<PAGE>
Prudential Securities
Command Account
Command Tax-Free Fund
SEMIANNUAL REPORT December 31, 1993
Prudential Mutual Funds
Building Your Future
On Our Strengthsm
Trustees
Edward D. Beach
Delayne Dedrick Gold
Harry A. Jacobs, Jr.
Lawrence C. McQuade
Richard A. Redeker
Stanley E. Shirk
Langdon R. Stevenson
Stephen Stoneburn
Nancy Hays Teeters
David S. Towner
Officers
Lawrence C. McQuade, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Domenick Pugliese, Asst. Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributor
Prudential Mutual Fund Distributors, Inc.
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
One Seaport Plaza
New York, NY 10292
(toll free) (800) 222-4321
This report is not authorized for distribution
to prospective investors unless preceded or
accompanied by a current prospectus.
The accompanying financial statements as of
December 31, 1993 were not audited and, accordingly,
no opinion is expressed on them.
LETTER TO
SHAREHOLDERS
February 10, 1994
Dear Shareholder:
For two years now, money market investors have been faced with a slow
and unsteady economic recovery. In particular, this has meant some of
the lowest interest rates in nearly three decades. Even in this
environment, however, the Command funds earned competitive current-
income returns.
Fund Performance Profile
The Command Money Fund, the Command Government Fund and the Command Tax-
Free Fund seek high current income consistent with the preservation of
principal and liquidity, each from a different segment of the short-term
markets. Additionally, the Tax-Free Fund targets income that is exempt
from Federal taxes.
<TABLE>
<CAPTION>
Performance Profile
As of December 31, 1993
Total
7-Day Yield NAV Net Assets (mil.)
----------- ----- -----------------
<S> <C> <C> <C>
Command Money 2.82% $1.00 $2,371,039
Command Government 2.67% $1.00 $ 358,650
Command Tax-Free 2.24% $1.00 $ 752,940
</TABLE>
Past performance is no guarantee of future results.
Please note that an investment in any of these Funds is neither insured
nor guaranteed by the U.S. government, and there can be no assurance
that they will be able to maintain a stable net asset value of $1.00 per
share.
A Potential Economic Turning Point.
Even as we entered the second half of 1993, the economy continued its
sluggish and fitful recovery. Over the summer, economic indicators were
reported as mixed and variable. But, finally in the fourth quarter
signals began to converge in the same direction and point toward more
positive economic progress. The growth rate for the last quarter in 1993
was in the robust 4% range.
The Fed Stays to the Sideline.
Interest rates tended to reflect the economy's hesitation, moving
through a choppy decline until early October when short rates reached
their all-time lows. The Fed funds target rate (the inter-bank lending
rate) and the discount rate (the cost of funds borrowed from the Fed)
have both remained around 3.0%. Fearful of harming the economy, the
Federal Reserve (Fed) has waited until February 1994 to increase
interest rates, despite their low levels.
Further influence on municipals.
Both the economic climate and the Fed's interest rate policy play
important roles in the short-term markets. However, short-term
municipals, the primary type of investment in the Command Tax-Free Fund,
are governed more by seasonal supply and demand. In fact, even the surge
in demand that followed the passage of the federal tax bill last summer
was mild in comparison to the supply/demand concerns during that time.
Command Money Fund
The Command Money Fund invests in high-quality, U.S.-dollar denominated
money market securities issued by major corporations and U.S. and
foreign banks and by the U.S. government and its agencies. Maturities
can range from one day to 13 months. We currently purchase securities
rated in the highest categories by at least two major rating agencies.
Portfolio Summary.
We adjusted the blend of securities to take advantage of special
opportunities for higher rates. Near the end of the third quarter, with
the availability of some new-issue government agency floating rate
instruments, we increased our holdings of variable rate securities to
17% of assets. Later, with the general strengthening of corporate
balance sheets, we added to corporate commercial paper. In particular,
we identified improving trends in the finance industry and targeted
companies like Household Finance and General Motors Acceptance
Corporation. By year end, your Fund had 65% in commercial paper and 18%
in bank obligations, with the remaining portion in variable rate
instruments and other corporate obligations.
Changes to the Fund's maturity level also played an important role. Over
the summer, we were generally positioned neutral to defensive. By the
end of September, we shortened the average maturity to 44 days--well
below the 68 day average of competing funds. At the end of December
1993, the waited average maturity was 43 days. We expect to return to a
more neutral posture to take advantage of the eventual cyclical rise in
interest rates.
Command Government Fund
The Command Government Fund invests primarily in high quality short-term
obligations of the U.S. government and its agencies.
Portfolio Summary.
