Prudential Securities
Command Account
- ----------------------
Command Money Fund
Command Government Fund
Command Tax-Free Fund
ANNUAL REPORT
June 30, 1997
(LOGO)
<PAGE>
Letter to
Shareholders
June 30, 1997
Dear Shareholder:
Investors repeatedly bid short-term
interest rates higher and lower
over the past year as they tried to
gauge how the Federal Reserve
would respond to an expanding U.S.
economy. This proved to be a
difficult task as economic growth
surged in one quarter only to
fizzle in the next. Still the
Command Money and Command
Government
funds provided competitive yields
during the 12-month reporting
period ended June 30, 1997 and the
Command Tax-Free Fund also
produced attractive, tax-free
income, which for the seven-day
period ending June 30, 1997 was
equivalent to a 5.76% taxable
yield for investors in the 39.6%
income tax bracket.
<TABLE>
FUND FACTS
As of 6/30/97
<CAPTION>
7 Day
Net Asset Weighted Total
Net
Current
Yld . Value Avg. Mat.
Assets (mil.)
<S> <C>
<C> <C> <C>
Command Money 5.13%
$1.00 55 days $ 6,630
IBC Financial Data 4.98%
$1.00 58 days N/A
Money Fund Avg.
(All Taxable)1
Command 5.02%
$1.00 56 days $ 528
Government
IBC Financial Data 4.89%
$1.00 48 days N/A
Total Government
Universe2
Command 3.48%
$1.00 68 days $ 1,130
Tax-Free3
IBC Financial Data 3.43%
$1.00 46 days N/A
General Purpose Tax-Free
Money Funds4
</TABLE>
Note: Yields will fluctuate from
time to time and past performance
is not indicative of future
results. An investment in the Fund
is
neither insured nor guaranteed by
the U.S. government and there
can be no assurance that the Fund
will be able to
maintain a stable net asset value.
1. This is the average 7-day
current yield, NAV and WAM of all
funds
in the International Business
Communications Financial Data all
taxable money market fund category
for July 1, 1997.
2. This is the average 7-day
current yield, NAV and WAM of all
funds in IBC Financial Data's total
government universe fund
category for July 1, 1997.
3. Some investors may be subject to
the federal alternative
minimum tax.
4. This is the average 7-day
current yield, NAV and WAM of all
funds in IBC Financial Data's
stockbroker & general purpose
tax-free money fund category for
July 1, 1997.
1
<PAGE>
Fund Objectives.
The Command Money Fund seeks high
current income, preservation
of capital and maintenance of
liquidity by investing in a
diversified portfolio of money
market instruments maturing
in 13 months or less.
The Command Government Fund seeks
high current income,
preservation of capital and
maintenance of liquidity by
investing in a portfolio of U.S.
government securities
maturing in 13 months or less.
The Command Tax-Free Fund seeks
high current income that
is exempt from federal income
taxes, consistent with the
preservation of capital and
maintenance of liquidity. The
Fund invests in a diversified
portfolio of short-term,
tax-exempt securities with
maturities of 13 months or
less that are issued by states,
municipalities and their
agencies (or authorities). Some
securities may be subject
to the federal alternative minimum
tax (AMT).
There can be no assurance that any
of the Funds will achieve
their respective investment
objectives.
Strategy Session.
A Waiting Game.
Investors spent much of the past
year waiting for the Federal
Reserve to increase the Federal
Funds rate (what banks charge
each other for overnight loans).
Correctly anticipating
changes in this rate is one way
your Fund seeks to enhance yield.
The central bank typically raises
the Federal Funds rate
to temper an economy it believes is
expanding too rapidly
and is causing inflationary
pressures to build. In a sense,
the Federal Reserve prefers the
economy to operate at the same
temperature that Goldilocks liked
her porridge -- not too hot
and not too cold.
Thus investors had ample reasons to
expect the central bank to
act when the economy expanded at a
6.0% annualized pace in the
second quarter of 1996. Beginning
in March of that year,
investors pushed up yields on money
market securities when data
indicated the economy was growing
too rapidly then drove
yields lower when the Federal
Reserve left rates unchanged.
Rate increase expectations cooled
further when a government
report revealed that real gross
domestic product (GDP is the total
value of goods and services
produced by the economy) rose at
an anemic 1.0% yearly pace in the
third quarter of 1996.
