ----------------------
COMMAND Money Fund
COMMAND Government Fund
COMMAND Tax-Free Fund
ANNUAL REPORT
June 30, 1998
(LOGO)
<PAGE>
LETTER TO
SHAREHOLDERS
June 30, 1998
Dear Shareholder:
Money market interest rates repeatedly rose and
fell over the past
12 months as investors tried to determine to what
extent Asian
financial problems would hurt U.S. economic growth
and whether
the Federal Reserve would respond by changing
monetary policy.
We took advantage of attractive buying
opportunities created
by shifts in market sentiment and imbalances in
the supply
and demand of money market securities. As a
result, your
COMMAND Money, COMMAND Government and COMMAND Tax-
Free
funds produced above average yields during the
year ended
June 30, 1998. For the seven-day period ended June
30,
the COMMAND Tax-Free Fund provided income
equivalent to a 5.23%
yield for investors in the 39.6% tax bracket.
<TABLE>
FUND FACTS
As of 6/30/98
<CAPTION>
7 Day
Net Asset Weighted Total Net
Current Yld.
Value (NAV) Avg. Mat. (WAM) Assets (mil.)
<S> <C>
<C> <C> <C>
COMMAND Money 5.09%
$1.00 62 days $ 9,090.3
IBC Financial Data 4.94%
$1.00 63 days N/A
Money Fund Avg.
(All Taxable)1
COMMAND 5.18%
$1.00 47 days $ 608.7
Government
IBC Financial Data 4.91%
$1.00 48 days N/A
Total Government
Universe2
COMMAND 3.11%
$1.00 52 days $ 1,333.0
Tax-Free3
IBC Financial Data 3.03%
$1.00 41 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 Funds
is neither insured nor guaranteed by the U.S.
government and
there can be no assurance that the Funds 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 June 30, 1998.
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
money fund universe
as of June 30, 1998.
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
Communication Financial Data's stockbroker and
general purpose tax-free money fund category as of
June 30, 1998.
-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.
A Telling Difference.
Economic conditions in the U.S. contrasted
favorably with those in
Asian countries over the past 12 months. While the
U.S. economy
headed toward its longest ever peacetime
expansion, financial
problems mounted in Asia. By the autumn, the Asian
financial
crisis had erupted full force, driving down money
market interest
rates as cash poured into safe haven investments
such as U.S.
Treasuries and federal agency securities.
As 1997 drew to a close, the usual end-of-the-year
supply pressures
forced money market interest rates higher. This
trend was also
reflected in the tax-exempt market, where money
managers sold
securities to meet shareholder redemptions. The
new year, however,
brought several shifts in market sentiment that
initially caused
money market rates to fall sharply in January.
Some investors
believed worsening financial problems in Asia
would slow U.S.
economic growth enough to require a reduction in
the federal
funds rate (the overnight bank lending rate) to
stimulate the
economy. But the continued strength of the
American economy
plus some "balanced" comments by Federal Reserve
Chairman Alan Greenspan
abruptly dispelled the notion that the Federal
Reserve was poised to
lower the federal funds rate. Thus money market
rates began to edge
higher in late February, then climbed further in
March and early
April as some investors now believed the robust
U.S. economy might actually require a federal
funds rate
increase to keep it from overheating.
Calm After The Storm.
Finally a measure of calm descended on the money
market.
Short-term rates moved neither dramatically higher
nor lower for much
of the spring as the Asian crisis caused the U.S.
economy to
lose steam, domestic inflation remained low and
the federal
funds target rate stayed at 5.50%. Large
-2-
<PAGE>
reductions in the issuance of Treasuries also kept
a lid on money
market rates as did continued purchases by
investors seeking
refuge from prolonged financial difficulties in
Asia. But as
the 12-month period ended, several technical
market factors
converged to create an opportunity that allowed us
to purchase
taxable money market securities at what we
considered to be
"fire sale" prices.
What Went Well.
Riding Out The Wave.
As you remember, investors pushed short-term
interest rates
lower in January on the mistaken view that the
Federal Reserve
might have to cut the federal funds rate to
reinvigorate a
flagging U.S. economy. Fortunately, we had
extended the
COMMAND Money Fund's weighted average maturity
(WAM) in December
1997 by locking in higher yielding securities that
allowed us to
"ride out the wave." In other words, these
attractively priced,
year-end purchases let us avoid buying lower
yielding securities
in January. Instead, we waited until after Federal
Reserve
Chairman Greenspan's remarks in late February to
purchase
higher yielding, one-year term securities. Several
times
we employed this strategy of taking advantage of
buying
opportunities created by shifts in market
sentiment. Our
performance indicates that we were apparently
quite successful.
Implementing a barbell strategy in the
COMMAND Government Fund worked well as the outlook
for U.S.
monetary policy changed. Owning "near cash"
securities allowed
us the flexibility to buy higher yielding debt
securities that
could become available if the federal funds rate
was increased.
On the other hand, modest purchases of one-year
federal agency
coupon securities reduced the Fund's reinvestment
risk amid
the vagaries of market direction. In the interim,
we increased
the Fund's holdings of floating-rate securities
and reduced
repurchase agreements as the day-to-day supply of
collateral
to back repurchase agreements shrunk.
Longer Was Better.
Early in the spring, tax-exempt money market
yields surged
50 to 100 basis points as portfolio managers sold
securities to
meet shareholder redemptions during income tax
season. (A
basis point is equal to one 1/100th of a
percentage point.)
As yields hovered at higher levels, we extended
the COMMAND
Tax-Free Fund's WAM. This strategy worked well
because the WAM remained
significantly longer than its competition, which
bridged over the
period of sharply lower yields that usually occurs
in late June
and July.
We lengthened the WAM by purchasing longer-term,
tax-exempt commercial
paper. These maturities were priced attractively
in anticipation
of a federal funds rate increase. We also bought
municipal
asset-backed securities that have become
increasingly popular
with money managers because they help smooth out
seasonal
imbalances in the supply and demand of
short-term, tax-exempt securities.
-3-
<PAGE>
And Not So Well.
More Of The Same.
More than a year has passed since the Federal
Reserve raised the
federal funds target rate by a quarter percentage
point to 5.50%
on March 25, 1997. While U.S. central bankers
apparently have a
bias to increase the federal funds rate, economic
conditions -- namely
mounting inflationary pressures-- have not emerged
to justify this
change in monetary policy. Indeed consumer prices,
excluding food
and energy items, rose at a modest 2.5% annual
rate in the first
half of 1998. Unfortunately, a prolonged period of
stable
short-term interest rates will limit attractive
investment
opportunities for the COMMAND Money Fund and the
COMMAND
Government Fund.
The One That Got Away.
Prices of shorter-term municipal money market
securities fell
(and yields rose) in late May as it became
increasingly clear
the federal funds rate would remain unchanged. The
COMMAND Tax-Free
Fund could not take full advantage of this buying
opportunity
because we had already purchased attractively
priced securities
in late April and early May that significantly
extended the
Fund's WAM.
Looking Ahead.
Moderating U.S. economic growth, subdued
inflationary pressures and
the prolonged economic slump in Asia will likely
keep the Federal
Reserve from moving on short-term interest rates
over the next
several months. Still, Federal Reserve Chairman
Greenspan recently
warned that higher inflation remains more of a
risk
than recession in the U.S. We will manage the
Funds to maintain
attractive returns while waiting for more
situations in which
dramatic swings in market sentiment create buying
opportunities
that enable us to lock in higher yields.
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
-4-
<PAGE>
COMMAND MONEY FUND Portfolio
of Investments
June 30, 1998
<TABLE>
<CAPTION>
Principal Description Value
Amount (Note
1)
(000)
<C> <S> <C>
Bank Notes--4.3%
American Express Centurion
Bank
$ 12,000(a) 5.61625%, 7/13/98.......... $
11,999,562
First Union National Bank
86,000 5.59%, 2/19/99.............
86,000,000
First USA Bank
10,000(a) 5.96406%, 7/9/98...........
10,009,144
Key Bank N.A.
16,000(a) 5.65406%, 7/13/98..........
16,004,808
38,000(a) 5.54%, 7/29/98.............
37,988,276
122,000(a) 5.52%, 9/18/98.............
121,949,639
U.S. Bank N.A.
103,000(a) 5.55235%, 7/15/98..........
102,978,331
--------
- ------
386,929,760
--------
- ------
Certificates of Deposit - Domestic--
2.6%
Chase Manhattan Bank
100,000 5.62%, 7/6/98..............
100,000,000
55,000 5.57%, 8/24/98.............
55,000,000
First Tennessee Bank N.A.
27,000 5.55%, 7/13/98.............
26,999,724
27,000 5.56%, 8/6/98..............
26,999,035
27,000 5.57%, 9/8/98..............
26,998,159
Morgan Guaranty Trust Co.
3,000 5.87%, 8/6/98..............
2,999,915
--------
- ------
238,996,833
--------
- ------
Certificates of Deposit - Eurodollar-
- -2.2%
Abbey National Treasury
Services PLC
100,000 5.75%, 3/5/99..............