Last May, the Treasury Department announced a change to its financing
structure in favor of shorter-term maturities. This move could result in
an increase in the supply of Treasury securities available to money
market funds, causing short-term rates to drift higher. Since the effect
of this announcement was not likely to take hold until later in the
year, we sought the attractive yields available from longer dated
maturities for most of the period. As rates reached their all time lows
in early October, we reduced our maturity to a more neutral position
relative to other U.S. government money market funds, closing the year
at 52 days. We will likely maintain this posture through the first
quarter of 1994.
We also adjusted the Fund's composition to take advantage of yield
differences between securities. Treasury holdings were reduced from a
high of 12% of total net assets on June 30, 1993 to a low of 2% by year
end, in favor of higher yielding agency securities, which were generally
the largest asset class. In the fourth quarter we increased this sector
by buying new-issue agency floating rate instruments or "floaters,"
which have coupons that re-set periodically and change in tandem with
interest rates. Finally, to keep the Fund flexible and ready to take
advantage of rising interest rates as they occur, the Fund maintained a
large cash position, which it invested in short-term overnight
repurchase agreements.
Command Tax-Free Fund
The Command Tax-Free Fund invests primarily in short-term securities
issued by states, municipalities, their instrumentalities and
authorities, whose income is exempt from Federal taxes. As of December
31, 1993, the Fund had a 7-day tax equivalent yield of 3.25% at the 31%
tax rate. Of course, past performance, cannot guarantee future results.
Portfolio summary.
We continuously monitored the credit quality of our holdings, sticking
primarily with securities rated in the top or second tier by the ratings
agencies. At 1993 year end, 15% of holdings had earned a top rating of
A-1. Since the Fund is flexible and can purchase bonds throughout the
country, we avoided securities from California because we remain
concerned about the state's weakening economy.
We aggressively altered the Fund's weighted average maturity to take
advantage of seasonal supply and demand imbalances. For instance, most
municipal fiscal year ends occur on June 30, and supply can be thin
during the last few weeks of the year. Fortunately, in 1993, we were
able to lock in higher yields prior to the decline in supply. In
October, interest rates began to drift up, and municipal securities
followed suit. Municipals also faced typical seasonal events at the end
of the year as investors redeemed bonds to meet holiday needs and
institutions reduced their inventories to bolster the cash positions. We
used this opportunity to reduce the Fund's maturity to 67 days to take
advantage of higher yields as rates rose.
Looking Ahead to 1994
With signs of economic strength and inflation currently under control, a
solid foundation for steady growth is now in place. If inflationary
pressures follow as they have in the past, the Fed will likely push
short-term rates even higher by midyear. This may help raise yields for
both the Command Money and Government Funds as investors bid up rates in
anticipation of a Fed move. However, the Command Tax-Free Fund should
respond more to seasonal influences. Of course, there is no assurance
that this will happen.
There are two areas of caution on the horizon: the full impact of
Clinton's tax increases should be felt in 1994, and the proposed health-
care program may cause businesses to think twice before hiring new
employees. Both could provide a drag on economic momentum, and we will
be carefully watching for their effects.
As always, it is a pleasure to have you as a shareholder and to take
this opportunity to report our activities.
Sincerely,
Lawrence C. McQuade
President
<TABLE>
<CAPTION>
COMMAND TAX-FREE FUND
Moody's Principal Description (a) Value
Rating Amount (Note 1)
(000)
- --------------------------------------------------------------------
<C> <C> <S> <C>
ARIZONA--1.3%
Maricopa Cnty. Poll. Ctrl. Corp.,
Pub. Svc. Co., A.N.N.O.T.,
VMIG1 $ 10,000 3.10%, 8/1/94, Ser. 85A $ 10,000,000
------------
CALIFORNIA--4.5%
California Poll. Ctrl. Rev. Fin. Auth.,
Chevron Usa Inc., A.N.N.O.T.,
P-1 6,210 2.50%, 6/15/94, Ser. 84B 6,203,403
Huntington Beach Multifamily
Hsg. Rev., T.R.A.N.,
MIG1 13,750 3.00%, 6/30/94 13,772,438
Los Angeles Int'l. Arpt.,
LAX Ind. Proj., F.R.D.D.,
VMIG2 13,900 4.75%, 1/3/94 13,900,000
------------
33,875,841
------------
COLORADO--2.5%
Avon Cnty. Ind. Dev. Rev.,
Beaver Creek Proj., F.R.M.D.,
P-l 4,500 2.60%, 1/18/94, Ser 84 4,500,000
Colorado Hsg. Fin. Auth.,
Multifamily Proj., O.T.,
Aa 4,365 2.90%, 4/1/94, Ser. 92A 4,365,000
Aa 10,000 2.90%, 4/1/94, Ser. 92A4 10,000,000
------------
18,865,000
------------
CONNECTICUT--2.4%
Connecticut St. Hsg. Fin. Auth.,
VMIG1 11,000 2.80%, 11/15/94, Ser. H-1 11,000,000
Connecticut St. Spec. Assmt.