The economy picked up again to
expand at an annualized 4.3%
in the final quarter of 1996.
Furthermore, signs began to
emerge that the economy got off a
strong start in the new year.
More than 500,000 non-farm jobs
were created in the first two
months and sales at retailers
soared as the economy raced along
at a 4.9% yearly pace in the first
quarter of 1997. Investors,
sensing that
2
<PAGE>
action by the central bank was
near, began to bid
up money market yields in earnest
in late February. On
March 25, 1997, the Federal Reserve
did not disappoint them and
raised the Federal Funds rate by a
quarter percentage point to
5.5%, the first increase in two
years.
Initially, money market yields
continued to climb in the second
quarter as many investors
(including us) expected another
rate
increase at the central bank
meeting on May 20. However, weak
sales at retailers in April and May
slowed economic growth
from its breakneck pace in the
first quarter. It soon became
evident that the Federal Reserve
did not need to act again in
May, so yields on money market
securities began to edge lower.
What Went Well.
Sometimes It Pays To Wait.
The Command Money Fund maintained a
core position in variable rate
securities that reset each month or
each quarter off of the
comparable London Interbank Offered
Rate (LIBOR). Fortunately,
LIBOR had also edged higher in
anticipation of the March
interest rate increase so our
variable rate securities provided
a nice yield even before the
central bank moved in March.
The Fund was also heavily invested
in fixed-rate money market
securities that matured in one
month and three months. Owning
these securities allowed us quick
access to funds to purchase
any higher yielding securities that
became available when the
Federal Reserve boosted the Federal
Funds rate. As investors
pushed up money market yields ahead
of the rate increase, we
took advantage of the trend by
purchasing securities in the
one-year sector that provided
higher yields.
The Command Government Fund had
invested new assets in attractively
priced three- to five-month
securities last autumn when it
became
apparent that the Federal Reserve
was not going to increase rates
in 1996. Shortly before March 25,
the Fund held
securities that matured in a day or
a month in order to have
funds ready to invest in higher
yielding securities as they
became available when the central
bank increased the Federal
Funds rate. It also owned six-
month to one-year securities that
carried higher yields.
After the March interest rate
increase, yields on short-term
U.S. Treasury securities climbed
further, at least initially.
Then yields began to fall partly
because demand outstripped supply
as a declining U.S. budget deficit
and increased tax
revenues allowed the government to
issue fewer short-term Treasurys
than usual. We anticipated this
imbalance so we lengthened the
Fund's weighted average maturity
(WAM) to as much as 60 days in
the second quarter by purchasing
higher yielding
government agency securities
maturing in six months to one year.
As it turned out, this was a very
smart move.
3
<PAGE>
After the overnight bank lending
rate remained at 5.5% in May, money
market securities became more
expensive with significantly lower
yields.
Every Cloud Has A Silver Lining.
Imbalances in supply and demand can
challenge a portfolio's
performance, but the Command Tax-
Free Fund benefitted as we
took advantage of the usual
pressures that emerged in the
municipal securities market during
the April tax season. Portfolio
managers sold short-term tax-free
securities in order to
provide investors with cash to pay
their taxes. As a result,
yields surged as the market was
temporarily inundated with a
supply of tax-exempt securities.
We aggressively lengthened the
Fund's WAM in late April to longer
than that of our competition
by snapping up these cheaply priced
six-month and one-year
securities, thus locking in higher
yields for your Fund.
When the overnight bank lending
rate was left unchanged in May, we
were awfully glad we went bargain
hunting in April.
And Not So Well.
Nobody's Right All The Time.
We correctly predicted the March
rate increase, but our expectation
that a second move in May would
fuel a further rise in money
market securities yields proved
wrong. Instead, yields edged
lower later in the period as
investors realized the
central bank was going to leave the
rate unchanged.
We had shortened the WAM on the
Command Money Fund in April and
early May in preparation for a
higher overnight bank lending
rate. This hurt the Fund's
performance relative to its
competition.
Performance improved, however, when
we quickly
lengthened the WAM by buying higher
yielding nine month and one-year
money market securities.
