COMMAND MONEY FUND, 497, 1999-10-08

COMMAND MONEY FUND
497, 1999-10-08

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<PAGE>
FUND TYPE:
- -------------------------------------
Money market

COMMAND MONEY FUND
COMMAND TAX-FREE FUND
COMMAND GOVERNMENT FUND
[LOGO]
- ---------------------------------------------------------------
PROSPECTUS: OCTOBER 1, 1999

As with all mutual funds, the
Securities and Exchange
Commission has not approved or
disapproved the Funds' shares
nor has the SEC determined that
this prospectus is complete or
accurate. It is a criminal offense
to state otherwise. [LOGO]
<PAGE>
TABLE OF CONTENTS
- -------------------------------------

<TABLE>
<S> <C>
1 RISK/RETURN SUMMARY
1 COMMAND MONEY FUND:
1 Investment Objective and Principal Strategies
2 Principal Risks
2 Evaluating Performance
4 Fees and Expenses
5 COMMAND TAX-FREE FUND:
5 Investment Objective and Principal Strategies
6 Principal Risks
6 Evaluating Performance
8 Fees and Expenses
9 COMMAND GOVERNMENT FUND:
9 Investment Objective and Principal Strategies
10 Principal Risks
10 Evaluating Performance
12 Fees and Expenses
14 HOW THE FUNDS INVEST
14 COMMAND Money Fund: Investment Objective and Policies
16 COMMAND Tax-Free Fund: Investment Objective and Policies
18 COMMAND Government Fund: Investment Objective and Policies
20 Other Investments and Strategies
21 Rating of Fund Shares
21 Investment Risks
23 HOW THE FUNDS ARE MANAGED
23 Board of Trustees
23 Manager
23 Investment Adviser
23 Distributor
24 Year 2000 Readiness Disclosure
25 FUND DISTRIBUTIONS AND TAX ISSUES
25 Distributions
25 Tax Issues
27 HOW TO BUY AND SELL SHARES OF THE FUNDS
27 How to Buy Shares
29 How to Sell Your Shares
32 FINANCIAL HIGHLIGHTS
32 COMMAND Money Fund
33 COMMAND Tax-Free Fund
33 COMMAND Government Fund
36 THE PRUDENTIAL MUTUAL FUND FAMILY
FOR MORE INFORMATION (Back Cover)
</TABLE>

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COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
RISK/RETURN SUMMARY
- -------------------------------------

This prospectus provides information about the COMMAND FUNDS, which consists of
three separate mutual funds--COMMAND MONEY FUND, COMMAND TAX-FREE FUND and
COMMAND GOVERNMENT FUND (each, a Fund and together, the Funds). While the Funds
have some common attributes, each one has its own investment objective and
policies, performance information, and risks. Therefore, some sections of this
prospectus deal with each Fund separately, while other sections address two or
more Funds at the same time.
In sections that concern one particular Fund as identified in the section
heading, "the Fund" refers to that particular Fund.
Shares of each Fund are available for purchase only by participants in the
COMMAND-SM- Account and COMMAND Plus-SM- Account Programs (collectively, the
COMMAND program) which are available through Prudential Securities Incorporated,
and participants in the Prudential BusinessEdge-SM- Account Program (the
BusinessEdge program), which is available through either Prudential Securities
Incorporated or Pruco Securities Corporation.
This section highlights key information about each Fund. Additional
information follows this summary.

COMMAND MONEY FUND
INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES
Our investment objective is HIGH CURRENT INCOME, PRESERVATION OF CAPITAL AND
MAINTENANCE OF LIQUIDITY. This means we look for investments that we think will
provide a high level of current income. To achieve our objective, we invest in
short-term money market instruments such as obligations issued by the U.S.
Government, commercial paper, asset-backed securities, funding agreements,
variable rate demand notes, bills, notes and other obligations issued by banks,
corporations and other companies, and obligations issued by foreign banks,
companies or foreign governments. The Fund will invest only in instruments with
remaining maturities of thirteen months or less and which are denominated in
U.S. dollars. The Fund may invest in longer-term securities that are accompanied
by demand features, which will shorten the effective maturity of the securities
to thirteen months or less. While we make every effort to achieve our objective
and maintain a net asset value of $1 per share, we can't guarantee success.

- --------------------------------------------------------------------------------
1
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

COMMAND MONEY FUND: PRINCIPAL RISKS
Although we try to invest wisely, all investments involve risk. Since the Fund
invests in debt obligations, there is the risk that the value of a particular
obligation could go down. Debt obligations are generally subject to CREDIT
RISK--the risk that the issuer of a particular security may be unable to make
principal and interest payments when they are due, and MARKET RISK--the risk
that the securities could lose value because interest rates change or investors
lose confidence in the ability of issuers in general to pay back their debt.
With respect to the Fund's investments in asset-backed securities, there is a
risk of prepayment, which means that if the underlying obligations are paid
before they are due, the security may discontinue paying an attractive rate of
income.
The Fund's investment in foreign securities involves additional risks. For
example, foreign banks and companies generally are not subject to regulatory
requirements comparable to those applicable to U.S. banks and companies. In
addition, political developments and changes in currency rates may adversely
affect the value of foreign securities. In all cases, however, we invest only in
U.S. dollar denominated-securities.
There is also a risk that we will sell a security for a price that is higher
or lower than the value attributed to the security through the amortized cost
valuation procedures we follow. Such an event could affect our ability to
maintain a net asset value of $1 per share.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of an investment at $1 per
share, it is possible to lose money by investing in the Fund.

COMMAND MONEY FUND: EVALUATING PERFORMANCE
A number of factors--including risk--affect how the Fund performs. The following
bar chart shows the Fund's performance for each full calendar year of operation
for the last 10 years. The tables compare the Fund's average annual returns and
yield for the periods indicated with those of a group of similar funds. The bar
chart and tables demonstrate the risk of investing in the Fund and how returns
can change. Past performance does not mean that the Fund will achieve similar
results in the future. For current yield information, you can call us at (800)
225-1852.

- -------------------------------------------------------------------
2 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

COMMAND MONEY FUND
ANNUAL RETURNS(1) (AS OF 12/31/98)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
1989 9.10%
1990 7.93%
1991 5.90%
1992 3.59%
1993 2.81%
1994 3.92%
1995 5.63%
1996 5.04%
1997 5.20%
1998 5.20%
BEST QUARTER: 2.35% (2nd quarter of 1989)
WORST QUARTER: .68% (2nd quarter of 1993)
</TABLE>

COMMAND MONEY FUND
AVERAGE ANNUAL RETURNS(1) (AS OF 12/31/98)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fund Shares 5.20% 5.00% 5.42% 6.62% (since 2/26/82)
Lipper Average(2) 4.84% 4.77% 5.20% N/A
</TABLE>

COMMAND MONEY FUND
7-DAY YIELD(1) (AS OF 12/31/98)

<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Fund Shares 4.80%
IBC Average(3) 4.53%
</TABLE>

1 THE FUND'S RETURNS ARE AFTER DEDUCTION OF EXPENSES. THE TOTAL RETURN OF THE
FUND'S SHARES FROM 1-1-99 TO 6-30-99 WAS 2.26%.
2 THE LIPPER FUNDS AVERAGE IS BASED UPON THE AVERAGE RETURN OF ALL MUTUAL
FUNDS IN THE U.S. TAXABLE MONEY MARKET FUNDS CATEGORY.
3 THE IBC AVERAGE IS BASED UPON THE AVERAGE YIELD OF ALL MUTUAL FUNDS IN THE
INTERNATIONAL BUSINESS COMMUNICATIONS FINANCIAL DATA ALL TAXABLE MONEY
MARKET FUND CATEGORY.

- --------------------------------------------------------------------------------
3
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

COMMAND MONEY FUND: FEES AND EXPENSES
These tables show the fees and expenses that you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<S> <C>
- -----------------------------------------------------------
- -----------------------------------------------------------
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) None
Maximum deferred sales charge (load)
(as a percentage of the lower of original
purchase price or sale proceeds) None
Maximum sales charge (load) imposed on
reinvested dividends and other distributions None
Redemption fees None
Exchange fee None
COMMAND Account Program
Annual Fee $ 100*
COMMAND Plus Account Program
Annual Fee $ 150*
Prudential BusinessEdge Account
Program Annual Fee $ 250**
</TABLE>

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C>
- ----------------------------------------------------------
- ----------------------------------------------------------
Management fees .360%
+ Distribution and service (12b-1) fees .125%
+ Other expenses .055%
= TOTAL ANNUAL FUND OPERATING EXPENSES .540%
</TABLE>

* PRUDENTIAL SECURITIES CHARGES AN ANNUAL PROGRAM FEE OF $100 TO MOST
PARTICIPANTS IN THE COMMAND ACCOUNT PROGRAM WHETHER OR NOT THEY OWN SHARES
OF THE FUND. THE PROGRAM FEE IS $125 FOR COMMAND CORPORATE ACCOUNTS, $60
FOR COMMAND ESSENTIALS ACCOUNTS, $60 FOR COMMAND IRA ACCOUNTS AND $150 FOR
COMMAND FAMILY AND COMMAND PLUS ACCOUNTS. PRUDENTIAL SECURITIES MAY, IN ITS
SOLE DISCRETION, WAIVE OR REDUCE COMMAND PROGRAM ANNUAL FEES AND/OR THE FEE
ASSOCIATED WITH A PARTICULAR PRODUCT OR SERVICE, AS WELL AS MINIMUM
INVESTMENT REQUIREMENTS TO BE ELIGIBLE FOR PARTICIPATION IN A COMMAND
PROGRAM, GENERALLY OR FOR SPECIFIC ACCOUNTS.
** THE ANNUAL FEE DOES NOT INCLUDE CHARGES FOR CHECKS AND DEPOSITS IN EXCESS
OF BUSINESSEDGE PROGRAM LIMITS, ADDITIONAL CASH TRANSFER SERVICES,
ADDITIONAL BILLPAY SERVICES AND CHARGES RELATING TO MARGIN ACCOUNTS,
COMMERCIAL LINES OF CREDIT AND TERM LOANS THAT MAY BE AVAILABLE IN THE
BUSINESSEDGE PROGRAM. A BROKER/DEALER MAY, IN ITS SOLE DISCRETION, WAIVE OR
REDUCE THE ANNUAL FEES OF THE BUSINESSEDGE PROGRAM AND/OR THE FEE
ASSOCIATED WITH A PARTICULAR PRODUCT OR SERVICE, AS WELL AS MINIMUM
INVESTMENT REQUIREMENTS FOR PARTICIPATION IN THE BUSINESSEDGE PROGRAM,
GENERALLY OR FOR SPECIFIC ACCOUNTS.

- -------------------------------------------------------------------
4 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

EXAMPLE
This example will help you compare the cost of investing in the Fund with the
cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Fund shares $55 $173 $302 $677
</TABLE>

COMMAND TAX-FREE FUND
INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES
Our investment objective is HIGH CURRENT INCOME THAT IS EXEMPT FROM FEDERAL
INCOME TAXES, CONSISTENT WITH THE MAINTENANCE OF LIQUIDITY AND PRESERVATION OF
CAPITAL. This means we look for investments that we think will provide a high
level of tax-exempt current income. To achieve our objective, we invest in
short-term debt obligations issued by state and local governments, municipal
commercial paper, variable rate demand obligations, and municipal asset-backed
securities. The Fund will invest only in instruments with remaining maturities
of thirteen months or less and which are denominated in U.S. dollars. The Fund
may invest in longer-term securities that are accompanied by demand features,
which will shorten the effective maturity of the securities to thirteen months
or less. While we make every effort to achieve our objective and maintain a net
asset value of $1 per share, we can't guarantee success.
Under normal circumstances, at least 80% of the Fund's net assets are
invested in money market instruments that pay income exempt from federal income
taxes and which are not preference items for purposes of the federal alternative
minimum tax. The Fund may invest up to 20% of its net assets in municipal debt
obligations that may be considered a preference item for purposes of the federal
alternative minimum tax. Shareholders should consult with their tax adviser
regarding the applicability of the federal alternative minimum tax.

- --------------------------------------------------------------------------------
5
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

COMMAND TAX-FREE FUND: PRINCIPAL RISKS
Although we try to invest wisely, all investments involve risk. Since the Fund
invests in debt obligations, there is the risk that the value of a particular
obligation could go down. Debt obligations are generally subject to CREDIT
RISK--the risk that the issuer of a particular security may be unable to make
principal and interest payments when they are due, and MARKET RISK--the risk
that the securities could lose value because interest rates change or investors
lose confidence in the ability of issuers in general to pay back their debt. The
Fund's investment in municipal asset-backed securities are also subject to
PREPAYMENT RISK--the risk that the underlying obligations may be prepaid,
partially or completely, generally during times of falling interest rates, which
could adversely effect yield and could require the Fund to reinvest in lower
yielding obligations.
There is also a risk that we will sell a security for a price that is higher
or lower than the value attributed to the security through the amortized cost
valuation procedures we follow. Such an event could affect our ability to
maintain a net asset value of $1 per share.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of an investment at $1 per
share, it is possible to lose money by investing in the Fund.

COMMAND TAX-FREE FUND: EVALUATING PERFORMANCE
A number of factors--including risk--affect how the Fund performs. The following
bar chart shows the Fund's performance for each full calendar year of operation
for the last 10 years. The tables compare the Fund's average annual returns and
yield for the periods indicated with those of a group of similar mutual funds.
The bar chart and tables demonstrate the risk of investing in the Fund and how
returns can change. Past performance does not mean that the Fund will achieve
similar results in the future. For current yield information, you can call us at
(800) 225-1852.

- -------------------------------------------------------------------
6 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

COMMAND TAX-FREE FUND
ANNUAL RETURNS(1) (AS OF 12/31/98)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
1989 5.94%
1990 5.53%
1991 4.26%
1992 2.69%
1993 1.93%
1994 2.57%
1995 3.35%
1996 2.93%
1997 3.17%
1998 3.01%
BEST QUARTER: 1.54% (4th quarter of 1989)
WORST QUARTER: 0.45% (3rd quarter of 1994)
</TABLE>

COMMAND TAX-FREE FUND
AVERAGE ANNUAL RETURNS(1) (AS OF 12/31/98)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1 YR 5 YRS 10 YRS SINCE INCEPTION
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fund Shares 3.01% 3.00% 3.53% 4.07% (since 2/26/82)
Lipper Average(2) 2.92% 2.93% 3.47% N/A
</TABLE>

COMMAND TAX-FREE FUND
7-DAY YIELD(1) (AS OF 12/31/98)

<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------

Fund Shares 3.12%
IBC Average(3) 2.95%
Tax-equivalent yield of
the Fund(4) 5.17%
</TABLE>

1 THE FUND'S RETURNS ARE AFTER DEDUCTION OF EXPENSES. THE TOTAL RETURN OF THE
FUND'S SHARES FROM 1-1-99 TO 6-30-99 WAS 1.29%.
2 THE LIPPER FUNDS AVERAGE IS BASED UPON THE AVERAGE RETURN OF ALL MUTUAL
FUNDS IN THE U.S. NONTAXABLE MONEY MARKET FUNDS CATEGORY.

3 THE IBC AVERAGE IS BASED UPON THE AVERAGE YIELD OF ALL MUTUAL FUNDS IN THE
INTERNATIONAL BUSINESS COMMUNICATIONS FINANCIAL DATA ALL NONTAXABLE MONEY
MARKET FUND CATEGORY.
4 TAX-EQUIVALENT YIELD SHOWS THE TAXABLE YIELD AN INVESTOR WOULD HAVE TO EARN
FROM A FULLY TAXABLE INVESTMENT IN ORDER TO EQUAL THE FUND'S YIELD AFTER
TAXES. IT IS CALCULATED BY DIVIDING THE FUND'S CURRENT YIELD BY THE RESULT
OF ONE MINUS THE MAXIMUM MARGINAL FEDERAL TAX RATE.

- --------------------------------------------------------------------------------
7
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

COMMAND TAX-FREE FUND: FEES AND EXPENSES
These tables show the fees and expenses that you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C>
- ----------------------------------------------------------
- ----------------------------------------------------------
Management fees .431%
+ Distribution and service (12b-1) fees .125%
+ Other expenses .034%
= TOTAL ANNUAL FUND OPERATING EXPENSES .590%
</TABLE>

- -------------------------------------------------------------------
8 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

COMMAND GOVERNMENT FUND
INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES
Our investment objective is HIGH CURRENT INCOME, PRESERVATION OF CAPITAL AND
MAINTENANCE OF LIQUIDITY. This means we look for investments that we think will
provide a high level of current income. To achieve our objective, we invest in
short-term money market instruments issued by the U.S. Government, its agencies
and intrumentalities, including mortgage-backed securities issued by U.S.
Government agencies. The Fund will invest only in instruments with remaining
maturities of thirteen months or less and which are denominated in U.S. dollars.
The Fund may invest in longer-term securities that are accompanied by demand
features, which will shorten the effective maturity of the securities to
thirteen months or less. While we make every effort to achieve our objective and
maintain a net asset value of $1 per share, we can't guarantee success.

- --------------------------------------------------------------------------------
9
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

COMMAND GOVERNMENT FUND: PRINCIPAL RISKS
Although we try to invest wisely, all investments involve risk. Since the Fund
invests in debt obligations, there is the risk that the value of a particular
obligation could go down. Debt obligations of the U.S. Government are generally
subject of the MARKET RISK--the risk that the securities could lose value
because interest rates change. The Fund's investment in mortgage-backed
securities are also subject to prepayment risk--the risk that the underlying
obligations may be prepaid, partially or completely, generally during times of
falling interest rates, which could adversely effect yield and could require the
Fund to reinvest in lower yielding obligations.
There is also a risk that we will sell a security for a price that is higher
or lower than the value attributed to the security through the amortized cost
valuation procedures we follow. Such an event could affect our ability to
maintain a net asset value of $1 per share.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of an investment at $1 per
share, it is possible to lose money by investing in the Fund.

COMMAND GOVERNMENT FUND: EVALUATING PERFORMANCE
A number of factors--including risk--affect how the Fund performs. The following
bar chart shows the Fund's performance for each full calendar year of operation
for the last 10 years. The tables compare the Fund's average annual returns and
yield for the periods indicated with those of a group of similar mutual funds.
The bar chart and tables demonstrate the risk of investing in the Fund and how
returns can change. Past performance does not mean that the Fund will achieve
similar results in the future. For current yield information, you can call us at
(800) 225-1852.

- -------------------------------------------------------------------
10 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

COMMAND GOVERNMENT FUND
ANNUAL RETURNS(1) (AS OF 12/31/98)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
1989 8.84%
1990 7.75%
1991 5.70%
1992 3.44%
1993 2.68%
1994 3.65%
1995 5.42%
1996 4.89%
1997 5.08%
1998 5.08%
BEST QUARTER: 2.75% (2nd quarter of 1982)
WORST QUARTER: .65% (2nd quarter of 1993)
</TABLE>

COMMAND GOVERNMENT FUND
AVERAGE ANNUAL RETURNS(1) (AS OF 12/31/98)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1 YR 5 YRS 10 YRS SINCE INCEPTION
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fund Shares 5.08% 4.82% 5.24% 6.24% (since 2/26/82)
Lipper Average(2) 4.89% 4.72% 5.10% N/A
</TABLE>

COMMAND GOVERNMENT FUND
7-DAY YIELD(1) (AS OF 12/31/98)

<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Fund Shares 4.68%
IBC Average(3) 4.39%
</TABLE>

1 THE FUND'S RETURNS ARE AFTER DEDUCTION OF EXPENSES. THE TOTAL RETURN OF THE
FUND'S SHARES FROM 1-1-99 TO 6-30-99 WAS 2.22%.
2 THE LIPPER FUNDS AVERAGE IS BASED UPON THE AVERAGE RETURN OF ALL MUTUAL
FUNDS IN THE U.S. GOVERNMENT MONEY MARKET FUNDS CATEGORY.
3 THE IBC AVERAGE IS BASED UPON THE AVERAGE YIELD OF ALL MUTUAL FUNDS IN THE
INTERNATIONAL BUSINESS COMMUNICATIONS FINANCIAL DATA ALL GOVERNMENT MONEY
MARKET FUND CATEGORY.

- --------------------------------------------------------------------------------
11
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

COMMAND GOVERNMENT FUND: FEES AND EXPENSES
These tables show the fees and expenses that you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C>
- ----------------------------------------------------------
- ----------------------------------------------------------
Management fees .400%
+ Distribution and service (12b-1) fees .125%
+ Other expenses .035%
= TOTAL ANNUAL FUND OPERATING EXPENSES .560%
</TABLE>

** THE ANNUAL FEE DOES NOT INCLUDE CHARGES FOR CHECKS AND DEPOSITS IN EXCESS
OF BUSINESSEDGE PROGRAM LIMITS, ADDITIONAL CASH TRANSFER SERVICES,
ADDITIONAL BILLPAY SERVICES AND CHARGES RELATING TO MARGIN ACCOUNTS,
COMMERCIAL LINES OF CREDIT AND TERM LOANS THAT MAY BE AVAILABLE IN THE
BUSINESSEDGE PROGRAM. A BROKER/DEALER MAY, IN ITS SOLE DISCRETION, WAIVE OR
REDUCE THE ANNUAL FEES OF THE BUSINESSEDGE PROGRAM AND/OR THE FEE
ASSOCIATED WITH A PARTICULAR PRODUCT OR SERVICE, AS WELL AS MINIMUM
INVESTMENT REQUIREMENTS FOR PARTICIPATION IN THE BUSINESSEDGE PROGRAM,
GENERALLY OR FOR SPECIFIC ACCOUNTS.

- -------------------------------------------------------------------
12 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

- --------------------------------------------------------------------------------
13
<PAGE>
HOW THE FUNDS INVEST
- -------------------------------------

COMMAND MONEY FUND
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of this Fund is HIGH CURRENT INCOME, PRESERVATION OF
CAPITAL AND MAINTENANCE OF LIQUIDITY. This means we seek investments that will
provide a high level of current income. While we make every effort to achieve
our objective, we can't guarantee success. Our investment objective is a
fundamental investment policy, which means that it cannot be changed without
shareholder approval.
We invest in a diversified portfolio of short-term debt obligations which
include, but are not limited to, obligations issued by the U.S. Government, its
agencies and instrumentalities, as well as commercial paper, asset-backed
securities, funding agreements, variable rate demand notes, bills, notes and
other obligations issued by banks, corporations and other companies (including
trust structures), obligations issued by foreign banks, companies or foreign
governments, and municipal notes.
The Fund invests in high-quality money market instruments to try to provide
investors with current income while maintaining a stable net asset value of $1
per share. We manage the Fund to comply with specific rules designed for money
market mutual funds. This means that we manage its portfolio to comply with the
requirements of Investment Company Act Rule 2a-7. As such, we will not acquire
any security with a remaining maturity exceeding thirteen months, and we will
maintain a dollar-weighted average portfolio of 90 days or less. In addition, we
will comply with the diversification, quality and other requirements of Rule
2a-7. This means, generally, that the instruments we purchase present "minimal
credit risk" and are of "eligible quality." "Eligible quality" for this purpose
means a security: (i) rated in one of the two highest short-term rating
categories by at least two nationally recognized statistical rating
organizations (NRSROs) or, if only one NRSRO has rated the security, so rated by
that NRSRO; (ii) rated in one of the three highest long-term rating categories
by at least two NRSROs or, if only one NRSRO has rated the security, so rated by
that NRSRO; or (iii) if unrated, of comparable quality as determined by the
Fund's investment adviser. All securities that we purchase will be denominated
in U.S. dollars.
COMMERCIAL PAPER is short-term debt obligations of banks, corporations and
other borrowers. The obligations are usually issued by financially strong
businesses and often include a line of credit to protect purchasers of the
obligations. An ASSET-BACKED SECURITY is a loan or note that pays interest based
upon the cash flow of a pool of assets, such as mortgages, loans and credit card
receivables. CERTIFICATES OF DEPOSIT, TIME

- -------------------------------------------------------------------
14 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
HOW THE FUNDS INVEST
- ------------------------------------------------

DEPOSITS, BANKERS' ACCEPTANCES and bank notes are obligations issued by or
through a bank. These instruments depend upon the strength of the bank involved
in the borrowing to give investors comfort that the borrowing will be repaid
when promised. FUNDING AGREEMENTS are contracts issued by insurance companies
that guarantee a return of principal, plus some amount of interest. When
purchased by money market funds, funding agreements will typically be short-term
and provide an adjustable rate of interest.
DEBT OBLIGATIONS in general, including those listed above and any others
that we may purchase, are basically written promises to repay a debt. Among the
various types of debt securities we may purchase, the terms of repayment may
vary, as may the commitment of other parties to honor the obligations of the
issuer of the security. We may purchase securities that include DEMAND FEATURES,
which allow us to demand repayment of a debt obligation before the obligation is
due or "matures." This means that longer-term securities can be purchased
because of our expectation that we can demand repayment of the obligation at an
agreed price within a relatively short period of time. This procedure follows
the rules applicable to money market mutual funds.
FOREIGN SECURITIES and foreign markets involve additional risk. Foreign laws
and accounting standards typically are not as strict as they are in the U.S.
Foreign fixed income and currency markets may be less stable than U.S. markets.
Changes in the exchange rates of foreign currencies can affect the value of
foreign assets. There is a risk that foreign companies and governments, just as
is the case in the U.S., will not be prepared to handle issues that will arise
when we reach the year 2000 if their computer systems cannot differentiate the
year 2000 from the year 1900.
The securities that we may purchase may change over time as new types of
money market instruments are developed. We will purchase these new instruments,
however, only if their characteristics and features follow the rules governing
money market mutual funds.
Any of the money market instruments that the Fund may purchase may be
accompanied with the right to resell the instrument prior to the instrument's
maturity. In addition, we may separately purchase rights to resell these
instruments. These rights are referred to as "PUTS" and are acquired by the Fund
to protect against a possible decline in the market value of the securities to
which the puts relate in the event of interest rate fluctuations, to shorten the
effective maturity of the security and to provide the Fund with liquidity to
meet shareholder redemption requests.

- --------------------------------------------------------------------------------
15
<PAGE>
HOW THE FUNDS INVEST
- ------------------------------------------------

The Board of Trustees of the Fund can change investment policies that are
not fundamental. For more information, see "Investment Risks" and the Statement
of Additional Information, "Description of the Funds, Their Investments and
Risks." The Statement of Additional Information--which we refer to as the
SAI--contains more information about the Fund.