100,000,000
Bayerische Hypotheken und
Weschel Bank
55,000 5.58%, 8/10/98.............
55,000,501
Westdeutsche Landesbank
Girozentrale
$ 48,000 5.82%, 8/3/98.............. $
47,996,638
--------
- ------
202,997,139
--------
- ------
Certificates of Deposit - Yankee--
19.2%
Barclays Bank PLC
191,000(a) 5.52125%, 7/2/98...........
190,861,040
50,000 5.56%, 2/25/99.............
49,981,157
Bayerische Hypotheken und
Wechsel Bank
23,000 5.94%, 10/22/98............
22,995,917
15,000 5.675%, 3/3/99.............
14,995,658
Bayerische Landesbank
Girozentrale
50,000(a) 5.5525%, 7/30/98...........
49,960,110
Canadian Imperial Bank of
Commerce
12,000 5.57%, 8/3/98..............
12,000,000
114,000 5.55%, 2/10/99.............
113,966,439
43,000 5.705%, 3/30/99............
42,970,850
Credit Agricole Indosuez
82,000 5.87%, 8/10/98.............
81,995,704
50,000 5.90%, 10/19/98............
49,992,798
20,000 5.95%, 10/21/98............
19,997,067
50,000 5.66%, 3/23/99.............
49,982,604
50,000 5.74%, 4/26/99.............
49,976,474
Credit Communal De Belgique
S.A.
21,000 5.58%, 8/13/98.............
21,000,000
42,000 5.58%, 8/18/98.............
42,000,000
103,000 5.58%, 8/24/98.............
103,000,000
25,000 5.575%, 8/28/98............
24,999,112
Deutsche Bank
10,000 5.94%, 10/23/98............
9,998,209
150,000 5.54%, 2/24/99.............
149,953,076
</TABLE>
-5-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
Principal Description Value
Amount (Note
1)
(000)
<C> <S> <C>
Certificates of Deposit - Yankee--
(cont'd.)
Deutsche Bank
$ 25,000 5.57%, 2/26/99............. $
24,992,116
47,000 5.62%, 2/26/99.............
46,985,185
47,000 5.63%, 2/26/99.............
46,973,346
50,000 5.66%, 3/3/99..............
49,983,917
Dresdner Bank AG
6,000 5.76%, 7/31/98.............
5,999,317
Rabobank Nederland N.V.
92,000 5.50%, 2/9/99..............
91,956,850
Societe Generale
50,000 5.97%, 9/15/98.............
49,995,026
29,295 5.56%, 1/19/99.............
29,253,236
Svenska Handelsbanken
77,000 5.60%, 9/24/98.............
77,000,896
Westdeutsche Landesbank
Girozentrale
224,000 5.55%, 7/8/98..............
224,000,000
--------
- ------
1,747,766,104
--------
- ------
Commercial Paper--55.7%
American General Corp.
12,000 5.53%, 8/31/98.............
11,887,557
20,000 5.53%, 9/18/98.............
19,757,294
American Honda Finance
Corp.
19,000 5.57%, 9/10/98.............
18,791,280
6,000 5.57%, 9/11/98.............
5,933,160
Aon Corp.
10,054 5.52%, 7/7/98..............
10,044,750
17,100 5.62%, 7/9/98..............
17,078,644
25,000 5.55%, 7/23/98.............
24,915,208
5,000 5.55%, 7/24/98.............
4,982,271
773 5.56%, 7/31/98.............
769,418
5,853 5.56%, 8/3/98..............
5,823,169
Aristar, Inc.
21,000 5.57%, 7/31/98.............
20,902,525
14,000 5.60%, 8/11/98.............
13,910,711
Associates Corp. of North
America
$ 82,000 5.53%, 7/29/98............. $
81,647,309
42,000 5.52%, 8/10/98.............
41,742,400
62,000 5.52%, 9/10/98.............
61,325,027
Associates First Capital
Corp.
64,000 5.52%, 8/18/98.............
63,528,960
44,000 5.52%, 9/9/98..............
43,527,733
Atlantic Richfield Co.
50,000 5.55%, 9/14/98.............
49,421,875
Bank Austria Finance, Inc.
163,038 5.53%, 8/17/98.............
161,860,911
Bank of Montreal
50,000 5.473%, 7/15/98............
49,893,581
Bank of New York Co., Inc.
61,146 5.52%, 9/17/98.............
60,414,694
Barton Capital Corp.
15,000 5.75%, 7/8/98..............
14,983,229
15,598 5.70%, 7/14/98.............
15,565,894
6,387 5.61%, 8/13/98.............
6,344,202
11,271 5.60%, 8/21/98.............
11,181,583
26,192 5.62%, 8/28/98.............
25,954,846
BBL North America, Inc.
95,000 5.52%, 8/14/98.............
94,359,067
65,000 5.52%, 8/21/98.............
64,491,700
Bell Atlantic Network
Funding Corp.
19,000 5.56%, 7/30/98.............
18,914,901
Beneficial Corp.
18,000 5.59%, 7/24/98.............
17,935,715
Centric Capital Corp.
20,000 5.55%, 7/10/98.............
19,972,250
60,000 5.70%, 7/20/98.............
59,819,500
6,000 5.63%, 7/27/98.............
5,975,603
5,750 5.57%, 8/20/98.............
5,705,517
8,700 5.57%, 8/24/98.............
8,627,312
22,000 5.54%, 9/22/98.............
21,718,999
49,000 5.55%, 9/29/98.............
48,320,125
</TABLE>
-6-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
Principal Description Value
Amount (Note
1)
(000)
<C> <S> <C>
Commercial Paper--(cont'd.)
CIT Group Holdings, Inc.
$ 37,000 5.56%, 8/5/98.............. $
36,799,994
Coca-Cola Enterprises, Inc.
20,000 5.55%, 7/21/98.............
19,938,333
6,000 5.55%, 8/7/98..............
5,965,775
Commercial Credit Co.
39,000 5.53%, 8/19/98.............
38,706,449
22,000 5.53%, 8/20/98.............
21,831,028
22,000 5.53%, 9/8/98..............
21,766,818
Commerzbank U.S. Finance,
Inc.
36,000 5.53%, 8/26/98.............
35,690,320
Corestates Capital Corp.
40,000(a) 5.61234%, 7/1/98...........
40,000,000
Corporate Receivables Corp.
10,000 5.60%, 7/27/98.............
9,959,556
Countrywide Home Loan, Inc.
9,616 5.60%, 7/28/98.............
9,575,613
4,000 5.60%, 7/29/98.............
3,982,578
47,000 5.60%, 7/31/98.............
46,780,667
14,000 5.60%, 8/4/98..............
13,925,956
Du Pont (E.I.) De Nemours &
Co., Inc.
35,000 5.60%, 8/12/98.............
34,771,333
Eastman Kodak Co.
2,000 5.57%, 8/26/98.............
1,982,671
20,000 5.57%, 8/28/98.............
19,820,522
5,000 5.57%, 9/1/98..............
4,952,036
10,000 5.57%, 9/2/98..............
9,902,525
First Chicago Financial
Corp.
73,000 5.52%, 8/18/98.............
72,462,720
11,000 5.53%, 9/10/98.............
10,880,030
20,000 5.53%, 9/11/98.............
19,778,800
First Data Corp.
26,000 5.57%, 7/21/98.............
25,919,544
26,000 5.57%, 7/28/98.............
25,891,385
Ford Motor Credit Co.
$ 95,000 5.54%, 7/2/98.............. $
94,985,381
262,000 5.53%, 7/10/98.............
261,637,785
General Electric Capital
Corp.
133,000 5.48%, 7/9/98..............
132,838,036
75,000 5.53%, 7/16/98.............
74,827,188
6,000 5.52%, 8/19/98.............
5,954,920
100,000 5.51%, 9/3/98..............
99,020,444
30,000 5.51%, 9/10/98.............
29,673,992
45,000 5.53%, 9/11/98.............
44,502,300
General Motors Acceptance
Corp.
150,000 5.53%, 7/17/98.............
149,631,333
91,310 5.58%, 7/23/98.............
90,998,633
86,188 5.52%, 8/17/98.............
85,566,872
88,000 5.52%, 8/18/98.............
87,352,320
Hertz Corp.
24,000 5.55%, 9/3/98..............
23,763,200
Household Finance Corp.
20,000 6.00%, 7/8/98..............
19,976,667
ING America Insurance Holdings, Inc.
30,718 5.51%, 7/13/98.............
30,661,581
10,000 5.47%, 8/3/98..............
9,949,858
11,000 5.54%, 8/21/98.............
10,913,668
Martin Marietta Material
9,000 5.60%, 8/6/98..............
8,949,600
Merrill Lynch & Co., Inc.
53,000 5.53%, 8/14/98.............
52,641,779
93,000 5.55%, 8/25/98.............
92,211,438
Mont Blanc Capital Corp.
35,000 5.60%, 8/27/98.............
34,689,667
62,592 5.57%, 9/9/98..............
61,914,094
Monte Rosa Capital Corp.
117,000 5.60%, 8/25/98.............