Unemployment, Compensation
Adv. Fund Rev., A.M.B.A.C.,
A-1+
asterisk 6,900 2.70%, 2/15/94, Ser. A 6,900,000
17,900,000
FLORIDA--2.1%
First Mun. Loan Council
Rev., T.E.C.P.,
VMIG1 4,400 2.75%, 1/25/94, Ser. 85 4,400,000
Homestead Spec. Ins.
Assmnt. Rev., Hurricane
Andrew Cov'd. Claim, M.B.I.A.,
Aaa 1,000 2.875%, 3/1/94, Ser 93 1,000,000
Jacksonville Hlth. Facs.
Auth. Hosp. Rev., M.B.I.A.,
VMIG1 3,300 4.30%, 1/3/94 3,300,000
Miami Hlth. Facs. Auth. Rev.,
Miami Jewish Home
& Hosp., F.R.W.D.,
Aa3 7,000 3.20%,1/5/94, Ser. 92 7,000,000
------------
15,700,000
------------
GEORGIA--4.5%
Albany Dougherty Payroll
Dev. Auth., Philip
Morris Co. Inc., F.R.W.D.,
P-1 10,000 3.20%, 1/5/94 10,000,000
Fulco Hosp. Auth.,
St. Joseph Hosp., T.E.C.P.,
VMIG1 6,000 2.65%, 1/12/94, Ser. 89 6,000,000
Fulton Cnty.
Dev. Auth. Rev.,
Robert W. Woodruff Art Center,
F.R.W.D.,
Aa2 12,500 3.20%, 1/6/94, Ser. 93 12,500,000
Georgia St., Tender Option
Cust Rcpt., F.R.W.D.,
VMIG1 5,000 3.00%, 1/6/94, Ser. 53 5,000,000
------------
33,500,000
------------
ILLINOIS--9.2%
Chicago O'Hare Int'l. Arpt.,
American Airlines, Inc.,
F.R.D.D.,
P-2 400 4.75%, 1/3/94 400,000
Hazel Crest Village Rev.,
Waterford Estates Proj.,
F.R.W.D.,
VMIG1 7,500 3.15%, 1/7/94, Ser. 92A 7,500,000
lllinois Ed. Facs. Auth. Rev.,
DePaul Univ., F.R.W.D.,
VMIG1 9,900 3.30%, 1/5/94, Ser. 92 9,900,000
lllinois Hlth. Facs. Auth. Rev.,
Childrens Mem. Hosp.,
S.E.M.M.T.,
VMIG1 15,000 2.75%, 5/4/94, Ser. A 15,000,000
Evanston Hosp. Corp.,
S.E.M.M.T.,
VMIG1 10,000 2.65%, 5/5/94, Ser. 87D 10,000,000
lllinois St. Toll Hwy. Auth. Rev.,
F. R.W.D.,
VMIG1 8,000 3.10%, 1/5/94, Ser. 93B 8,000,000
Wheeling Multifamily Hsg.
Rev., Woodland Creek ll,
F.R.W.D.,
SP-1+
asterisk 8,000 3.50%, 1/7/94, Ser. 90 8,000,000
Woodridge Dupage Cntys.,
Multifamily Hsg. Rev.,
Rfdg., Hinsdale Terr.
Apts., F.R.W.D.,
NR 10,760 3.15%, 1/7/94, Ser. 90 10,760,000
------------
69,560,000
------------
IOWA--4.4%
Des Moines Private Coll. Rev.,
Osteopathic Med. & Hlth.,
F.R.M.D.,
A-1+
asterisk 9,075 2.50%, 1/16/94 9,075,000
lowa Sch. Corps Warrant Ctfs.,
MIG1 12,850 3.60%, 12/30/94 12,999,703
lowa St., T.R.A.N.,
MIG1 11,000 3.25%, 6/30/94, Ser. 93A 11,016,824
------------
33,091,527
------------
LOUISIANA--3.3%
Louisiana Hsg. Fin. Agcy.,
Sngl. Fam. Mtge. Rev.,
A.N.N.M.T.,
VMIG1 9,100 2.65%, 6/2/94, Ser. 92A 9,100,000
Louisiana Offshore Term.
Auth., Port Rev., T.E.C.P.,
P-1 8,900 2.65%, 2/1/94, Ser. 86 8,900,000
Louisiana Pub. Facs. Auth.,
Hosp. Equip., F.R.W.D.,
VMIG1 6,900 3.20%, 1/5/94, Ser. 85A 6,900,000
------------
24,900,000
------------
MAINE--0.8%
Biddeford Res. Rec. Rev.,
Energy Recovery Co. Proj.,
F.R.M.D.,
VMIG1 5,800 2.75%, 1/3/94, Ser. 85 5,800,000
MARYLAND--3.9%
Maryland St. Cmnty.