COMMAND TAX-FREE FUND
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of this Fund is HIGH CURRENT INCOME THAT IS EXEMPT FROM
FEDERAL INCOME TAXES, CONSISTENT WITH MAINTENANCE OF LIQUIDITY AND PRESERVATION
OF CAPITAL. This means we seek investments that will provide a high level of
tax-exempt current income. While we make every effort to achieve our objective,
we can't guarantee success. Our investment objective is a fundamental investment
policy, which means that it cannot be changed without shareholder approval.
We invest in a diversified portfolio of short-term debt obligations issued
by states, territories and possessions of the United States and the District of
Columbia, and their respective political subdivisions. The interest on these
debt obligations is wholly exempt from federal income tax. The exemption from
federal income tax is supported by an opinion of counsel to the issuer. These
securities are generally known as "Municipal Bonds" or "Municipal Notes."
Municipal Bonds include industrial development bonds issued for various public
purposes and certain private activity bonds where public authorities issue bonds
to fund privately operated facilities, such as housing facilities, sports
facilities, pollution control facilities and parking facilities. Municipal Notes
include the tax anticipation notes, bond anticipation notes and revenue
anticipation notes. Municipal Notes sold in anticipation of collection of taxes,
a bond sale or receipt of other revenues are usually general obligations of the
issuing municipality or agency.
Interest on certain Municipal Bonds and Municipal Notes may be a preference
item for purposes of the federal alternative minimum tax (AMT Paper), which
means that certain investors who receive distributions from the Fund will be
subject to federal income taxes on such distributions. The Fund may invest up to
20% of its net assets in AMT Paper. Under normal circumstances, the Fund will
invest at least 80% of its net assets in Municipal Bonds and Municipal Notes
that are not subject to the federal Alternative Minimum Tax.
The Fund invests in eligible high-quality money market instruments to try to
provide investors with current tax-exempt income while maintaining a

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16 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
HOW THE FUNDS INVEST
- ------------------------------------------------

stable net asset value of $1 per share. We manage the Fund to comply with
specific rules designed for money market mutual funds. This means that we manage
its portfolio to comply with the requirements of Investment Company Act Rule
2a-7. As such, we will not acquire any security with a remaining maturity
exceeding thirteen months, and we will maintain a dollar-weighted average
portfolio of 90 days or less. In addition, we will comply with the
diversification, quality and other requirements of Rule 2a-7. This means,
generally, that the instruments we purchase present "minimal credit risk" and
are of "eligible quality." "Eligible quality" for this purpose means a security:
(i) rated in one of the two highest short-term rating categories by at least two
nationally recognized statistical rating organizations (NRSROs) or, if only one
NRSRO has rated the security, so rated by that NRSRO; (ii) rated in one of the
three highest long-term rating categories by at least two NRSROs or, if only one
NRSRO has rated the security, so rated by that NRSRO; or (iii) if unrated, of
comparable quality as determined by the Fund's investment adviser.
DEBT OBLIGATIONS in general, including those listed above and any others
that we may purchase, are basically written promises to repay a debt. Among the
various types of debt securities we may purchase, the terms of repayment may
vary, as may the commitment of other parties to honor the obligations of the
issuer of the security. We may purchase securities that are subject to DEMAND
FEATURES, which provide liquidity and allow us to demand repayment of a debt
obligation before the obligation is due or "matures". This means that
longer-term securities can be purchased because of our expectation that we can
demand repayment of the obligation at an agreed price within a relatively short
period of time. This procedure follows the rules applicable to money market
mutual funds.
The Fund's investments also include variable rate demand obligations
("VRDOs") and VRDOs in the form of participation interests ("Participating
VRDOs") in variable rate tax-exempt obligations held by financial institutions.
The VRDOs in which the Fund may invest are tax-exempt obligations that contain a
floating or variable interest rate adjustment formula and an unconditional right
of demand on the part of the holder to receive payment of the unpaid principal
plus accrued interest on a short notice period. Participating VRDOs provide the
Fund with a specified undivided interest (up to 100%) of the underlying
obligations and the right to demand payment of the unpaid principal plus accrued
interest on the Participating VRDOs from the financial institution on a short
notice period. There is a possibility, because of default or insolvency, that
the demand

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17
<PAGE>
HOW THE FUNDS INVEST
- ------------------------------------------------

features of VRDOs or Participating VRDOs may not be honored.
The securities that we may purchase may change over time as new types of
money market instruments are developed. We will purchase these new instruments,
however, only if their characteristics and features follow the rules governing
money market mutual funds.
Any of the money market instruments that the Fund may purchase may be
accompanied with the right to resell the instrument prior to the instrument's
maturity. These rights are referred to as "PUTS" and are acquired by the Fund to
protect against a possible decline in the market value of the securities to
which the puts relate in the event of interest rate fluctuations and to shorten
the effective maturity of the security. One form of liquidity puts consists of
an underlying fixed rate municipal bond that is subject to a third party demand
feature or "TENDER OPTION." Tender option bonds are the functional equivalent of
ordinary variable or floating rate obligations.
From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Bonds and Municipal Notes and for providing state and
local governments with federal credit assistance. Reevaluation of the Fund's
investment objective and structure might be necessary in the future due to
market conditions which may result from future changes in the tax laws.
The Board of Trustees of the Fund can change investment policies that are
not fundamental. For more information, see "Investment Risks" and the Statement
of Additional Information, "Description of the Funds, Their Investments and
Risks." The Statement of Additional Information--which we refer to as the
SAI--contains more information about the Fund.

COMMAND GOVERNMENT FUND
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of this Fund is HIGH CURRENT INCOME, PRESERVATION OF
CAPITAL AND MAINTENANCE OF LIQUIDITY. This means we seek investments that will
provide a high level of current income. While we make every effort to achieve
our objective, we can't guarantee success. Our investment objective is a
fundamental investment policy, which means that it cannot be changed without
shareholder approval.
The Fund invests in money market instruments issued by the U.S. Government,
its agencies and instrumentalities to try to provide investors with current
income while maintaining a stable net asset value of

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18 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
HOW THE FUNDS INVEST
- ------------------------------------------------

$1 per share. We manage the Fund to comply with specific rules designed for
money market mutual funds. This means that we manage its portfolio to comply
with the requirements of Investment Company Act Rule 2a-7. As such, we will not
acquire any security with a remaining maturity exceeding thirteen months, and we
will maintain a dollar-weighted average portfolio of 90 days or less. In
addition, we will comply with the diversification, quality and other
requirements of Rule 2a-7. This means, generally, that the instruments that we
purchase present "minimal credit risk" and are of "eligible quality." "Eligible
quality" for this purpose includes all short-term debt obligations of the U.S.
Government, its agencies and instrumentalities, in which the Fund may invest.
Treasury debt obligations are sometimes "stripped" into their component
parts; the Treasury's obligation to make periodic interest payments and its
obligation to repay the amount borrowed. These STRIPPED SECURITIES are sold to
investors separately. Stripped securities do not make periodic interest
payments. They are usually sold at a discount and then redeemed for their face
value on their maturity dates. These securities increase in value when interest
rates fall and lose value when interest rates rise. However, the value of
stripped securities generally fluctuates more in response to interest rate
movements than the value of traditional bonds. The Fund may try to earn money by
buying stripped securities at a discount and either selling them after they
increase in value or holding them until they mature.
DEBT OBLIGATIONS ISSUED OR GUARANTEED BY THE U.S. GOVERNMENT and
government-related entities include debt securities backed by the full faith and
credit of the U.S. Government, like obligations of the Government National
Mortgage Association (GNMA or "Ginnie Mae"). Debt securities issued by other
government entities, like obligations of the Federal National Mortgage
Association (FNMA or "Fannie Mae") and the Student Loan Marketing Association
(SLMA or "Sallie Mae"), are not backed by the full faith and credit of the U.S.
Government. However, these issuers have the right to borrow from the U.S.
Treasury to meet their obligations. In contrast, the debt securities of other
issuers, like the Farm Credit System, depend entirely upon their own resources
to repay their debt.
The securities that we may purchase may change over time as new types of
money market instruments are developed. We will purchase these new instruments,
however, only if their characteristics and features follow the rules governing
money market mutual funds.

- --------------------------------------------------------------------------------
19
<PAGE>
HOW THE FUNDS INVEST
- ------------------------------------------------

Any of the money market instruments that the Fund may purchase may be
accompanied with the right to resell the instrument prior to the instrument's
maturity. In addition, we may separately purchase rights to resell these
instruments. These rights are referred to as "PUTS" and are acquired by the Fund
to protect against a possible decline in the market value of the securities to
which the puts relate in the event of interest rate fluctuations and to shorten
the effective maturity of the security.
The Board of Trustees of the Fund can change investment policies that are
not fundamental. For more information, see "Investment Risks" and the Statement
of Additional Information, "Description of the Funds, Their Investments and
Risks." The Statement of Additional Information--which we refer to as the
SAI--contains more information about the Fund.

OTHER INVESTMENTS AND STRATEGIES
While each Fund invests principally in the securities described above, they may
invest in other securities or use certain investment strategies to increase
returns or protect their assets if market conditions warrant.
Each Fund intends to participate in one or more JOINT TRADING ACCOUNTS
whereby the Fund, along with other investment companies managed by Prudential
Investments Fund Management LLC, will jointly engage in repurchase agreements
and, subject to the issuance of an Order by the Securities and Exchange
Commission, jointly purchase money market instruments. The ability of the Funds
to participate in these joint trading accounts will be conditioned upon
requirements imposed by such Order, as may be amended from time to time.
Each Fund intends to use REPURCHASE AGREEMENTS, where a party agrees to sell
a security to a Fund and then repurchase it at an agreed-upon price at a stated
time. This creates a fixed return for a Fund. A Fund will only enter into these
repurchase agreements with parties whom we believe can honor their obligations
in the transactions.
Each Fund may use REVERSE REPURCHASE AGREEMENTS where we borrow money on a
temporary basis by selling a security with an obligation to repurchase it at an
agreed-upon price at a stated time.
Each Fund may purchase money market or other obligations on a "WHEN-ISSUED"
or "DELAYED-DELIVERY" basis. When a Fund makes this type of purchase, the price
and interest rate are fixed at the time of purchase, but delivery and payment
for the obligations take place at a later time. A Fund does not earn interest
income until the date the obligations are delivered.

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20 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
HOW THE FUNDS INVEST
- ------------------------------------------------

Each Fund may purchase FLOATING RATE and VARIABLE RATE securities. These
securities pay interest at rates that change periodically to reflect changes in
market interest rates. Because these securities adjust the interest they pay,
they may be beneficial when interest rates are rising because of the additional
return a Fund will receive, and they may be detrimental when interest rates are
falling because of the reduction in interest payments to a Fund.
Each Fund also follows certain policies when it BORROWS MONEY (COMMAND Money
Fund and COMMAND Government Fund may each borrow up to 20% of the value of their
respective total assets; COMMAND Tax-Free Fund may borrow up to 5% of the value
of its total assets); LENDS ITS SECURITIES TO OTHERS (COMMAND Money Fund and
COMMAND Government Fund may each lend up to 10% of its total assets, including
collateral received in the transaction; COMMAND Tax-Free Fund may not lend its
securities); and holds ILLIQUID SECURITIES (each Fund may hold up to 10% of its
net assets in securities, including certain restricted securities, which do not
have a readily available market, repurchase agreements with maturities longer
than seven days and, with respect to COMMAND Tax-Free Fund, municipal
asset-backed VRDOs with notice periods for demand of unpaid principal and
accrued interest exceeding seven days). Each Fund is subject to certain
investment restrictions that are fundamental policies, which means they cannot
be changed without shareholder approval. For more information about these
restrictions, see the SAI.

RATING OF FUND SHARES
Duff & Phelps Credit Rating Co. (DCR) has given COMMAND Money Fund and COMMAND
Government Fund each an AAA rating. According to DCR, the AAA rating means the
Fund's ability to meet redemption requests in a timely manner for $1.00 per
share is strong. This rating is based on the Fund's risk management procedures,
internal control systems, limitations on market risk and experienced management
team.

INVESTMENT RISKS
As noted, all investments involve risk, and investing in the Funds is no
exception. This chart outlines the key risks and potential rewards of the
principal investments each Fund may make. See, "Description of the Funds, Their
Investments and Risks" in the SAI.

- --------------------------------------------------------------------------------
21
<PAGE>
HOW THE FUNDS INVEST
- ------------------------------------------------

INVESTMENT TYPE

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
% OF FUND'S TOTAL ASSETS RISKS POTENTIAL REWARDS
- -----------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------
HIGH-QUALITY MONEY -- Credit risk--the risk that default of an -- Regular interest income
MARKET OBLIGATIONS issuer would leave the Fund with unpaid -- May be more secure than stock and equity
interest or principal or, in the case of securities since corporate issuers must
ALL FUNDS: VRDOs and Participating VRDOs, that the pay their debts before they pay dividends
UP TO 100% issuer of a put may not be able to meet
its obligation to purchase the underlying
security.
-- Market risk--the risk that the obligations
may lose value because interest rates
change or there is a lack of confidence
in a group of borrowers or an industry
- ------------------------------------------------------------------------------------
MONEY MARKET -- Foreign markets, economies and political -- Investors may realize higher returns based
OBLIGATIONS OF systems may not be as stable as in the upon higher interest rates paid on
FOREIGN ISSUERS U.S. foreign investments
(DOLLAR-DENOMINATED) -- Differences in foreign laws, accounting -- Increased diversification by expanding the
standards, public information and custody allowable choices of high-quality money
COMMAND MONEY FUND: and settlement procedures provide less market obligations
UP TO 100% reliable information on foreign
investments and involve more risk
-- Year 2000 conversion may be more of a
problem for some foreign issuers,
governments and securities markets
- ------------------------------------------------------------------------------------
ILLIQUID SECURITIES -- May be difficult to value -- May offer a more attractive yield than
-- May be difficult to sell at the time or more widely traded securities
ALL FUNDS: price desired
UP TO 10% OF NET
ASSETS
- ------------------------------------------------------------------------------------
</TABLE>

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22 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
HOW THE FUNDS ARE MANAGED
- -------------------------------------

BOARDS OF TRUSTEES
Each Board of Trustees oversees the actions of the Manager, investment adviser
and Distributor and decides on general policies for the Fund on whose Board they
serve. The Boards also oversee each Fund's officers who conduct and supervise
the daily business operations of the Funds.

MANAGER
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC (PIFM)
GATEWAY CENTER THREE, 100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077

Under a management agreement with each Fund, PIFM manages each Fund's
investment operations and administers its business affairs.
As of June 30, 1999, PIFM served as the Manager to all 46 of the Prudential
Mutual Funds, and as Manager or administrator to 22 closed-end investment
companies, with aggregate assets of approximately $72.6 billion.

INVESTMENT ADVISER
The Prudential Investment Corporation (PIC), called Prudential Investments, is
the investment adviser to each Fund (the subadviser). Its address is Prudential
Plaza, 751 Broad Street, Newark, New Jersey 07102. PIFM is responsible for all
investment advisory services, supervises the subadviser and reimburses the
subadviser for its reasonable costs and expenses.
Each Fund is a money market mutual fund managed by a portfolio manager
employed by the subadviser, and supported by a group of research analysts.
Prudential Investments Fixed Income Group has organized into teams that
specialize by sector. The Fixed Income Investment Policy Committee, which is
comprised of senior investment staff from each sector team, provides guidance to
the teams regarding duration risk, asset allocations and general risk
parameters. Portfolio managers contribute bottom up security selection within
those guidelines.

DISTRIBUTOR
Prudential Investment Management Services LLC (PIMS) distributes the Funds'
shares under a Distribution Agreement with each Fund. Each Fund also has a
Distribution and Service Plan under Rule 12b-1 of the Investment Company Act.
Under the Plans and the Distribution Agreement, PIMS pays the expenses of
distributing each Fund's shares and provides

- --------------------------------------------------------------------------------
23
<PAGE>
HOW THE FUNDS ARE MANAGED
- ------------------------------------------------

certain shareholder support services. Each Fund reimburses PIMS for its
distribution services. These fees--known as 12b-1 fees--are shown in the "Fees
and Expenses" table of each Fund. Because these fees are paid from each Fund's
assets on a continuous basis, over time these fees will increase the cost of
your investment and may cost you more than paying other types of sales charges.

YEAR 2000
The services provided to the Funds and the shareholders by the Manager, the
Distributor, the Transfer Agent and the Custodian depend on the smooth
functioning of their computer systems and those of outside service providers.
Many computer software systems in use today cannot distinguish the year 2000
from the year 1900 because of the way dates are encoded and calculated. Such an
event could have a negative impact on handling securities trades, payments of
interest and dividends, and pricing and account services. Although, at this
time, there can be no assurance that there will be no adverse impact on the
Funds, the Manager, the Distributor, the Transfer Agent and the Custodian have
advised the Funds that they have been actively working on necessary changes to
their computer systems to prepare for the year 2000. The Funds and their Boards
of Trustees receive, and have received since early 1998, satisfactory quarterly
reports from the principal service providers as to their preparations for year
2000 readiness, although there can be no assurance that the service providers
(or other securities market participants) will successfully complete the
necessary changes in a timely manner. Moreover, the Funds at this time have not
considered retaining alternative service providers or directly undertaken
efforts to achieve year 2000 readiness, the latter of which would involve
substantial expenses without an assurance of success.
Additionally, issuers of securities generally, as well as those purchased by
the Funds, may confront year 2000 compliance issues which, if material and not
resolved, could have an adverse impact on securities markets
and/or a specific issuer's performance and could result in a decline in the
value of the securities held by the Funds.

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24 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
FUND DISTRIBUTIONS
AND TAX ISSUES
- -------------------------------------

Investors who buy shares of a Fund should be aware of some important tax issues.
For example, each Fund distributes DIVIDENDS of ordinary income and any realized
net CAPITAL GAINS to shareholders. These distributions are subject to taxes,
unless you hold your shares in a 401(k) plan, an Individual Retirement Account
(IRA), or some other qualified tax-deferred plan or account.
The following briefly discusses some of the important tax issues that should
be considered, but is not meant to be tax advice. For tax advice, please speak
with your tax adviser.

DISTRIBUTIONS
Each Fund distributes DIVIDENDS of any net investment income to shareholders
every month. Dividends received from the COMMAND Money Fund and the COMMAND
Government Fund will be taxed as ORDINARY INCOME, whether or not they are
reinvested in the Fund. The COMMAND Tax-Free Fund intends to invest so that
dividend distributions to you will be exempt from federal income taxation.
Although a Fund is not likely to realize capital gains because of the types
of securities we purchase, any realized net CAPITAL GAINS will be paid to
shareholders (typically once a year). Capital gains are generated when a Fund
sells assets for a profit.
For your convenience, Fund distributions of dividends and capital gains are
automatically reinvested in your Fund. If you ask us to pay the distributions in
cash, we will send you a check instead of purchasing more shares of your Fund.
Either way, distributions from the COMMAND Money Fund and the COMMAND Government
Fund will be subject to taxes, unless your shares are held in a qualified or
tax-deferred plan or account.

TAX ISSUES
FORM 1099
Every year, you will receive a Form 1099, which reports the amount of dividends
and capital gains we distributed to you during the prior year. If you own shares
of a Fund as part of a qualified tax-deferred plan or account, your taxes are
deferred, so you will not receive a Form 1099. However, you will receive a Form
1099 when you take any distributions from your qualified tax-deferred plan or
account.

- --------------------------------------------------------------------------------
25
<PAGE>
FUND DISTRIBUTIONS
AND TAX ISSUES
- ------------------------------------------------

Fund distributions are generally taxable to you in the year they are
received, except when we declare certain dividends in December of a calendar
year but actually pay them in January of the following year. In such cases, the
dividends are treated as if they were paid on December 31 of the prior year.

WITHHOLDING TAXES
If federal law requires you to provide a Fund with your taxpayer identification
number and certifications as to your tax status, and you fail to do so, or if
you are otherwise subject to backup withholding, we will withhold and pay to the
U.S. Treasury 31% of your distributions. Dividends of net investment income and
short-term capital gains paid to a nonresident foreign shareholder generally
will be subject to a U.S. withholding tax of 30%. This rate may be lower,
depending on any tax treaty the U.S. may have with the shareholder's country.

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26 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
HOW TO BUY AND
SELL SHARES OF THE FUNDS
- -------------------------------------

HOW TO BUY SHARES
COMMAND AND BUSINESSEDGE ACCOUNTS
Shares of the Funds are available only to participants in the COMMAND Account
and COMMAND Plus Account programs (collectively, the COMMAND programs) who have
placed a minimum of $10,000 in cash and/or securities in the COMMAND program or
who have placed a minimum of $2,000 in cash and/or securities in a COMMAND
Essentials Account (the minimum initial investment for employees of Prudential
and its subsidiaries and affiliates is $2,500). The shares of the Funds are also
available to participants in the BusinessEdge program who have placed a minimum
of $10,000 in cash and/or securities in their BusinessEdge Account.
The COMMAND programs are available through Prudential Securities
Incorporated. The BusinessEdge program is available through either Prudential
Securities Incorporated or Pruco Securities Corporation. For purposes of this
section, the COMMAND program and the BusinessEdge program are individually
referred to as a "Program" and collectively referred to as the "Programs."
The Programs allow you to designate a money market fund as your primary
money sweep fund for the Program. This sweep feature allows you to have free
credit balances in your Program securities account automatically invested in one
of the Funds, the U.S. Treasury Series of the Prudential Government Securities
Trust, the California Money Market Series of the Prudential California Municipal
Fund or the New Jersey Money Market Series, New York Money Market Series,
Connecticut Money Market Series or Massachusetts Money Market Series of the
Prudential Municipal Series Fund (collectively, the "Account Funds"), depending
on which of the Account Funds has been designated by the participant as his or
her primary money sweep fund.

AUTOMATIC PURCHASE PROCEDURES
With each Program, all credit balances (that is, immediately available funds) of
$1 or more will be invested in the primary money sweep fund on a daily basis.
Prudential Securities arranges for the investment of the credit balance in the
primary money sweep fund and will purchase shares of the primary money sweep
fund equal to that amount. This will occur on the business day following the
availability of the credit balance. Prudential Securities may use and retain the
benefit of credit balances in your account until shares are purchased.

- --------------------------------------------------------------------------------
27
<PAGE>
HOW TO BUY AND
SELL SHARES OF THE FUNDS
- ------------------------------------------------

Shares of the primary money sweep fund, including any of the Funds, will be
purchased as follows:

-- When your account has a credit balance of $10,000 or more, Prudential
Securities will arrange for the automatic purchase of shares with all
cash balances of $1 or more. This will occur on the business day
following the availability of the credit balance

-- When your account has a credit balance that results from a securities
sale totaling more than $1,000, all cash balances of $1 or more will
be invested on the business day following the settlement date

-- For all other credit balances of $1 or more, shares will be purchased
automatically at least once a month on the last business day of each
month

You will begin earning dividends on your shares purchased through the
Program on the first business day after the order is placed. Prudential
Securities will purchase shares of the Fund at the price determined at 4:30 p.m.
New York time, on the business day following the availability of the credit
balance. Prudential Securities will use and retain the benefit of credit
balances in your account until shares are purchased.
Purchases of, withdrawals from and dividends from the primary money sweep
fund will be shown on your Program statement. Under either the COMMAND program
or the BusinessEdge program, Prudential Securities or Pruco Securities has the
right to terminate a Program securities account for any reason. If this occurs,
all shares held in a shareholder's account will be redeemed.

UNDERSTANDING THE PRICE YOU'LL PAY
When you invest in a mutual fund, you buy shares of a Fund. Shares of a money
market mutual fund, like the Funds, are priced differently than shares of common
stock and other securities.
The price you pay for each share of a Fund is based on the share value. The
share value of a mutual fund--known as the NET ASSET VALUE or NAV--is determined
by a simple calculation: it's the total value of the Fund (assets minus
liabilities) divided by the total number of shares outstanding. In determining
NAV, the Funds value their securities using the amortized cost method. Each Fund
seeks to maintain a NAV of $1 at all

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28 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
HOW TO BUY AND
SELL SHARES OF THE FUNDS
- ------------------------------------------------

times. Your broker may charge you a separate or additional fee for purchases of
shares.
We determine the NAV of our shares once each business day at 4:30 p.m. New
York Time on days that the New York Stock Exchange is open for trading. We do
not determine NAV on days when we have not received any orders to purchase, sell
or exchange Fund shares, or when changes in the value of a Fund's portfolio do
not affect the NAV.

ADDITIONAL SHAREHOLDER SERVICES
As a Fund shareholder, you can take advantage of the following services and
privileges:

AUTOMATIC REINVESTMENT. As we explained in the Fund Distributions and Tax Issues
section, the Funds pay out--or distribute--its net investment income and capital
gains to all shareholders. For your convenience, we will automatically reinvest
your distributions in your Fund at NAV.

REPORTS TO SHAREHOLDERS. Every year we will send you an annual report (along
with an updated prospectus) and a semi-annual report, which contain important
financial information about your Fund. To reduce Fund expenses, we will send one
annual shareholder report, one semi-annual shareholder report and one annual
prospectus per household, unless you instruct us or your broker otherwise.

HOW TO SELL YOUR SHARES
When you sell shares of a Fund--also known as REDEEMING your shares-- the price
you will receive will be the NAV next determined after Prudential Securities or
Pruco Securities receives your order to sell. We must receive your order to sell
by 4:15 p.m. New York time to process the sale on that day.

AUTOMATIC REDEMPTION
Shares of your primary money sweep fund may be automatically redeemed to cover
any deficit in your account. A deficit in your COMMAND program account or your
BusinessEdge program account may result from activity arising under either
Program, such as debit balances incurred by use of the
Visa-Registered Trademark- Gold Account, including Visa purchases, cash advances
and Visa

- --------------------------------------------------------------------------------
29
<PAGE>
HOW TO BUY AND
SELL SHARES OF THE FUNDS
- ------------------------------------------------

Account checks. Debit balances for Visa purchases are payable on the 25th day of
each month or, if that day is a weekend or holiday, on the preceding business
day. Participants in the BusinessEdge program may also effect an automatic
redemption of Fund shares by using their BusinessEdge Visa-Registered Trademark-
Debit Card Account.
Your Program securities account will be automatically scanned for deficits
each day and, if there is insufficient cash in your account, we will redeem an
appropriate number of shares of your primary money sweep fund and, if necessary,
shares of other money market funds that you own in the Program but which are not
designated as your primary money sweep fund, to satisfy any remaining deficit.
Margin loans will be utilized to satisfy any deficits in your account after all
of your shares in a Fund and other money market funds you own are redeemed.
Shares of a Fund may not be purchased until all deficits and overdrafts in your
account are satisfied.
You are entitled to any dividends declared on the redeemed shares through
the day before the redemption is made. Dividends declared on the redemption date
will be retained by Prudential Securities, which has advanced monies to satisfy
deficits in your account. The amount redeemed will be the nearest dollar amount
necessary to cover deficits from securities transactions or to honor your
redemption requests.

MANUAL REDEMPTION
You may make manual redemptions (that is, a non-money market sweep redemption)
of shares of a Fund other than the fund selected as your primary money sweep
fund under the COMMAND program or the BusinessEdge program. To complete a manual
redemption, you should submit a written request for redemption directly to the
Distributor or by calling your Prudential Securities Financial Advisor or Pruco
Securities Preferred Agent. The proceeds from a manual redemption will
immediately become a free cash balance in your Program securities account and
will automatically be invested in the fund that you have selected as your
primary money sweep fund. Each Program requires that the written redemption
request be signed by all persons in whose name the shares are registered,
exactly as their names appear on the Program account client statement. In
certain instances, additional documents such as trust instruments, death
certificates, appointments as executor or administrator or certificates of
corporate authority may be requested.

- -------------------------------------------------------------------
30 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
HOW TO BUY AND
SELL SHARES OF THE FUNDS
- ------------------------------------------------

RESTRICTIONS ON SALES
There are certain times when you may not be able to sell shares of a Fund, or
when we may delay paying you the proceeds from a sale. This may happen during
unusual market conditions or emergencies when the Fund can't determine the value
of its assets or sell its holdings. For more information, see the SAI, "Purchase
and Redemption of Fund Shares."

REDEMPTION IN KIND
If the sales of shares of a Fund you make during any 90-day period reach the
lesser of $250,000 or 1% of the value of that Fund's net assets, we can then
give you securities from that Fund's portfolio instead of cash. If you want to
sell the securities for cash, you would have to pay the costs charged by a
broker.

- --------------------------------------------------------------------------------
31
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------

The financial highlights will help you evaluate each of the Fund's financial
performance. The TOTAL RETURN in the chart represents the rate that a
shareholder earned on an investment in the Fund, assuming reinvestment of all
dividends and other distributions. The information is for shares of the Fund for
the periods indicated.
Review this chart with the financial statements and report of independent
accountants which appear in the SAI. Additional performance information is
contained in the annual report, which you can receive at no charge.
The financial highlights were audited by PricewaterhouseCoopers LLP,
independent accountants. Their reports were unqualified.

COMMAND MONEY FUND (FISCAL YEARS ENDED 6-30)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income and net
realized gains .048 .052 .049 .052 .050
Dividends and
distributions to
shareholders (.048) (.052) (.049) (.052) (.050)
Net asset value,
end of year $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN(1) 4.85% 5.31% 5.06% 5.30% 5.13%
- ----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
NET ASSETS, END OF
YEAR (000) $12,246,946 $9,090,289 $6,629,903 $5,309,842 $4,055,700
RATIOS TO AVERAGE
NET ASSETS:
Net investment
income 4.73% 5.19% 4.97% 5.15% 5.09%
Expenses .54% .54% .57% .58% .59%
</TABLE>

1. TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. IT IS
CALCULATED ASSUMING SHARES ARE PURCHASED ON THE FIRST DAY AND SOLD ON THE
LAST DAY OF EACH PERIOD REPORTED.