115,999,000
14,696 5.60%, 8/27/98.............
14,565,695
56,000 5.63%, 8/27/98.............
55,500,807
</TABLE>
-7-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
Principal Description Value
Amount (Note
1)
(000)
<C> <S> <C>
Commercial Paper--(cont'd.)
Morgan (J.P.) & Co., Inc.
$ 23,000 5.54%, 8/24/98............. $
22,808,870
21,000 5.52%, 9/10/98.............
20,771,380
Newell Co.
32,433 5.55%, 7/17/98.............
32,352,999
Nordbanken North America,
Inc.
69,000 5.52%, 8/4/98..............
68,640,280
56,000 5.52%, 9/18/98.............
55,321,653
Old Line Funding Corp.
50,000 5.60%, 7/24/98.............
49,821,111
20,000 5.60%, 7/28/98.............
19,916,000
36,361 5.59%, 8/5/98..............
36,163,388
9,590 5.66%, 8/28/98.............
9,502,550
Preferred Receivables
Funding Corp.
16,975 5.55%, 10/5/98.............
16,723,770
Quincy Capital Corp.
21,870 5.60%, 7/22/98.............
21,798,558
Safeco Corp.
36,000 5.54%, 8/21/98.............
35,717,460
80,000 5.54%, 8/25/98.............
79,322,889
57,000 5.54%, 9/14/98.............
56,342,125
Salomon Smith Barney Holdings, Inc.
38,000 5.53%, 8/17/98.............
37,725,651
30,000 5.55%, 8/24/98.............
29,750,250
117,000 5.53%, 9/17/98.............
115,598,145
SBC Finance (Delaware),
Inc.
300,000 5.53%, 8/24/98.............
297,511,500
Special Purpose Accounts
Recreation Cooperative
Corp.
17,000 5.62%, 8/24/98.............
16,856,690
22,000 5.66%, 8/27/98.............
21,802,843
Svenska Handelsbanken
89,000 5.55%, 7/9/98..............
88,890,233
39,000 5.53%, 8/10/98.............
38,760,367
50,000 5.52%, 9/3/98..............
49,509,333
Thunder Bay Funding, Inc.
$ 51,000 5.68%, 7/10/98............. $
50,927,580
15,162 5.63%, 7/31/98.............
15,090,865
Triple A One Funding Corp.
2,394 5.65%, 9/4/98..............
2,369,578
UBS Finance (Delaware),
Inc.
46,434 5.53%, 8/7/98..............
46,170,087
56,000 5.53%, 8/10/98.............
55,655,911
Windmill Funding Corp.
98,000 5.60%, 7/27/98.............
97,603,644
57,000 5.63%, 7/30/98.............
56,741,489
7,482 5.59%, 8/7/98..............
7,439,014
26,000 5.62%, 8/28/98.............
25,764,584
Xerox Capital (Europe) PLC
55,000 5.52%, 7/14/98.............
54,890,367
Xerox Credit Corp.
984 5.56%, 8/10/98.............
977,921
--------
- ------
5,063,278,916
--------
- ------
Loan Participations--0.4%
Cooper Industries, Inc.
24,000(b) 5.65%, 7/13/98
(cost $24,000,000;
purchased 6/12/98).......
24,000,000
Halliburton Corp.
10,000(b) 5.80%, 7/21/98
(cost $10,000,000;
purchased 6/29/98).......
10,000,000
--------
- ------
34,000,000
--------
- ------
Other Corporate Obligations--15.8%
Abbey National Treasury
Services PLC
22,000 5.50%, 2/5/99..............
21,989,757
75,000 5.72%, 6/11/99.............
74,945,694
Associates Corp. of North
America
10,000(a) 5.75%, 11/15/98............
10,003,165
General Motors Acceptance
Corp.
31,000(a) 5.69875%, 8/3/98...........
30,994,671
Goldman Sachs Group L.P.
268,000 a)(b) 5.8125%, 7/21/98
(cost $268,000,000;
purchased 6/26/98).......
268,000,000
</TABLE>
-8-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
Principal Description Value
Amount (Note
1)
(000)
<C> <S> <C>
Other Corporate Obligations--
(cont'd.)
John Deere Capital Corp.
$ 54,000(a) 5.5575%, 8/10/98........... $
53,980,205
Liquid Asset Backed Securities Trust
102,623(a) 5.65625%, 7/22/98..........
102,623,017
72,500(a) 5.65625%, 7/27/98..........
72,499,690
Merrill Lynch & Co., Inc.
47,000(a) 5.61625%, 7/8/98...........
46,998,753
Morgan Stanley Dean Witter
Discover & Co., Inc.
18,000(a) 5.85156%, 7/15/98..........
18,000,000
33,000(a) 5.85938%, 8/14/98..........
33,000,000
Restructured Asset
Securities
172,000(a) 5.64625%, 7/28/98..........
172,000,000
23,000 a)(b) 5.6875%, 7/31/98
(cost $23,000,000;
purchased 4/3/98)........
23,000,000
Short Term Repackaged Asset Trust
94,000 a)(b) 5.67825%, 7/15/98
(cost $94,000,000;
purchased 12/15/97)......
94,000,000
SMM Trust Notes 1997-X
127,000(a) 5.65625%, 7/13/98..........
127,000,000
Strategic Money Market Trust 1997-A
195,000(a) 5.6875%, 9/23/98...........
195,000,000
Strategic Money Market Trust 1998-B
88,000(a) 5.65625%, 7/6/98...........
88,000,000
--------
- ------
1,432,034,952
--------
- ------
Total Investments--100.2%
(amortized cost
$9,106,003,704)..........
9,106,003,704
Liabilities in excess of
other assets--(0.2%).....
(15,714,833)
--------
- ------
Net Assets--100%...........
$9,090,288,871
--------
- ------
--------
- ------
</TABLE>
- ---------------
(a) Variable rate instrument. 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.
The aggregate cost of such
securities is $419,000,000. The aggregate
value of $419,000,000 is
approximately 4.6% of net assets.
The industry classification of portfolio holdings
and other assets in excess of
liabilities shown as a percentage of net assets as
of June 30, 1998 was as
follows:
<TABLE>
<S> <C>
Commercial Banks............................
50.8%
Asset Backed Securities.....................
11.9
Short-Term Business Credit..................
8.6
Security Brokers & Dealers..................
7.7
Personal Credit Institutions................
5.3
Finance Lessors.............................
3.9
Fire & Marine Casualty Insurance............
2.4
Bank Holding Companies - Domestic...........
2.1
Photographic Equipment......................
1.0
Motor Vehicle Parts.........................
1.0
Mortgage Bankers............................
0.8
Accidental & Health Insurance...............
0.7
Farm Machinery & Equipment..................
0.6
Computer Rental & Leasing...................
0.6
Petroleum Refining..........................
0.5
Plastic Material - Synthetic................
0.4
Miscellaneous Furniture.....................
0.4
Life Insurance..............................
0.3
Beverages...................................
0.3
Miscellaneous Electronics, Equipment &
Supplies..................................
0.3
Auto Rent & Leasing.........................
0.3
Telephone & Communications..................
0.2
Mining & Quarry.............................
0.1
----
- -
100.2
Liabilities in excess of other assets....... -
0.2
----
- -
100.0%
----
- -
----
- -
</TABLE>
-9-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND MONEY FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets
June 30, 1998
- --------------
<S>
<C>
Investments, at amortized cost which approximates
market value..........................
$9,106,003,704
Cash..............................................
......................................
20,423
Receivable for Fund shares
sold..............................................
........... 333,778,046
Interest
receivable........................................
............................. 46,097,349
Prepaid
expenses..........................................
.............................. 85,162
- --------------
Total
assets............................................
.............................. 9,485,984,684
- --------------
Liabilities
Payable for Fund shares
repurchased.......................................
.............. 391,137,256
Management fee
payable...........................................
....................... 2,712,753
Accrued expenses and other
liabilities.......................................
........... 1,346,323
Distribution fee
payable...........................................
..................... 499,481
- --------------
Total
liabilities.......................................
.............................. 395,695,813
- --------------
Net
Assets............................................
..................................
$9,090,288,871
- --------------
- --------------
Net assets were comprised of:
Shares of beneficial interest, at
par...............................................
.. $ 90,902,889
Paid-in capital in excess of
par...............................................
....... 8,999,385,982
- --------------
Net assets, June 30,
1998..............................................
................. $9,090,288,871
- --------------
- --------------
Net asset value, offering price and redemption
price per share ($9,090,288,871 /
9,090,288,871 shares of beneficial interest
($.01 par value) issued and
outstanding)......................................
....................................
$1.00
- --------------
- --------------
</TABLE>
See Notes to Financial Statements appearing on
page 29.
-10-
<PAGE>
COMMAND MONEY FUND
Statement of Operations
<TABLE>
<CAPTION>
Year
Ended
June
30,
Net Investment Income 1998
<S> <C>
Income
Interest............................. $
454,539,249
----------
- ----
Expenses
Management fee.......................
29,026,767
Distribution fee.....................
9,920,274
Transfer agent's fees and expenses...
2,801,000
Registration fees....................