Dev. Auth., Multifamily
Hsg. Rev., S.E.M.O.T.3,
Aa 8,000 2.80%, 5/15/94, Ser. 84B 8,000,000
Maryland St. Cmnty,
Dev. Auth., Sngl. Fam.
Mtge. Rev., S.E.M.O.T.3,
Aa 12,605 2.90%, 4/1/94, Ser. 85-2 12,605,000
Aa 8,600 2.90%, 4/1/94, Ser. 87-2 8,600,000
------------
29,205,000
------------
MASSACHUSETTS--7.2%
Massachusetts
Commonwealth, G.O.,
Tender Option Cust. Rcpt.
F.R.W.D.,
VMIG1 11,000 3.00%, 1/6/94 11,000,000
Massachusetts Hsg.
Fin. Agcy., Q.T.R.O.T.,
Aaa 8,500 2.70%, 3/1/94, Ser. 5 8,500,000
Sngl. Fam., A.N.N.M.T.,
VMIG1 4,650 2.95%, 9/1/94, Ser. 25 4,650,000
Massachusetts St. Ind. Fin. Agcy.
Poll., Ctrl. Rev., T.E.C.P.,
VMIG1 6,000 2.65%, 1/13/94, Ser. 93B 6,000,000
VMIG1 9,000 2.55%, 1/27/94, Ser. 93A 9,000,000
Revere Hsg. Auth., Multifamily
Mtge. Rev., Waters
Edge Proj., F.R.W.D.,
A-1+
asterisk 15,000 3.15%, 1/7/94, Ser. 91C 15,000,000
------------
54,150,000
------------
MICHIGAN--1.9%
Michigan Strategic Fd.,
Poll. Ctrl. Rev., General
Motors Proj., F.R.W.D.,
VMIG2 14,155 3.25%, 1/4/94, Ser. 85 14,155,000
------------
MINNESOTA--4.6%
City of Fridley Comm. Dev. Rev.,
River Rd. Invsmt. Proj.,
F.R.M.D.,
A-1
asterisk 5,745 2.65%, 1/3/94, Ser. 84 5,745,000
Minnesota Hsg. Fin. Agcy.,
St. Assisted Home Impvt.,
A.N.N.M.T.,
VMIG1 4,000 2.50%, 5/17/94, Ser. 92A 4,000,000
Minnesota St. G.O.,
Trust, F.R.W.D.,
NR 17,940 3.45%, 1/5/94, Ser. 6 17,940,182
Minnetonka Multifamily Hsg.
Rev., Cliffs Ridgedale
Proj., F.R.W.D.,
A-1 7,100 3.50%, 1/7/94, Ser. 85A 7,100,000
------------
34,785,182
------------
MISSISSIPPI--1.1%
Harrison Cnty. Poll. Ctrl. Rev.,
Mississippi Pwr. Co. Proj.,
F.R.W.D.,
VMIG1 8,000 3.20%, 1/5/94, Ser. 92 8,000,000
------------
MISSOURI--5.2%
Missouri St. Environ. Impvt. &
Energy Res. Auth.,
Union Elec. Co.,
A.N.N.O.T.,
P-1 18,000 2.65%, 6/1/94, Ser. 84A 18,000,000
T.E.C.P.,
P-1 6,000 2.40%, 1/5/94, Ser. 85B 6,000,000
St. Charles Cnty. Ind. Dev. Auth.,
Cedar Ridge Apts., F.R.W.D.,
A-1+ $ 7,250 3.10%, 1/5/94, Ser. 88A 7,250,000
Vanderbilt Apts. Proj.,
F.R.W.D.,
A-1
asterisk 8,000 3.10%, 1/5/94, Ser. 90A 8,000,000
------------
39,250,000
------------
NEBRASKA--1.3%
Nebraska Inv. Fin. Auth.,
Sngl. Fam. Mtge. Rev.,
S.E.M.O.T.,
VMIG1 9,550 2.60%, 1/15/94, F.G.I.C. 9,549,065
NEVADA--1.1%
Nevada Hsg. Dev., Sngl. Fam.
Mtge. Rev., S.E.M.O.T.,
AA
asterisk 4,075 2.95%, 4/1/94, Ser. 88A-2 4,075,000
AA
asterisk 4,350 2.95%, 4/1/94, Ser. 88A 4,350,000
------------
8,425,000
------------
NEW YORK--2.6%
New York St. Energy Resh. &
Devel. Auth., Lilco
Proj., A.N.N.M.T.,
VMIG1 5,250 2.50%, 3/1/94, Ser. 85B 5,250,000
New York St. B.A.N.,
P-1 14,600 2.25%, 2/7/94, Ser. N 14,600,000
------------
19,850,000
------------
NORTH CAROLINA--0.1%
North Carolina Eastn. Mun. Pwr.,
Catawba Proj., T.E.C.P.,
P-1 1,000 2.40%, 1/5/94 999,850
------------
OHIO--4.0%
Manon Cnty. Hosp. Rev.,
S.E.M.O.T.,
A-1+
asterisk 7,700 2.90%, 4/1/94, Ser. 92 7,700,000
Ohio St. Air Quality Dev. Auth.