- -------------------------------------------------------------------
32 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------

COMMAND TAX-FREE FUND (FISCAL YEARS ENDED 6-30)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income and net
realized gains .027 .031 .030 .031 .032
Dividends and
distributions to
shareholders (.027) (.031) (.030) (.031) (.032)
Net asset value,
end of year $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN(1) 2.77% 3.16% 3.05% 3.12% 3.29%
- ----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
NET ASSETS, END OF
YEAR (000) $1,476,732 $1,332,985 $1,129,513 $1,156,935 $1,055,568
RATIOS TO AVERAGE
NET ASSETS:
Net investment
income 2.72% 3.11% 3.00% 3.06% 3.05%
Expenses 0.59% 0.60% 0.64% 0.66% 0.66%
</TABLE>

1. TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. IT IS
CALCULATED ASSUMING SHARES ARE PURCHASED ON THE FIRST DAY AND SOLD ON THE
LAST DAY OF EACH PERIOD REPORTED.

COMMAND GOVERNMENT FUND (FISCAL YEARS ENDED 6-30)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income and net
realized gains .046 .051 .049 .050 .048
Dividends and
distributions to
shareholders (.046) (.051) (.049) (.050) (.048)
Net asset value,
end of year $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN(1) 4.74% 5.20% 4.97% 5.12% 4.89%
- ----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
NET ASSETS, END OF
YEAR (000) $714,390 $608,727 $528,469 $487,485 $404,295
RATIOS TO AVERAGE
NET ASSETS:
Net investment
income 4.63% 5.08% 4.84% 4.97% 4.81%
Expenses .56% .56% .63% .68% .65%
</TABLE>

1. TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. IT IS
CALCULATED ASSUMING SHARES ARE PURCHASED ON THE FIRST DAY AND SOLD ON THE
LAST DAY OF EACH PERIOD REPORTED.

- --------------------------------------------------------------------------------
33
<PAGE>
[This page has been left blank intentionally.]

- -------------------------------------------------------------------
34 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
[This page has been left blank intentionally.]

- --------------------------------------------------------------------------------
35
<PAGE>
THE PRUDENTIAL MUTUAL FUND FAMILY
- --------------------------------------------------------------------------------

Prudential offers a broad range of mutual funds designed to meet your individual
needs. For information about these funds, contact your financial adviser or call
us at (800) 225-1852. Please read the prospectus carefully before you invest or
send money.

STOCK FUNDS
PRUDENTIAL DISTRESSED SECURITIES FUND, INC.
PRUDENTIAL EMERGING GROWTH FUND, INC.
PRUDENTIAL EQUITY FUND, INC.
PRUDENTIAL EQUITY INCOME FUND
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL SMALL-CAP INDEX FUND
PRUDENTIAL STOCK INDEX FUND
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH FUND
PRUDENTIAL JENNISON GROWTH & INCOME FUND
PRUDENTIAL MID-CAP VALUE FUND
PRUDENTIAL REAL ESTATE SECURITIES FUND
PRUDENTIAL SECTOR FUNDS, INC.
PRUDENTIAL FINANCIAL SERVICES FUND
PRUDENTIAL HEALTH SCIENCES FUND
PRUDENTIAL TECHNOLOGY FUND
PRUDENTIAL UTILITY FUND
PRUDENTIAL SMALL-CAP QUANTUM FUND, INC.
PRUDENTIAL SMALL COMPANY VALUE FUND, INC.
PRUDENTIAL TAX-MANAGED EQUITY FUND
PRUDENTIAL 20/20 FOCUS FUND
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
TARGET FUNDS
LARGE CAPITALIZATION GROWTH FUND
LARGE CAPITALIZATION VALUE FUND
SMALL CAPITALIZATION GROWTH FUND
SMALL CAPITALIZATION VALUE FUND
ASSET ALLOCATION/BALANCED FUNDS
PRUDENTIAL BALANCED FUND
PRUDENTIAL DIVERSIFIED FUNDS
CONSERVATIVE GROWTH FUND
MODERATE GROWTH FUND
HIGH GROWTH FUND
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL ACTIVE BALANCED FUND
GLOBAL FUNDS
GLOBAL STOCK FUNDS
PRUDENTIAL DEVELOPING MARKETS FUND
PRUDENTIAL DEVELOPING MARKETS EQUITY FUND
PRUDENTIAL LATIN AMERICA EQUITY FUND
PRUDENTIAL EUROPE GROWTH FUND, INC.
PRUDENTIAL GLOBAL GENESIS FUND, INC.
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL EUROPE INDEX FUND
PRUDENTIAL PACIFIC INDEX FUND
PRUDENTIAL NATURAL RESOURCES FUND, INC.
PRUDENTIAL PACIFIC GROWTH FUND, INC.
PRUDENTIAL WORLD FUND, INC.
GLOBAL SERIES
INTERNATIONAL STOCK SERIES
GLOBAL UTILITY FUND, INC.
TARGET FUNDS
INTERNATIONAL EQUITY FUND

GLOBAL BOND FUNDS
PRUDENTIAL GLOBAL LIMITED MATURITY FUND, INC.
LIMITED MATURITY PORTFOLIO

- -------------------------------------------------------------------
36 COMMAND FUNDS [ICON] (800) 225-1852
<PAGE>
THE PRUDENTIAL MUTUAL FUND FAMILY
- --------------------------------------------------------------------------------

PRUDENTIAL INTERMEDIATE GLOBAL
INCOME FUND, INC.
PRUDENTIAL INTERNATIONAL BOND FUND, INC.
PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC.
BOND FUNDS
TAXABLE BOND FUNDS
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
PRUDENTIAL GOVERNMENT INCOME FUND, INC.
PRUDENTIAL GOVERNMENT SECURITIES TRUST
SHORT-INTERMEDIATE TERM SERIES
PRUDENTIAL HIGH YIELD FUND, INC.
PRUDENTIAL HIGH YIELD TOTAL RETURN FUND, INC.
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL BOND MARKET INDEX FUND
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
INCOME PORTFOLIO
TARGET FUNDS
TOTAL RETURN BOND FUND

TAX-EXEMPT BOND FUNDS
PRUDENTIAL CALIFORNIA MUNICIPAL FUND
CALIFORNIA SERIES
CALIFORNIA INCOME SERIES
PRUDENTIAL MUNICIPAL BOND FUND
HIGH INCOME SERIES
INSURED SERIES
PRUDENTIAL MUNICIPAL SERIES FUND
FLORIDA SERIES
MASSACHUSETTS SERIES
NEW JERSEY SERIES
NEW YORK SERIES
NORTH CAROLINA SERIES
OHIO SERIES
PENNSYLVANIA SERIES

PRUDENTIAL NATIONAL MUNICIPALS FUND, INC.
MONEY MARKET FUNDS
TAXABLE MONEY MARKET FUNDS
CASH ACCUMULATION TRUST
LIQUID ASSETS FUND
NATIONAL MONEY MARKET FUND
PRUDENTIAL GOVERNMENT SECURITIES TRUST
MONEY MARKET SERIES
U.S. TREASURY MONEY MARKET SERIES
PRUDENTIAL SPECIAL MONEY MARKET FUND, INC.
MONEY MARKET SERIES
PRUDENTIAL MONEYMART ASSETS, INC.

TAX-FREE MONEY MARKET FUNDS
PRUDENTIAL TAX-FREE MONEY FUND, INC.
PRUDENTIAL CALIFORNIA MUNICIPAL FUND
CALIFORNIA MONEY MARKET SERIES
PRUDENTIAL MUNICIPAL SERIES FUND
CONNECTICUT MONEY MARKET SERIES
MASSACHUSETTS MONEY MARKET SERIES
NEW JERSEY MONEY MARKET SERIES
NEW YORK MONEY MARKET SERIES

COMMAND FUNDS
COMMAND MONEY FUND
COMMAND GOVERNMENT FUND
COMMAND TAX-FREE FUND

INSTITUTIONAL MONEY MARKET FUNDS
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES

- --------------------------------------------------------------------------------
37
<PAGE>
FOR MORE INFORMATION:
- --------------------------------------------------------------------------------

Please read this prospectus before you invest in a Fund and keep it for future
reference. For information or shareholder questions contact:

PRUDENTIAL MUTUAL FUND SERVICES LLC
P.O. BOX 15005
NEW BRUNSWICK, NJ 08906-5005
(800) 225-1852
(732) 417-7555
(if calling from outside the U.S.)

- --------------------------------
Outside Brokers Should Contact:
PRUDENTIAL INVESTMENT MANAGEMENT
SERVICES LLC
P.O. BOX 15035
NEW BRUNSWICK, NJ 08906-5035
(800) 778-8769

- ------------------------------------
Visit Prudential's Web Site At:
http://www.prudential.com

- --------------------------------
Additional information about the Funds can be obtained without charge and can be
found in the following documents:

STATEMENT OF ADDITIONAL
INFORMATION (SAI)
(incorporated by reference into this prospectus)

ANNUAL REPORT

SEMI-ANNUAL REPORT

You can also obtain copies of Fund documents from the Securities and Exchange
Commission as follows:

By Mail:
Securities and Exchange Commission
Public Reference Section
Washington, DC 20549-6009
(The SEC charges a fee to copy documents.)

In Person:
Public Reference Room in
Washington, DC
(For hours of operation, call (800) SEC-0330.)

Via the Internet:
http://www.sec.gov

- --------------------------------
CUSIP Numbers:
COMMAND Money Fund:
20050F-10-3

COMMAND Tax-Free Fund:
20050R-10-7

COMMAND Government Fund:
20050D-10-8

Investment Company Act File Nos:
COMMAND Money Fund:
811-3253

COMMAND Tax-Free Fund:
811-3252

COMMAND Government Fund:
811-3251

[LOGO] Printed on Recycled Paper
<PAGE>
COMMAND MONEY FUND
COMMAND TAX-FREE FUND
COMMAND GOVERNMENT FUND

Statement of Additional Information
dated October 1, 1999

COMMAND Money Fund, COMMAND Tax-Free Fund and COMMAND Government Fund, are
each open-end, diversified, management investment companies (each a Fund and
collectively, the Funds). Shares of each Fund are available for purchase only by
participants in the COMMAND-SM- Account and COMMAND Plus-SM- Account Programs
(collectively, the COMMAND program) which are available through Prudential
Securities Incorporated, and participants in the Prudential
BusinessEdge-SM-Account Program (the BusinessEdge program), which is available
through either Prudential Securities Incorporated or Pruco Securities
Corporation.

The investment objective of COMMAND Money Fund is high current income,
preservation of capital and maintenance of liquidity. The investment objective
of COMMAND Tax-Free Fund is high current income that is exempt from federal
income taxes, consistent with the maintenance of liquidity and preservation of
capital. The investment objective of COMMAND Government Fund is high current
income, preservation of capital and maintenance of liquidity. There can be no
assurance that any Fund's investment objective will be achieved. See "How the
Funds Invest" in the Prospectus and "Description of the Funds, Their Investments
and Risks."

The Funds' address is Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077 and their telephone number is (800) 225-1852.

This Statement of Additional Information sets forth information about each
of the Funds. This Statement of Additional Information is not a prospectus and
should be read in conjunction with the combined Prospectus for the Funds, dated
October 1, 1999, a copy of which may be obtained from the Funds upon request.

Investors should be aware that COMMAND Program and BusinessEdge Program
accounts are not bank accounts. As with any investment in securities, the value
of a participant's investment in the COMMAND Program or the BusinessEdge Program
will fluctuate.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
The Funds' History...................................................... B-2
Description of the Funds, Their Investments and Risks................... B-2
Investment Restrictions................................................. B-7
Management of the Funds................................................. B-10
Control Persons and Principal Holders of Securities..................... B-13
Investment Advisory and Other Services.................................. B-14
Brokerage Allocation and Other Practices................................ B-17
Securities and Organization............................................. B-18
Purchase and Redemption of Fund Shares.................................. B-19
Net Asset Value......................................................... B-20
Taxes, Dividends and Distributions...................................... B-20
Calculation of Yield.................................................... B-22
Issuance of Fund Shares for Securities.................................. B-23
Description of Securities Ratings....................................... B-23
Financial Statements - COMMAND Money Fund............................... B-25
Report of Independent Accountants....................................... B-32
Financial Statements - COMMAND Tax-Free Fund............................ B-33
Report of Independent Accountants....................................... B-43
Financial Statements - COMMAND Government Fund.......................... B-44
Report of Independent Accountants....................................... B-48
Notes to Financial Statements........................................... B-49
Appendix I - General Investment Information............................. I-1
Appendix II - Information Relating to Prudential........................ II-1
</TABLE>
<PAGE>
THE FUNDS' HISTORY

Each of the Funds was organized under the laws of Massachusetts on June 5,
1981, as an unincorporated business trust.

DESCRIPTION OF THE FUNDS, THEIR INVESTMENTS AND RISKS

(a) CLASSIFICATION. Each Fund is a diversified open-end management investment
company.

(b) INVESTMENT STRATEGIES AND RISKS.

The investment objective of COMMAND Money Fund is high current income,
preservation of capital and maintenance of liquidity. The investment objective
of COMMAND Tax-Free Fund is high current income that is exempt from federal
income taxes, consistent with the maintenance of liquidity and preservation of
capital. The investment objective of COMMAND Government Fund is high current
income, preservation of capital and maintenance of liquidity. There can be no
assurance that any Fund's investment objective will be achieved. While the
principal investment policies and strategies for seeking to achieve each Fund's
objective are described in the Prospectus, a Fund may from time to time also
utilize the securities, instruments, policies and strategies described below in
seeking to achieve its objective. A Fund may not be successful in achieving its
objective and you can lose money.

MUNICIPAL DEBT OBLIGATIONS (COMMAND TAX-FREE FUND)

COMMAND Tax-Free Fund may purchase municipal debt obligations which include,
but are not limited to, those described below. The Fund intends to invest in
securities that are currently available, or which may be developed in the
future, and are appropriate to allow the Fund's investment adviser to pursue the
Fund's investment objectives.

MUNICIPAL BONDS. Municipal Bonds may be general obligation or revenue
bonds.

General obligation bonds are secured by the issuer's pledge of its faith,
credit and taxing power for the payment of principal and interest. Municipal
Bonds are generally issued to obtain funds for various public purposes,
including construction of public facilities such as airports, bridges, highways,
housing, hospitals, mass transportation, schools, streets and water and sewer
works. They may also be issued to refund outstanding obligations, to meet
general operating expenses or to obtain funds to lend to other public
institutions and facilities.

Revenue bonds are payable from the revenues derived from a particular
facility or class of facilities or from the proceeds of a special excise tax or
other specific revenue source but not from the general taxing power. Some
municipal revenue bonds also include bonds issued through or on behalf of public
authorities in order to obtain funds with which to provide privately operated
housing facilities, sports facilities, pollution control facilities, convention
or trade show facilities, industrial, port or parking facilities and facilities
for water supply, gas, electricity or waste disposal. The bonds typically are
revenue bonds and generally do not carry the pledge of the issuing authority's
credit.

MUNICIPAL NOTES. Municipal Notes are short-term obligations generally with
a maturity, at the time of issuance, ranging from six months to three years. The
principal types of Municipal Notes include tax anticipation notes, bond
anticipation notes and revenue anticipation notes. Municipal Notes sold in
anticipation of collection of taxes, a bond sale, or receipt of other revenues,
are usually general obligations of the issuing municipality or agency.

Municipal Notes also include tax-exempt or municipal commercial paper, which
is likely to be issued to meet seasonal working capital needs of a municipality
or interim construction financing and to be paid from general revenues of the
municipality or refinanced with long-term debt. In most cases municipal
commercial paper may be backed by letters of credit, lines of credit, lending
agreements, note repurchase agreements or other credit facility agreements
offered by banks or other institutions.

The Fund may invest up to 20% of its net assets in Municipal Bonds and
Municipal Notes, the interest on which would be a preference item for purposes
of the federal alternative minimum tax.

The Fund will treat an investment in a municipal security refunded with
escrowed U.S. Government securities as U.S. Government securities for purposes
of the Investment Company Act's diversification requirements of Rule 2a-7.

B-2
<PAGE>
MUNICIPAL ASSET BACKED SECURITIES. The Fund may purchase municipal asset
backed securities. These securities are debt obligations, oftentimes issued
through a trust or other investment vehicles, that are backed by municipal debt
obligations and accompanied by a liquidity facility to comply with Rule 2a-7.
These trusts or other investment vehicles represent investment companies. Unlike
investments in CMOs, the Fund's investment in securities of such issuers are
subject to limitations imposed by the Investment Company Act. The Fund may not
invest more than 10% of its assets in all such entities and may not acquire more
than 3% of the voting securities of any single such entity.

BANK OBLIGATIONS (COMMAND MONEY FUND).

The COMMAND Money Fund may invest in obligations (including time deposits,
certificates of deposit and bankers acceptances) of commercial banks, savings
banks and savings and loan associations having, at the time of investment, total
assets of $1 billion or more. The COMMAND Money Fund may invest in U.S.
dollar-denominated obligations of domestic banks, foreign branches of U.S.
banks, foreign banks and U.S. and foreign branches of foreign banks and
instruments secured by such obligations. The COMMAND Money Fund may invest more
than 25% of its total assets in money market instruments of domestic banks
(including U.S. branches of foreign banks that are subject to the same
regulation as U.S. banks and foreign branches of domestic banks, provided the
domestic bank is unconditionally liable in the event of the failure of the
foreign branch to make payment on its instruments for any reason).

OBLIGATIONS ISSUED OR GUARANTEED BY THE U.S. GOVERNMENT, ITS AGENCIES AND
INSTRUMENTALITIES (COMMAND MONEY FUND AND COMMAND GOVERNMENT FUND)

Obligations issued or guaranteed as to principal and interest by the U.S.
Government may be acquired by COMMAND Money Fund and COMMAND Government Fund in
the form of custodial receipts that evidence ownership of future interest
payments, principal payments or both on certain United States Treasury notes or
bonds. Such notes and bonds are held in custody by a bank on behalf of the
owners. These custodial receipts are known by various names, including "Treasury
Receipts," "Treasury Investment Growth Receipts" (TIGRs) and "Certificates of
Accrual on Treasury Securities" (CATS).

The Funds may also invest in Treasury Inflation Protected Securities, known
as "TIPS," if these securities are deemed to comply with the requirements of
Rule 2a-7.

OTHER INVESTMENTS APPLICABLE TO THE COMMAND GOVERNMENT FUND. The COMMAND
Government Fund may also invest in obligations of the International Bank for
Reconstruction and Development (World Bank), which is not a U.S. Government
agency or instrumentality. World Bank obligations are supported by appropriated
but unpaid commitments of its member countries. There is no assurance that these
commitments will be honored in the future.

FLOATING RATE AND VARIABLE RATE SECURITIES

Each Fund may purchase "floating rate" and "variable rate" securities.
Investments in floating or variable rate securities normally will involve
securities which provide that the rate is set as a spread to a designated base
rate or index rate, such as rates on Treasury bills or LIBOR (London Interbank
Offered Rate) index, and, in some cases, that the purchaser can demand payment
of the obligation at specified intervals or after a specified notice period (in
each case a period of less than thirteen months) at par plus accrued interest.
Variable rate securities provide for a specified periodic adjustment in the
interest rate, while floating rate securities have an interest rate which
changes whenever there is a change in the designated base rate or index rate.

DEMAND FEATURES AND/OR GUARANTEES

Each Fund may purchase securities subject to demand features and/or
guarantees. A demand feature supporting a money market fund instrument can be
relied upon in a number of respects. First, the demand feature can be relied
upon to SHORTEN THE MATURITY of the underlying instrument. Second, the demand
feature, if unconditional, can be used to EVALUATE THE CREDIT QUALITY of the
underlying security. This means that the credit quality of the underlying
security can be based solely on the credit quality of the unconditional demand
feature supporting that security.

A GUARANTEE is a form of unconditional credit support that may include, for
example, bond insurance, a letter of credit, and an unconditional demand
feature. A Fund holding a security subject to a guarantee may determine the
credit quality of the underlying security solely on the basis of the credit
quality of the supporting guarantee.

B-3
<PAGE>
Each Fund may invest in securities directly issued by, or supported by, a
demand feature provider or guarantor. Investment Company Act Rule 2a-7 currently
limits each Fund's investment in demand features and guarantees that are "second
tier securities" under the Rule; that is, those securities that are rated in the
second highest category by a specified number of rating organizations.
Specifically, Rule 2a-7 provides that a money market fund cannot invest more
than 5% of its total assets in securities directly issued by or supported by
second tier demand features or guarantees that are issued by the same entity.
Each Fund is limited to invest no more than 5% of its total assets in second
tier securities, with no more than 1% of its total assets or one million
dollars, whichever is greater, in any single second tier issuer. If the
limitations described in Rule 2a-7 are changed, each of the Funds will comply
with the amended limitation.

LENDING OF SECURITIES (COMMAND MONEY FUND AND COMMAND GOVERNMENT FUND)

Consistent with applicable regulatory requirements, COMMAND Money Fund and
COMMAND Government Fund may lend its portfolio securities to brokers, dealers
and financial institutions, provided that outstanding loans for each Fund do not
exceed in the aggregate 10% of the value of the respective Fund's total assets
and provided that such loans are callable at any time by such Fund and are at
all times secured by cash or U.S. Government securities that is equal to at
least the market value, determined daily, of the loaned securities. The
advantage of such loans is that a Fund continues to receive payments in lieu of
the interest on the loaned securities, while at the same time earning interest
either directly from the borrower or on the cash collateral which will be
invested in short-term obligations. Any voting rights, or rights to consent,
relating to the securities loaned pass to the borrower. However, if a material
event affecting the investment occurs, such loans will be called so securities
may be voted by one or more of the Fund, as applicable.

A loan may be terminated by the borrower on one business day's notice or by
a Fund at any time. If the borrower fails to maintain the requisite amount of
collateral, the loan automatically terminates, and the Fund could use the
collateral to replace the securities while holding the borrower liable for any
excess of replacement cost over collateral. As with any extensions of credit,
there are risks of delay in recovery and in some cases loss of rights in the
collateral should the borrower of the securities fail financially. However,
these loans of portfolio securities will only be made to firms determined to be
creditworthy pursuant to procedures approved by the Board of Trustees of the
applicable Fund. On termination of the loan, the borrower is required to return
the securities to the Fund, and any gain or loss in the market price during the
loan would inure to that Fund.

Each Fund will pay reasonable finders', administrative and custodial fees in
connection with a loan of its securities or may share the interest earned on
collateral with the borrower.

ILLIQUID SECURITIES

Each of the Funds may not hold more than 10% of its net assets in illiquid
securities, including securities that are illiquid by virtue of the absence of a
readily available market or legal or contractual restrictions on resale and
repurchase agreements which have a maturity of longer than seven days. If a Fund
were to exceed this limit, the Fund's investment adviser would take reasonable
measures to reduce the Fund's holdings in illiquid securities to no more than
10% of its net assets within seven days, including the sale of such securities.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (Securities Act),
securities which are otherwise not readily marketable securities having a demand
feature of longer than seven days, and repurchase agreements having a maturity
of longer than seven days. Securities which have not been registered under the
Securities Act are referred to as private placements or restricted securities
and are purchased directly from the issuer or in the secondary market. Mutual
funds do not typically hold a significant amount of these restricted or other
illiquid securities because of the potential for delays on resale and
uncertainty in valuation. Limitations on resale may have an adverse effect on
the marketability of portfolio securities and a mutual fund might be unable to
dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemptions. A mutual
fund might also have to register such restricted securities in order to dispose
of them, resulting in additional expense and delay. Adverse market conditions
could impede such a public offering of securities.

However, a large institutional market has developed for certain securities
that are not registered under the Securities Act, including repurchase
agreements, commercial paper, foreign securities, municipal securities and
corporate bonds

B-4
<PAGE>
and notes. Institutional investors depend on an efficient institutional market
in which the unregistered security can be readily resold or on an issuer's
ability to honor a demand for repayment. The fact that there are contractual or
legal restrictions on resale to the general public or to certain institutions
may not be indicative of the liquidity of such securities.

Rule 144A of the Securities Act allows for a broader institutional trading
market for securities otherwise subject to restriction on resale to the general
public. Rule 144A establishes a "safe harbor" from the registration requirements
of the Securities Act for resales of certain securities to qualified
institutional buyers. The investment adviser anticipates that the market for
certain restricted securities such as institutional commercial paper and foreign
securities will expand further as a result of this regulation and the
development of automated systems for the trading, clearance and settlement of
unregistered securities of domestic and foreign issuers, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc.

Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act and commercial paper for which there is a readily available
market will not be deemed to be illiquid under procedures established by the
Board of Trustees. The investment adviser will monitor the liquidity of such
restricted securities subject to the supervision of the Board of Trustees. In
reaching liquidity decisions, the investment adviser will consider, inter alia,
the following factors: (1) the frequency of trades and quotes for the security;
(2) the number of dealers wishing to purchase or sell the security and the
number of other potential purchasers; (3) dealer undertakings to make a market
in the security; and (4) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers and the mechanics of the transfer). In addition, in order
for commercial paper that is issued in reliance on Section 4(2) of the
Securities Act to be considered liquid, (i) it must be rated in one of the two
highest rating categories by at least two nationally recognized statistical
rating organizations (NRSRO), or if only one NRSRO rates the securities, by that
NRSRO, or, if unrated, be of comparable quality in the view of the investment
adviser; and (ii) it must not be "traded flat" (i.e., without accrued interest)
or in default as to principal or interest. Repurchase agreements and variable
rate demand obligations ("VRDOs") subject to demand are deemed to have a
maturity equal to the notice period.

BORROWING

COMMAND Money Fund and COMMAND Government Fund may each borrow (including
through entering reverse repurchase agreements) up to 20% of the value of its
total assets (computed at the time the loan is made) from banks for temporary,
extraordinary or emergency purposes. COMMAND Tax-Free Fund may borrow (including
through entering reverse repurchase agreements) up to 5% of the value of its
total assets (computed at the time the loan is made) from banks for temporary,
extraordinary or emergency purposes. A Fund will not purchase portfolio
securities if its borrowings (other than permissible securities loans) exceed 5%
of its total assets.

REPURCHASE AGREEMENTS

Each Fund may purchase securities and concurrently enter into "repurchase
agreements" with the seller, whereby the seller agrees to repurchase such
securities at a specified price within a specified time (generally seven days or
less). The repurchase agreements provide that the Fund will sell the underlying
instruments back to the dealer or the bank at the specified price and at a fixed
time in the future, usually not more than seven days from the date of purchase.
The difference between the purchase price and the resale price represents the
interest earned by the Fund, which is unrelated to the coupon rate or maturity
of the purchased security. Repurchase agreements will at all times be fully
collateralized in an amount at least equal to the resale price which, in the
case of COMMAND Government Fund and COMMAND Money Fund, will be U.S. Government
obligations. Such collateral will be held by the Fund's Custodian or a
sub-custodian in a tri-party repurchase agreement, either physically or in a
book-entry account.

A Fund will enter into repurchase transactions only with parties which meet
creditworthiness standards approved by the Fund's Board of Trustees. Each Fund's
investment adviser monitors the creditworthiness of such parties under the
general supervision of the Board of Trustees. In the event of a default or
bankruptcy by a seller, the Fund will promptly seek to liquidate the collateral.
To the extent that the proceeds from any sale of such collateral upon a default
in the obligation to repurchase are less than the resale price, the Fund will
suffer a loss. When the financial institution that is a party to the repurchase
agreement petitions for bankruptcy or becomes subject to the U.S. Bankruptcy
Code, the law regarding the rights of a Fund is unsettled. As a result, under
these circumstances, there may be a restriction on the Fund's ability to sell
the collateral, and the Fund could suffer a loss.

B-5
<PAGE>
Each Fund may participate in a joint trading account with other investment
companies managed by Prudential Investments Fund Management LLC (PIFM or the
Manager) pursuant to an order of the Securities and Exchange Commission. The
order allows the Fund, along with other investment companies managed by PIFM, to
jointly engage in repurchase agreement transactions. Pursuant to the order, on a
daily basis, any uninvested cash balances of a Fund may be aggregated with those
of such other investment companies and invested in one or more repurchase
agreements. Each Fund participates in the income earned or accrued in the joint
account based on the percentage of its investment. In connection with
transactions in repurchase agreements with U.S. financial institutions, it is
each Fund's 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 equals or exceeds the resale price of
the agreement. 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 Fund may be delayed or limited.