The Command Government Fund would
have performed better had we
realized just how far short-term
interest rates would fall after
the central bank met on May 20. In
hindsight, we should have
bought even more securities in the
one-year sector that
provided such attractive yields in
early May. Still, the impact
on the Fund was minimal as its
duration was longer than that of
its competition and we continued to
search for the best yields
available on money market
securities.
Assets of the Command Tax-Free Fund
typically decline in December
as investors pay for holiday
related expenses and prepare for
year-end tax liabilities. We were
unable to purchase longer-term
attractively priced tax-free
securities in December due
to the seasonal asset declines.
Thus the Fund began the new year
with a shorter WAM than we desired.
As cash flowed back into
tax-free funds, the resulting
dearth of short-term, tax-free
securities pushed yields sharply
lower on the few securities
available for purchase.
4
<PAGE>
Fortunately, this state of affairs
known as the "January Effect"
was comparably short-lived this
year, limiting the impact on your
Fund.
Looking Ahead.
Investors are once again playing
the waiting game. Certainly
Federal
Reserve Chairman Alan Greenspan
speaking before a congressional
panel in July indicated the central
bank will not raise interest
rates soon. We believe the Federal
Reserve will
probably leave the overnight bank
lending rate at 5.5% for the
time being. With this in mind,
investors have again pushed
short-term interest rates lower.
In fact, they may have pushed
them too low in light of minutes
from the May 20 central bank
meeting that revealed the Federal
Reserve stands poised to boost
the Federal Funds rate again should
inflationary pressures build.
We are therefore taking a cautious
position.
Sincerely,
Robert N. Felice Michelle
Errico Gonnella Richard S.
Lynes
Portfolio Manager Portfolio
Manager Portfolio
Manager
Command Money Fund Command
Government Fund Command Tax-
Free Fund
Richard A. Redeker
President
5
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description
(Note 1)
<C> <S>
<C>
Bank Notes--6.3%
American Express
Centurion
Bank
$ 46,000(a) 5.6575%,
7/9/97............ $ 45,999,726
14,000(a) 5.6575%,
7/22/97........... 13,999,336
Bank of America,
Illinois
10,000 5.85%,
3/13/98.............
9,989,697
Comerica Bank of
Detroit
20,000(a) 5.5875%,
7/7/97............ 19,992,464
83,000(a) 5.5825%,
7/11/97........... 82,965,397
CoreStates Bank N.A.
10,000(a) 5.6075%,
7/18/97........... 9,997,895
8,000(a) 5.80203%,
7/23/97.......... 8,000,000
First Bank N.A.,
Minneapolis
19,000(a) 5.5875%,
7/16/97........... 18,995,855
41,000(a) 5.6075%,
7/16/97........... 40,987,631
42,000(a) 5.6475%,
7/16/97........... 42,000,000
Keybank National
Association
41,000(a) 5.6075%,
7/21/97........... 40,998,785
Wachovia Bank, N.A.
80,000 6.14%,
6/1/98..............
80,000,000
- --------------
Total Bank Notes
(amortized cost
$413,926,786)............
413,926,786
- --------------
Certificates of
Deposit - Eurodollar--3.5%
Abbey National
Treasury Services, PLC
68,000 5.76%,
8/22/97.............
68,000,000
Australia-New Zealand
Banking Group, Ltd.
18,000 5.54%,
8/4/97..............
18,000,606
Bayerische Landesbank
Girozentrale
18,000 5.52%,
7/7/97..............
18,000,041
Berliner Handels-Und
Frankfurter Bank
20,000 5.72%,
7/21/97.............
20,000,110
Credit Agricole
Indosuez
$ 21,000 5.63%,
8/11/97............. $
21,000,587
ING Bank
33,000 5.54%,
8/7/97..............
33,001,320
Swiss Bank Corp.
10,000 5.65%,
7/14/97.............
10,000,079
Toronto Dominion Bank
12,000 5.48%,
7/7/97..............
11,999,949
Westdeutsche
Landesbank
Girozentrale
34,000 5.61%,
8/18/97.............
34,000,410
- --------------
Total Certificates of
Deposit--Eurodollar
(amortized cost
$234,003,102)............
234,003,102
- --------------
Certificates of
Deposit - Yankee--17.5%
Banque Nationale de
Paris
132,000 5.74%,
8/20/97.............