465,000
Reports to shareholders..............
269,000
Custodian's fees and expenses........
185,000
Insurance expense....................
98,000
Trustees' fees.......................
50,000
Audit fee............................
30,000
Legal fees and expenses..............
20,000
Miscellaneous........................
46,242
----------
- ----
Total expenses.....................
42,911,283
----------
- ----
Net investment income..................
411,627,966
----------
- ----
Realized Gain on Investments
Net realized gain on investment
transactions.........................
76,865
----------
- ----
Net Increase in Net Assets
Resulting from Operations.............. $
411,704,831
----------
- ----
----------
- ----
</TABLE>
COMMAND MONEY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended June 30,
in Net Assets 1998
1997
<S> <C> <C>
Operations
Net investment
income........... $ 411,627,966 $
301,906,638
Net realized gain
on investment
transactions..... 76,865
168,167
---------------- ---------
- -------
Net increase in net
assets resulting
from
operations....... 411,704,831
302,074,805
---------------- ---------
- -------
Dividends and
distributions to
shareholders (Note
1)................... (411,704,831)
(302,074,805)
---------------- ---------
- -------
Fund share
transactions (at $1
per share)
Net proceeds from
shares
subscribed....... 40,246,065,983
30,172,770,064
Net asset value of
shares issued in
reinvestment of
dividends and
distributions.... 411,704,831
302,074,805
Cost of shares
reacquired....... (38,197,384,515)
(29,154,784,207)
---------------- ---------
- -------
Net increase in net
assets from Fund
share
transactions..... 2,460,386,299
1,320,060,662
---------------- ---------
- -------
Total increase....... 2,460,386,299
1,320,060,662
Net Assets
Beginning of year.... 6,629,902,572
5,309,841,910
---------------- ---------
- -------
End of year.......... $ 9,090,288,871 $
6,629,902,572
---------------- ---------
- -------
---------------- ---------
- -------
</TABLE>
See Notes to Financial Statements appearing on
page 29.
See Notes to Financial Statements appearing on
page 29.
-11-
<PAGE>
COMMAND MONEY FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
- --------------------------------------------------
- ----------------
1998 1997 1996 1995
1994
- ---------- ---------- ---------- --------
- -- ----------
<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 0.049
0.052 0.050 0.029
Dividends and distributions to
shareholders......... (0.052) (0.049)
(0.052) (0.050) (0.029)
- ---------- ---------- ---------- --------
- -- ----------
Net asset value, end of
year........................ $ 1.000 $
1.000 $ 1.000 $ 1.000 $ 1.000
- ---------- ---------- ---------- --------
- -- ----------
- ---------- ---------- ---------- --------
- -- ----------
TOTAL
RETURN(a):....................................
5.31% 5.06% 5.30% 5.13%
2.98%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000)....................... $9,090,289
$6,629,903 $5,309,842 $4,055,700
$2,448,201
Average net assets
(000)............................ $7,936,219
$6,078,525 $4,896,794 $3,072,284
$2,570,195
Ratios to average net assets:
Expenses, including distribution
fees............. .54% .57%
.58% .59% .59%
Expenses, excluding distribution
fees............. .42% .44%
.46% .47% .47%
Net investment
income............................. 5.19%
4.97% 5.15% 5.09% 2.92%
</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 29.
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, 1998, 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, 1998 by
correspondence with the custodian, provide a
reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
August 18, 1998
-12-
<PAGE>
COMMAND GOVERNMENT FUND Portfolio
of Investments
June 30, 1998
<TABLE>
<CAPTION>
Principal Description Value
Amount (Note
1)
(000)
<C> <S> <C>
U.S. Government Agencies--54.7%
Federal Farm Credit Bank--3.7%
$ 2,000 5.46%, 7/1/98................. $
2,000,000
1,305 5.75%, 7/1/98.................
1,305,000
19,000 5.70%, 9/2/98.................
18,996,074
-----
- -------
22,301,074
-----
- -------
Federal Home Loan Bank--23.6%
43,000(a) 5.42625%, 7/4/98..............
42,995,883
40,000(a) 5.42625%, 7/23/98.............
39,997,361
2,500(a) 5.581%, 9/24/98...............
2,499,397
6,000 5.80%, 10/27/98...............
5,999,069
17,000 5.81%, 11/4/98................
16,996,791
10,000 5.58%, 3/11/99................
10,001,183
5,000 5.56%, 3/25/99................
4,996,577
8,000 5.50%, 3/26/99................
7,991,549
12,000 5.54%, 4/7/99.................
11,979,958
-----
- -------
143,457,768
-----
- -------
Federal Home Loan Mortgage
Corporation--3.7%
22,500(a) 5.45625%, 7/26/98.............
22,491,070
-----
- -------
Federal National Mortgage
Association--18.8%
25,000(a) 5.43625%, 7/15/98.............
24,999,114
25,000(a) 5.596%, 7/20/98...............
24,996,693
10,000 5.63%, 8/14/98................
9,997,456
20,000 5.531%, 9/16/98...............
19,992,931
9,500 7.05%, 12/10/98...............
9,556,933
18,000 5.41%, 2/23/99................
17,984,233
7,000 5.37%, 2/26/99................
6,988,134
-----
- -------
114,515,494
-----
- -------
Student Loan Marketing Association--
4.9%
$ 12,000(a) 5.441%, 7/16/98............... $
11,998,904
5,150(a) 5.321%, 8/10/98...............
5,145,919
2,000 5.79%, 9/16/98................
2,000,958
11,034 5.58%, 3/11/99................
11,032,104
-----
- -------
30,177,885
-----
- -------
Total U.S. Government Agencies
(amortized cost
$332,943,291)...............
332,943,291
-----
- -------
Repurchase Agreements(b)--44.2%
50,000 Bear, Stearns & Co., 5.63%,
dated 6/25/98, due 7/2/98 in
the amount of $50,054,736
(cost $50,000,000), value of
collateral including accrued
interest--$51,317,770.......
50,000,000
2,700 Goldman, Sachs & Co., 5.57%,
dated 6/17/98, due 7/17/98
in the amount of $2,712,533
(cost $2,700,000), value of
collateral including accrued
interest--$2,754,074........
2,700,000
41,208 Goldman, Sachs & Co., 5.53%,
dated 6/8/98, due 7/8/98 in
the amount of $41,397,900
(cost $41,208,000), value of
collateral including accrued
interest--$42,033,282.......
41,208,000
1,108 Merrill Lynch, Pierce, Fenner
& Smith, Inc., 5.75%, dated
6/29/98, due 7/6/98 in the
amount of $1,109,239 (cost
$1,108,000), value of
collateral including
accru+ed
interest--$1,131,647........
1,108,000
38,017 Merrill Lynch, Pierce, Fenner
& Smith, Inc., 5.72%, dated
6/30/98, due 7/7/98 in the
amount of $38,059,283 (cost
$38,017,000), value of
collateral including accrued
interest--$38,778,219.......
38,017,000
</TABLE>
-13-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND GOVERNMENT FUND
<TABLE>
<CAPTION>
Principal Description Value
Amount (Note
1)
(000)
<C> <S> <C>
$ 11,335 Morgan (J.P.) Securities,
Inc., 5.53%, dated 4/23/98,
due 7/29/98 in the amount of
$11,503,895 (cost
$11,335,000), value of
collateral including accrued
interest--$11,682,469....... $
11,335,000
5,000 Morgan (J.P.) Securities,
Inc., 5.53%, dated 4/24/98,
due 7/29/98 in the amount of
$5,073,733 (cost
$5,000,000), value of
collateral including accrued
interest--$5,152,489........
5,000,000
60,000 Morgan Stanley & Co., 5.58%,
dated 6/24/98, due 7/1/98 in
the amount of $60,065,100
(cost $60,000,000), value of
collateral including accrued
interest--$61,286,043.......
60,000,000
4,000 Salomon Smith Barney, 5.70%,
dated 6/26/98, due 7/2/98 in
the amount of $4,003,800
(cost $4,000,000), value of
collateral including accrued
interest--$4,080,329........
4,000,000
$ 18,388 Salomon Smith Barney, 5.58%,
dated 6/24/98, due 7/1/98 in
the amount of $18,407,951
(cost $18,388,000), value of
collateral including accrued
interest--$18,757,272....... $
18,388,000
37,479 Salomon Smith Barney, 5.61%,
dated 6/25/98, due 7/2/98 in
the amount of $37,519,883
(cost $37,479,000), value of
collateral including accrued
interest--$38,231,663.......
37,479,000
-----
- -------
Total Repurchase Agreements
(amortized cost
$269,235,000)...............
269,235,000
-----
- -------
Total Investments--98.9%
(amortized cost
$602,178,291)...............
602,178,291
Other assets in excess of
liabilities--1.1%...........
6,549,112
-----
- -------
Net Assets--100%..............
$608,727,403
-----
- -------
-----
- -------
</TABLE>
- ---------------
(a) Variable rate instrument. 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 29.