REVERSE REPURCHASE AGREEMENTS

Reverse repurchase agreements have the characteristics of borrowing and
involve the sale of securities held by a Fund with an agreement to repurchase
the securities at a specified price, date and interest payment. Each Fund
intends only to use the reverse repurchase technique when it will be to its
advantage to do so. These transactions are only advantageous if the Fund has an
opportunity to earn a greater rate of interest on the cash derived from the
transaction than the interest cost of obtaining that cash. A Fund may be unable
to realize earnings from the use of the proceeds equal to or greater than the
interest required to be paid. The use of reverse repurchase agreements may
exaggerate any increase or decrease in the value of the Fund's portfolio. The
Fund's Custodian will maintain in a segregated account cash, or other liquid
assets, maturing not later than the expiration of the reverse repurchase
agreements and having a value equal to or greater than such commitments.

PUTS

The COMMAND Tax-Free Fund may purchase Municipal Bonds or Municipal Notes
together with the right to resell the Bonds or Notes at an agreed-upon price or
yield within a specified period prior to the maturity date of the Bonds or
Notes. Similarly, the COMMAND Government Fund and the COMMAND Money Fund may
purchase securities together with the right to resell the securities at an
agreed-upon price or yield within a specified period prior to the maturity date
of the security. Such a right to resell is commonly known as a "put," and the
aggregate price which the COMMAND Tax-Free Fund pays for Municipal Bonds or
Municipal Notes with puts and which the COMMAND Government Fund and the COMMAND
Money Fund pay for securities with puts may be higher than the price which
otherwise would be paid for the Bonds or Notes or securities, as the case may
be. Consistent with the investment objectives of each Fund and subject to the
supervision of the Trustees, the purpose of this practice is to permit each Fund
to be fully invested while preservng the necessary liquidity to meet unusually
large redemptions and to purchase at a later date securities other than those
subject to the put. Puts may be exercised prior to the expiration date in order
to fund obligations to purchase other securities or to meet redemption requests.
These obligations may arise during periods in which proceeds from sales of each
Fund's shares and from recent sales of portfolio securities are insufficient to
meet such obligations or when the funds available are otherwise allocated for
investment. In addition, puts may be exercised prior to the expiration date in
the event the investment adviser revises its evaluation of the creditworthiness
of the issuer of the underlying security. In determining whether to exercise
puts prior to their expiration date and in selecting which puts to exercise in
such circumstances, the investment adviser considers, among other things, the
amount of cash available to each Fund, the expiration dates of the available
puts, any future commitments for securities purchases, the yield, quality and
maturity dates of the underlying securities, alternative investment
opportunities and the desirability of retaining the underlying securities in
each Fund's portfolio.

Each Fund values instruments which are subject to puts at amortized cost; no
value is assigned to the put. The cost of the put is carried as an unrealized
loss from the time of purchase until it is exercised or expires.

Since the value of the put is dependent on the ability of the put writer to
meet its obligation to repurchase, each Fund's policy is to enter into put
transactions only with such brokers, dealers or financial institutions which
present minimal credit risks. There is a credit risk associated with the
purchase of puts in that the broker, dealer or financial institution might

B-6
<PAGE>
default on its obligation to repurchase an underlying security. In the event
such a default should occur, each Fund is unable to predict whether all or any
portion of any loss sustained could subsequently be recovered from the broker,
dealer or financial institution.

The COMMAND Tax-Free Fund has received an exemptive order from the SEC which
permits the Fund to purchase puts from broker-dealers.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

Each Fund may purchase securities on a "when-issued" or delayed delivery
basis. When-issued or delayed delivery transactions arise when securities are
purchased or sold by a Fund with payment and delivery taking place in the future
in order to secure what is considered to be an advantageous price and yield to
the Fund at the time of entering into the transaction. Each Fund will limit such
purchases to those which the date of delivery and payment falls within 90 days
of the date of the commitment. A Fund will make commitments for such when-issued
transactions only with the intention of actually acquiring the securities. The
Funds' Custodian will segregate cash or other liquid assets having a value equal
to or greater than a Fund's purchase commitments. If a Fund chooses to dispose
of the right to acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other portfolio security, incur a gain or
loss due to market fluctuations. The securities so purchased are subject to
market fluctuation and no interest accrues to the purchaser during the period
between purchase and settlement.

INVESTMENT RESTRICTIONS

The following restrictions are fundamental policies. Fundamental policies
are those which cannot be changed without the approval of the holders of a
majority of the outstanding voting securities of a Fund. A "majority of the
outstanding voting securities," when used in this Statement of Additional
Information, means the lesser of (i) 67% of the voting shares represented at a
meeting at which more than 50% of the outstanding voting shares are present in
person or represented by proxy or (ii) more than 50% of the outstanding voting
shares.

COMMAND MONEY FUND

The investment restrictions of the COMMAND Money Fund provide that the Fund
may not:

1. Borrow money, except from banks for temporary or emergency purposes,
including the meeting of redemption requests, which might otherwise require the
untimely disposition of securities, and borrowing in the aggregate may not
exceed 20%, and borrowing for purposes other than meeting redemptions may not
exceed 5%, of the value of the COMMAND Money Fund's total assets (including the
amount borrowed) less liabilities (not including the amount borrowed) at the
time the borrowing is made, except that these borrowing restrictions do not
apply to reverse repurchase agreements. The COMMAND Money Fund will not purchase
securities while borrowings are outstanding;

2. Make loans to others, except through the purchase of debt obligations,
repurchase agreements and loans of portfolio securities limited to 10% of the
value of the COMMAND Money Fund's total assets;

3. Purchase or sell real estate or real estate mortgage loans; however, the
COMMAND Money Fund may purchase marketable securities issued by companies which
invest in real estate or interests therein;

4. Purchase securities on margin or sell short;

5. Pledge, hypothecate, mortgage or otherwise encumber its assets, except
in an amount up to 10% of the value of its net assets but only to secure
permitted borrowings of money;

6. Issue senior securities as defined in the Investment Company Act except
insofar as the COMMAND Money Fund may be deemed to have issued a senior security
by reason of (a) entering into any repurchase agreement or reverse repurchase
agreement; (b) permitted borrowings of money; or (c) purchasing securities on a
when-issued or delayed delivery basis;

7. Purchase or sell commodities or commodity futures contracts, or oil,
gas, or mineral exploration or development programs;

B-7
<PAGE>
8. Underwrite securities of other issuers;

9. Purchase the securities of any other investment company, except in
connection with a merger, consolidation, reorganization or acquisition of
assets;

10. Purchase securities of any issuer for the purpose of exercising control
or management;

11. Purchase any securities, other than obligations of the U.S. Government,
its agencies or instrumentalities, if, as a result, with respect to 75% of the
value of the COMMAND Money Fund's total assets, more than 5% of the value of the
COMMAND Money Fund's total assets would be invested in the securities of a
single issuer;

12. Purchase any securities (other than obligations of the U.S. Government,
its agencies and instrumentalities) if as a result 25% or more of the value of
the COMMAND Money Fund's total assets (determined at the time of investment)
would be invested in the securities of one or more issuers conducting their
principal business activities in the same industry, provided that there is no
limitation with respect to money market instruments of domestic banks. For
purposes of this exception, domestic banks shall include all banks which are
organized under the laws of the United States or a state (as defined in the
Investment Company Act), U.S. branches of foreign banks that are subject to the
same regulations as U.S. banks and foreign branches of domestic banks (as
permitted by SEC regulation); and

13. Enter into reverse repurchase agreements if, as a result thereof, the
COMMAND Money Fund's obligations with respect to reverse repurchase agreements
would exceed one-third of the COMMAND Money Fund's net assets (defined to be
total assets, taken at market value, less liabilities other than reverse
repurchase agreements).

For purposes of investment limitation number 11, the COMMAND Money Funds'
compliance with Investment Company Act Rule 2a-7's diversification requirements
is deemed to constitute compliance with the stated diversification restriction,
which reflects the requirements of Section 5(b)(1) of the Investment Company
Act.

Whenever any fundamental investment policy or investment restriction states
a maximum percentage of the Fund's assets, it is intended that if the percentage
limitation is met at the time the investment is made, a later change in
percentage resulting from changing total or net asset values will not be
considered a violation of such policy. However, in the event that the Fund's
asset coverage for borrowings falls below 300%, the Fund will take action within
three days to reduce its borrowings, as required by applicable law. Loans of
portfolio securities and reverse repurchase agreements will not cumulatively
exceed one-third of the Fund's net assets.

COMMAND TAX-FREE FUND

The investment restrictions of the COMMAND Tax-Free Fund provide that the
Fund may not:

1. With respect to 75% of its total assets, invest more than 5% of the
value of its total assets in the securities of a single issuer (other than
obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities or secured by such obligations);

2. Concentrate more than 25% of its total assets in securities of
governmental units located in any one state, territory or possession of the
United States. The COMMAND Tax-Free Fund may invest more than 25% of its total
assets in industrial development and pollution control obligations whether or
not the users of facilities financed by such obligations are in the same
industry;

3. Make short sales of securities;

4. Purchase securities on margin, except for such short-term credits as are
necessary for the clearance of transactions;

5. Issue senior securities, except by purchasing securities on a
when-issued or delayed delivery basis, or borrow money, except that the COMMAND
Tax-Free Fund may borrow for temporary purposes in amounts not exceeding 5% of
the market or other fair value (taken at the lower of cost or current value) of
its total assets (not including the amount borrowed). Any such borrowings will
be made only from banks. The COMMAND Tax-Free Fund would maintain, in a
segregated account with its custodian, liquid assets equal in value to the
amount owed. The COMMAND Tax-Free Fund will not purchase securities while
borrowings are outstanding;

B-8
<PAGE>
6. Pledge its assets or assign or otherwise encumber them in excess of 10%
of its net assets (taken at market or other fair value at the time of pledging)
and then only to secure permitted borrowings of money;

7. Engage in the underwriting of securities;

8. Purchase or sell real estate or real estate mortgage loans, although it
may purchase Municipal Bonds or Notes secured by interests in real estate;

9. Make loans of money or securities. The purchase of a portion of an issue
of publicly distributed debt securities is not considered the making of a loan;

10. Invest in securities of other investment companies, except by purchases
in the open market involving only customary brokerage commissions and as a
result of which not more than 10% of its total assets (determined at the time of
investment) would be invested in such securities, or except as part of a merger,
consolidation, or acquisition;

11. Invest for the purpose of exercising control or management of another
company;

12. Write, purchase or sell puts, calls, or combinations thereof, except
that it may obtain rights to resell Municipal Bonds and Notes, as set forth in
the Prospectus and/or in this Statement of Additional Information;

13. Purchase industrial revenue bonds if, as a result of such purchase, more
than 5% of total COMMAND Tax-Free Fund assets would be invested in industrial
revenue bonds where payment of principal and interest are the responsibility of
companies with less than three years of operating history; and

14. Purchase or sell commodities or commodity futures contracts, or oil,
gas, or mineral exploration or development programs.

For purposes of investment limitation number 1, the COMMAND Tax-Free Funds'
compliance with Investment Company Act Rule 2a-7's diversification requirements
is deemed to constitute compliance with the stated diversification restriction,
which reflects the requirements of Section 5(b)(1) of the Investment Company
Act.

The COMMAND Tax-Free Fund has reserved freedom to invest more than 25% of
its total assets in industrial development and pollution control obligations
whether or not the users of facilities financed by such obligations are in the
same industry. See Investment Restriction No. 2. The COMMAND Tax-Free Fund,
however, will not invest more than 25% of the value of its assets in obligations
of private (I.E., non-governmental) issuers in the same industry.

COMMAND GOVERNMENT FUND

The investment restrictions of the COMMAND Government Fund provide that the
Fund may not:

1. Borrow money, except from banks for temporary or emergency purposes,
including the meeting of redemption requests which might otherwise require the
untimely disposition of securities; borrowing in the aggregate may not exceed
20%, and borrowing for purposes other than meeting redemptions may not exceed
5%, of the value of the COMMAND Government Fund's total assets (including the
amount borrowed), less liabilities (not including the amount borrowed) at the
time the borrowing is made; the COMMAND Government Fund will not purchase
securities while borrowings are outstanding;

2. Pledge, hypothecate, mortgage or otherwise encumber its assets, except
in an amount up to 10% of the value of its net assets but only to secure
permitted borrowings of money;

3. Make loans to others, except through the purchase of the debt
obligations and repurchase agreements and loans of portfolio securities referred
to under "How the Funds Invest--Other Investments." Loans of portfolio
securities

B-9
<PAGE>
will be limited to 10% of the value of the Government Fund's total assets and
will be made according to guidelines established by the Trustees, including
maintenance of collateral of the borrower equal at all times to the current
market value of the securities loaned;

4. Purchase or sell real estate or real estate mortgage loans;

5. Purchase securities on margin or sell short;

6. Purchase or sell commodities or commodity futures contracts, or oil,
gas, or mineral exploration or development programs;

7. Underwrite securities of other issuers;

8. Purchase the securities of any other investment company, except in
connection with a merger, consolidation, reorganization or acquisition of
assets; and

9. Issue senior securities as defined in the Investment Company Act except
insofar as the COMMAND Government Fund may be deemed to have issued a senior
security by reason of: (a) entering into any repurchase agreement; (b) permitted
borrowings of money; or (c) purchasing securities on a when-issued or delayed
delivery basis.

Whenever any fundamental investment policy or investment restriction states
a maximum percentage of the Fund's assets, it is intended that if the percentage
limitation is met at the time investment is made, a later change in percentage
resulting from changing total or net asset values will not be considered a
violation of such policy. However, in the event that a Fund's asset coverage for
borrowings falls below 300%, the Fund will take action to reduce its borrowings
within three days, as required by applicable law. Loans of portfolio securities
will not cumulatively exceed one-third of the Fund's net assets.

MANAGEMENT OF THE FUND

(a) TRUSTEES

Each Fund has Trustees who, in addition to overseeing the actions of each
Fund's Manager, Subadviser, and Distributor, decide upon matters of general
policy.

The Trustees also review the actions of the officers of each Fund, who
conduct and supervise the daily business operations of the Fund.

(b) MANAGEMENT INFORMATION-TRUSTEES AND OFFICERS

<TABLE>
<CAPTION>
POSITION
WITH THE PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE (1) TRUST AND OTHER AFFILIATIONS
- ------------------------------ ------------- --------------------------------------------------
<S> <C> <C>
Edward D. Beach (74) Trustee President and Director of BMC Fund, Inc., a
closed-end investment company; previously Vice
Chairman of Broyhill Furniture Industries, Inc.,
Certified Public Accountant; Secretary and
Treasurer of Broyhill Family Foundation, Inc.;
Member of the Board of Trustees of Mars Hill
College; and Director of The High Yield Income
Fund, Inc.
Delayne Dedrick Gold (60) Trustee Marketing and Management Consultant; Director of
The High Yield Income Fund, Inc.
</TABLE>

B-10
<PAGE>
<TABLE>
<CAPTION>
POSITION
WITH THE PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE (1) TRUST AND OTHER AFFILIATIONS
- ------------------------------ ------------- --------------------------------------------------
<S> <C> <C>
*Robert F. Gunia (52) Trustee Vice President (since September 1997) of
Prudential Investments; Executive Vice President
and Treasurer (since December 1996) of Prudential
Investments Fund Management LLC (PIFM); Senior
Vice President (since March 1987) of Prudential
Securities Incorporated (Prudential Securities);
formerly Chief Administrative Officer (July
1990-September 1996), Director (January
1989-September 1996) and Executive Vice President,
Treasurer and Chief Financial Officer (June
1987-September 1996) of Prudential Mutual Fund
Management, Inc. (PMF); Vice President and
Director (since May 1989) of The Asia Pacific
Fund, Inc.; Director of The High Yield Income
Fund, Inc.
Robert E. LaBlanc (64) Trustee President (since 1981) of Robert E. LaBlanc
Associates, Inc. (telecommunications); formerly
General Partner at Salomon Brothers; and
Vice-Chairman of Continental Telecom; Director of
Storage Technology Corporation, Titan Corporation,
Salient 3 Communications, Inc. and Tribune
Company; and Trustee of Manhattan College.
*David R. Odenath, Jr. (42) Trustee Officer in Charge, President, Chief Executive
Officer and Chief Operating Officer (since June
1999), Prudential Investments Fund Management LLC
(PIFM); Senior Vice President (since June 1999),
The Prudential Insurance Company of America
(Prudential); Senior Vice President (August 1993 -
May 1999), Paine Webber.
Robin B. Smith (59) Trustee Chairman and Chief Executive Officer (since August
1996) of Publishers Clearing House; formerly
President and Chief Executive Officer (January
1988-August 1996) and President and Chief
Operating Officer (September 1981-December 1988)
of Publishers Clearing House; Director of
BellSouth Corporation, Texaco Inc., Springs
Industries Inc., and Kmart Corporation.
Langdon R. Stevenson (64) Trustee Independent Contractor to the American Birding
Association; Director, Point Reyes Bird
Observatory; former Treasurer and Development
Director of American Birding Association Inc.;
faculty member (economics and history) Hackley
School, Tarrytown, New York; Senior Vice President
(1985-1989) and Director (1978-1986) of Prudential
Securities; President of P-B Trade Finance Ltd.
(1985-1987).
Stephen Stoneburn (55) Trustee President and Chief Executive Officer (since June
1996) of Quadrant Media Corp. (a publishing
company); formerly President (June 1995-June 1996)
of Argus Integrated Media, Inc.; Senior Vice
President and Managing Director (January
1993-1995) of Cowles Business Media; Senior Vice
President (January 1991-1992) and Publishing Vice
President (May 1989-December 1990) of Gralla
Publications (a division of United Newspapers,
U.K.); and Senior Vice President of Fairchild
Publications, Inc.
</TABLE>

B-11
<PAGE>
<TABLE>
<CAPTION>
POSITION
WITH THE PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE (1) TRUST AND OTHER AFFILIATIONS
- ------------------------------ ------------- --------------------------------------------------
<S> <C> <C>
*John R. Strangfeld (45) Trustee and Chief Executive Officer, Chairman, President and
President Director of The Prudential Investment Corporation
(since January 1990); Executive Vice President of
the Prudential Global Asset Management Group of
Prudential (since February of 1998); Chairman of
Pricoa Capital Group (since August 1989); Chief
Executive Officer of Private Asset Management
Group of Prudential (November 1994-December 1998).
Nancy H. Teeters (67) Trustee Economist; Director of Inland Steel Industries;
formerly, Vice President and Chief Economist of
International Business Machines; Member of the
Board of Governors of the Federal Reserve System;
Governor of the Horace H. Rackham School of
Graduate Studies of the University of Michigan;
Assistant Director of the Committee on the Budget
of the US House of Representatives; Senior Fellow
at the Library of Congress; Senior Fellow at the
Brookings Institution; staff at Office of
Management and Budget, Council of Economic
Advisors and the Federal Reserve Board.
Robert C. Rosselot (39) Secretary Assistant General Counsel (since September 1997)
of PIFM; formerly, partner with the firm of Howard
& Howard, Bloomfield Hills, Michigan (December
1995-September 1997) and Corporate Counsel
(September 1990-December 1995) of Federated
Investors.
Grace C. Torres (40) Treasurer and First Vice President (since December 1996) of
Principal PIFM; First Vice President (since March 1994) of
Financial and Prudential Securities; formerly First Vice
Accounting President (March 1994-September 1996) of
Officer Prudential Mutual Fund Management, Inc. and Vice
President (July 1989-March 1994) of Bankers Trust
Corporation.
Stephen M. Ungerman (45) Assistant Vice President and Tax Director (since March 1996)
Treasurer of Prudential Investments; formerly First Vice
President of Prudential Mutual Fund Management,
Inc. (February 1993-September 1996).
</TABLE>

- ------------
(1) Unless otherwise noted, the address for each of the above persons is c/o
Prudential Investments Fund Management LLC, Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102-4077.

* "Interested" Trustee of the Funds, as defined in the Investment Company Act
of 1940 (the Investment Company Act).

Trustees and officers of the Funds are also trustees, directors and officers
of some or all of the other investment companies distributed by Prudential
Investment Management Services LLC.

The Trustees have adopted a retirement policy which calls for the retirement
of Trustees on December 31 of the year in which they reach the age of 72, except
that retirement is being phased in for Trustees who were age 68 or older as of
December 31, 1993. Under this phase-in provision, Mr. Beach is scheduled to
retire on December 31, 1999.

Pursuant to the terms of the Management Agreements with each Fund, the
Manager pays all compensation of officers of the Fund as well as the fees and
expenses of all Trustees of the Fund who are affiliated persons of the Manager.

Each Fund pays each of its Trustees who is not an affiliated person of PIFM
or Prudential Investments (PI) annual compensation as follows: COMMAND Money
Fund: $5,500, COMMAND Tax-Free Fund: $3,000 and COMMAND Government Fund: $2,500,
in addition to certain out-of-pocket expenses. The amount of annual compensation
paid to each Trustee may change as a result of the introduction of additional
funds on the board of which the Trustee will be asked to serve.

B-12
<PAGE>
Trustees may receive their Trustee's fees pursuant to a deferred fee
agreement with the Fund. Under the terms of the agreement, each Fund accrues
daily the amount of such Trustee's fees in installments which accrue interest at
a rate equivalent to the prevailing rate applicable to 90-day U.S. Treasury
Bills at the beginning of each calendar quarter or, at the daily rate of return
of the Fund (the Fund Rate). Payment of the interest so accrued is also deferred
and accruals become payable at the option of the Trustee. Each Fund's obligation
to make payments of deferred Trustees' fees, together with interest thereon, is
a general obligation of the Fund.

The following table sets forth the aggregate compensation paid by the Funds
to the Trustees who are not affiliated with the Manager for the fiscal year
ended June 30, 1999, and the aggregate compensation paid to such Trustees for
service on the Fund's Board and that of all other funds managed by PIFM (Fund
Complex) for the calendar year ended December 31, 1998.

COMPENSATION TABLE

<TABLE>
<CAPTION>
PENSION OR
RETIREMENT APPROXIMATE
BENEFITS ESTIMATED COMPENSATION FROM
AGGREGATE ACCRUED AS ANNUAL TRUST AND PRUDENTIAL
COMPENSATION PART OF TRUST BENEFITS UPON FUND COMPLEX PAID TO
NAME AND POSITION FROM TRUST EXPENSES RETIREMENT TRUSTEES(2)
- ------------------------------------------- ------------ -------------- -------------- ---------------------
<S> <C> <C> <C> <C>
Edward D. Beach - Trustee.................. $ 11,000 None N/A $ 135,000 (44/71)*
Stephen C. Eyre - Former Trustee........... $ 5,500 None N/A $ 45,000 (14/17)*
Delayne D. Gold - Trustee.................. $ 11,000 None N/A $ 135,000 (44/71)*
Robert F. Gunia(1) - Trustee............... -- None N/A --
Don G. Hoff - Former Trustee............... $ 11,000 None N/A $ 45,000 (14/17)*
Robert E. LaBlanc - Trustee................ $ 11,000 None N/A $ 45,000 (14/17)*
Mendel A. Melzer(1) - Former Trustee....... -- None N/A --
Richard A. Redeker(1) - Former Trustee..... -- None N/A --
Robin B. Smith(2) - Trustee................ $ 11,000 None N/A $ 90,000 (32/41)*
Langdon R. Stevenson - Trustee............. $ 11,000 None N/A $ 11,000 (3/3)*
Stephen Stoneburn - Trustee................ $ 11,000 None N/A $ 45,000 (14/17)*
Brian M. Storms(1) - Former Trustee........ -- None N/A --
John R. Strangfeld(1) - Trustee............ -- None N/A --
Nancy H. Teeters - Trustee................. $ 11,000 None N/A $ 90,000 (26/47)*
</TABLE>

- ------------
* Indicates number of funds/portfolios in Prudential Fund Complex (including
the Fund) to which aggregate compensation relates.

(1) Trustees who are "interested" do not receive compensation from the Funds or
any fund in the Fund Complex.

(2) Total compensation from all the funds in the Prudential Fund Complex for the
calendar year ended December 31, 1998, including amounts deferred at the
election of Trustees under the funds' deferred compensation plans. Including
accrued interest, total deferred compensation amounted to $116,225 for
Trustee Robin B. Smith. Currently, Ms. Smith has agreed to defer some of her
fees at the T-Bill rate and other fees at the Fund Rate.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of September 3, 1999, the Trustees and officers of each Fund, as a group,
owned less than 1% of the outstanding shares of beneficial interest of each of
the Funds and there were no beneficial owners of greater than 5% of the
outstanding shares of any Fund.

As of September 3, 1999, Prudential Securities was record holder of
12,938,644,157 shares (or 100%) 1,560,000,724 shares (or 100%) and 723,869,230
shares (or 100%) of the outstanding shares of COMMAND Money Fund, COMMAND
Tax-Free Fund and COMMAND Government Fund, respectively. In the event of any
meetings of shareholders, Prudential Securities will forward, or cause the
forwarding of, proxy materials to the beneficial owners for which it is the
record holder.

B-13
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES

(a) INVESTMENT ADVISER

The manager of each of the Funds is Prudential Investments Fund Management
LLC (PIFM or the Manager), Gateway Center Three, 100 Mulberry Street, Newark,
New Jersey 07102-4077. PIFM serves as manager to all of the other investment
companies that, together with the Funds, comprise the Prudential Mutual Funds.
See "How the Funds are Managed" in the Prospectus. As of June 30, 1999, PIFM
managed and/or administered open-end and closed-end management investment
companies with assets of approximately $72.6 billion. According to the
Investment Company Institute, as of November 30, 1998, the Prudential Mutual
Funds were the 18th largest family of mutual funds in the United States.

PIFM is a subsidiary of Prudential Securities Incorporated. Prudential
Mutual Fund Services LLC (PMFS or the Transfer Agent), a wholly-owned subsidiary
of PIFM, serves as the transfer agent for the Prudential Mutual Funds and, in
addition, provides customer service, recordkeeping and management and
administration services to qualified plans.

Pursuant to the Management Agreement for each Fund (the Management
Agreement), PIFM, subject to the supervision of the Funds' Board of Trustees and
in conformity with the stated policies of the Funds, manages both the investment
operations of each Fund and the composition of each Fund's portfolio, including
the purchase, retention, disposition and loan of securities. In connection
therewith, PIFM is obligated to keep certain books and records of the Funds.
PIFM also administers the Funds' business affairs and, in connection therewith,
furnishes each Fund with office facilities, together with those ordinary
clerical and bookkeeping services which are not being furnished by State Street
Bank and Trust Company, the Funds' custodian, and PMFS, the Funds' transfer and
shareholder servicing agent. The management services of PIFM for the Funds are
not exclusive under the terms of the Management Agreements and PIFM is free to,
and does, render management services to others.

The Funds pay PIFM for the services performed and the facilities furnished
by PIFM fees computed daily and payable monthly as follows: COMMAND Money Fund
pays fees at an annual rate of .50% of 1% of average daily net assets up to and
including $500 million, .425 of 1% of the next $500 million, .375 of 1% of the
next $500 million, and .35 of 1% of the Fund's average daily net assets in
excess of $1.5 billion. COMMAND Tax-Free Fund pays fees at an annual rate of
.50% of 1% of average daily net assets up to and including $500 million, .425 of
1% of the next $500 million, and .375 of 1% of the Fund's average daily net
assets in excess of $1 billion. COMMAND Government Fund pays fees at an annual
rate of .40% of 1% of average daily net assets up to and including $1 billion,
and .375 of 1% of the Fund's average daily net assets in excess of $1 billion.