Rev., Duquesne Light Proj.,
A.N.N.M.T.,
VMIG1 10,000 2.80%, 10/12/94, Ser. 93A 10,000,000
Ohio St. Poll. Ctrl. Rev.
General Motors Corp. Proj.,
F.R.W.D.,
VMIG2 4,160 3.50%, 1/4/94, Ser 85 4,160,000
Toledo-Lucas Cnty., Convntn. &
Visitors Bureau, M.T.H.O.T.,
VMIG1 8,520 2.55%, 2/1/94, Ser. 88 8,520,000
------------
30,380,000
------------
OKLAHOMA--2.8%
Muskogee Ind. Trust Rev.,
Muskogee Mall Proj.,
F.R.W.D.,
VMIG1 6,200 3.45%, 1/5/94, Ser 85 6,200,000
Oklahoma Political Subdiv.,
Cash Mgmt. Trust,
SP-1+
asterisk 15,000 3.35%, 6/30/94, Ser. 93 15,028,769
------------
21,228,769
------------
OREGON--2.1%
Beaverton Sch. Dist. 48-J,
T.R.A.N.,
MIG1 15,600 3.00%, 6/30/94 15,625,457
------------
PENNSYLVANIA--10.0%
Beaver Cnty. Ind. Dev. Auth.,
Poll. Ctrl. Rev., Toledo
Edison Proj., M.T.H.M.T.,
A-1+
asterisk 11,000 2.50%, 3/16/94, Ser. 92E 11,000,000
Emmaus Gen. Auth. Rev.,
Local Gov't., F.R.W.D.,
A-1
asterisk 15,300 3.45%, 1/5/94, Ser B6 15,300,000
A-1
asterisk 8,000 3.45%, 1/5/94, Ser. C5 8,000,000
Philadelphia Gas Wks. Rev.,
T.E.C.P.,
P-1 10,200 2.30%, 2/2/94, Ser. A 10,200,000
Philadelphia, T.E.C.P.,
VMIG1 4,500 2.65%, 1/11/94, Ser. 90 4,500,000
VMIG1 7,700 2.50%, 1/12/94, Ser. 90 7,700,000
Quakertown Hosp. Auth.,
F.R.W.D.,
VMIG1 10,000 3.10%,1/4/94, Ser. 85 10,000,000
Upper Allegheny Rev. Bds.,
Hydro-Elec. Proj.,
A.N.N.M.T.,
SP-1+
asterisk 8,380 2.85%, 7/15/94, Ser. D 8,380,000
------------
75,080,000
------------
SOUTH CAROLINA--2.9%
So. Carolina Pub. Svc. Auth.,
T.E.C.P.,
P-1 11,192 2.60%, 1/18/94, Ser. 88 11,192,000
P-1 5,900 2.55%, 1/13/94, Ser. 88 5,900,000
So. Carolina St. F.R.W.D.,
VMIG1 4,500 3.00%, 1/6/94, Ser. 93B 4,500,000
------------
21,592,000
------------
SOUTH DAKOTA--0.9%
So. Dakota Hsg. Dev. Auth.,
Homeownership Mtge.,
S.E.M.O.T.3,
Aa 6,395 2.80%, 5/1/94, Ser. 86C 6,395,000
------------
TENNESSEE--1.1%
Met. Gov't. Nashville &
Davidson Cnty., Timberlake Proj.,
Dev. Rev., F.R.W.D.,
MIG1 8,600 3.10%, 1/6/94, Ser. 84A 8,600,000
------------
TEXAS--4.8%
Brazos Harbor Nav. Dist.,
Dow Chemical Co. Proj.,
T.E.C.P.,
P-1 2,750 2.20%, 1/6/94, Ser. 87B 2,750,000
P-1 5,000 2.65%, 3/18/94, Ser. 91 5,000,000
DeSoto Ind. Dev. Auth.,
Nat'l. Svc. Inds. Inc. Proj.,
F.R.W.D.,
Aa2 7,150 3.20%, 1/6/94, Ser. 91 7,150,000
Greater East Texas, Higher
Ed. Auth., Student
Ln. Rev., A.N.N.M.T.,
VMIG1 8,000 2.55%, 5/1/94, Ser. 92A 8,000,000
San Antonio Elec. & Gas Rev.,
P-1 13,000 2.70%, 1/12/94 13,000,000
35,900,000
------------
UTAH--1.8%
Intermountain Pwr. Auth.