<PAGE>
COMMAND GOVERNMENT FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets
June 30, 1998
- -------------
<S>
<C>
Investments, at amortized cost which approximates
market value............................ $
332,943,291
Repurchase
agreements........................................
............................. 269,235,000
Cash..............................................
........................................
2,092
Receivable for Fund shares
sold..............................................
............. 21,658,793
Interest
receivable........................................
............................... 3,573,084
Prepaid
expenses..........................................
................................ 7,568
- -------------
Total
assets............................................
................................ 627,419,828
- -------------
Liabilities
Payable for Fund shares
repurchased.......................................
................ 18,083,570
Accrued expenses and other
liabilities.......................................
............. 376,723
Management fee
payable...........................................
......................... 198,834
Distribution fee
payable...........................................
....................... 33,298
- -------------
Total
liabilities.......................................
................................ 18,692,425
- -------------
Net
Assets............................................
.................................... $
608,727,403
- -------------
- -------------
Net assets were comprised of:
Shares of beneficial interest, at
par...............................................
.... $ 6,087,274
Paid-in capital in excess of
par...............................................
......... 602,640,129
- -------------
Net assets, June 30,
1998..............................................
................... $ 608,727,403
- -------------
- -------------
Net asset value, offering price and redemption
price per share ($608,727,403 / 608,727,403
shares of beneficial interest ($.01 par value)
issued and outstanding)..................
$1.00
- -------------
- -------------
</TABLE>
See Notes to Financial Statements appearing on
page 29.
-15-
<PAGE>
COMMAND GOVERNMENT FUND
Statement of Operations
<TABLE>
<CAPTION>
Year
Ended
June
30,
Net Investment Income 1998
<S> <C>
Income
Interest............................. $
31,712,681
----------
- ----
Expenses
Management fee.......................
2,250,774
Distribution fee.....................
703,367
Transfer agent's fees and expenses...
94,000
Custodian's fees and expenses........
30,000
Reports to shareholders..............
28,000
Audit fee............................
27,000
Trustees' fees.......................
23,000
Insurance expense....................
9,000
Legal fees and expenses..............
8,000
Miscellaneous........................
5,819
----------
- ----
Total expenses.....................
3,178,960
----------
- ----
Net investment income..................
28,533,721
----------
- ----
Realized Gain on Investments
Net realized gain on investment
transactions.........................
50,018
----------
- ----
Net Increase in Net Assets
Resulting from Operations.............. $
28,583,739
----------
- ----
----------
- ----
</TABLE>
COMMAND GOVERNMENT FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended June 30,
in Net Assets 1998
1997
<S> <C> <C>
Operations
Net investment
income............. $ 28,533,721 $
25,896,199
Net realized gain
on investment
transactions..... 50,018
100,048
---------------- ---------
- -------
Net increase in net
assets resulting
from
operations....... 28,583,739
25,996,247
---------------- ---------
- -------
Dividends and
distributions to
shareholders (Note
1)................... (28,583,739)
(25,996,247)
---------------- ---------
- -------
Fund share
transactions (at $1
per share)
Net proceeds from
shares
subscribed....... 2,601,216,630
2,583,554,167
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions.... 28,583,739
25,996,247
Cost of shares
reacquired......... (2,549,542,451)
(2,568,565,639)
---------------- ---------
- -------
Net increase in net
assets from Fund
share
transactions..... 80,257,918
40,984,775
---------------- ---------
- -------
Total increase....... 80,257,918
40,984,775
Net Assets
Beginning of year.... 528,469,485
487,484,710
---------------- ---------
- -------
End of year.......... $ 608,727,403 $
528,469,485
---------------- ---------
- -------
---------------- ---------
- -------
</TABLE>
See Notes to Financial Statements appearing on
page 29.
See Notes to Financial Statements appearing on
page 29.
-16-
<PAGE>
COMMAND GOVERNMENT FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
- --------------------------------------------------
- ------
1998 1997 1996 1995
1994
- -------- -------- -------- -------- --
- ------
<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............... 0.051 0.049
0.050 0.048 0.028
Dividends and distributions to
shareholders................ (0.051)
(0.049) (0.050) (0.048) (0.028)
- -------- -------- -------- -------- --
- ------
Net asset value, end of
year............................... $ 1.000
$ 1.000 $ 1.000 $ 1.000 $ 1.000
- -------- -------- -------- -------- --
- ------
- -------- -------- -------- -------- --
- ------
TOTAL
RETURN(a).........................................
... 5.20% 4.97% 5.12%
4.89% 2.86%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000).............................. $608,727
$528,469 $487,485 $404,295 $325,257
Average net assets
(000)...................................
$562,693 $534,580 $477,168 $350,458
$376,159
Ratios to average net assets:
Expenses, including distribution
fees.................... .56% .63%
.68% .65% .63%
Expenses, excluding distribution
fees.................... .44% .51%
.56% .53% .51%
Net investment
income....................................
5.08% 4.84% 4.97% 4.81%
2.79%
</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 29.
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, 1998, 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, 1998 by correspondence with the custodian,
provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
August 18, 1998
-17-
<PAGE>
COMMAND TAX-FREE FUND
Portfolio of Investments
June 30, 1998
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000) Description (a)
(Note 1)
<S> <C> <C>
<C>
ALASKA--1.7%
Valdez Marine Air
Terminal Rev., Arco
Trans. Proj.,
T.E.C.P.,
3.55%, 7/15/98, Ser.
A-1(c) $ 15,900 94A...................
$ 15,900,000
3.70%, 7/9/98, Ser.
VMIG1 7,000 94C...................
7,000,000
- --------------
22,900,000
- --------------
CALIFORNIA--3.8%
California St., Gen.
Oblig., T.E.C.P.,
P-1 25,000 3.85%, 7/16/98..........
25,000,000
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
- --------------
50,800,000
- --------------
COLORADO--2.4%
Colorado Hsg. Fin.
Auth., Eagle Trust,
F.R.W.D.S.,
3.78%, 7/2/98, Ser.
A-1(c) 31,700 94C...................
31,700,000
- --------------
CONNECTICUT--0.4%
Connecticut St. Hlth. &
Ed. Facs. Auth. Rev.,
Yale Univ., T.E.C.P.
VMIG1 3,600 3.50%, 7/8/98, Ser. S...
3,600,000
Connecticut St. Spec.
Tax Oblig.,
Trans. Infrastructure
Rev., F.R.W.D.,
3.50%, 7/1/98, Ser.
VMIG1 1,500 90I...................
1,500,000
- --------------
5,100,000
- --------------
DISTRICT OF COLUMBIA--
4.6%
Dist. of Columbia Rev.,
Consortium Issue,
F.R.W.D.,
3.55%, 7/2/98, Ser.
A-1(c) $ 15,000 98....................
$ 15,000,000
Dist. of Columbia Gen.
Oblig.,
F.R.D.D.,
4.00%, 7/1/98, Ser.
VMIG1 5,878 92A-5.................
5,878,000
F.R.D.D.,
4.00%, 7/1/98, Ser.
VMIG1 1,100 92A-6.................
1,100,000
T.R.A.N.,
4.50%, 9/30/98, Ser.
MIG1 24,300 98B...................
24,336,693
Metro. Wash. Airport
Rev., T.E.C.P.,
A-1(c) 15,500 3.80%, 10/26/98.........
15,500,000
- --------------
61,814,693
- --------------
FLORIDA--2.3%
Capital Proj. Fin. Auth.
Rev., Florida Hosp.
Assoc., F.R.W.D.,
4.00%, 7/1/98, Ser.
A-1+(c) 5,000 98A...................
5,000,000
Highlands Cnty. Hlth.
Fac., Adventist Hlth.
Sys., F.R.W.D.,
3.55%, 7/2/98, Ser.
VMIG1 9,800 96A...................
9,800,000
Putnam Cnty. Dev. Auth.,
Poll. Ctrl. Rev.,
Seminole Elec. H-3,
S.E.M.O.T.,
P-1 15,285 3.50%, 9/15/98..........
15,280,239
- --------------
30,080,239
- --------------
</TABLE>
-18-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000) Description (a)
(Note 1)
<S> <C> <C>
<C>
Atlanta Urban Res.,
Greystone, F.R.W.D.S.,
A.M.T.,
3.85%, 7/2/98, Ser.
A-1+(c) $ 11,662 98B...................
$ 11,662,000
Burke Cnty. Dev. Auth.,
Poll. Ctrl. Rev.,
Oglethorpe Pwr. Corp.,
T.E.C.P.,
3.60%, 8/14/98, Ser.
VMIG1 18,900 98....................
18,900,000
Cobb Cnty. Dev. Auth.,
Institute of Nuclear
Pwr., F.R.W.D.,
3.60%, 7/1/98, Ser.
NR 10,000 98....................
10,000,000
Cobb Cnty. Hsg. Auth.,
Post Bridge Proj.,
F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1+(c) 10,000 96....................
10,000,000
Terrell Mill II Assoc.,
F.R.W.D.,
3.75%, 7/2/98, Ser.
A-1+(c) 10,600 93....................
10,600,000
De Kalb Cnty. Hsg.