In connection with its management of the business affairs of the Funds
pursuant to the Management Agreements, PIFM bears the following expenses:

(a) the salaries and expenses of all personnel of the Funds and the Manager,
except the fees and expenses of Trustees who are not affiliated persons of PIFM
or the Funds' investment adviser;

(b) all expenses incurred by PIFM or by the Funds in connection with
managing the ordinary course of the Funds' business, other than those assumed by
the Funds, as described below; and

(c) the costs and expenses payable to The Prudential Investment Corporation,
doing business as Prudential Investments (PI, the Subadviser or the investment
adviser), pursuant to subadvisory agreements on behalf of the Funds between PIFM
and PI (the Subadvisory Agreements).

Under the terms of the Management Agreement, each Fund is responsible for
the payment of the following expenses, including (a) the fees or reimbursements
payable to the Manager, (b) the fees and expenses of Trustees who are not
affiliated with the Manager or each Fund's investment adviser, (c) the fees and
certain expenses of each Fund's Custodian and Transfer and Dividend Disbursing
Agent, including the cost of providing records to the Manager in connection with
its obligation of maintaining required records of each Fund and of pricing each
Fund's shares, (d) the charges and expenses of each Fund's legal counsel and
independent accountants, (e) brokerage commissions, if any, and any issue or
transfer taxes chargeable to each Fund in connection with its securities
transactions, (f) all taxes and trust fees payable by a Fund to governmental
agencies, (g) the fees of any trade association of which a Fund is a member, (h)
the cost of share certificates, if any, representing, and/or non-negotiable
share deposit receipts evidencing, shares of a Fund, (i) the cost of fidelity
and liability insurance, (j) the fees and expenses involved in registering and
maintaining registration of the Fund and

B-14
<PAGE>
of its shares with the Commission, including the preparation and printing of the
Fund's registration statements and prospectuses for such purposes, and paying
the fees and expenses of notice filings made in accordance with state securities
laws, (k) allocable communications expenses with respect to investor services
and all expenses of shareholders' and Trustees' meetings and of preparing,
printing and mailing reports, proxy statements and prospectuses to shareholders,
(l) litigation and indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of a Fund's business and (m) distribution fees.

Each Management Agreement also provides that PIFM will not be liable for any
error of judgment or any loss suffered by a Fund in connection with the matters
to which the Management Agreement relates except in the case of a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award for damages will be limited as provided in the Investment
Company Act) or a loss resulting from willful misfeasance, bad faith, gross
negligence or reckless disregard of duty. The Management Agreement provides that
it will terminate automatically if assigned (as defined in the Investment
Company Act), and that it may be terminated without penalty by either party upon
not more than 60 days' nor less than 30 days' written notice. The Management
Agreement provides that it will continue in effect for a period of more than two
years from its execution only so long as such continuance is specifically
approved at least annually in accordance with the requirements of the Investment
Company Act.

PIFM has entered into Subadvisory Agreements with PIC, doing business as PI
(the Subadviser), a wholly-owned subsidiary of Prudential, on behalf of each
Fund. The Subadvisory Agreements provide that PI furnish investment advisory
services in connection with the investment management of the Funds. In
connection therewith, PI is obligated to keep certain books and records of the
Funds. PIFM continues to have responsibility for all investment advisory
services pursuant to the Management Agreement and supervises PI's performance of
such services. PI is reimbursed by PIFM for its direct costs, excluding profit
and overhead, incurred by PI in furnishing services to PIFM.

The Subadviser maintains a corporate credit unit which provides credit
analysis and research on taxable fixed-income securities including money market
instruments. The portfolio manager consults routinely with the credit unit in
managing the Funds. The credit unit, with a staff including 7 credit analysts,
reviews on an ongoing basis commercial paper issuers, commercial banks, non-bank
financial institutions and issuers of other taxable fixed-income obligations.
Credit analysts have broad access to research and financial reports, data
retrieval services and industry analysts. They maintain relationships with the
management of corporate issuers and from time to time visit companies in whose
securities the Funds may invest.

Each Subadvisory Agreement provides that it will terminate in the event of
its assignment (as defined in the Investment Company Act) or upon the
termination of the applicable Management Agreement. Each Subadvisory Agreement
may be terminated by the Fund, PIFM or PI upon not more than 60 days' nor less
than 30 days' written notice. Each Subadvisory Agreement provides that it will
continue in effect for a period of more than two years from its execution only
so long as such continuance is specifically approved at least annually in
accordance with the requirements of the Investment Company Act.

The Management Agreement between each Fund and PIFM and the Subadvisory
Agreements between PIFM and PIC were last approved by the Board of Trustees of
each Fund, including a majority of the Trustees who are not parties to the
contracts or interested persons of any such parties, as defined in the
Investment Company Act, on May 25, 1999 and by a majority of the outstanding
shares of COMMAND Government Fund and COMMAND Tax-Free Fund on August 18, 1988
and by a majority of the outstanding shares of COMMAND Money Fund on October 18,
1988.

For the fiscal years ended June 30, 1999, 1998 and 1997, COMMAND Money Fund
paid PIFM management fees of $43,127,743, $29,026,767 and $22,524,838,
respectively. For the fiscal years ended June 30, 1999, 1998 and 1997, COMMAND
Tax-Free Fund paid PIFM management fees of $6,685,127, $5,671,955 and
$5,304,067, respectively. For the fiscal years ended June 30, 1999, 1998 and
1997, COMMAND Government Fund paid PIFM management fees of $2,959,117,
$2,250,774 and $2,138,318, respectively.

(b) PRINCIPAL UNDERWRITER AND DISTRIBUTOR

Prudential Investment Management Services LLC (PIMS or the Distributor),
Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077, acts
as the distributor of the shares of the Fund.

B-15
<PAGE>
PLANS OF DISTRIBUTION

Pursuant to Rule 12b-1, a Distribution and Service Plan for each of the
Funds (collectively, the Plans) was last approved by the vote of a majority of
the Trustees, including a majority of the Trustees who are not interested
persons of each Fund and who have no direct or indirect financial interest in
the operation of the Plans or in any agreements related to the Plans (the Rule
12b-1 Trustees) at a meeting called for the purpose of voting on such Plans, on
May 13, 1998. Under each Fund's Distribution and Service Plan and Distribution
Agreement, each Fund pays the Distributor a distribution fee of up to 0.125% of
the average daily net assets of each Fund, computed daily and payable monthly,
to reimburse the Distributor for its distribution-related expenses.

For the fiscal year ended June 30, 1999, the Distributor incurred
distribution expenses of $14,956,337 for the Money Fund, $924,724 for the
Government Fund and $1,936,709 for the Tax-Free Fund, all of which was recovered
through the distribution fees paid by the Funds. It is estimated that of the
distribution fees received by the Distributor from each Fund for the fiscal year
ended June 30, 1999, commission credits to Prudential Securities branch offices
for payments of commissions to account executives amounted to approximately 80%
($11,965,070) for the Money Fund; 80% ($739,780) for the Government Fund; and
80% ($1,549,367) for the Tax-Free Fund; and overhead and other branch office
distribution-related expenses amounted to approximately 20% ($2,991,267) for the
Money Fund; approximately 20% ($184,944) for the Government Fund; and
approximately 20% ($387,342) for the Tax-Free Fund.

The term "overhead and other branch office distribution-related expenses"
represents (a) the expenses of operating Prudential Securities branch offices in
connection with the sale of the Fund's shares including lease costs, the
salaries and employee benefits of operations and sales support personnel,
utility costs, communications costs and the costs of stationery and supplies,
(b) the costs of client sales seminars, (c) travel expenses of mutual fund sales
coordinators to promote the sale of the Fund's shares and (d) other incidental
expenses relating to branch promotion of the Fund's sales.

Pursuant to the Plans, the Trustees are provided at least quarterly with
written reports of the amounts expended under the Plans and the purposes for
which such expenditures were made. The Trustees review such reports on a
quarterly basis.

The Plans provide that they will continue in effect from year to year,
provided each such continuance is approved annually by a vote of the Trustees of
each of the Funds in the manner described above. The Plans may not be amended to
increase materially the amount to be spent for the services described therein
without approval of the shareholders of the respective Funds, and all material
amendments of the Plans must also be approved by the Trustees in the manner
described above. The Plans may be terminated at any time, without payment of any
penalty, by vote of a majority of the Rule 12b-1 Trustees, or by a vote of a
majority of the outstanding voting securities of the Funds (as defined in the
Investment Company Act) on not more than 30 days' written notice to any other
party to the Plans. The Plans will automatically terminate in the event of an
assignment (as defined in the Investment Company Act). So long as the Plans are
in effect, the selection and nomination of Trustees who are not interested
persons of the Funds shall be committed to the discretion of the Trustees who
are not interested persons. The Trustees have determined that, in their
judgment, there is a reasonable likelihood that the Plans will benefit the Funds
and their shareholders. In the Trustees' quarterly review of the Plans, they
consider the continued appropriateness of such Plans and the level of
compensation provided therein. Each Distribution Agreement provides that it will
terminate automatically if assigned and that it may be terminated without
penalty by either party upon no more than 60 days', nor less than 30 days',
written notice.

In the respective Distribution Agreements, the Funds have agreed to
indemnify the Distributor to the extent permitted by applicable law against
certain liabilities under the Securities Act.

State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for each Fund's portfolio securities,
and in that capacity maintains cash and certain financial and accounting books
and records pursuant to an agreement with each Fund.

Prudential Mutual Fund Services LLC (PMFS), Raritan Plaza One, Edison, New
Jersey 08837, serves as the Transfer and Shareholder Servicing Agent of each
Fund. It is a wholly-owned subsidiary of PIFM. PMFS provides customary

B-16
<PAGE>
transfer agency services to the Fund, including the handling of shareholder
communications, the processing of shareholder transactions, the maintenance of
shareholder account records, payment of dividends and distributions and related
functions. In connection with the transfer agency services rendered by PMFS to
the Fund, PMFS receives an annual fee per shareholder account, a new account
set-up fee for each manually established account and a monthly inactive balance
account fee per shareholder account. PMFS is also reimbursed for its
out-of-pocket expenses, including but not limited to postage, stationery,
printing, allocable communications expenses, and other costs. For the fiscal
year ended June 30, 1999, fees of approximately $3,698,400, $186,300 and
$103,700 were incurred by COMMAND Money Fund, COMMAND Tax-Free Fund and COMMAND
Government Fund, respectively, for such services.

PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036, serves as each Fund's independent public accountants, and in that
capacity audits the annual financial statements of each Fund.

BROKERAGE ALLOCATION AND OTHER PRACTICES

The Manager is responsible for decisions to buy and sell securities for the
Funds, the selection of brokers and dealers to effect the transactions and the
negotiation of brokerage commissions, if any. (For purposes of this section, the
term "Manager" includes the Subadviser.) The Funds do not normally incur any
brokerage commission expense on such transactions. In the market for money
market instruments, securities are generally traded on a "net" basis, with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price which includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. On occasion, certain money market
instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Portfolio securities may not be purchased
from any underwriting or selling syndicate of which the Distributor, or an
affiliate (including Prudential Securities), during the existence of the
syndicate, is a principal underwriter (as defined in the Investment Company
Act), except in accordance with rules of the SEC. The Funds will not deal with
the Distributor or its affiliates on a principal basis.

In placing orders for portfolio securities of the Funds, the Manager is
required to give primary consideration to obtaining the most favorable price and
efficient execution. This means that the Manager will seek to execute each
transaction at a price and commission, if any, which provide the most favorable
total cost or proceeds reasonably attainable under the circumstances. While the
Manager generally seeks reasonably competitive spreads or commissions, the Funds
will not necessarily be paying the lowest spread or commission available. Within
the framework of this policy, the Manager may consider research and investment
services provided by brokers or dealers who effect or are parties to portfolio
transactions of the Funds, the Manager or the Manager's other clients. Such
research and investment services are those which brokerage houses customarily
provide to institutional investors and include statistical and economic data and
research reports on particular companies and industries. Such services are used
by the Manager in connection with all of its investment activities, and some of
such services obtained in connection with the execution of transactions for the
Funds may be used in managing other investment accounts. Conversely, brokers
furnishing such services may be selected for the execution of transactions for
such other accounts, whose aggregate assets are far larger than the Funds', and
the services furnished by such brokers may be used by the Manager in providing
investment management for the Funds. While such services are useful and
important in supplementing its own research and facilities, the Manager believes
that the value of such services is not determinable and does not significantly
reduce expenses. The Funds do not reduce the advisory fee it pays to the Manager
by any amount that may be attributed to the value of such services.

Subject to the above considerations, Prudential Securities, as an affiliate
of the Funds, may act as a securities broker (or futures commission merchant)
for the Funds. In order for Prudential Securities to effect any portfolio
transactions for the Funds, the commissions, fees or other remuneration received
by Prudential Securities must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold
during a comparable period of time. This standard would allow Prudential
Securities to receive no more than the remuneration which would be expected to
be received by an unaffiliated broker in a commensurate arm's-length
transaction. Furthermore, the Board of Trustees of each Fund, including a
majority of the Trustees who are not "interested" persons, has adopted
procedures which are reasonably

B-17
<PAGE>
designed to provide that any commissions, fees or other remuneration paid to
Prudential Securities are consistent with the foregoing standard. Brokerage
transactions with Prudential Securities are also subject to such fiduciary
standards as may be imposed by applicable law.

SECURITIES AND ORGANIZATION

Each Fund is authorized to issue an unlimited number of full and fractional
shares of beneficial interest. Each share of a Fund represents an equal
proportionate interest in that Fund with each other share of that Fund and is
entitled to a proportionate interest in the dividends and distributions from
that Fund. Upon termination of a Fund, whether pursuant to liquidation of the
Fund or otherwise, shareholders of that Fund are entitled to share pro rata in
the net assets of the Fund then available for distribution to such shareholders.
Shareholders have no preemptive rights.

A copy of the Agreement and Declaration of Trust (the Declaration of Trust)
establishing each Fund is on file with the Secretary of State of the
Commonwealth of Massachusetts. The Declaration of Trust provides for the
perpetual existence of the Fund. The Fund, however, may be terminated at any
time by vote of at least two-thirds of the outstanding shares or by the Trustees
upon written notice to the shareholders. Upon termination of a Fund, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated, of the Fund as may be determined by the
Trustees, the Fund shall, in accordance with such procedures as the Trustees
consider appropriate, reduce the remaining assets to distributable form in cash
or shares or other securities, or any combination thereof, and distribute the
proceeds to the shareholders of the Fund, ratably according to the number of
shares of such Fund held by the several shareholders of the Fund on the date of
termination.

Each Declaration of Trust provides that shareholders shall not be subject to
any personal liability for the acts or obligations of the Fund and that every
written obligation, contract, instrument or undertaking made by the Fund shall
contain a provision to the effect that the shareholders are not personally
liable thereunder. Massachusetts counsel for the Funds has advised the Funds
that no personal liability will attach to the shareholders under any undertaking
containing such provision when adequate notice of such provision is given,
except possibly in a few jurisdictions. With respect to all types of claims in
the latter jurisdictions and with respect to tort claims, contract claims where
the provision referred to is omitted from the undertaking, claims for taxes and
certain statutory liabilities in other jurisdictions, a shareholder of a Fund
may be held personally liable to the extent that claims are not satisfied by
such Fund. However, upon payment of any such liability, the shareholder will be
entitled to reimbursement from the general assets of such Fund. The Trustees
intend to conduct the operations of each Fund in such a way so as to avoid, to
the extent possible, ultimate liability of the shareholders for liabilities of
such Fund.

The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a Trustee against any liability to which the
Trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The Declaration of Trust provides for indemnification by the Fund of
the Trustees and the officers of the Fund except with respect to any matter as
to which any such person did not act in good faith in the reasonable belief that
his action was in or not opposed to the best interests of the Fund. Such person
may not be indemnified against any liability to the Fund or the Fund's
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.

The Funds will not normally hold annual shareholders' meetings. At such time
as less than a majority of the Trustees have been elected by the shareholders,
the Trustees then in office will call a shareholders' meeting for the election
of Trustees. In addition, Trustees may be removed from office by a written
consent signed by the holders of two-thirds of the outstanding shares and filed
with the Funds' Custodian or by a vote of the holders of two-thirds of the
outstanding shares at a meeting duly called for the purpose, which meeting shall
be held upon written request of the holders of not less than 10% of the
outstanding shares. Upon written request by ten or more shareholders, who have
been such for at least six months and who hold shares constituting 1% of the
outstanding shares, stating that such shareholders wish to communicate with the
other shareholders for the purpose of obtaining the signatures necessary to
demand a meeting to consider removal of a Trustee, each Fund has undertaken to
provide a list of shareholders or to disseminate appropriate materials (at the
expense of the requesting shareholders).

B-18
<PAGE>
Except as otherwise disclosed in the Prospectus and in this Statement of
Additional Information, the Trustees shall continue to hold office and may
appoint their successors.

PURCHASE AND REDEMPTION OF FUND SHARES

Shares of each Fund may be purchased at a price equal to the next determined
net asset value (NAV) per share. The procedures for the purchase and redemption
of shares of a Fund are described in the Prospectus.

TAX-DEFERRED RETIREMENT ACCOUNTS

INDIVIDUAL RETIREMENT ACCOUNTS. An individual retirement account (IRA)
permits the deferral of federal income tax on income earned in the account until
the earnings are withdrawn (or, in the case of a Roth IRA, the avoidance of
federal income tax on such income). The following chart represents a comparison
of the earnings in a personal savings account with those in an IRA, assuming a
$2,000 annual contribution, an 8% rate of return and a 39.6% federal income tax
bracket and shows how much more retirement income can accumulate within an IRA
as opposed to a taxable individual savings account. The Tax-Free Fund may not be
a suitable investment for an IRA.

TAX-DEFERRED COMPOUNDING(1)

<TABLE>
<CAPTION>
CONTRIBUTIONS PERSONAL
MADE OVER: SAVINGS IRA
- ----------- ----------------------- ----------
<S> <C> <C>
10 years $ 26,165 $ 31,291
15 years 44,675 58,649
20 years 68,109 98,846
25 years 97,780 157,909
30 years 135,346 244,692
</TABLE>

- ------------
(1)The chart is for illustrative purposes only and does not represent the
performance of any Fund or any specific investment. It shows taxable versus
tax-deferred compounding for the periods and on the terms indicated. Earnings in
a traditional IRA account will be subject to tax when withdrawn from the
account. Distributions from a Roth IRA which meet the conditions required under
the Internal Revenue Code will not be subject to tax upon withdrawal from the
account.

COMMAND-SM-, COMMAND PLUS-SM- AND BUSINESSEDGE-SM- ACCOUNT PROGRAMS

Shares of the Funds are offered exclusively to participants in the COMMAND
and COMMAND Plus Account programs (collectively, the COMMAND program) and the
Prudential BusinessEdge Program (the BusinessEdge Program).

The COMMAND program is an integrated financial services program of
Prudential Securities that offers Prudential Securities' clients the use of
their assets by linking together several components: (i) a securities account,
(ii) an automatic investment sweep into one or more mutual funds (including the
Funds) or a Federal Deposit Insurance Corporation insured savings account and
(iii) a COMMAND Visa-Registered Trademark- Gold Debit Card. Other COMMAND
program features include, among others, direct deposit and bill pay services and
a dividend reinvestment program with respect to common stocks traded on the New
York and American Stock Exchanges and with respect to NASDAQ stocks in which
Prudential Securities makes a principal market.

The COMMAND program offers various other products or services. From time to
time, the COMMAND program annual fee and/or the fee associated with a particular
product or service may be waived or reduced. For information regarding products
and services available through the COMMAND program, please contact your
Prudential Securities Financial Adviser.

The BusinessEdge program offers a comprehensive money management system to
businesses, designed to optimize cash flow and invest idle cash. Products and
services offered through the BusinessEdge program, and the associated fees, and
waivers or reductions thereto, are subject to change. For information regarding
the BusinessEdge program, please contact your Prudential Securities Financial
Adviser or your Pruco Securities Preferred Agent.

B-19
<PAGE>
From time to time, the Distributor, Prudential Securities or Pruco
Securities may advertise the COMMAND program or BusinessEdge program and their
component features and other products and services available through the COMMAND
program or BusinessEdge program. Such advertisements may include information
about the performance of market indices, whether or not related to the Funds'
performance (E.G. the S&P 500), and other performance data.

NET ASSET VALUE

Each Fund's NAV per share is determined by subtracting its liabilities from
the value of its assets and dividing the remainder by the number of outstanding
shares.

Each Fund uses the amortized cost method of valuation to determine the value
of its portfolio securities. In that regard, each Fund's Board of Trustees has
determined to maintain a dollar-weighted average portfolio maturity of 90 days
or less, to purchase only instruments having remaining maturities of thirteen
months or less, and to invest only in securities determined by the investment
adviser under the supervision of the Board of Trustees to be of minimal credit
risk and to be of "eligible quality" in accordance with regulations of the SEC.
The remaining maturity of an instrument held by a Fund that is subject to a put
is deemed to be the period remaining until the principal amount can be recovered
through the exercise of a right of demand or, in the case of a variable rate
instrument, the next interest reset date, if longer. The value assigned to the
put is zero. The Board of Trustees also has established procedures designed to
stabilize, to the extent reasonably possible, each Fund's price per share, as
computed for the purpose of sales and redemptions, at $1.00. Such procedures
will include review of each Fund's portfolio holdings by the Board, at such
intervals as deemed appropriate, to determine whether the Fund's NAV calculated
by using available market quotations deviates from $1.00 per share based on
amortized cost. The extent of any deviation will be examined by the Board, and
if such deviation exceeds 1/2 of 1%, the Board will promptly consider what
action, if any, will be initiated. In the event the Board of Trustees determines
that a deviation exists which may result in material dilution or other unfair
results to investors or existing shareholders, the Board will take such
corrective action as it regards necessary and appropriate, including the sale of
portfolio instruments prior to maturity to realize gains or losses, the
shortening of average portfolio maturity, the withholding of dividends or the
establishment of NAV per share by using available market quotations.

Each Fund computes its NAV at 4:30 p.m., New York time, on each day the New
York Stock Exchange (the Exchange) is open for trading. In the event the New
York Stock Exchange closes early on any business day, the NAV of a Fund's shares
shall be determined at a time between such closing and 4:30 p.m., New York time.
The Exchange is closed on the following holidays: New Year's Day, Martin Luther
King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.

TAXES, DIVIDENDS AND DISTRIBUTIONS

Each Fund has elected to qualify, and each Fund intends to remain qualified,
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended. This relieves the Fund (but not its shareholders) from
paying federal income tax on income which is distributed to shareholders, and,
if the Fund did realize long-term capital gains, permits net capital gains of
the fund (i.e., the excess of net long-term capital gains over net short-term
capital losses) to be treated as long-term capital gains of the shareholders,
regardless of how long shareholders have held their shares in the Fund.

Qualification as a regulated investment company requires, among other
things, that (a) at least 90% of a fund's annual gross income (without reduction
for losses from the sale or other disposition of securities or foreign
currencies) be derived from interest, dividends, payments with respect to
securities loans, and gains from the sale or other disposition of securities or
options thereon, or other income (including, but not limited to, gains from
options) derived with respect to its business of investing in such securities;
(b) a fund must diversify its holdings so that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of a fund's assets is
represented by cash, U.S. Government obligations and other securities limited in
respect of any one issuer to an amount not greater than 5% of the market value
of the fund's assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is

B-20
<PAGE>
invested in the securities of any one issuer (other than U.S. Government
obligations) and (c) the fund must distribute to its shareholders at least 90%
of its net investment income and net short-term gains (i.e., the excess of net
short-term capital gains over net long-term capital losses) in each year.

Gains or losses on sales of securities by a Fund will be treated as
long-term capital gains or losses if the securities have been held by it for
more than one year. None of the Funds anticipate realizing long-term capital
gains. Other gains or losses on the sale of securities will be short-term
capital gains or losses. In addition, debt securities acquired by a Fund may be
subject to original issue discount and market discount rules.

Each Fund is required to distribute 98% of its ordinary income in the same
calendar year in which it is earned. Each Fund is also required to distribute
during the calendar year 98% of the capital gain net income it earned during the
twelve months ending on October 31 of such calendar year, as well as all
undistributed ordinary income and undistributed capital gain net income from the
prior year or the twelve-month period ending on October 31 of such prior year,
respectively. To the extent it does not meet these distribution requirements, a
Fund will be subject to a non-deductible 4% excise tax on the undistributed
amount. For purposes of this excise tax, income on which a Fund pays income tax
is treated as distributed. Each Fund intends to make timely distributions in
order to avoid this excise tax. For the purposes of this excise tax, dividends
declared in December payable to shareholders of record on a specified date in
December and paid in the following January will be treated as having been
received by shareholders on December 31 of the calendar year in which declared.
Under this rule, therefore, a shareholder may be taxed in the prior year on
dividends or distributions actually received in January of the following year.

Dividend distributions to shareholders from the COMMAND Tax-Free Fund (the
"Tax-Free Fund") will be exempt from federal income taxation (though not
necessarily exempt from state and local taxation) provided that 50% or more of
the value of the Tax-Free Fund's assets at the end of each quarter is invested
in state, municipal and other bonds whose interest payments are excluded from
gross income for federal income tax purposes and provided that the Fund mails a
notice to shareholders that properly designates the dividend as an exempt
interest dividend.

It is anticipated that the NAV per share of each Fund will remain constant.
However, if the NAV per share fluctuates, a shareholder may realize gain or loss
upon the disposition of a share. Any gain or loss realized upon a sale or
redemption of shares by a shareholder who is not a dealer in securities will
generally be treated as long-term capital gain or loss if the shares have been
held for more than one year and otherwise as short-term capital gain or loss.
Any such loss, however, although otherwise treated as short-term capital loss,
will be treated as long-term capital loss to the extent of any capital gain
distributions received by the shareholder, if the shares have been held for six
months or less. Futhermore, certain rules may apply which would limit the
ability of the shareholder to recognize any loss if, for example, the
shareholder replaced the shares (including shares purchased pursuant to dividend
reinvestment) within 30 days of the disposition of the shares. In such a case
the basis of the shares acquired will be readjusted to reflect the disallowed
loss.

Because none of the Funds' net income is expected to arise from dividends on
common or preferred stock, none of the Funds' distributions to shareholders will
be eligible for the dividends received deduction for corporations under the
Internal Revenue Code.

Interest on indebtedness incurred or continued by a shareholder to purchase
or carry shares of the Tax-Free Fund is not deductible. Exempt-interest
dividends attributable to interest on certain "private activity" tax-exempt
obligations are a preference item for computing the alternative minimum tax for
both individuals and corporations. Moreover, exempt-interest dividends
attributable to interest on tax-exempt obligations, whether or not private
activity bonds, that are received by corporations, (i) will be taken into
account in determining the alternative minimum tax imposed on 75% of the excess
of adjusted current earnings over alternative minimum taxable income and (ii) in
determining the foreign branch profits tax imposed on the effectively connected
earnings and profits (with adjustments) of United States branches of foreign
corporations. Entities or persons who are "substantial users" (or related
persons) of facilities financed by private activity bonds should consult their
tax advisers before purchasing shares of the Tax-Free Fund.

Shareholders who have held their shares of the Tax-Free Fund for six months
or less may be subject to a disallowance of losses from the sale or exchange of
those shares to the extent of any exempt-interest dividends received

B-21
<PAGE>
by the shareholder with respect to the shares and if such losses are not
disallowed, they will be treated as long-term capital losses to the extent of
any distributions of long-term capital gains received by the shareholder with
respect to such shares.

Shareholders will be notified annually by the Funds as to the federal tax
status of distributions made by the Fund.

Interest income from the Tax-Free Fund that is exempt from federal income
taxation may not be exempt from taxation under the laws of a particular state or
local taxing authority. The Tax-Free Fund will report annually to its
shareholders the percentage and source, on a state-by-state basis, of interest
income on municipal bonds or notes received by the Tax-Free Fund during the
preceding year.

Dividends and distributions subject to federal income taxation may also be
subject to state and local taxes. Furthermore, under the laws of certain states,
distributions of net income from the Funds may be taxable to shareholders as
income even though a portion of such distributions may be derived from interest
on U.S. obligations which, if realized directly, would be exempt from state
income taxes. Shareholders are advised to consult their tax advisors concerning
the application of state and local taxes.

Each Fund is organized as a Massachusetts business trust. Under current law,
so long as the Funds qualify for federal income tax treatment as described
above, it is believed that no Fund should be liable for any income or franchise
tax in the Commonwealth of Massachusetts.