Supply Rev., S.E.M.O.T.,
VMIG1 5,500 2.55%, 3/15/94, Ser. 85E 5,500,000
Salt Lake City Rev.,
T.E.C.P.,
VMIG1 8,000 2.55%, 1/11/94, Ser. 90 8,000,000
------------
13,500,000
------------
VIRGINIA--3.9%
Chesterfield Cnty. Ind. Dev. Auth.,
Phillip Morris Proj., F.R.W.D.,
P-1 8,500 3.20%, 1/5/94 8,500,000
Virginia Elec. Pwr. Co. Proj.,
T.E.C.P.,
VMIG1 11,230 2.50%, 1/26/94 11,229,170
Virginia Hsg. Dev. Auth.,
Mtge. Rev., S.E.M.M.T.,
VMIG1 10,000 2.95%, 5/12/94, Ser. C-3 10,000,000
------------
29,729,170
------------
WASHINGTON--3.4%
Snohomish Cnty. Pub. Util.
Dist. Elec. Rev.,
Generation Sys.,
Aaa 3,500 2.75%, 1/3/94, Ser 93 3,500,000
Washington G.O.,
Q.T.R.O.T.S.,
A-1+
asterisk 9,000 2.80%, 4/4/94, Ser. G 9,000,000
Washington St. G.O. Trust,
NR 13,046 3.45%, 1/5/94, Ser. 5 13,046,425
------------
25,546,425
------------
WISCONSIN--1.7%
Wisconsin G.O.,
F.R.W.D.,
VMIG1 4,000 3.00%, 1/6/94, Ser. 93-3 4,000,000
Wisconsin Hsg. & Econ.
Dev. Auth., O.T.,
Aaa 9,130 2.65%, 3/1/94, Ser. 87P 9,130,000
------------
13,130,000
------------
Total Investments--103.4%
(amortized cost $778,268,286) 778,268,286
Liabilities in excess of other
assets--(3.4%) (25,327,896)
------------
Net Assets--100% $752,940,390
============
</TABLE>
(a) The following abbreviations are used in portfolio descriptions:
A.M.B.A.C.--American Municipal Bond Assurance Corporation
A.N.N.M.T.--Annual Mandatory Tender
A.N.N.O.T.--Annual Optional Tender
B.A.N.--Bond Anticipation Note
F.G.I.C.--Financial Guaranty Insurance Company
F.R.D.D.--Floating Rate (Daily) Demand Note asterisk asterisk
F.R.M.D.--Floating Rate (Monthly) Demand Note asterisk asterisk
F.R.W.D.--Floating Rate (Weekly) Demand Note asterisk asterisk
G.O.--General Obligation
M.B.I.A.--Municipal Bond Insurance Association
M.T.--Mandatory Tender
M.T.H.M.T.--Monthly Mandatory Tender
M.T.H.O.T.--Monthly Optional Tender
O.T.--Optional Tender
Q.T.R.O.T.--Quarterly Optional Tender
Q.T.R.O.T.S.--Quarterly Synthetic Optional Tender
S.E.M.M.T.--Semi-Annual Mandatory Tender
S.E.M.O.T.--Semi-Annual Optional Tender
S.E.M.O.T.3--Semi-Annual 3rd Party Optional Tender
T.E.C.P.--Tax Exempt Commercial Paper
T.R.A.N.--Tax & Revenue Anticipation Note
asterisk Standard & Poor's Rating.
asterisk asterisk For purposes of amortized cost valuation, the maturity
date of these instruments is considered to be the next date on which the
rate of interest is adjusted.
NR--Not Rated by Moody's or Standard & Poor's.
The Fund's current statement of Additional Information contains a
description of Moody's and Standard & Poor's ratings.
COMMAND TAX-FREE FUND
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
December 31,
1993
------------
<S> <C>
Assets
Investments, at value................................ $778,268,286
Receivable for Fund shares sold...................... 17,784,076
Receivable for investments sold...................... 11,113,038
Interest receivable.................................. 4,071,390
Prepaid expenses..................................... 14,233
------------
Total assets....................................... 811,251,023
------------
Liabilities
Bank overdraft....................................... 19,852,076
Payable for Fund shares repurchased.................. 25,012,871
Payable for investments purchased.................... 13,004,843
Due to Manager....................................... 352,364
Due to Distributor................................... 51,124
Accrued expenses and other liabilities............... 37,355
------------
Total liabilities.................................. 58,310,633
------------
Net assets
Applicable to 752,940,390 shares of beneficial interest
($.01 par value) issued and outstanding;
unlimited number of shares authorized.............. $752,940,390
============
Net asset value, offering price and redemption price
per share ($752,940,390 divide 752,940,390 shares). $1.00
=====
</TABLE>
See Notes to Financial Statements appearing on page 25.