Auth., Single Family
Mtge. Rev.,
F.R.W.D.S., A.M.T.,
A-1+(c) 4,550 3.80%, 7/2/98, Ser. A...
4,550,000
Monroe Cnty. Dev. Auth.,
Poll. Ctrl. Rev.,
Oglethorpe Pwr. Corp.,
S.E.M.O.T.,
3.80%, 11/2/98, Ser.
NR 11,000 96....................
11,000,000
Municipal Elec. Auth.,
F.R.W.D.S.,
3.73%, 7/2/98, Ser.
VMIG1 12,000 39....................
12,000,000
Roswell Hsg. Auth., Post
Canyon Proj.,
F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1+(c) 9,345 96....................
9,345,000
Willacoochee Dev. Auth.,
Poll. Ctrl. Rev.,
Langboard Inc. Proj.,
F.R.W.D., A.M.T.,
3.65%, 7/2/98, Ser.
Aa2 $ 17,000 97....................
$ 17,000,000
- --------------
115,057,000
- --------------
ILLINOIS--16.0%
Chicago, Equipment
Notes, A.N.N.M.T.,
3.80%, 12/3/98, Ser.
VMIG1 14,000 97....................
14,000,000
Chicago Single Fam.
Mtge. Rev.,
A.N.N.M.T., A.M.T.,
3.70%, 4/1/99, Ser.
MIG1 6,500 98B...................
6,500,000
Chicago Stockyards Indl.
Proj., F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1+(c) 13,300 96A...................
13,300,000
Gurnee Ind. Dev. Rev.,
Sterigenics Intl.
Proj., F.R.W.D.,
A.M.T.,
3.70%, 7/1/98, Ser.
A-1(c) 7,750 96....................
7,750,000
Illinois Community Sch.
Dist.,
Kane, McHenry, Cook & De
Kalb, T.A.N.,
4.30%, 9/23/98, Ser.
NR 7,000 97....................
7,006,280
Illinois Dev. Fin. Auth.
Rev., Adventist Hlth.
Sys., F.R.W.D.,
3.55%, 7/2/98, Ser.
VMIG1 40,165 97A...................
40,165,000
American College of
Surgeons, F.R.W.D.,
3.60%, 7/3/98, Ser.
A-1+(c) 15,200 96....................
15,200,000
Illinois Hlth. Fac.
Auth., Children's Mem.
Hosp., T.E.C.P.,
3.70%, 9/10/98, Ser.
VMIG1 14,500 90A...................
14,500,000
</TABLE>
-19-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000) Description (a)
(Note 1)
<S> <C> <C>
<C>
ILLINOIS--(cont'd.)
Illinois Hlth. Fac.
Auth.,
Evanston Hosp. Corp.
Prog., A.N.N.M.T.,
3.80%, 4/30/99, Ser.
VMIG1 $ 18,000 95....................
$ 18,000,000
3.85%, 11/30/98, Ser.
VMIG1 19,000 92....................
19,000,000
Servant Cor Falcon II,
F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1+(c) 16,000 96A...................
16,000,000
Illinois Hlth. Fac. Dev.
Auth., Riverside Hlth.
Sys., F.R.W.D.,
3.55%, 7/2/98, Ser.
VMIG1 13,300 94....................
13,300,000
SSM Health Care,
T.E.C.P.,
3.70%, 8/25/98, Ser.
A-1+(c) 20,000 98B...................
20,000,000
Illinois Student Asst.
Commission, Student
Ln. Rev., F.R.W.D.,
A.M.T.,
3.65%, 7/1/98, Ser.
VMIG1 9,000 98A...................
9,000,000
- --------------
213,721,280
- --------------
INDIANA--1.8%
Indiana Ed. Fac. Auth.,
Wesleyan Univ.,
F.R.W.D.,
3.55%, 7/2/98, Ser.
NR 8,750 93....................
8,750,000
Indianapolis, Citizen
Gas & Coke, T.E.C.P.,
P-1 6,500 3.55%, 7/16/98..........
6,500,000
Mount Vernon Poll. Ctrl.
Rev., General Elec.
Co., T.E.C.P.,
3.75%, 8/14/98, Ser.
P-1 3,790 89A...................
3,790,000
Tippecanoe Sch. Corp.,
T.A.N.,
NR 5,500 4.00%, 12/30/98.........
5,506,878
- --------------
24,546,878
- --------------
IOWA--0.7%
Sergeant Bluff Dev.
Rev., Sioux City Brick
& Tile Proj.,
F.R.W.D., A.M.T.,
3.75%, 7/2/98, Ser.
NR $ 8,795 96....................
$ 8,795,000
- --------------
KENTUCKY--0.8%
Pendleton Cnty., Lease
Rev. Prog., T.E.C.P.,
3.55%, 8/14/98, Ser.
A-1+(c) 10,000 89....................
10,000,000
- --------------
LOUISIANA--1.5%
Calcasieu Parish Ind.
Dev., Board Citgo
Corp., F.R.D.D.,
A.M.T.,
4.00%, 7/1/98, Ser.
VMIG1 2,000 96....................
2,000,000
West Baton Rouge Parish
Ind. Dist. Pound3
Rev.,
Dow Chemical Co.
Proj., F.R.D.D.,
A.M.T.,
4.05%, 7/1/98, Ser.
P-1 3,300 95....................
3,300,000
Dow Chemical Co. Proj.,
T.E.C.P.,
3.70%, 7/7/98, Ser.
P-1 14,200 91....................
14,200,000
- --------------
19,500,000
- --------------
MARYLAND--1.4%
Gaithersburg Econ. Dev.
Rev.,
Asbury Methodist
Village,
F.R.W.D.,
3.55%, 7/2/98, Ser.
A-1+(c) 8,200 97A...................
8,200,000
</TABLE>
-20-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000) Description (a)
(Note 1)
<S> <C> <C>
<C>
MARYLAND--(cont'd.)
Montgomery Cnty., First
Chicago Tender Option
Certificates,
F.R.W.D.S.,
3.70%, 7/1/98, Ser.
VMIG1 $ 10,990 98C...................
$ 10,990,000
- --------------
19,190,000
- --------------
MASSACHUSETTS--1.6%
First Chicago Tender
Option Certificate,
Comnwlth. of
Massachusetts,
S.E.M.O.T.S.,
3.95%, 12/1/98, Ser.
VMIG1 7,025 98B...................
7,025,000
Massachusetts Hsg. Fin.
Agy.,
Single Fam. Hsg. Rev.,
Ser. 5-Eagle Trust,
Q.T.R.O.T.S.,
3.80%, 9/1/98, Ser.
A-1+(c) 6,925 2103..................
6,925,000
Massachusetts Port
Auth., T.E.C.P.,
3.60%, 7/14/98, Ser.
P-1 7,000 96....................
7,000,000
- --------------
20,950,000
- --------------
MINNESOTA--1.6%
Avon Ind. Dev. Rev.,
Vesper Corp. Proj.,
F.R.W.D., A.M.T.,
3.80%, 7/1/98, Ser.
NR 7,225 98....................
7,225,000
Bloomington Port Auth.
Tax Rev., F.R.W.D.,
3.60%, 7/3/98, Ser.
VMIG1 14,000 95A...................
14,000,000
- --------------
21,225,000
- --------------
MISSISSIPI--1.3%
Harrison Cnty. Poll.
Ctrl. Rev.,
Mississippi Pwr. Co.
Proj., F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1(c) $ 16,750 92....................
$ 16,750,000
- --------------
MISSOURI--1.6%
Missouri Hsg. Dev.
Commission Mtge.,
Single Fam. Mtge.
Rev., A.N.N.M.T.,
A.M.T.,
3.90%, 4/1/99, Ser.
SP-1+(c) 7,565 98C...................
7,565,000
St. Charles Cnty. Ind.
Dev. Auth., Cedar
Ridge Apts., F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1+(c) 14,225 88A...................
14,225,000
- --------------
21,790,000
- --------------
NEW HAMPSHIRE--0.8%
New Hampshire Bus. Fin.
Auth.,
New England Pwr. Co.
Proj.,
T.E.C.P.,
3.75%, 7/31/98, Ser.
VMIG1 10,500 90B...................
10,500,000
- --------------
NEW JERSEY--0.8%
New Jersey Econ. Dev.
Auth. Rev., 865
Centennial Ave. Proj.,
F.R.W.D., A.M.T.,
3.68%, 7/2/98, Ser.
A-1+(c) 3,050 85....................
3,050,000
Newark Recycling Fac.,
A.N.N.M.T.,
3.95%, 12/15/98, Ser.
A-1+(c) 7,700 97....................
7,700,000
- --------------
10,750,000
- --------------
</TABLE>
-21-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000) Description (a)
(Note 1)
<S> <C> <C>
<C>
NEW YORK--2.7%
Long Island Pwr. & Elec.
Auth.,
3.68%, 7/1/98, Ser.
A-1(c) $ 6,000 1998-52...............
$ 6,000,000
New York City, Gen.
Oblig., T.E.C.P.,
3.55%, 8/27/98, Ser.
VMIG1 17,000 J3....................