CALCULATION OF YIELD

Each Fund will prepare a current quotation of yield daily. The yield quoted
will be the simple annualized yield for an identified seven calendar day period.
The yield calculation will be based on a hypothetical account having a balance
of exactly one share at the beginning of the seven-day period. The base period
return will be the change in the value of the hypothetical account during the
seven-day period, including dividends declared on any shares purchased with
dividends on the shares, but excluding any capital changes, divided by the value
of the account at the beginning of the base period. The yield will vary as
interest rates and other conditions affecting money market instruments change.
Yield also depends on the quality, length of maturity and type of instruments in
a Fund's portfolio, and its operating expenses. Each Fund also may prepare an
effective annual yield computed by compounding the unannualized seven-day period
return as follows: by adding 1 to the unannualized seven-day period return,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result.

Effective yield = [(base period return + 1) TO THE POWER OF 365/7]-1

The yield and effective yield of each Fund based on the 7 days ended June
30, 1999 were 4.53% and 4.64%, respectively, for COMMAND Money Fund, 3.01% and
3.06%, respectively, for COMMAND Tax-Free Fund and 4.47% and 4.57%,
respectively, for COMMAND Government Fund.

COMMAND Tax-Free Fund may also calculate the tax equivalent yield over a
7-day period. The tax equivalent yield will be determined by first computing the
current yield as discussed above. The Fund will then determine what portion of
the yield is attributable to securities, the income of which is exempt for
federal income tax purposes. This portion of the yield will then be divided by
one minus 39.6% (the assumed maximum tax rate for individual taxpayers not
subject to Alternative Minimum Tax) and then added to the portion of the yield
that is attributable to taxable securities. COMMAND Tax-Free Fund's 7-day tax
equivalent yield as of June 30, 1999 was 4.98%.

Comparative performance information may be used from time to time in
advertising or marketing each Fund's shares, including data from Lipper
Analytical Services, Inc., Morningstar Publications, Inc., IBC Financial Data,
Inc., The Bank Rate Monitor, other industry publications, business periodicals
and market indices.

Each Fund's yield fluctuates, and an annualized yield quotation is not a
representation by a Fund as to what an investment in the Fund will actually
yield for any given period. Actual yields will depend upon not only changes in
interest rates generally during the period in which the investment in a Fund is
held, but also on changes in the Fund's expenses. Yield does not take into
account any federal or state income taxes.

B-22
<PAGE>
ISSUANCE OF FUND SHARES FOR SECURITIES

Transactions involving the issuance of shares of a Fund for securities
(rather than cash) will be limited to: (i) reorganizations, (ii) statutory
mergers, or (iii) other acquisitions of portfolio securities that: (a) meet the
investment objective and policies of the Fund, (b) are liquid and not subject to
restrictions on resale, (c) have a value that is readily ascertainable via
listing on or trading in a recognized United States or international exchange or
market, and (d) is approved by the Fund's investment adviser.

DESCRIPTION OF SECURITIES RATINGS

CORPORATE AND TAX-EXEMPT BOND RATINGS

The four highest ratings of Moody's Investors Service (Moody's) for
tax-exempt and corporate bonds are Aaa, Aa, A and Baa. Bonds rated Aaa are
judged to be of the "best quality." The rating of Aa is assigned to bonds which
are of "high quality by all standards," but as to which margins of protection or
other elements make long-term risks appear somewhat larger than Aaa rated bonds.
The Aaa and Aa rated bonds comprise what are generally known as "high grade
bonds." Bonds which are rated A by Moody's possess many favorable investment
attributes and are to be considered as "upper medium grade obligations." Factors
giving security to principal and interest of A rated bonds are considered
adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future. Bonds rated Baa are considered as "medium
grade" obligations. They are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well. Moody's
applies numerical modifiers "1", "2" and "3" in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier "1" indicates that the company ranks in the higher end of its generic
rating category; the modifier "2" indicates a mid-range ranking; and the
modifier "3" indicates that the company ranks in the lower end of its generic
rating category. The foregoing ratings for tax-exempt bonds are sometimes
presented in parentheses with a "con" indicating the bonds are rated
conditionally. Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed or (d) payments to which some other limiting condition
attaches. Such parenthetical rating denotes the probable credit stature upon
completion of construction or elimination of the basis of the condition.

The four highest ratings of Standard & Poor's Ratings Group (Standard &
Poor's) for corporate or municipal debt are AAA, AA, A and BBB. Obligations
rated AAA bear the highest rating assigned by Standard & Poor's to a debt
obligation and indicate an extremely strong capacity to pay principal and
interest. Obligations rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degrees. Obligations rated A
have a strong capacity to pay principal and interest, although they are somewhat
more susceptible to the adverse effects of changes in circumstances and economic
conditions. The BBB rating, which is the lowest "investment grade" security
rating by Standard & Poor's, indicates an adequate capacity to pay principal and
interest. Whereas they normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay principal and interest for debt in this category than
for debt in the A category. The foregoing ratings are sometimes followed by a
"p" indicating that the rating is provisional. A provisional rating assumes the
successful completion of the project being financed by the debt being rated and
indicates that payment of debt service requirements is largely or entirely
dependent upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion.

TAX-EXEMPT NOTE RATINGS

The ratings of Moody's for short-term obligations are MIG 1, MIG 2, MIG 3
and MIG 4. Short-term obligations bearing the designation MIG 1 are judged to be
of the best quality, enjoying strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing. Short-term obligations bearing the designation MIG 2 are
judged to be of high quality, with margins of protection which are ample

B-23
<PAGE>
although not so large as in the preceding group. Short-term obligations
designated MIG 3 are judged to be of favorable quality, but lack the undeniable
strength of the preceding grades because liquidity and cash flow protection may
be narrow and market access for refinancing is likely to be less well
established. Short-term obligations designated MIG 4 are judged to be of
adequate quality. Though protection commonly regarded as required of an
investment security is present, and such obligations are not distinctly or
predominantly speculative, there is specific risk.

The ratings of Standard & Poor's for municipal notes are SP-1, SP-2 and
SP-3. The designation "SP-1" indicates a very strong or strong capacity to pay
principal and interest. A "+" is added for those issues determined to possess
overwhelming safety characteristics. An "SP-2" designation indicates a
satisfactory capacity to pay principal and interest while an "SP-3" designation
indicates speculative capacity to pay principal and interest.

CORPORATE AND TAX-EXEMPT COMMERCIAL PAPER RATINGS

Moody's and Standard & Poor's rating grades for commercial paper, set forth
below, are applied to Municipal Commercial Paper as well as taxable commercial
paper.

Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations having an original maturity not
exceeding one year. Moody's employs the following three designations, all judged
to be investment grade, to indicate the relative repayment ability of rated
issuers: Prime-1, superior ability; Prime-2, strong ability; and Prime-3,
acceptable ability.

Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the relevant
market. Ratings are graded into several categories, ranging from "A-1" for the
highest quality obligations to "D" for the lowest. The "A-1" designation
indicates that the degree of safety regarding timely payment is strong. A "+"
designation is applied to those issues rated "A-1" which possess an overwhelming
degree of safety. The "A-2" designation indicates that capacity for timely
payment is satisfactory. However, the relative degree of safety is not as high
as for issues designated "A-1." The "A-3" designation indicates that the
capacity for timely payment is adequate. Such issues, however, are somewhat more
vulnerable to the adverse effects of changes in circumstances than obligations
carrying the higher designations. Issues rated "B" are regarded as having only
speculative capacity for timely payment. Issues rated "C" are regarded as having
a doubtful capacity for payment. Issues rated "D" are in payment default and the
rating is used when interest or principal payments are not made on the date due,
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period.

B-24
<PAGE>
COMMAND MONEY FUND PORTFOLIO OF INVESTMENTS
JUNE 30, 1999

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
BANK NOTES--9.3%
Comerica Bank N.A.
$ 115,000 4.855%, 7/13/99(a)....... $ 114,929,720
50,000 4.88%, 7/19/99(a)........ 49,998,544
FCC National Bank
125,000 4.885%, 12/16/99......... 124,963,895
66,000 4.90%, 12/16/99.......... 65,985,336
First Union National Bank
88,000 4.928%, 7/2/99(a)........ 88,000,000
69,000 4.925%, 7/8/99(a)........ 69,000,000
129,000 4.994%, 7/21/99(a)....... 129,000,000
Key Bank N.A.
13,000 5.05%, 7/19/99(a)........ 13,010,021
84,000 5.035%, 9/14/99(a)....... 83,952,686
54,000 5.109%, 9/24/99(a)....... 53,973,884
Nationsbank N.A.
108,000 4.90%, 12/14/99.......... 107,976,290
U.S. Bank N.A.
90,000 4.91%, 7/21/99(a)........ 89,939,583
146,000 4.971%, 7/21/99(a)....... 145,924,135
---------------
1,136,654,094
---------------
CERTIFICATES OF DEPOSIT - DOMESTIC--2.7%
Chase Manhattan Bank
60,000 5.365%, 5/22/00.......... 59,958,428
First National Bank of
Chicago
100,000 5.47%, 6/2/00............ 99,973,404
Morgan Guaranty Trust Co.
165,000 5.12%, 8/23/99........... 165,000,000
---------------
324,931,832
---------------
CERTIFICATES OF DEPOSIT - EURODOLLAR--2.9%
Abbey National Treasury
Services PLC
315,000 5.23%, 9/1/99............ 315,000,000
ING Bank, NV
45,000 4.97%, 9/20/99........... 44,998,605
---------------
359,998,605
---------------
CERTIFICATES OF DEPOSIT - YANKEE--15.6%
ABN-Amro Bank
131,000 4.88%, 12/22/99.......... 130,957,797
100,000 4.92%, 12/23/99.......... 99,976,861
Bayerische Landesbank
Girozentrale
195,000 4.885%, 12/20/99......... 194,942,351
Canadian Imperial Bank of
Commerce
300,000 5.08%, 8/23/99........... 300,000,000
Commerzbank
108,000 5.14%, 9/15/99........... 108,014,694
Deutsche Bank
100,000 5.06%, 1/18/00........... 99,984,083
40,000 5.10%, 2/18/00........... 39,991,425
97,000 5.60%, 6/14/00........... 96,955,536
Royal Bank of Canada
118,000 4.828%, 7/6/99(a)........ 117,992,107
100,000 4.92%, 12/24/99.......... 99,976,728
Toronto Dominion Bank
23,000 5.06%, 2/10/00........... 22,994,558
23,000 5.13%, 2/17/00........... 23,000,000
UBS AG
152,000 5.08%, 1/18/00........... 151,975,810
150,000 5.16%, 2/28/00........... 149,961,702
120,000 5.29%, 5/18/00........... 119,938,922
150,000 5.29%, 5/19/00........... 149,923,416
---------------
1,906,585,990
---------------
COMMERCIAL PAPER--48.8%
Allianz Of America
Finance Corp.
26,400 5.02%, 8/9/99............ 26,256,428
15,800 5.04%, 8/16/99........... 15,698,248
Ameritech Corp.
28,100 5.10%, 7/27/99........... 27,996,498
Aon Corp.
34,210 5.26%, 7/30/99........... 34,065,045
</TABLE>
B-25

<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
COMMERCIAL PAPER--(CONT'D.)
Associates First Capital
Corp.
$ 16,000 4.93%, 7/14/99........... $ 15,971,516
100,000 4.87%, 7/26/99........... 99,661,806
20,000 4.88%, 7/26/99........... 19,932,222
27,000 5.05%, 8/13/99........... 26,837,137
45,000 5.06%, 8/18/99........... 44,696,400
BankAmerica Corp.
40,000 4.84%, 8/25/99........... 39,704,222
8,000 4.79%, 10/6/99........... 7,896,749
65,151 4.94%, 11/22/99.......... 63,863,616
Barton Capital Corp.
33,169 5.17%, 7/26/99........... 33,049,914
BBL North America Funding
Corp.
100,000 5.08%, 8/9/99............ 99,449,667
61,000 5.03%, 8/17/99........... 60,599,416
Bell Atlantic Financial
Services, Inc.
35,000 5.10%, 7/20/99........... 34,905,792
Blue Ridge Asset Funding
Corp.
18,000 5.06%, 7/14/99........... 17,967,110
BMW U.S. Capital Corp.
9,335 5.03%, 8/16/99........... 9,275,002
57,623 5.03%, 8/17/99........... 57,244,593
49,000 5.03%, 8/18/99........... 48,671,373
Centric Capital Corp.
30,000 4.85%, 7/9/99............ 29,967,667
Chevron USA, Inc.
47,300 5.11%, 8/5/99............ 47,065,011
39,000 5.11%, 8/9/99............ 38,784,102
Ciesco, L.P.
52,000 5.07%, 8/10/99........... 51,707,067
66,000 5.25%, 8/19/99........... 65,528,375
CIT Group, Inc.
41,000 5.03%, 7/22/99........... 40,879,699
30,000 5.03%, 8/16/99........... 29,807,183
Colonial Pipeline Co.
10,100 5.05%, 8/18/99........... 10,031,993
Commercial Credit Co.
16,000 5.02%, 7/23/99........... 15,950,915
36,000 5.03%, 7/26/99........... 35,874,250
Countrywide Home Loan,
Inc.
30,000 5.05%, 7/12/99........... 29,953,708
25,000 5.08%, 8/16/99........... 24,837,722
30,500 5.08%, 8/20/99........... 30,284,805
CXC, Inc.
18,000 5.25%, 8/19/99........... 17,871,375
32,600 5.08%, 8/24/99........... 32,351,588
Daimler Chrysler North
America Holdings, Inc.
15,000 5.04%, 8/4/99............ 14,928,600
93,000 5.13%, 8/26/99........... 92,257,860
Edison Asset
Securitization LLC
50,000 4.86%, 9/8/99............ 49,534,250
Enterprise Funding Corp.
10,576 5.06%, 7/29/99........... 10,534,378
16,513 5.18%, 8/3/99............ 16,434,591
14,000 5.18%, 8/9/99............ 13,921,437
Falcon Asset
Securitization Corp.
16,000 5.04%, 7/26/99........... 15,944,000
80,000 5.15%, 8/9/99............ 79,553,667
27,643 5.15%, 8/16/99........... 27,461,094
Finova Capital Corp.
27,000 5.35%, 7/14/99........... 26,947,837
26,000 5.06%, 7/19/99........... 25,934,220
10,000 5.06%, 7/21/99........... 9,971,889
17,000 5.12%, 7/26/99........... 16,939,555
Ford Motor Credit Co.
290,718 4.81%, 7/8/99............ 290,446,098
104,000 5.02%, 8/20/99........... 103,274,889
183,000 5.03%, 8/24/99........... 181,619,265
</TABLE>
B-26

<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
Commercial Paper--(cont'd.)
FPL Group Capital, Inc.
$ 26,513 4.84%, 7/13/99........... $ 26,470,226
4,086 4.84%, 8/2/99............ 4,068,421
18,400 5.16%, 8/2/99............ 18,315,605
GE Capital International
Funding, Inc.
3,000 5.10%, 8/2/99............ 2,986,400
9,000 5.14%, 8/18/99........... 8,938,320
40,000 5.28%, 2/14/00........... 38,662,400
17,000 5.31%, 2/14/00........... 16,428,290
GE Financial Assurance
Holdings, Inc.
5.13%, 8/23/99(b)
(cost $97,259,855;
98,000 purchased 6/24/98)..... 97,259,855

General Electric Capital
Corp.
29,000 4.90%, 7/19/99........... 28,928,950
94,000 4.82%, 7/23/99........... 93,723,118
106,000 5.06%, 8/2/99............ 105,523,236
17,000 4.79%, 8/5/99............ 16,920,832
104,000 5.12%, 8/18/99........... 103,290,027
General Motors Acceptance
Corp.
55,947 4.90%, 7/15/99........... 55,840,390
7,992 5.02%, 8/2/99............ 7,956,338
234,000 5.07%, 8/16/99........... 232,484,070
330,208 5.04%, 8/23/99........... 327,757,857
GTE Funding, Inc.
24,000 5.03%, 7/14/99........... 23,956,407
Household Finance Corp.
14,000 5.02%, 7/19/99........... 13,964,860
218,000 5.13%, 8/23/99........... 216,353,555
ING America Insurance
Holdings, Inc.
52,000 4.84%, 7/6/99............ 51,965,044
14,500 4.85%, 7/28/99........... 14,447,256
15,000 4.84%, 7/29/99........... 14,943,533
Johnson Controls, Inc.
21,000 5.85%, 7/1/99............ 21,000,000
50,892 5.00%, 7/30/99........... 50,687,018
Merrill Lynch & Co., Inc.
6,000 5.02%, 7/27/99........... 5,978,247
Mont Blanc Capital Corp.
11,000 4.91%, 7/9/99............ 10,987,998
38,000 4.91%, 7/16/99........... 37,922,258
41,000 5.05%, 7/21/99........... 40,884,972
67,000 5.17%, 7/23/99........... 66,788,317
Monte Rosa Capital Corp.
67,000 5.07%, 7/20/99........... 66,820,719
106,000 5.05%, 7/22/99........... 105,687,742
50,000 5.10%, 8/4/99............ 49,759,167
Morgan Stanley Dean
Witter & Co., Inc.
157,000 5.16%, 9/7/99(a)......... 157,000,000
Nationwide Building
Society
73,000 5.20%, 7/13/99........... 72,873,467
Nordbanken North America,
Inc.
117,000 5.10%, 8/23/99........... 116,121,525
Old Line Funding Corp.
37,261 4.88%, 7/2/99............ 37,255,949
9,545 5.02%, 7/15/99........... 9,526,366
11,000 5.07%, 8/2/99............ 10,950,427
64,000 5.07%, 8/6/99............ 63,675,520
Paccar Financial Corp.
24,000 5.20%, 7/26/99........... 23,913,333
Petrofina Delaware, Inc.
16,000 5.00%, 7/9/99............ 15,982,222
PNC Funding Corp.
33,000 5.10%, 8/23/99........... 32,752,225
Potomac Electric Power
Co.
12,050 5.00%, 7/9/99............ 12,036,611
</TABLE>
B-27

<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
COMMERCIAL PAPER--(CONT'D.)
Preferred Receivables
Funding Corp.
$ 9,000 5.04%, 7/19/99........... $ 8,977,320
96,000 5.05%, 8/5/99............ 95,528,667
32,000 5.16%, 8/23/99........... 31,756,907
Quincy Capital Corp.
8,732 5.30%, 7/21/99........... 8,706,289
15,948 5.07%, 8/17/99........... 15,842,437
Receivables Capital Corp.
61,000 5.07%, 8/3/99............ 60,716,502
Safeco Corp.
10,000 4.88%, 7/19/99........... 9,975,600
50,000 5.10%, 8/10/99........... 49,716,667
26,000 5.09%, 8/13/99........... 25,841,927
45,000 5.10%, 8/13/99........... 44,725,875
21,000 5.20%, 8/23/99........... 20,839,233
43,000 5.10%, 8/27/99........... 42,652,775
Salomon Smith Barney
Holdings, Inc.
52,000 5.05%, 8/4/99............ 51,751,989
173,000 5.05%, 8/5/99............ 172,150,618
Skandinaviska Enskilda
Banken
61,000 5.02%, 7/21/99........... 60,829,878
Thunder Bay Funding, Inc.
60,972 4.95%, 7/6/99............ 60,930,082
18,728 5.00%, 7/15/99........... 18,691,584
3,014 5.06%, 7/19/99........... 3,006,375
5,171 5.06%, 8/6/99............ 5,144,835
20,170 5.08%, 8/13/99........... 20,047,613
Toyota Motor Credit Co.
26,320 5.00%, 7/26/99........... 26,228,611
Unifunding, Inc.
32,273 5.10%, 7/9/99............ 32,236,424
Variable Funding Capital
Corp.
20,493 5.05%, 7/19/99........... 20,441,255
25,000 5.06%, 7/20/99........... 24,933,236
Windmill Funding Corp.
65,000 5.17%, 7/26/99........... 64,766,632
46,000 5.07%, 8/3/99............ 45,786,215
42,000 5.05%, 8/5/99............ 41,793,792
25,000 5.15%, 8/6/99............ 24,871,250
18,000 5.15%, 8/23/99........... 17,863,525
13,000 5.18%, 8/23/99........... 12,900,861
Wood Street Funding Corp.
24,000 5.04%, 7/16/99........... 23,949,600
22,800 5.06%, 7/21/99........... 22,735,907
20,900 5.08%, 8/13/99........... 20,773,183
---------------
5,977,244,581
---------------
LOAN PARTICIPATIONS--0.6%
Alltel Corp.
20,925 5.92%, 7/1/99............ 20,925,000
Caterpillar, Inc.
30,000 5.45%, 7/7/99............ 30,000,000
National Rural Utilities
Cooperative Finance
Corp.
4.95%, 7/12/99(b)
(cost $28,000,000;
28,000 purchased 6/2/99)...... 28,000,000
---------------
78,925,000
---------------
OTHER CORPORATE OBLIGATIONS--16.0%
Abbey National Treasury
Services PLC
43,000 5.29%, 5/22/00........... 42,977,845
Associates Corp. of North
America
355,000 5.097%, 7/29/99(a)....... 354,752,858
Bishops Gate Residental
Mortgage Trust 1998-2
78,000 5.144%, 7/1/99(a)........ 78,000,000
Chase Manhattan Corp.
4,000 5.20%, 7/20/99(a)........ 4,007,972
General Electric Capital
Corp.
57,000 4.95%, 8/12/99(a)........ 57,000,000
Goldman, Sachs & Co.
5.095%, 7/19/99(a)(b)
(cost $268,000,000;
268,000 purchased 6/25/97)..... 268,000,000
John Hancock Capital
Corp.
5.08%, 7/14/99(a)(b)
(cost $66,000,000;
66,000 purchased 1/12/98)..... 66,000,000
</TABLE>
B-28

<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
OTHER CORPORATE OBLIGATIONS--(CONT'D.)
Restructured Asset
Securities
$ 245,000 4.934%, 7/2/99(a)........ $ 245,000,000
221,000 5.053%, 7/12/99(a)....... 221,000,000
Security Life of Denver
5.07%, 7/12/99(a)(b)
(cost $27,000,000;
27,000 purchased 4/12/99)..... 27,000,000
Short Term Repackaged
Asset Trust 1998-E
5.02%, 7/17/99(a)(b)
(cost $148,000,000;
148,000 purchased 9/17/98)....... 148,000,000
Strategic Money Market
Trust 1998-A
286,000 5.255%, 9/16/99(a)....... 286,000,000
Strategic Money Market
Trust 1999-B
133,000 5.204%, 9/15/99(a)....... 133,000,000
Strategic Money Market
Trust 1999-E
31,000 4.983%, 7/6/99(a)........ 31,000,000
---------------
1,961,738,675
---------------
TIME DEPOSIT - EURODOLLAR--3.0%
Bank Austria
363,199 5.875%, 7/1/99........... 363,199,000
---------------
U.S. GOVERNMENT AGENCY & INSTRUMENTALITY
OBLIGATIONS - NON-DISCOUNT--2.9%
Federal Home Loan Bank
84,000 4.90%, 8/11/99........... 83,950,083
116,000 4.95%, 8/17/99........... 115,960,724
109,840 5.035%, 8/25/99.......... 109,783,900
Federal National Mortgage
Association
50,000 4.99%, 2/22/00........... 49,995,151
---------------
359,689,858
---------------
TOTAL INVESTMENTS--101.8%
(amortized cost
$12,468,967,635(c)).... 12,468,967,635
Liabilities in excess of
other assets--(1.8%)... (222,021,718)
---------------
NET ASSETS--100%......... $12,246,945,917
---------------
---------------
</TABLE>

(a) Variable rate instrument. The maturity date presented for these instruments
was 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 was adjusted.
(b) Indicates illiquid securities restricted as to resale. The aggregate cost of
such securities was $634,259,855. The aggregate value of $634,259,855 was
approximately 5.2% of net assets.
(c) The cost for federal income tax purposes is substantially the same as for
financial reporting purposes.
- ---------------
The industry classification of portfolio holdings and liabilities in excess of
other assets shown as a percentage of net assets as of June 30, 1999 was as
follows:
<TABLE>
<S> <C>
Commercial Banks............................ 44.3%
Asset Backed Securities..................... 15.0
Motor Vehicle Parts......................... 12.0
Personal Credit Institutions................ 6.9
Security Brokers & Dealers.................. 5.4
Short-Term Business Credit.................. 5.3
Federal Credit Agencies..................... 2.9
Fire & Marine Casualty Insurance............ 2.2
Life Insurance.............................. 1.9
Bank Holding Companies - Domestic........... 1.8
Telephone & Communications.................. 0.9
Petroleum Refining.......................... 0.7
Mortgage Bankers............................ 0.7
Regulating Controls......................... 0.6
Electrical Services......................... 0.5
Accidental & Health Insurance............... 0.3
Construction Machinery & Equipment.......... 0.2
Crude Petroleum & Natural Gas............... 0.1
Pipelines................................... 0.1
-----
101.8
Liabilities in excess of other assets....... (1.8)
-----
100.0%
-----
-----
</TABLE>

B-29

<PAGE>
COMMAND MONEY FUND
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1999
---------------
<S> <C>
Investments, at amortized cost which approximates market value.......................... $12,468,967,635
Receivable for Fund shares sold......................................................... 256,444,881
Interest receivable..................................................................... 61,181,986
Prepaid expenses........................................................................ 65,500
---------------
Total assets.......................................................................... 12,786,660,002
---------------
LIABILITIES
Payable for investments purchased....................................................... 315,000,000
Payable for Fund shares repurchased..................................................... 218,345,391
Management fee payable.................................................................. 3,714,890
Accrued expenses and other liabilities.................................................. 1,967,260
Distribution fee payable................................................................ 686,544
---------------
Total liabilities..................................................................... 539,714,085
---------------
NET ASSETS.............................................................................. $12,246,945,917
---------------
---------------
Net assets were comprised of:
Shares of beneficial interest, at par................................................. $ 122,469,459
Paid-in capital in excess of par...................................................... 12,124,476,458
---------------
Net assets, June 30, 1999............................................................... $12,246,945,917
---------------
---------------
Net asset value, offering price and redemption price per share ($12,246,945,917
divided by 12,246,945,917 shares of beneficial interest ($.01 par value) issued and
outstanding).......................................................................... $1.00
---------------
---------------
</TABLE>

B-30
<PAGE>
COMMAND MONEY FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
NET INVESTMENT INCOME 1999
----------
<S> <C>
Income
Interest and discount earned......... $ 630,468,597
--------------
Expenses
Management fee....................... 43,127,743
Distribution fee..................... 14,956,337
Transfer agent's fees and expenses... 3,750,000
Registration fees.................... 1,134,000
Reports to shareholders.............. 800,000
Custodian's fees and expenses........ 290,000
Insurance expense.................... 177,000
Trustees' fees....................... 44,000
Audit fee............................ 30,000
Legal fees and expenses.............. 15,000
Miscellaneous........................ 28,472
--------------
Total expenses..................... 64,352,552
--------------
Net investment income.................. 566,116,045
--------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.............. $ 566,116,045
--------------
--------------
</TABLE>

COMMAND MONEY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED JUNE 30,
-------------------------
IN NET ASSETS 1999 1998
------ ------
<S> <C> <C>
Operations
Net investment
income............ $ 566,116,045 $ 411,627,966
Net realized gain on
investment
transactions...... -- 76,865
---------------- ----------------
Net increase in net
assets resulting
from operations... 566,116,045 411,704,831
---------------- ----------------
Dividends and
distributions to
shareholders (Note
1).................... (566,116,045) (411,704,831)
---------------- ----------------
Fund share
transactions (at $1
per share)
Net proceeds from
shares
subscribed........ 56,589,927,827 40,246,065,983
Net asset value of
shares issued in
reinvestment of
dividends and
distributions..... 566,116,045 411,704,831
Cost of shares
reacquired........ (53,999,386,826) (38,197,384,515)
---------------- ----------------
Net increase in net
assets from Fund
share
transactions...... 3,156,657,046 2,460,386,299
---------------- ----------------
Total increase........ 3,156,657,046 2,460,386,299
NET ASSETS
Beginning of year..... 9,090,288,871 6,629,902,572
---------------- ----------------
End of year........... $ 12,246,945,917 $ 9,090,288,871
---------------- ----------------
---------------- ----------------
</TABLE>

B-31
<PAGE>
COMMAND MONEY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ---------- ---------- ---------- ----------
<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................................ 0.048 0.052 0.049 0.052 0.050
Dividends and distributions to
shareholders......................... (0.048) (0.052) (0.049) (0.052) (0.050)
----------- ---------- ---------- ---------- ----------
Net asset value, end of year........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ----------
TOTAL RETURN(a):....................... 4.85% 5.31% 5.06% 5.30% 5.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000).......... $12,246,946 $9,090,289 $6,629,903 $5,309,842 $4,055,700
Average net assets (000)............... $11,965,069 $7,936,219 $6,078,525 $4,896,794 $3,072,284
Ratios to average net assets:
Expenses, including distribution
fees................................. .54% .54% .57% .58% .59%
Expenses, excluding distribution
fees................................. .41% .42% .44% .46% .47%
Net investment income................ 4.73% 5.19% 4.97% 5.15% 5.09%
</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 30.