COMMAND TAX-FREE FUND
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
Net Investment Income 1993
-----------
<S> <C>
Income
Interest............................................ $11,567,887
-----------
Expenses
Management fee...................................... 2,103,019
Distribution fee.................................... 562,935
Transfer agent's fees and expenses.................. 70,000
Registration fees................................... 40,000
Trustees' fees...................................... 28,000
Audit fee........................................... 21,000
Custodian's fees and expenses....................... 17,000
Reports to shareholders............................. 13,000
Legal fees.......................................... 13,000
Insurance expense................................... 13,000
Miscellaneous....................................... 2,384
-----------
Total expenses 2,883,338
-----------
Net investment income................................. 8,684,549
-----------
Realized gain on Investments
Net realized gain on investment transactions.......... 261
-----------
Net Increase in Net Assets
Resulting from Operations............................. $ 8,684,810
===========
</TABLE>
See Notes to Financial Statements appearing on page 25.
COMMAND TAX-FREE FUND
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
December 31, June 30,
1993 1993
--------------- ---------------
<S> <C> <C>
Increase (Decrease)
in Net Assets
Operations
Net investment income.............. $ 8,684,549 $ 17,215,395
Net realized gain on
investment transactions.......... 261 22,277
--------------- ---------------
Net increase in net
assets resulting from
operations....................... 8,684,810 17,237,672
--------------- ---------------
Dividends and distributions
to shareholders.................... (8,684,810) (17,237,672)
--------------- ---------------
Fund share transactions
(at $1 per share)
Net proceeds from
shares subscribed................ 1,863,145,608 3,185,277,847
Net asset value of
shares issued to
shareholders in rein-
vestment of dividends
and distributions................ 8,684,810 17,237,672
Cost of shares reacquired.......... (1,972,819,568) (3,077,708,239)
------------- -------------
Net increase (decrease) in
net assets from Fund
share transactions............... (100,989,150) 124,807,280
--------------- ---------------
Total increase (decrease)............ (100,989,150) 124,807,280
Net Assets
Beginning of period.................. 853,929,540 729,122,260
--------------- ---------------
End of period........................ $ 752,940,390 $ 853,929,540
=============== ===============
</TABLE>
See Notes to Financial Statements appearing on page 25.
COMMAND TAX-FREE FUND
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended June 30,
December 31, --------------------------------------------------------
1993 1993 1992 1991 1990 1989
----------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net realized gains.. 0.010 0.022 0.035 0.049. 055 0.054
Dividends and distributions to shareholders... (0.010) (0.022) (0.035) (0.049) (0.055) (0.054)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========= ========= ========= ========= =========
TOTAL RETURN pound:........................... 1.00% 2.23% 3.53% 5.02% 5.66% 5.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $ 752,940 $ 853,930 $ 729,122 $ 750,567 $ 714,650 $ 611,631
Average net assets (000)...................... $ 892,398 $ 823,517 $ 751,458 $ 770,745 $ 699,559 $ 695,347
Ratios to average net assets:
Expenses, including distribution fees....... .64% asterisk .68% .69% .66% .68% .67%
Expenses, excluding distribution fees....... .52% asterisk .55% .56% .54% .55% .55%
Net investment income....................... 1.93% asterisk 2.09% 3.47% 4.88% 5.57% 5.46%
<FN>
- ------------------
asterisk Annualized
pound 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. Total returns for periods
of less than a full year are not annualized.
</TABLE>
See Notes to Financial Statements appearing on page 25.
COMMAND FUNDS
Notes to Financial Statements
(Unaudited)
Command Money Fund, Command Govemment Fund, and Command Tax-Free Fund
(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 Funds invest in a portfolio
of money market instruments maturing in 13 months or less whose ratings
are within the two highest ratings categories by a nationally recognized
statistical rating agency or, if not rated, are of comparable quality.
The ability of the issuers of the securities held by the Funds to meet
their obligations may be affected by economic and/or political
developments in a specific industry, state or region.
Note 1. Accounting
Policies
The following is a summary of significant accounting policies followed
by the Funds in the preparation of their financial statements.
Securities Valuations: Portfolio securities are valued at amortized
cost, which approximates market value. The amortized cost method
involves valuing a security at its cost on the date of purchase and
thereafter assuming a constant amortization to maturity of any discount
or premium. If the amortized cost method is determined not to represent
fair value, the value shall be determined by or under the direction of
the Board of Trustees. All securities are valued as of 4:30 p.m., New
York time.
In connection with transactions in repurchase agreements, the Funds'
custodian takes 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. The cost of portfolio securities for
federal income tax purposes is substantially the same as for financial
reporting purposes.
Federal Income Taxes: Each Fund intends to continue to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its net income to its
shareholders. Therefore, no federal income tax provision is required.
Dividends: Each Fund declares all of its net investment income as
dividends daily to its shareholders of record at the time of such
declaration. Dividends are reinvested daily into additional full and
fractional shares of the respective Fund at the net asset value per
share detemined on the date of declaration. Net investment income for
dividend purposes includes accrued interest and amortization of premiums
and discounts, plus or minus any gains or losses realized on sales of
portfolio securities, and less the estimated expenses of the Fund
applicable to the dividend period.