17,000,000
New York Pwr. Auth.,
T.E.C.P.,
3.75%, 8/10/98, Ser.
P-1 12,650 2.....................
12,650,000
- --------------
35,650,000
- --------------
NORTH CAROLINA--0.5%
Rockingham Cnty. Ind.
Facs.,
Poll. Ctrl. Rev.,
Phillip Morris Proj.,
F.R.W.D.,
P-1 7,200 3.80%, 7/1/98...........
7,200,000
- --------------
OHIO--3.8%
Cincinnati, T.A.N.,
NR 6,720 4.08%, 12/31/98.........
6,735,640
Clinton Cnty. Hosp.
Rev., Ohio Hosp.
Capital Inc.,
F.R.W.D.,
3.65%, 7/1/98, Ser.
A-1+(c) 8,000 98....................
8,000,000
Mahoning Cnty. Hosp.
Rev., Forum Hlth.
Oblig. Grp. B,
F.R.W.D.,
3.55%, 7/2/98, Ser.
VMIG1 11,600 97B...................
11,600,000
Medina Cnty. Hsg. Rev.,
Oaks At Medina Proj.,
F.R.W.D.,
NR 9,650 3.60%, 7/2/98...........
9,650,000
Montgomery Cnty. Rev.,
Miami Valley Hosp.,
T.E.C.P.,
3.55%, 7/16/98, Ser.
VMIG1 $ 15,000 98B...................
$ 15,000,000
- --------------
50,985,640
- --------------
OKLAHOMA--0.4%
Muskogee Ind. Trust,
Muskogee Mall Proj.,
F.R.W.D.,
3.85%, 7/1/98, Ser.
VMIG1 5,200 85....................
5,200,000
- --------------
OREGON--3.0%
Klamath Falls Elec.
Rev., Salt Caves
Hydroelectric,
A.N.N.M.T.,
3.80%, 5/3/99, Ser.
SP-1+(c) 40,000 86A...................
40,000,000
- --------------
PENNSYLVANIA--5.1%
Dauphin Cnty. Gen. Auth.
Rev.,
Ed. & Hlth. Prog.,
F.R.W.D.,
3.60%, 7/2/98, Ser.
VMIG1 23,800 97....................
23,800,000
Emmaus Gen. Auth.,
F.R.W.D.,
3.55%, 7/1/98, Ser.
A-1+(c) 11,900 96....................
11,900,000
Montgomery Cnty., Higher
Ed. & Hlth. Auth.
Rev., F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1(c) 19,790 96A...................
19,790,000
Philadelphia Water &
Waste Proj.,
A.N.N.M.T.,
VMIG1 12,900 3.82%, 8/5/98, Ser. B...
12,899,951
- --------------
68,389,951
- --------------
PUERTO RICO--0.6%
Puerto Rico Elec. Pwr.
Auth., F.R.W.D.S.,
3.45%, 7/1/98, Ser.
A-1+(c) 8,000 SGA43.................
8,000,000
- --------------
</TABLE>
-22-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000) Description (a)
(Note 1)
<S> <C> <C>
<C>
RHODE ISLAND--0.8%
Rhode Island Student Ln.
Auth., Student Ln.
Pgrm. Rev. Proj.,
F.R.W.D., A.M.T.,
3.55%, 7/1/98, Ser.
A-1+(c) $ 10,000 96-2..................
$ 10,000,000
- --------------
SOUTH CAROLINA--4.7%
South Carolina Ed. Fac.
Auth.,
Presbyterian College,
F.R.W.D.,
3.60%, 7/9/98, Ser.
NR 11,630 98....................
11,630,000
South Carolina Pub. Svc.
Auth., T.E.C.P.,
P-1 15,000 3.55%, 7/16/98..........
15,000,000
P-1 10,000 3.55%, 7/24/98..........
10,000,000
P-1 25,900 3.55%, 8/13/98..........
25,900,000
- --------------
62,530,000
- --------------
SOUTH DAKOTA--2.3%
Brookings Sch. Dist.,
Cert. of Part.,
Q.T.R.M.T.,
3.85%, 10/29/98, Ser.
NR 12,210 97....................
12,210,000
South Dakota Hlth. & Ed.
Fac. Auth., Sioux
Valley Hosp. & Hlth.
Rev., F.R.W.D.,
3.60%, 7/3/98, Ser.
VMIG1 9,860 97....................
9,860,000
South Dakota Hsg. Dev.
Auth.,
Homeownership Mtg.,
A.M.T.,
3.95%, 8/13/98, Ser.
MIG1 8,000 G.....................
8,000,000
- --------------
30,070,000
- --------------
TENNESSEE--3.6%
Dickson Cnty.,
Renaissance Learning
Cent. Rev., F.R.W.D.,
3.60%, 7/1/98, Ser.
Aa3 $ 7,000 97....................
$ 7,000,000
Montgomery Cnty. Pub.
Bldg. Auth., Cnty. Ln.
Pool, F.R.W.D.,
3.60%, 7/2/98, Ser.
VMIG1 17,250 97....................
17,250,000
Nashville & Davidson
Co., Crossing
Multifam. Hsg. Proj.,
F.R.W.D.,
A-1+(c) 8,540 3.65%, 7/2/98, Ser. A...
8,540,000
Shelby Cnty., T.E.C.P.,
3.55%, 7/24/98, Ser.
A-1+(c) 15,000 A.....................
15,000,000
- --------------
47,790,000
- --------------
TEXAS--8.6%
Brazos Harbor Nav.
Dist., Dow Chemical
Co. Proj., T.E.C.P.,
3.85%, 7/1/98, Ser.
P-1 16,100 91....................
16,100,000
F.R.D.D., A.M.T.,
4.05%, 7/1/98, Ser.
P-1 1,300 97....................
1,300,000
Collin Cnty. Hsg. Fin.
Corp., Huntington
Apts. Proj., F.R.W.D.,
3.68%, 7/2/98, Ser.
A-1(c) 6,155 96....................
6,155,000
Greater Texas Student
Ln. Rev. Rfdg.,
A.N.N.M.T., A.M.T.,
3.60%, 3/1/99, Ser.
VMIG1 30,500 96A...................
30,500,000
</TABLE>
-23-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000) Description (a)
(Note 1)
<S> <C> <C>
<C>
TEXAS--(cont'd.)
Guadalupe Blanco River
Auth.,
BOC Group Inc.,
F.R.W.D.,
3.55%, 7/2/98, Ser.
NR $ 13,800 1993..................
$ 13,800,000
Houston Water & Swr.
Sys., Eagle Trust
Proj., F.R.W.D.S.,
3.68%, 7/2/98, Ser.
A-1+(c) 14,005 4305..................
14,005,000
San Antonio Elec. & Gas,
T.E.C.P.,
3.75%, 8/18/98, Ser.
P-1 8,100 A.....................
8,100,000
Texas State, T.R.A.N.,
4.75%, 8/31/98, Ser.
MIG1 18,000 97....................
18,030,585
Waller Cnty. Ind. Dev.
Corp., McKesson Water
Prod., F.R.W.D.,
A.M.T.,
4.45%, 7/1/98, Ser.
A-2(c) 6,000 96....................
6,000,000
- --------------
113,990,585
- --------------
UTAH--2.3%
Intermountain Pwr. Agy.,
T.E.C.P.,
3.70%, 7/10/98, Ser.
A-1(c) 7,000 B.....................
7,000,000
3.80%, 7/28/98, Ser.
A-1(c) 11,300 B.....................
11,300,000
Utah, Gen. Oblig.,
T.E.C.P.,
P-1 12,600 3.55%, 7/14/98..........
12,600,000
- --------------
30,900,000
- --------------
VIRGINIA--1.6%
Campbell Cnty. Ind. Dev.
Auth. Rev., Hadson
Pwr., F.R.D.D.,
A.M.T.,
4.05%, 7/1/98, Ser.
Aa2 2,700 90A...................
2,700,000
Harrisonburg Redev. &
Hsg. Auth., Multifam.
Hsg. Rev., F.R.W.D.,
3.55%, 7/2/98, Ser.
VMIG1 $ 18,555 91A...................
$ 18,555,000
- --------------
21,255,000
- --------------
WASHINGTON--2.5%
Pierce Cnty. Econ. Dev.
Corp., Sealand Inc.,
F.R.W.D.,
3.55%, 7/2/98, Ser.
NR 10,000 96....................
10,000,000
Seattle Hsg. Auth. Rev.,
Holly Park Proj.,
F.R.W.D., A.M.T.,
3.75%, 7/1/98, Ser.
Aa2 9,200 97....................
9,200,000
Washington Hsg. Fin.
Commission, Anchor
Village Apts. Proj.,
F.R.W.D., A.M.T.,
3.70%, 7/2/98, Ser.
A-1+(c) 10,750 97....................
10,750,000
Yakima Cnty. Pub. Corp.
Ind. Rev., Cowiche
Grovers Proj.,
F.R.W.D., A.M.T.,
3.75%, 7/2/98, Ser.
NR 4,000 98....................