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, 1999, 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, 1999 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, 1999
B-32

<PAGE>
COMMAND TAX-FREE FUND PORTFOLIO OF INVESTMENTS
JUNE 30, 1999

<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (A) (NOTE 1)
<S> <C> <C> <C>
ALABAMA--1.0%
Alabama St. Pub. Sch. &
College Auth.,
F.R.W.D.S.,
3.72%, 7/1/99, Ser.
VMIG1 $ 9,300 101................... $ 9,300,000
Jefferson Cnty. Swr.
Rev. Cap. Improv.,
F.R.D.D.S.,
3.45%, 7/1/99, Ser. SSP
VMIG1 5,000 31.................... 5,000,000
--------------
14,300,000
--------------
ALASKA--1.2%
Valdez Marine Air
Terminal Rev., Arco
Trans. Proj.,
T.E.C.P.,
3.10%, 7/16/99, Ser.
VMIG1 14,400 94C................... 14,400,000
3.40%, 8/6/99, Ser.
VMIG1 3,500 94C................... 3,500,000
--------------
17,900,000
--------------
ARIZONA--2.6%
Maricopa Cnty., St. Joseph's Care Ctr.,
Prerefunded,
7.75%, 7/1/00, Ser.
NR 3,800 90A................... 4,036,461
Salt River Proj.
Agricultural Improv. &
Pwr., T.E.C.P.,
3.10%, 8/12/99, Ser.
P1 1,400 80.................... 1,398,328
3.10%, 8/13/99, Ser.
P1 7,700 80.................... 7,700,000
3.40%, 2/15/00, Ser.
P1 14,400 80.................... 14,400,000
3.35%, 2/17/00, Ser.
P1 11,006 80.................... 11,006,000
--------------
38,540,789
--------------
CALIFORNIA--2.2%
California Higher Ed.
Ln. Auth., Student Ln.
Rev., A.N.N.M.T.,
3.50%, 7/1/00, Ser.
VMIG1 24,000 87B................... 24,000,000
California Student Ln.
Mktg. Corp., Student
Ln. Rev., F.R.W.D.,
3.80%, 7/1/99, Ser.
VMIG1 9,000 93A................... 9,000,000
--------------
33,000,000
--------------
COLORADO--0.8%
El Paso Cnty. Co.,
Single Fam. Mtge.
Rev., T.A.N.,
3.25%, 5/15/00, Ser.
SP1+* 6,710 99C................... 6,710,000
Wheat Ridge Ind. Dev.
Rev., Var. Adolph
Coors Co. Proj.,
A.M.T., F.R.W.D.,
3.70%, 7/7/99, Ser.
A1+* 5,000 93.................... 5,000,000
--------------
11,710,000
--------------
CONNECTICUT--0.2%
Connecticut Spec.
Assmt., Unemploy.
Comp. Rev.,
A.N.N.M.T.,
3.38%, 7/1/00, Ser.
VMIG1 3,200 93C................... 3,200,000
--------------
DISTRICT OF COLUMBIA--3.8%
Dist. of Columbia, Gen.
Oblig., F.R.D.D.S.,
3.50%, 7/1/99, Ser.
VMIG1 6,200 92A-1................. 6,200,000
3.50%, 7/1/99, Ser.
VMIG1 4,200 92A-2................. 4,200,000
3.50%, 7/1/99, Ser.
VMIG1 100 92A-3................. 100,000
3.50%, 7/1/99, Ser.
VMIG1 1,520 92A-5................. 1,520,000
Dist. of Columbia,
National Academy of
Science, T.E.C.P.,
3.25%, 9/7/99, Ser.
VMIG1 10,000 99B................... 10,000,000
Metro. Wash. Arpt. Rev.,
A.M.T., T.E.C.P.,
3.35%, 8/5/99, Ser.
A1* 15,500 94.................... 15,500,000
3.50%, 11/19/99, Ser.
A1+* 13,500 99A................... 13,500,000
3.50%, 12/21/99, Ser.
A1+* 4,500 99B................... 4,500,000
--------------
55,520,000
--------------
</TABLE>

B-33
<PAGE>
COMMAND TAX-FREE FUND PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (a) (NOTE 1)
<S> <C> <C> <C>
FLORIDA--2.0%
Gulf Envir. Svcs. Inc.,
F.R.W.D.S.,
3.60%, 7/7/99, Ser. SSP
VMIG1 $ 4,500 28A................... $ 4,500,000
Pinellas Cnty. Hlth.
Fac., Prerefunded,
8.50%, 3/1/00, Ser.
AAA* 10,705 90A................... 11,298,737
St. Lucie Cnty. Pwr. &
Light, T.E.C.P.,
3.35%, 10/7/99, Ser.
VMIG1 13,725 94B................... 13,725,000
--------------
29,523,737
--------------
GEORGIA--11.1%
Atlanta Urban Res., Fin.
Auth., Greystone,
A.M.T., F.R.W.D.S.,
3.85%, 7/1/99, Ser.
A1+* 20,861 98B................... 20,861,000
Burke Co. Georgia Dev.
Auth., Oglethorpe Pwr.
Corp., T.E.C.P.,
3.15%, 8/11/99, Ser.
VMIG1 15,000 98.................... 15,000,000
Cobb Cnty. Dev. Auth.,
Institute of Nuclear
Pwr., F.R.W.D.,
3.75%, 7/7/99, Ser.
CPS1 18,390 98.................... 18,390,000
Cobb Cnty. Hsg. Auth.,
Multifam. Hsg. Rev.,
Post Bridge Proj.,
F.R.W.D.,
3.35%, 7/7/99, Ser.
A1+* 10,000 96.................... 10,000,000
Terrell Mill II Assoc., F.R.W.D.,
3.80%, 7/1/99, Ser.
A1+*D 10,600 93.................... 10,600,000
De Kalb Cnty. Hsg.
Auth., Single Fam.
Mtge. Rev., A.M.T.,
F.R.W.D.S.,
A1+* 7,500 3.85%, 7/1/99, Ser. A... 7,500,000
Fulton Cnty. Dev. Auth.,
Catholic Sch. Prop.,
F.R.W.D.,
3.65%, 7/1/99, Ser.
Aa2 26,900 99.................... 26,900,000
Siemen's Energy, Inc.,
F.R.W.D.,
3.70%, 7/1/99, Ser.
VMIG1 7,750 94.................... 7,750,000
Georgia Mun. Gas Auth.
Rev., F.R.W.D.,
A1+* 10,000 3.50%, 7/7/99, Ser. C... 10,000,000
Monroe Cnty. Dev. Auth.
Poll., Oglethorpe Pwr.
Corp., S.E.M.O.T.,
3.35%, 11/1/99, Ser.
NR 11,000 96.................... 11,000,000
Roswell Hsg. Auth., Post
Canyon Proj.,
F.R.W.D.,
3.35%, 7/7/99, Ser.
A1+* 9,345 96.................... 9,345,000
Willacoochee Dev. Auth.,
Poll. Ctrl. Rev.,
Langboard, Inc. Proj.,
F.R.W.D., A.M.T.,
3.75%, 7/1/99, Ser.
Aa2 17,000 97.................... 17,000,000
--------------
164,346,000
--------------
HAWAII--1.1%
Hawaii St.,
Gen. Oblig., F.R.W.D.S.,
3.86%, 7/1/99, Ser.
VMIG1 11,810 98B................... 11,810,000
Gen. Oblig., F.R.W.D.S.,
8.125%, 2/1/00, Ser.
Aaa 2,305 91.................... 2,371,888
Honolulu City & Cnty.,
Gen. Oblig., Wtr.
Bonds, Prerefunded,
7.25%, 6/1/00, Ser.
NR 1,745 90.................... 1,822,689
--------------
16,004,577
--------------
ILLINOIS--18.1%
Chicago Sales Tax Rev.,
Secs. Trust Rcpts.,
F.R.D.D.S.,
3.45%, 7/1/99, Ser. SSP
VMIG1 5,565 33.................... 5,565,000
Chicago Stockyards Ind.
Proj., F.R.W.D.,
3.50%, 7/7/99, Ser.
A1+* 13,300 96A................... 13,300,000
</TABLE>

B-34
<PAGE>
COMMAND TAX-FREE FUND PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (a) (NOTE 1)
<S> <C> <C> <C>
ILLINOIS--(cont'd.)
Tender Notes,
S.E.M.O.T.,
2.85%, 10/28/99, Ser.
VMIG1 $ 13,000 98.................... $ 12,971,950
Illinois Dev. Fin. Auth.
Rev., Adventist Hlth.
Sys., F.R.W.D.,
3.75%, 7/1/99, Ser.
VMIG1 29,365 97A................... 29,365,000
American College of
Surgeons, F.R.W.D.,
3.70%, 7/2/99, Ser.
A1+* 15,200 96.................... 15,200,000
Lyric Opera Chicago
Proj., F.R.W.D.,
3.60%, 7/7/99, Ser.
VMIG1 13,700 94.................... 13,700,000
Illinois Ed. Fac. Auth.,
Art Institute Of
Chicago, F.R.W.D.,
3.70%, 7/7/99, Ser.
VMIG1 8,000 96.................... 8,000,000
Illinois Hlth. Fac.
Auth., Children's Mem.
Hosp., T.E.C.P.,
3.50%, 7/26/99, Ser.
VMIG1 14,000 90A................... 14,000,000
Evanston Hosp. Corp.
Prog., A.N.N.M.T.,
3.10%, 11/1/99, Ser.
VMIG1 25,000 92.................... 25,000,000
3.25%, 2/29/00, Ser.
VMIG1 20,000 95.................... 20,000,000
Servant Cor Falcon II, F.R.W.D.,
3.75%, 7/7/99, Ser.
A1+* 14,000 96A................... 14,000,000
Illinois Hlth. Fac. Dev.
Auth., Riverside Hlth.
Sys., F.R.W.D.,
3.70%, 7/1/99, Ser.
VMIG1 12,900 94C................... 12,900,000
SSM Health Care,
T.E.C.P.,
3.25%, 8/18/99, Ser.
A1+* 18,540 98B................... 18,540,000
Illinois Hsg. Dev.
Auth., Homeowner's
Mtge. Rev.,
A.N.N.M.T., A.M.T.,
3.45%, 10/7/99, Ser.
VMIG1 6,000 98F2.................. 6,000,000
Illinois St. Sec. Trust
Certs., Class A,
Q.T.R.O.T.S.,
3.28%, 9/2/99, Ser.
A-1* 7,500 98-25................. 7,500,000
Illinois St., Gen.
Oblig., Q.T.R.O.T.S.,
5.125%, 12/1/99, Ser.
Aaa 10,000 95.................... 10,080,486
6.70%, 6/1/00, Ser.
AAA* 2,140 90.................... 2,247,514
Wheeling Multifam. Hsg.
Rev., Woodland Creek
II, F.R.W.D.,
3.70%, 7/2/99, Ser.
SP1+* 17,655 90.................... 17,655,000
Woodridge & Dupage
Cntys., Multifam. Hsg.
Rev., Hinsdale Lake
Terr. Apts., F.R.W.D.,
3.85%, 7/2/99, Ser.
A1+* 20,760 90.................... 20,760,000
--------------
266,784,950
--------------
INDIANA--2.7%
Indiana Ed. Fac. Auth.,
Wesleyan Univ.,
F.R.W.D.,
3.55%, 7/1/99, Ser.
NR 7,900 93.................... 7,900,000
Indiana Sec. Market for
Ed. Loans, B.A.N.,
3.60%, 6/1/00, Ser.
AAA** 2,000 98F................... 2,002,650
Indiana St. Office
Building Comm.,
Hoosier Notes,
T.E.C.P.,
3.20%, 9/27/99, Ser.
P-1 11,600 A..................... 11,600,000
Lawrence Met. Sch.
Dist., T.A.N.,
3.50%, 12/31/99, Ser.
NR 9,000 99.................... 9,017,545
Tippecanoe Cnty.,
Caterpillar, Inc.
Proj., F.R.W.D.,
A.M.T.,
3.80%, 7/2/99, Ser.
P-1 8,750 91.................... 8,750,000
--------------
39,270,195
--------------
</TABLE>

B-35
<PAGE>
COMMAND TAX-FREE FUND PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (a) (NOTE 1)
<S> <C> <C> <C>
IOWA--0.6%
Sergeant Bluff Ind.
Auth., Sioux City
Brick & Tile Proj.,
F.R.W.D., A.M.T.,
3.77%, 7/1/99, Ser.
NR $ 8,480 96C................... $ 8,480,000
--------------
KENTUCKY--6.6%
Henderson Cnty. Ind.
Dev. Rev., Eastern
Alloys LLC Proj.,
F.R.W.D., A.M.T.,
3.75%, 7/1/99, Ser.
A1+* 5,500 99.................... 5,500,000
Kentucky Hsg. Corp.
Rev., A.M.T.,
S.E.M.O.T.,
3.20%, 12/31/99, Ser.
MIG1 5,500 99C................... 5,500,000
Kentucky St. Tpk. Auth. Econ.
Dev., Revitalization Proj.,
Prerefunded,
7.50%, 5/15/00, Ser.
Aaa 2,500 90.................... 2,625,903
Road Rev., Prerefunded,
7.25%, 5/15/00, Ser.
Aaa 2,700 90.................... 2,832,410
Leitchfield Ind.
Building Rev., Styline
Inds., Inc. Proj.,
F.R.W.D., A.M.T.,
3.75%, 7/1/99, Ser.
A1+* 5,000 99.................... 5,000,000
Ohio Cnty. Poll. Ctrl.
Rev., Big Rivers Elec.
Corp. Proj., F.R.W.D.,
3.50%, 7/7/99, Ser.
VMIG1 28,300 83.................... 28,300,000
3.50%, 7/7/99, Ser.
VMIG1 47,100 85.................... 47,100,000
--------------
96,858,313
--------------
MARYLAND--1.1%
Anne Arundel Cnty.,
Baltimore Gas &
Electric, A.N.N.M.T.,
3.52%, 7/1/00, Ser.
VMIG1 6,000 84.................... 6,000,000
Montgomery Cnty., First
Chicago Tender Opt.
Cert., F.R.W.D.S.,
3.85%, 7/7/99, Ser.
VMIG1 10,935 98C................... 10,935,000
--------------
16,935,000
--------------
MASSACHUSETTS--1.6%
Brockton, Gen. Oblig.,
Prerefunded,
6.00%, 5/1/00, Ser.
Aaa 1,000 99.................... 1,022,762
Mass. St. Hsg. Fin.
Agcy., Single Fam.
Hsg. Notes, A.M.T.,
MIG1 2,000 3.60%, 6/1/00, Ser. A... 2,000,000
Mass. St. Hlth. & Ed.
Fac., Univ. Hospital,
Prerefunded,
NR 6,000 7.25%, 7/1/00, Ser. C... 6,347,142
Mass. St. Wtr. Res.
Auth., Prerefunded,
7.00%, 4/1/00, Ser.
Aaa 3,560 90A................... 3,729,857
7.625%, 4/1/00, Ser.
Aaa 1,145 90A................... 1,204,868
Mass. St., Prerefunded,
7.25%, 3/1/00, Ser.
Aaa 2,235 90A................... 2,339,973
First Chicago Tender
Opt. Cert.,
F.R.W.D.S.,
3.80%, 7/7/99, Ser.
VMIG1 7,020 98B................... 7,020,000
--------------
23,664,602
--------------
MICHIGAN--0.4%
Willow Run Comm. Sch.,
Prerefunded,
6.375%, 5/1/00, Ser.
NR 5,200 91.................... 5,435,629
--------------
MINNESOTA--1.3%
Bloomington Port Auth.,
Tax Rev., F.R.W.D.,
3.70%, 7/2/99, Ser.
VMIG1 19,000 95A................... 19,000,000
--------------
MISSISSIPPI--1.1%
Harrison Cnty. Poll.
Ctrl. Rev.,
Mississippi Pwr. Co.
Proj., F.R.W.D.,
3.75%, 7/7/99, Ser.
A-1* 16,750 92.................... 16,750,000
--------------
</TABLE>

B-36
<PAGE>
COMMAND TAX-FREE FUND PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (a) (NOTE 1)
<S> <C> <C> <C>
MISSOURI--0.9%
St. Charles Cnty. Ind.
Dev. Auth., Cedar
Ridge Apts., F.R.W.D.,
3.57%, 7/7/99, Ser.
A1+* $ 13,975 88A................... $ 13,975,000
--------------
NEVADA--1.1%
Clark Cnty. Arpt.
Improv. Rev.,
F.R.W.D.,
3.30%, 7/7/99, Ser.
VMIG1 16,100 93A................... 16,100,000
--------------
NEW JERSEY--0.1%
New Jersey Econ. Dev.
Auth. Rev.,
865 Centennial Ave.
Proj., F.R.W.D.,
A.M.T.,
3.77%, 7/1/99, Ser.
A1+* 1,850 85.................... 1,850,000
--------------
NEW MEXICO--0.2%
New Mexico St. Highway
Comm., Sr. Sub. Lien
Tax Rev., B.A.N.,
4.25%, 6/15/00, Ser.
Aa2 2,715 98A................... 2,740,219
--------------
NEW YORK--1.3%
Met. Trans. Auth., Comm.
Fac., T.E.C.P.,
3.25%, 10/7/99, Ser.
P-1 15,000 1313.................. 15,000,000
New York City Mun. Wtr.
Fin. Auth., Mun. Secs.
Trust Rcpts.,
F.R.D.D.S.,
3.45%, 7/1/99, Ser.
VMIG1D 3,700 SSP34................. 3,700,000
--------------
18,700,000
--------------
NORTH CAROLINA--1.3%
North Carolina Ed. Fac.
Fin. Agcy., Warren
Wilson College,
F.R.W.D.,
3.65%, 7/1/99, Ser.
Aa1 12,200 98.................... 12,200,000
Rockingham Cnty. Ind.
Fac., Poll. Ctrl.
Rev., Phillip Morris
Proj., F.R.W.D.,
3.50%, 7/7/99, Ser.
P-1 7,200 92.................... 7,200,000
--------------
19,400,000
--------------
OHIO--3.6%
Clinton Cnty. Hosp.
Rev., Ohio Hosp. Cap.
Fin., F.R.W.D.,
3.50%, 7/7/99, Ser.
A1+* 28,000 98.................... 28,000,000
Medina Cnty. Hsg. Rev.,
Oaks At Medina Proj.,
F.R.W.D.,
3.62%, 7/1/99, Ser.
NR 9,650 97.................... 9,650,000
Ohio Hsg. Fin. Agcy.,
Multifam. Hsg. Rev.,
F.R.W.D.,
A1+* 5,945 3.80%, 7/2/99, Ser. B... 5,945,000
Perrysburg Exe. Village
Sch., B.A.N.,
3.82%, 7/15/99, Ser.
NR 10,000 99.................... 10,003,144
--------------
53,598,144
--------------
OKLAHOMA--0.3%
Muskogee Ind. Trust,
Muskogee Mall Proj.,
F.R.W.D.,
3.70%, 7/7/99, Ser.
VMIG1 5,100 85.................... 5,100,000
--------------
OREGON--0.9%
Oregon St. Hsg. & Comm.
Svcs. Dep., Single
Fam. Mtge., A.M.T.,
3.15%, 4/13/00, Ser.
MIG1 5,000 99C................... 5,000,000
3.20%, 4/13/00, Ser.
MIG1 1,500 99D................... 1,500,000
3.45%, 6/29/00, Ser.
MIG1 6,400 99G................... 6,400,000
--------------
12,900,000
--------------
</TABLE>

B-37
<PAGE>
COMMAND TAX-FREE FUND PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (a) (NOTE 1)
<S> <C> <C> <C>
PENNSYLVANIA--5.7%
Dauphin Cnty. Gen. Auth. Rev.,
All Hlth. Pooled Fin.
Prog., F.R.W.D.,
3.50%, 7/7/99, Ser.
A1+* $ 30,000 97A................... $ 30,000,000
A1+* 10,000 3.50%, 7/7/99, Ser. B... 10,000,000
Ed. & Hlth. Prog.,
F.R.W.D.,
3.70%, 7/1/99, Ser.
VMIG1 23,800 97.................... 23,800,000
Lehigh Cnty. Gen.
Purpose Auth., Wiley
House, Prerefunded,
8.75%, 11/1/99, Ser.
Aaa 11,060 89.................... 11,476,222
Penn. Intergov Coop. Auth.,
Philadelphia Funding Prog.,
B.A.N.,
5.75%, 6/15/00, Ser.
Aaa 3,000 96.................... 3,069,750
Temple Univ. Funding Notes,
T.A.N.,
3.15%, 5/12/00, Ser.
MIG1 6,000 99.................... 6,000,000
--------------
84,345,972
--------------
RHODE ISLAND--0.7%
Rhode Island Student Ln.
Auth., Student Ln.
Prog. Rev. Proj.,
F.R.W.D., A.M.T.,
3.45%, 7/7/99, Ser.
A1+* 10,000 96-2.................. 10,000,000
--------------
SOUTH CAROLINA--2.1%
Richland Cnty. Sch.
Dist. 1, FGIC-TCRS,
B.A.N.,
6.625%, 3/1/00, Ser.
MIG1 2,310 96.................... 2,361,993
South Carolina Ed. Fac.
Auth., Presbyterian
College, F.R.W.D.,
3.65%, 7/1/99, Ser.
CPS1 11,630 98.................... 11,630,000
South Carolina Jobs
Econ. Dev. Auth.,
Wellman, Inc. Proj.,
F.R.D.D., A.M.T.,
3.65%, 7/1/99, Ser.
CPS1 700 91.................... 700,000
South Carolina Pub.
Svcs. Auth., T.E.C.P.,
P-1 16,400 3.25%, 9/9/99........... 16,400,000
--------------
31,091,993
--------------
SOUTH DAKOTA--4.0%
South Dakota Hsg. Dev.
Auth. Homeownership
Mtge.,
T.A.N.,
3.40%, 7/7/00, Ser.
MIG1 5,315 99E................... 5,315,000
A.M.T.,
3.75%, 8/5/99, Ser.
MIG1 9,000 98C................... 9,000,000
3.20%, 4/7/00, Ser.
NR 6,000 99C................... 6,000,000
3.45%, 7/7/00, Ser.
MIG1 22,000 99F................... 22,000,000
A.M.T., A.N.N.M.T.,
3.20%, 12/2/99, Ser.
MIG1 16,250 98.................... 16,250,000
--------------
58,565,000
--------------
TENNESSEE--6.5%
Dickson Cnty.,
Renaissance Learning
Cent. Rev., F.R.W.D.,
3.75%, 7/7/99, Ser.
Aa3 12,000 97.................... 12,000,000
F.R. Morgan Keegan Mun.
Prods., Trust Rcpts.,
A.M.T., F.R.W.D.S.,
3.92%, 7/1/99, Ser.
A1+* 26,000 99C................... 26,000,000
Memphis Center City Rev.
Fin. Corp., Arbors of
Harbor Town, F.R.W.D.,
3.40%, 7/7/99, Ser.
A1+* 12,150 90.................... 12,150,000
Nashville & Davidson
Cntys.
Country Music Hall Of
Fame, F.R.W.D.,
3.65%, 7/1/99, Ser.
A1+* 5,000 99.................... 5,000,000
Eagle Tax Exempt Trust,
A.N.N.O.T.S.,
3.25%, 8/12/99, Ser.
A1+*D 16,965 96C................... 16,965,000
</TABLE>

B-38
<PAGE>
COMMAND TAX-FREE FUND PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (a) (NOTE 1)
<S> <C> <C> <C>
TENNESSEE--(cont'd.)
Shelby Cnty., T.E.C.P.,
4.40%, 7/9/99, Ser.
P-1 $ 4,000 98A................... $ 4,000,000
Sumner Cnty. Hlth. Ed. &
Hsg. Bd. Rev., Hosp.
Alliance Pooled,
F.R.W.D.,
3.77%, 7/1/99, Ser.
A1+* 20,000 99A................... 20,000,000
--------------
96,115,000
--------------
TEXAS--9.6%
Bexar Cnty. Hsg. Fin.
Corp., Perrin Park
Apt., A.M.T.,
F.R.W.D.,
3.77%, 7/1/99, Ser.
VMIG1 10,375 96.................... 10,375,000
Collin Cnty. Hsg. Fin.
Corp. Multifam. Hsg.
Rev., Huntington Apts.
Proj., F.R.W.D.,
3.77%, 7/1/99, Ser.
A1* 6,155 96.................... 6,155,000
Guadalupe Blanco River
Auth., BOC Group,
Inc., F.R.W.D.,
3.65%, 7/1/99, Ser.
CPS1 13,800 93.................... 13,800,000
Houston Wtr. & Swr.
Sys., F.R.W.D.S.,
3.62%, 7/14/99, Ser.
A1+* 5,600 SG73.................. 5,600,000
Houston, Gen. Oblig.,
T.E.C.P.,
3.30%, 7/21/99, Ser.
P-1 7,000 B..................... 7,000,000
3.10%, 8/12/99, Ser.
P-1 21,100 B..................... 21,100,000
3.25%, 8/19/99, Ser.
P-1 11,000 A..................... 11,000,000
San Antonio Electric &
Gas Rev., Mun. Secs.
Trust Rcpts.
F.R.W.D.S.,
3.62%, 7/14/99, Ser.
A1+* 10,220 SGA48................. 10,220,000
San Antonio Wtr. Sys.,
T.E.C.P.,
3.15%, 8/13/99, Ser.
P-1 17,500 95.................... 17,500,000
3.25%, 8/13/99, Ser.
P-1 7,000 95.................... 7,000,000
Tarrant Cnty. Hlth. Fac. Dev.,
Var. Adventist/Sunbelt, F.R.W.D.,
3.70%, 7/1/99, Ser.
VMIG1 10,000 96A................... 10,000,000
Texas St. Nat. Res.
Lab., Prerefunded,
7.125%, 4/1/00, Ser.
Aaa 16,580 90.................... 17,386,170
Texas St. Univ. Sys.
Rev., Ref. Fin. Sys.,
B.A.N.,
4.50%, 3/15/00, Ser.
Aaa 4,245 98B................... 4,288,837
--------------
141,425,007
--------------
UTAH--1.5%
Intermountain Pwr.
Agcy., T.E.C.P.,
3.25%, 10/13/99, Ser.
VMIG1 6,300 85F................... 6,300,000
Utah Cnty., T.R.A.N.,
3.85%, 12/29/99, Ser.
NR 3,000 99.................... 3,008,756
Utah St., Gen. Oblig.,
T.E.C.P.,
P-1 13,000 3.15%, 8/16/99.......... 13,000,000
--------------
22,308,756
--------------
VIRGINIA--1.5%
Fairfax Cnty. Econ. Dev.
Auth., LEHM-Res. Rec.,
A.M.T., Q.T.R.O.T.S.,
3.30%, 8/2/99, Ser.
VMIG1D 15,000 99A15................. 15,000,000
Hopewell Ind. Dev. Auth.
Rev., Hudson Pwr.
Proj., A.M.T.,
F.R.D.D.,
3.65%, 7/1/99, Ser.
P-1 6,700 90A................... 6,700,000
--------------
21,700,000
--------------
</TABLE>