Note 2. Agreements
Each Fund has a management agreement with Prudential Mutual Fund
Management, Inc. ("PMF"). Pursuant to this agreement PMF has
responsibility for all investment advisory services and supervises the
subadviser's performance of such services. PMF has entered into a
subadvisory agreement with the Prudential Investment Corporation
("PIC"); PIC furnishes investment advisory services in connection with
the management of the Funds. PMF pays for the cost of the subadvisor's
services, the compensation of officers of the Funds, occupancy and
certain clerical and bookkeeping costs of the Funds. The Funds bear all
other costs and expenses.
The management fee paid PMF is computed daily and payable monthly on the
following basis:
<TABLE>
<CAPTION>
Average Daily Command Command Command
Net Assets Money Government Tax-Free
- ---------- ------- ---------- --------
<S> <C> <C> <C>
First $500 million.......... .500% .400% .500%
Second $500 million......... .425% .400% .425%
Third $500 million.......... .375% .375% .375%
Excess of $1.5 billion...... .350% .375% .375%
</TABLE>
Each Fund has a distribution agreement with Prudential Mutual Fund
Distributors, Inc. ("PMFD"). To reimburse PMFD for its expenses incurred
pursuant to a plan of distribution, the Funds pay PMFD a reimbursement,
accrued daily and payable monthly, at an annual rate of .125 of 1% of
each Fund's average daily net assets. PMFD pays various broker-dealers,
including Prudential Securities and Pruco Securities Corporation,
affiliated broker-dealers, for account servicing fees and other expenses
incurred by such brokers-dealers.
PMFD is a wholly-owned subsidiary of PMF; Prudential Securities, PMF and
PIC are (indirect) wholly-owned subsidiaries of The Prudential Insurance
Company of America.
Note 3. Other
Transactions
with Affiliates
Prudential Mutual Fund Services, Inc. ("PMFS"), a wholly-owned
subsidiary of PMF, serves as the Funds' transfer agent.
As of December 31, 1993, the following amounts were due to PMFS from the
Funds:
Command Money................................................. $91,006
Command Government............................................ $ 5,475
Command Tax-Free.............................................. $13,258
Note 4. Joint Repurchase
Agreement Account
The Command Government Fund, along with other affiliated registered
investment companies, transfers uninvested cash balances into a single
joint account, the daily aggregate balance of which is invested in one
or more repurchase agreements collateralized by the U.S. Treasury or
federal agency obligations. As of December 31, 1993, the Command
Government Fund had a 0.2% undivided interest in the repurchase
agreements in the joint account. The undivided interest for the Command
Government Fund represented $1,816,000 in principal amount. As of such
date, each repurchase agreement in the joint account and the collateral
therefore were as follows:
Barclays de Zoete Wedd Securities, Inc., 3.10%, in the principal amount
of $100,000,000, repurchase price $100,025,833, due 1/3/94;
collateralized by $49,000,000 U.S. Treasury Notes, 8.875%, due 11/15/98;
$32,000,000 U.S. Treasury Notes, 7.50%, due 11/15/01 and $7,305,000 U.S.
Treasury Notes, 8.50%, due 2/15/00; approximate aggregate value
including accrued interest--$102,043,014.
Bear Stearns & Co., Inc., 3.18%, in the principal amount of
$323,000,000, repurchase price $323,085,595, due 1/3/94; collateralized
by $200,000,000 U.S. Treasury Notes, 3.875%, due 3/31/95; $80,030,000
U.S. Treasury Notes, 7.50%, due 11/15/01; $30,000,000 U.S. Treasury
Notes, 5.625%, due 1/31/98; $5,745,000 U.S. Treasury Notes, 4.25%, due
7/31/95 and $85,000 U.S. Treasury Notes, 7.375%, due 5/15/96;
approximate aggregate value including accrued interest--
$329,564,341.
Goldman, Sachs & Co., 3.10%, dated 12/31/93, in the principal amount of
$399,000,000, repurchase price $399,103,075, due 1/3/94; collateralized
by $363,720,000 U.S. Treasury Bonds, 7.50%, due 11/15/16; approximate
value including accrued interest-- $408,104,889.
Kidder, Peabody & Co., Inc., 3.20%, dated 12/31/93, in the principal
amount of $375,000,000, repurchase price $375,100,000, due 1/3/94;
collateralized by $200,000,000 U.S. Treasury Bonds, 11.625%, due
11/15/04; $38,000,000 U.S. Treasury Bonds, 12.75%, due 11/15/10; $90,000
U.S. Treasury Bonds, 9.00%, due 2/15/93; $15,000,000 U.S. Treasury
Notes, 7.375%, due 5/15/96 and $11,730,000 U.S. Treasury Notes, 7.25%,
due 11/15/96; approximate aggregate value including accrued interest--
$382,608,562.