4,000,000
- --------------
33,950,000
- --------------
WEST VIRGINIA--1.4%
Grant Cnty. Solid Waste
Rev., Vepco, T.E.C.P.,
A.M.T.,
3.80%, 7/30/98, Ser.
VMIG1 10,000 96....................
10,000,000
West Virginia Pub.
Energy Auth. Rev.,
Morgantown Energy,
T.E.C.P., A.M.T.,
3.80%, 8/14/98, Ser.
A-1+(c) 9,000 89A...................
9,000,000
- --------------
19,000,000
- --------------
</TABLE>
-24-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000) Description (a)
(Note 1)
<S> <C> <C>
<C>
WISCONSIN--0.7%
Wisconsin State, Gen.
Oblig., T.E.C.P.,
3.55%, 7/15/98, Ser.
P-1 $ 9,878 97A...................
$ 9,878,000
- --------------
WYOMING--1.4%
Converse Cnty. Poll.
Ctrl. Rev.,
Pacificorp, T.E.C.P.,
3.70%, 7/28/98, Ser.
VMIG1 10,000 92....................
10,000,000
Sweetwater Cnty. Poll.
Ctrl. Rev., Pacificorp
Proj., T.E.C.P.,
VMIG1 9,335 3.55%, 7/29/98..........
9,335,000
- --------------
19,335,000
- --------------
Total Investments--99.7%
(cost $1,329,294,266)...
1,329,294,266
Other assets in excess
of
liabilities--0.3%.....
3,690,988
- --------------
Net Assets--100%........
$1,332,985,254
- --------------
- --------------
</TABLE>
- ---------------
(a) The following abbreviations are used in
portfolio descriptions:
A.M.T.--Alternative Minimum Tax.
A.N.N.M.T.--Annual Mandatory Tender.
B.A.N.--Bond Anticipation Note.
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.
S.E.M.O.T.S.--Quarterly Optional Tender--
Synthetic.
T.A.N.--Tax Anticipation Note.
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) Standard & Poor's rating.
NR--Not Rated by Moody's or Standard & Poor's.
-25-
See Notes to Financial
Statements appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets
June 30, 1998
- --------------
<S>
<C>
Investments, at amortized cost which approximates
market value..........................
$1,329,294,266
Receivable for Fund shares
sold..............................................
........... 31,058,909
Interest
receivable........................................
............................. 10,125,728
Receivable for investments
sold..............................................
........... 9,100,000
Prepaid
expenses..........................................
.............................. 17,291
- --------------
Total
assets............................................
.............................. 1,379,596,194
- --------------
Liabilities
Payable for Fund shares
repurchased.......................................
.............. 30,000,917
Bank
overdraft.........................................
................................. 13,326,944
Payable for investments
purchased.........................................
.............. 2,200,000
Accrued
expenses..........................................
.............................. 518,408
Management fee
payable...........................................
....................... 490,516
Distribution fee
payable...........................................
..................... 74,155
- --------------
Total
liabilities.......................................
.............................. 46,610,940
- --------------
Net
Assets............................................
..................................
$1,332,985,254
- --------------
- --------------
Net assets were comprised of:
Shares of beneficial interest, at
par...............................................
.. $ 13,329,853
Paid-in capital in excess of
par...............................................
....... 1,319,655,401
- --------------
Net assets, June 30,
1998..............................................
................. $1,332,985,254
- --------------
- --------------
Net asset value, offering price and redemption
price per share ($1,332,985,254 /
1,332,985,254 shares of beneficial interest
($.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
<TABLE>
<CAPTION>
Year
Ended
June
30,
Net Investment Income 1998
<S> <C>
Income
Interest............................. $
47,366,829
----------
- ----
Expenses
Management fee.......................
5,671,955
Distribution fee.....................
1,598,985
Transfer agent's fees................
185,000
Custodian's fees and expenses........
70,000
Reports to shareholders..............
32,000
Trustees' fees.......................
27,000
Audit fee............................
27,000
Insurance expense....................
17,000
Legal fees and expenses..............
10,000
Miscellaneous........................
8,343
----------
- ----
Total expenses.....................
7,647,283
Less: custodian fee credit.........
(74,021)
----------
- ----
Net expenses.......................
7,573,262
----------
- ----
Net investment income..................
39,793,567
----------
- ----
Realized Gain on Investments
Net realized gain on investment
transactions.........................
6,522
----------
- ----
Net Increase in Net Assets
Resulting from Operations.............. $
39,800,089
----------
- ----
----------
- ----
</TABLE>
COMMAND TAX-FREE FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended June 30,
in Net Assets 1998
1997
<S> <C> <C>
Operations
Net investment
income............. $ 39,793,567 $
35,446,503
Net realized gain
on investment
transactions..... 6,522
8,700
---------------- ---------
- -------
Net increase in net
assets resulting
from
operations....... 39,800,089
35,455,203
---------------- ---------
- -------
Dividends and
distributions to
shareholders (Note
1)................... (39,800,089)
(35,455,203)
---------------- ---------
- -------
Fund share
transactions (at $1
per share)
Net proceeds from
shares
subscribed....... 5,269,527,972
4,862,507,754
Net asset value of
shares issued in
reinvestment of
dividends and
distributions.... 39,800,089
35,455,203
Cost of shares
reacquired......... (5,105,855,856)
(4,925,385,345)
---------------- ---------
- -------
Net increase
(decrease) in net
assets from Fund
share
transactions..... 203,472,205
(27,422,388)
---------------- ---------
- -------
Total increase
(decrease)........... 203,472,205
(27,422,388)
Net Assets
Beginning of year.... 1,129,513,049
1,156,935,437
---------------- ---------
- -------
End of year.......... $ 1,332,985,254 $
1,129,513,049
---------------- ---------
- -------
---------------- ---------
- -------
</TABLE>
See Notes to Financial Statements appearing on
page 29.
See Notes to Financial Statements appearing on
page 29.
-27-
<PAGE>
COMMAND TAX-FREE FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
- --------------------------------------------------
- ---------------
1998 1997 1996 1995
1994
- ---------- ---------- ---------- -------
- --- --------
<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 0.030
0.031 0.032 0.020
Dividends and distributions to
shareholders......... (0.031) (0.030)
(0.031) (0.032) (0.020)
- ---------- ---------- ---------- -------
- --- --------
Net asset value, end of
year........................ $ 1.000 $
1.000 $ 1.000 $ 1.000 $ 1.000
- ---------- ---------- ---------- -------
- --- --------
- ---------- ---------- ---------- -------
- --- --------
TOTAL
RETURN(a).....................................
3.16% 3.05% 3.12% 3.29%
1.98%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000)....................... $1,332,985
$1,129,513 $1,156,935 $1,055,568 $847,602
Average net assets
(000)............................ $1,279,188
$1,181,084 $1,134,257 $ 926,888 $908,421
Ratios to average net assets:
Expenses, including distribution
fees............. .60% .64%
.66% .66% .65%
Expenses, excluding distribution
fees............. .47% .51%
.54% .54% .53%
Net investment
income............................. 3.11%
3.00% 3.06% 3.05% 1.96%
</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 29.
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, 1998, 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, 1998 by
correspondence with the custodian, provide a
reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
August 18, 1998
-28-
<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 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.
The Fund may hold up to 10% of its net assets in
illiquid securities, inlcuding
those which are restricted as to disposition under
securities law ('restricted
securities'). None of the issues of restricted
securities held by the Fund at
June 30, 1998 include registration rights under
which the Fund may demand
registration by the issuer.
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
-29-
<PAGE>
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 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 to 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 had a distribution agreement with
Prudential Securities
Incorporated ('PSI'), which acted as the
distributor of the shares of each Fund.
Each Fund compensated 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 are
accrued daily and payable monthly. Effective July
1, 1998, Prudential Investment
Management Services LLC ('PIMS') became the
distributor of the Funds and is
serving the Funds under the same terms and
conditions as under the arrangement
with PSI.
PIFM, PSI, PIC and PIMS are indirect, wholly owned
subsidiaries of The
Prudential Insurance Company of America.
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
year ended June 30, 1998 the Funds incurred fees
for the services of PMFS of
approximately:
<TABLE>
<S>
<C>
Command Money..................................
$2,800,400
Command Government............................. $
93,700
Command Tax-Free............................... $
184,500
</TABLE>
As of June 30, 1998, the following amounts were
due to PMFS from the Funds:
<TABLE>
<S>
<C>
Command Money....................................
$278,322
Command Government...............................
$ 8,408
Command Tax-Free.................................
$ 15,788
</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, 1998) 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, 1998,
dividends paid from net investment income totaling
$.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 26% 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.
-31-
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Toll free (800) 222-4324
Trustees
Edward D. Beach
Stephen C. Eyre
Delayne Dedrick Gold
Robert F. Gunia
Don G. Hoff
Robert E. LaBlanc
Mendel A. Melzer, CFA
Richard A. Redeker
Robin B. Smith
Langdon R. Stevenson
Stephen Stoneburn
Nancy H. Teeters
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Robert C. Rosselot, Assistant Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
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
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
This report is not authorized for distribution to
prospective investors unless
preceded or accompanied by a current prospectus.