B-39
<PAGE>
COMMAND TAX-FREE FUND PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (a) (NOTE 1)
<S> <C> <C> <C>
WASHINGTON--2.1%
Port Seattle Washington,
B.A.N.,
6.00%, 2/1/00, Ser.
Aaa $ 1,000 95A................... $ 1,015,440
Thurston Cnty. Sc.
Dist., B.A.N.,
4.00%, 12/1/99, Ser.
Aaa 1,060 97.................... 1,063,030
Washington Hsg. Fin.
Comm., Anchor Village
Apts. Proj., A.M.T.,
F.R.W.D.,
3.80%, 7/1/99, Ser.
A1+* 10,750 97.................... 10,750,000
Washington St. Hlth.
Care
Fac., Sisters of St.
Joseph's Peace,
F.R.W.D.,
3.75%, 7/1/99, Ser.
VMIG1 18,300 93.................... 18,300,000
--------------
31,128,470
--------------
WEST VIRGINIA--1.0%
Grant Cnty. Solid Waste
Rev., Vepco, T.E.C.P.,
A.M.T.,
3.30%, 8/2/99, Ser.
VMIG1 15,000 96.................... 15,000,000
--------------
WISCONSIN--0.8%
Middleton Crossplains
Area, T.R.A.N.,
NR 5,300 3.73%, 8/25/99.......... 5,300,377
Milwaukee Redev. Auth.,
Historic Third Ward
Parking, F.R.W.D.,
3.60%, 7/1/99, Ser.
NR 4,290 99.................... 4,290,000
Milwaukee, Gen. Oblig.,
B.A.N.,
6.60%, 6/15/00, Ser.
Aa1 2,960 BY.................... 3,052,212
--------------
12,642,589
--------------
WYOMING--0.6%
Sweetwater Cnty. Poll.
Ctrl. Rev., Pacificorp
Proj., T.E.C.P.,
3.45%, 7/16/99, Ser.
VMIG1 9,335 92A................... 9,335,000
--------------
Total Investments--105.3%
(cost
$1,555,244,942**)..... 1,555,244,942
Liabilities in excess of
other
assets--(5.3%)........ (78,513,425)
--------------
Net Assets--100%........ $1,476,731,517
--------------
--------------
</TABLE>
- ---------------
(a) The following abbreviations are used in portfolio descriptions:
A.M.T.--Alternative Minimum Tax.
A.N.N.M.T.--Annual Mandatory Tender.
A.N.N.O.T.S.--Annual Option Tender--Synthetic.
B.A.N.--Bond Anticipation Note.
F.R.D.D.--Floating Rate (Daily) Demand Note(b).
F.R.D.D.S.--Floating Rate (Daily) Demand--Synthetic 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.O.T.S.--Quarterly Optional Tender--Synthetic.
S.E.M.O.T.--Semi-Annual Optional Tender.
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.
* Standard & Poor's rating.
** The cost for federal income tax purposes is substantially the same as for
financial reporting purposes.
+ Indicates an illiquid security restricted as to resale. The aggregate cost of
such securities is $46,265,000. The aggregate value of $46,265,000 is
approximately 3.1% of net assets.
NR--Not Rated by Moody's or Standard & Poor's.
B-40

<PAGE>
COMMAND TAX-FREE FUND
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1999
--------------
<S> <C>
Investments, at amortized cost which approximates market value.......................... $1,555,244,942
Cash.................................................................................... 54,224
Receivable for Fund shares sold......................................................... 12,910,898
Interest receivable..................................................................... 8,077,133
Prepaid expenses........................................................................ 14,101
--------------
Total assets.......................................................................... 1,576,301,298
--------------
LIABILITIES
Payable for investments purchased....................................................... 76,493,050
Payable for Fund shares repurchased..................................................... 22,087,133
Management fee payable.................................................................. 542,621
Accrued expenses........................................................................ 363,806
Distribution fee payable................................................................ 83,171
--------------
Total liabilities..................................................................... 99,569,781
--------------
NET ASSETS.............................................................................. $1,476,731,517
--------------
--------------
Net assets were comprised of:
Shares of beneficial interest, at par................................................. $ 14,767,315
Paid-in capital in excess of par...................................................... 1,461,964,202
--------------
Net assets, June 30, 1999............................................................... $1,476,731,517
--------------
--------------
Net asset value, offering price and redemption price per share ($1,476,731,517
divided by 1,476,731,517 shares of beneficial interest ($.01 par value) issued and
outstanding).......................................................................... $1.00
--------------
--------------
</TABLE>

B-41
<PAGE>
COMMAND TAX-FREE FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
NET INVESTMENT INCOME 1999
--------------
<S> <C>
Income
Interest and discount earned.......... $ 51,160,693
--------------
Expenses
Management fee........................ 6,685,127
Distribution fee...................... 1,936,709
Transfer agent's fees................. 188,000
Reports to shareholders............... 90,000
Custodian's fees and expenses......... 70,000
Registration fees..................... 50,000
Trustees' fees........................ 27,000
Audit fee............................. 27,000
Insurance expense..................... 17,000
Legal fees and expenses............... 10,000
Miscellaneous......................... 3,677
--------------
Total expenses...................... 9,104,513
Less: custodian fee credit (Note 1)... (71,762)
--------------
Net expenses........................ 9,032,751
--------------
Net investment income................... 42,127,942
--------------
REALIZED GAIN ON INVESTMENTS
Net realized gain on investment
transactions.......................... 16,415
--------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............... $ 42,144,357
--------------
--------------
</TABLE>

COMMAND TAX-FREE FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED JUNE 30,
---------------------------------
IN NET ASSETS 1999 1998
--------------- ---------------
<S> <C> <C>
Operations
Net investment
income............... $ 42,127,942 $ 39,793,567
Net realized gain on
investment
transactions....... 16,415 6,522
--------------- ---------------
Net increase in net
assets resulting
from operations.... 42,144,357 39,800,089
--------------- ---------------
Dividends and
distributions to
shareholders (Note
1)..................... (42,144,357) (39,800,089)
--------------- ---------------
Fund share transactions
(at $1 per share)
Net proceeds from
shares
subscribed......... 5,590,973,138 5,269,527,972
Net asset value of
shares issued in
reinvestment of
dividends and
distributions...... 42,144,357 39,800,089
Cost of shares
reacquired........... (5,489,371,232) (5,105,855,856)
--------------- ---------------
Net increase in net
assets from Fund
share
transactions....... 143,746,263 203,472,205
--------------- ---------------
Total increase......... 143,746,263 203,472,205
NET ASSETS
Beginning of year...... 1,332,985,254 1,129,513,049
--------------- ---------------
End of year............ $ 1,476,731,517 $ 1,332,985,254
--------------- ---------------
--------------- ---------------
</TABLE>

B-42
<PAGE>
COMMAND TAX-FREE FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <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
Net investment income and net realized
gains................................ 0.027 0.031 0.030 0.031 0.032
Dividends and distributions to
shareholders......................... (0.027) (0.031) (0.030) (0.031) (0.032)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period......... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN(a)........................ 2.77% 3.16% 3.05% 3.12% 3.29%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........ $1,476,732 $1,332,985 $1,129,513 $1,156,935 $1,055,568
Average net assets (000)............... $1,549,367 $1,279,188 $1,181,084 $1,134,257 $ 926,888
Ratios to average net assets:
Expenses, including distribution
fees................................. .59% .60% .64% .66% .66%
Expenses, excluding distribution
fees................................. .46% .47% .51% .54% .54%
Net investment income................ 2.72% 3.11% 3.00% 3.06% 3.05%
</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 30.

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, 1999, 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, 1999 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, 1999
B-43

<PAGE>

COMMAND GOVERNMENT FUND PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
U.S> Government Agencies--83.3%
Federal Farm Credit Bank--2.3%
$ 2,000 6.49%, 7/19/99............ $ 2,001,407
14,000 4.875%, 9/1/99............ 13,994,039
---------------
15,995,446
---------------
FEDERAL HOME LOAN BANK--51.4%
33,500 4.91%, 7/1/99(a).......... 33,491,752
50,500 5.339%, 7/7/99(a)......... 50,497,792
11,000 5.349%, 7/7/99(a)......... 10,996,562
11,000 5.419%, 7/7/99(a)......... 11,001,482
92,000 4.775%, 7/8/99(a)......... 91,991,222
11,965 5.54%, 7/13/99............ 11,964,771
2,000 5.536%, 7/15/99........... 2,000,396
500 5.57%, 8/3/99............. 500,199
6,000 5.00%, 10/27/99........... 6,000,000
14,000 4.80%, 1/11/00(a)......... 13,994,866
22,000 4.90%, 1/14/00............ 22,000,000
11,000 4.90%, 2/11/00............ 10,993,463
6,000 4.95%, 2/17/00............ 5,997,968
8,000 5.00%, 2/24/00............ 7,999,007
8,000 5.00%, 2/25/00............ 8,000,000
16,000 5.035%, 2/25/00........... 15,992,352
8,000 5.035%, 3/2/00............ 8,000,000
6,000 5.605%, 3/23/00........... 6,022,048
13,000 5.01%, 4/28/00............ 12,988,211
2,500 5.075%, 4/28/00........... 2,500,087
13,000 5.02%, 5/12/00............ 12,985,090
10,500 5.15%, 5/19/00............ 10,492,031
5,000 5.35%, 6/8/00............. 4,996,624
5,500 5.66%, 7/6/00............. 5,507,453
---------------
366,913,376
---------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION--6.4%
2,500 5.00%, 7/6/99............. 2,498,264
27,000 4.82%, 8/18/99(a)......... 26,997,552
15,000 4.85%, 8/26/99............ 14,886,833
1,500 6.395%, 5/16/00........... 1,516,836
---------------
45,899,485
---------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION--15.1%
24,000 5.299%, 7/7/99(a)......... 23,997,839
7,410 6.03%, 7/7/99............. 7,411,209
17,000 6.64%, 7/12/99............ 17,008,581
10,154 4.74%, 8/13/99............ 10,096,511
4,000 5.47%, 8/16/99............ 4,003,095
2,000 6.00%, 8/19/99............ 2,002,041
35,000 4.975%, 9/17/99(a)........ 34,995,472
8,500 5.33%, 6/9/00............. 8,492,772
---------------
108,007,520
---------------
STUDENT LOAN MARKETING
ASSOCIATION--8.1%
22,500 4.92%, 7/1/99(a).......... 22,495,398
11,500 5.639%, 7/7/99(a)......... 11,497,565
11,025 5.53%, 7/16/99............ 11,024,696
13,000 4.50%, 8/2/99............. 12,993,642
---------------
58,011,301
---------------
Total U.S. Government
Agencies
(amortized cost
$594,827,128)........... 594,827,128
---------------
</TABLE>
B-44

<PAGE>
COMMAND GOVERNMENT FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
REPURCHASE AGREEMENTS(b)--16.0%
$ 30,585 Goldman, Sachs & Co.,
5.15%, dated 6/29/99,
due 7/1/99 in the amount
of $30,593,751 (cost
$30,585,000), value of
collateral including
accrued
interest--$31,196,701... $ 30,585,000

10,572 Merrill Lynch, Pierce,
Fenner & Smith, Inc.,
5.10%, dated 6/30/99,
due 7/2/99 in the amount
of $10,574,995 (cost
$10,572,000), value of
collateral including
accrued
interest--$10,784,029... 10,572,000

39,134 Morgan Stanley Dean
Witter, 4.80%, dated
6/17/99, due 7/1/99 in
the amount of
$39,207,050 (cost
$39,134,000), value of
collateral including
accrued
interest--$40,524,523... 39,134,000

34,000 Morgan Stanley Dean
Witter, 5.15%, dated
6/28/99, due 7/6/99 in
the amount of
$34,038,911 (cost
$34,000,000), value of
collateral including
accrued
interest--$35,208,100... 34,000,000
---------------
Total Repurchase
Agreements
(amortized cost
$114,291,000)........... 114,291,000
---------------
TOTAL INVESTMENTS--99.3%
(amortized cost
$709,118,128(c))........ 709,118,128
Other assets in excess of
liabilities--0.7%....... 5,271,409
---------------
NET ASSETS--100%.......... $ 714,389,537
---------------
---------------
</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.
(c) The cost for federal income tax purposes is substantially the same as for
financial reporting purposes.
B-45

<PAGE>
COMMAND GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1999
-------------
<S> <C>
Investments, at amortized cost which approximates market value............................ $ 594,827,128
Repurchase agreements..................................................................... 114,291,000
Receivable for Fund shares sold........................................................... 26,554,598
Interest receivable....................................................................... 5,906,587
Prepaid expenses.......................................................................... 6,100
-------------
Total assets............................................................................ 741,585,413
-------------
LIABILITIES
Payable for Fund shares repurchased....................................................... 26,699,826
Management fee payable.................................................................... 245,941
Accrued expenses and other liabilities.................................................... 209,239
Distribution fee payable.................................................................. 40,870
-------------
Total liabilities....................................................................... 27,195,876
-------------
NET ASSETS................................................................................ $ 714,389,537
-------------
-------------
Net assets were comprised of:
Shares of beneficial interest, at par................................................... $ 7,143,895
Paid-in capital in excess of par........................................................ 707,245,642
-------------
Net assets, June 30, 1999................................................................. $ 714,389,537
-------------
-------------
Net asset value, offering price and redemption price per share ($714,389,537 divided by
714,389,537 shares of beneficial interest ($.01 par value) issued and outstanding)...... $1.00
-------------
-------------
</TABLE>

B-46

<PAGE>
COMMAND GOVERNMENT FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
NET INVESTMENT INCOME 1999
--------------
<S> <C>
Income
Interest and discount earned......... $ 38,384,200
--------------
Expenses
Management fee....................... 2,959,117
Distribution fee..................... 924,724
Transfer agent's fees and expenses... 104,000
Custodian's fees and expenses........ 75,000
Reports to shareholders.............. 31,000
Audit fee............................ 27,000
Trustees' fees....................... 21,000
Insurance expense.................... 9,000
Legal fees and expenses.............. 8,000
Miscellaneous........................ 941
--------------
Total expenses..................... 4,159,782
--------------
Net investment income.................. 34,224,418
--------------
REALIZED GAIN ON INVESTMENTS
Net realized gain on investment
transactions......................... 22,602
--------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.............. $ 34,247,020
--------------
--------------
</TABLE>

COMMAND GOVERNMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED JUNE 30,
---------------------------------
IN NET ASSETS 1999 1998
--------------- ---------------
<S> <C> <C>
Operations
Net investment
income............... $ 34,224,418 $ 28,533,721
Net realized gain on
investment
transactions....... 22,602 50,018
--------------- ---------------
Net increase in net
assets resulting
from operations.... 34,247,020 28,583,739
--------------- ---------------
Dividends and
distributions to
shareholders (Note
1)..................... (34,247,020) (28,583,739)
--------------- ---------------
Fund share transactions
(at $1 per share)
Net proceeds from
shares
subscribed......... 3,282,787,339 2,601,216,630
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions...... 34,247,020 28,583,739
Cost of shares
reacquired........... (3,211,372,225) (2,549,542,451)
--------------- ---------------
Net increase in net
assets from Fund
share
transactions....... 105,662,134 80,257,918
--------------- ---------------
Total increase......... 105,662,134 80,257,918
NET ASSETS
Beginning of year...... 608,727,403 528,469,485
--------------- ---------------
End of year............ $ 714,389,537 $ 608,727,403
--------------- ---------------
--------------- ---------------
</TABLE>

B-47
<PAGE>
COMMAND GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<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................................ 0.046 0.051 0.049 0.050 0.048
Dividends and distributions to
shareholders......................... (0.046) (0.051) (0.049) (0.050) (0.048)
-------- -------- -------- -------- --------
Net asset value, end of year........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL RETURN(a)........................ 4.74% 5.20% 4.97% 5.12% 4.89%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000).......... $714,390 $608,727 $528,469 $487,485 $404,295
Average net assets (000)............... $739,779 $562,693 $534,580 $477,168 $350,458
Ratios to average net assets:
Expenses, including distribution
fees................................. .56% .56% .63% .68% .65%
Expenses, excluding distribution
fees................................. .44% .44% .51% .56% .53%
Net investment income................ 4.63% 5.08% 4.84% 4.97% 4.81%

</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 30.

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, 1999, 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, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
August 18, 1999
B-48

<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 of
POLICIES significant generally accepted
accounting policies 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.

The Fund may hold up to 10% of its net assets in illiquid securities, including
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, 1999 include registration rights under which the Fund may demand
registration by the issuer.

REPURCHASE AGREEMENTS: 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. 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,
less the estimated expenses of the Fund applicable to the dividend period.

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. The cost of portfolio
securities for federal income tax purposes is substantially the same as for
financial reporting purposes.

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.

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 Pru-
dential Investments Fund Management LLC (PIFM). Pursuant

B-49

<PAGE>
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 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 has a distribution agreement with Prudential Investment Management
Services LLC ("PIMS") which acts as the distributor of the shares of each Fund.
Each Fund compensates PIMS 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.

PIFM, 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, 1999 the Funds incurred fees for the services of PMFS of
approximately:

<TABLE>
<S> <C>
Command Money.................................. $3,698,400
Command Government............................. $ 103,700
Command Tax-Free............................... $ 186,300
</TABLE>

As of June 30, 1999, the following amounts were due to PMFS from the Funds:
<TABLE>
<S> <C>
Command Money................................... $327,176
Command Government.............................. $ 8,510
Command Tax-Free................................ $ 15,250
</TABLE>

B-50

<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, 1999) 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, 1999,
dividends paid from net investment income totaling $.027 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 42% 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.
B-51

<PAGE>
APPENDIX I--GENERAL INVESTMENT INFORMATION

The following terms are used in mutual fund investing.

ASSET ALLOCATION

Asset allocation is a technique for reducing risk, providing balance. Asset
allocation among different types of securities within an overall investment
portfolio helps to reduce risk and to potentially provide stable returns, while
enabling investors to work toward their financial goal(s). Asset allocation is
also a strategy to gain exposure to better performing asset classes while
maintaining investment in other asset classes.

DIVERSIFICATION

Diversification is a time-honored technique for reducing risk, providing
"balance" to an overall portfolio and potentially achieving more stable returns.
Owning a portfolio of securities mitigates the individual risks (and returns) of
any one security. Additionally, diversification among types of securities
reduces the risks (and general returns) of any one type of security.

DURATION

Debt securities have varying levels of sensitivity to interest rates. As
interest rates fluctuate, the value of a bond (or a bond portfolio) will
increase or decrease. Longer term bonds are generally more sensitive to changes
in interest rates. When interest rates fall, bond prices generally rise.
Conversely, when interest rates rise, bond prices generally fall.

Duration is an approximation of the price sensitivity of a bond (or a bond
portfolio) to interest rate changes. It measures the weighted average maturity
of a bond's (or a bond portfolio's) cash flows, i.e., principal and interest
payments. Duration is expressed as a measure of time in years the longer the
duration of a bond (or a bond portfolio), the greater the impact of interest
rate changes on the bond's (or the bond portfolio's) price. Duration differs
from effective maturity in that duration takes into account call provisions,
coupon rates and other factors. Duration measures interest rate risk only and
not other risks, such as credit risk and, in the case of non-U.S. dollar
denominated securities, currency risk. Effective maturity measures the final
maturity dates of a bond (or a bond portfolio).

MARKET TIMING

Market timing buying securities when prices are low and selling them when
prices are relatively higher may not work for many investors because it is
impossible to predict with certainty how the price of a security will fluctuate.
However, owning a security for a long period of time may help investors offset
short-term price volatility and realize positive returns.

POWER OF COMPOUNDING

Over time, the compounding of returns can significantly impact investment
returns. Compounding is the effect of continuous investment on long-term
investment results, by which the proceeds of capital appreciation (and income
distributions, if elected) are reinvested to contribute to the overall growth of
assets. The long-term investment results of compounding may be greater than that
of an equivalent initial investment in which the proceeds of capital
appreciation and income distributions are taken in cash.

STANDARD DEVIATION

Standard deviation is an absolute (non-relative) measure of volatility
which, for a mutual fund, depicts how widely the returns varied over a certain
period of time. When a fund has a high standard deviation, its range of
performance has been very wide, implying greater volatility potential. Standard
deviation is only one of several measures of a fund's volatility.

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APPENDIX II--INFORMATION RELATING TO PRUDENTIAL

Set forth below is information relating to The Prudential Insurance Company
of America (Prudential) and its subsidiaries as well as information relating to
the Prudential Mutual Funds. See "How the Fund is Managed--Manager" in
Prudential Utility Fund's Prospectus and "How the Funds are Managed--Manager" in
the other Funds' Prospectus. The data will be used in sales materials relating
to the Prudential Mutual Funds. Unless otherwise indicated, the information is
as of December 31, 1997 and is subject to change thereafter. All information
relies on data provided by The Prudential Investment Corporation (PIC) or from
other sources believed by the Manager to be reliable. Such information has not
been verified by the Fund.

INFORMATION ABOUT PRUDENTIAL

The Manager and PIC(1) are subsidiaries of Prudential, which is one of the
largest diversified financial services institutions in the world and, based on
total assets, the largest insurance company in North America as of December 31,
1997. Principal products and services include life and health insurance, other
healthcare products, property and casualty insurance, securities brokerage,
asset management, investment advisory services and real estate brokerage.
Prudential (together with its subsidiaries) employs more than 79,000 persons
worldwide, and maintains a sales force of approximately 10,100 agents and 6,500
domestic and international financial advisors. Prudential is a major issuer of
annuities, including variable annuities. Prudential seeks to develop innovative
products and services to meet consumer needs in each of its business areas.
Prudential uses the rock of Gibraltar as its symbol. The Prudential rock is a
recognized brand name throughout the world.

INSURANCE. Prudential has been engaged in the insurance business since
1875. It insures or provides financial services to nearly 40 million people
worldwide. Long one of the largest issuers of life insurance, Prudential has 25
million life insurance policies in force today with a face value of almost $1
trillion. Prudential has the largest capital base ($12.1 billion) of any life
insurance company in the United States. Prudential provides auto insurance for
more than 1.5 million cars and insures approximately 1.2 million homes.

MONEY MANAGEMENT. Prudential is one of the largest pension fund managers in
the country, providing pension services to 1 in 3 Fortune 500 firms. It manages
$36 billion of individual retirement plan assets, such as 401(k) plans. As of
December 31, 1997, Prudential had more than $370 billion in assets under
management. Prudential Investments, a business group of Prudential (of which
Prudential Mutual Funds is a key part), manages over $211 billion in assets of
institutions and individuals. In INSTITUTIONAL INVESTOR, July 1998, Prudential
was ranked eighth in terms of total assets under management as of December 31,
1997.

REAL ESTATE. The Prudential Real Estate Affiliates is one of the leading
real estate residential and commercial brokerage networks in North America and
has more than 37,000 real estate brokers and agents with over 1,400 offices
across the United States.

HEALTHCARE. Over two decades ago, Prudential introduced the first
federally-funded, for-profit HMO in the country. Today, approximately 4.9
million Americans receive healthcare from a Prudential managed care
membership.(2)

FINANCIAL SERVICES. The Prudential Savings Bank FSB, a wholly-owned
subsidiary of Prudential, has nearly $1 billion in assets and serves nearly 1.5
million customers across 50 states.

INFORMATION ABOUT THE PRUDENTIAL MUTUAL FUNDS

As of November 30, 1998, Prudential Investments Fund Management was the
eighteenth largest mutual fund company in the country, with over 2.5 million
shareholders invested in more than 50 mutual fund portfolios and variable
annuities with more than 3.7 million shareholder accounts.

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(1)PIC serves as the Subadviser to substantially all of the Prudential
Mutual Funds. Wellington Management Company serves as the subadviser to Global
Utility Fund, Inc., Nicholas-Applegate Capital Management as the subadviser to
Nicholas-Applegate Fund, Inc., Jennison Associates LLC as one of the subadvisers
to Prudential Diversified Funds, Prudential 20/20 Focus Fund and The Prudential
Investment Portfolios, Inc. and Mercator Asset Management LP as the subadviser
to International Stock Series, a portfolio of Prudential World Fund, Inc. There
are multiple subadvisers for The Target Portfolio Trust.

(2)On December 10, 1998, Prudential announced its intention to sell
Prudential Health Care to Aetna Inc. for $1 billion.

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The Prudential Mutual Funds have over 30 portfolio managers who manage over
$55 billion in mutual fund and variable annuity assets. Some of Prudential's
portfolio managers have over 20 years of experience managing investment
portfolios.

From time to time, there may be media coverage of portfolio managers and
other investment professionals associated with the Manager and the Subadviser in
national and regional publications, on television and in other media.
Additionally, individual mutual fund portfolios are frequently cited in surveys
conducted by national and regional publications and media organizations such as
THE WALL STREET JOURNAL, THE NEW YORK TIMES, BARRON'S and USA TODAY.

EQUITY FUNDS. Prudential Equity Fund is managed with a "value" investment
style by PIC. In 1995, Prudential Securities introduced Prudential Jennison
Growth Fund, a growth-style equity fund managed by Jennison Associates LLC, a
premier institutional equity manager and a subsidiary of Prudential.

HIGH YIELD FUNDS. Investing in high yield bonds is a complex and research
intensive pursuit. A separate team of high yield bond analysts monitor
approximately 200 issues held in the Prudential High Yield Fund (currently the
largest fund of its kind in the country) along with 100 or so other high yield
bonds, which may be considered for purchase.(3) Non-investment grade bonds, also
known as junk bonds or high yield bonds, are subject to a greater risk of loss
of principal and interest including default risk than higher-rated bonds.
Prudential high yield portfolio managers and analysts meet face-to-face with
almost every bond issuer in the High Yield Fund's portfolio annually, and have
additional telephone contact throughout the year.

Prudential's portfolio managers are supported by a large and sophisticated
research organization. Investment grade bond analysts monitor the financial
viability of different bond issuers in the investment grade corporate and
municipal bond markets--from IBM to small municipalities, such as Rockaway
Township, New Jersey. These analysts consider among other things sinking fund
provisions and interest coverage ratios.

Prudential's portfolio managers and analysts receive research services from
almost 200 brokers and market service vendors. They also receive nearly 100
trade publications and newspapers--from PULP AND PAPER FORECASTER to WOMEN'S
WEAR DAILY--to keep them informed of the industries they follow.

Prudential Mutual Funds' traders scan over 100 computer monitors to collect
detailed information on which to trade. From natural gas prices in the Rocky
Mountains to the results of local municipal elections, a Prudential portfolio
manager or trader is able to monitor it if it's important to a Prudential Mutual
Fund.

Prudential Mutual Funds trade billions in U.S. and foreign government
securities a year. PIC seeks information from government policy makers.
Prudential's portfolio managers met with several senior U.S. and foreign
government officials, on issues ranging from economic conditions in foreign
countries to the viability of index-linked securities in the United States.

INFORMATION ABOUT PRUDENTIAL SECURITIES

Prudential Securities is the fifth largest retail brokerage firm in the
United States with approximately 6,000 financial advisors. It offers to its
clients a wide range of products, including Prudential Mutual Funds and
Annuities. As of December 31, 1998, assets held by Prudential Securities for its
clients approximated $268 billion. During 1998, over 31,000 new customer
accounts were opened each month at Prudential Securities.(4)

Prudential Securities has a two-year Financial Advisor training program plus
advanced education programs, including Prudential Securities "university," which
provides advanced education in a wide array of investment and financial planning
areas.

In addition to training, Prudential Securities provides its financial
advisors with access to firm economists and market analysts. It has also
developed proprietary tools for use by financial advisors, including the
Financial ArchitectsSFinancial Advisors to evaluate a client's objectives and
overall financial plan, and a comprehensive mutual fund information and analysis
system that compares different mutual funds.

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(3)The number of bonds and the size of the Fund are subject to change.

(4)As of December 31, 1998.

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For more complete information about any of the Prudential Mutual Funds,
including charges and expenses, call your Prudential Securities financial
adviser or Pruco/Prudential representative for a free prospectus. Read it
carefully before you invest or send money.

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