132,000,000
Canadian Imperial Bank
of Commerce
200,000 5.70%,
8/14/97.............
200,000,000
41,000 5.68%,
8/19/97.............
41,000,000
19,000 5.60%,
8/25/97.............
19,000,000
Commerzbank U.S.
Finance,
Inc.
25,000 6.075%,
5/27/98............ 24,992,447
Credit Agricole
Indosuez
100,000 5.615%,
8/18/97............ 100,001,981
35,000 5.60%,
8/26/97.............
35,000,000
Creditanstalt
Bankverein
89,000 5.56%,
7/9/97..............
88,999,966
Landesbank Hessen-
Thuringen
Girozentrale
13,000 6.01%,
7/18/97.............
13,001,891
25,000 6.13%,
4/7/98..............
25,021,958
73,000 5.94%,
6/19/98.............
72,959,514
National Westminster
Bank,
PLC
46,000 6.06%,
5/26/98.............
45,980,216
44,000 6.09%,
5/27/98.............
43,992,404
</TABLE>
- -6-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description
(Note 1)
<C> <S>
<C>
Certificates of
Deposit - Yankee--(cont'd)
Societe Generale
$ 55,900 5.47%,
7/11/97............. $
55,900,800
5,000 5.49%,
8/11/97.............
4,999,568
61,000 5.75%,
12/22/97............
61,014,031
99,000 5.75%,
12/26/97............
99,023,281
10,000 6.19%,
5/6/98..............
9,994,982
13,000 6.01%,
6/16/98.............
12,996,427
Swiss Bank Corp.
75,000 5.98%,
3/19/98.............
74,989,749
- --------------
Total Certificates of
Deposit--
Yankee
(amortized cost
$1,160,869,215)..........
1,160,869,215
- --------------
Commercial Paper--
49.3%
AC Acquisition Holding
Co.
10,000 5.60%,
7/8/97..............
9,989,111
Aetna Services Inc.
5,000 5.66%,
8/20/97.............
4,960,694
American Home Products
Corp.
9,774 5.62%,
7/14/97.............
9,754,164
American Honda Finance
Corp.
8,605 5.65%,
7/28/97.............
8,568,536
24,000 5.65%,
8/12/97.............
23,841,800
Aristar, Inc.
6,000 5.67%,
7/14/97.............
5,987,715
8,221 5.72%,
7/14/97.............
8,204,019
5,000 5.70%,
7/24/97.............
4,981,792
5,000 5.70%,
7/28/97.............
4,978,625
Asset Securitization
Coop.
Corp.
79,000 5.56%,
8/18/97.............
78,414,347
45,000 5.55%,
8/19/97.............
44,660,063
Associates Corp. of
North
America
116,000 6.1875%,
7/1/97............ 116,000,000
55,166 5.55%,
7/3/97..............
55,148,991
Bank of Montreal
$ 210,000 5.53%,
7/7/97.............. $
209,806,450
118,000 5.5318%,
7/9/97............ 117,854,944
Barton Capital Corp.
48,253 5.55%,
7/7/97..............
48,208,366
18,631 5.30%,
7/15/97.............
18,592,599
4,000 5.70%,
8/15/97.............
3,971,500
Bear Stearns Comp.,
Inc.
36,000 5.57%,
7/7/97..............
35,966,580
35,000 5.58%,
7/8/97..............
34,962,025
31,000 5.55%,
7/23/97.............
30,894,858
Ciesco, L.P.
24,000 5.60%,
8/14/97.............
23,835,733
13,000 5.60%,
8/18/97.............
12,902,933
Citicorp
70,000 5.70%,
7/10/97.............
69,900,250
Coca-Cola Enterprises,
Inc.
11,108 5.66%,
8/13/97.............
11,032,904
12,000 5.70%,
8/18/97.............
11,908,800
Commerzbank U.S.
Finance,
Inc.
26,000 5.67%,
8/21/97.............
25,791,155
CoreStates Capital
Corp.
19,000(a) 5.6575%,
7/24/97........... 19,000,000
Corporate Receivables
Corp.
30,200 5.55%,
7/10/97.............
30,158,098
40,000 5.57%,
7/14/97.............
39,919,544
15,000 5.625%,
8/20/97............ 14,882,813
22,000 5.655%,
8/22/97............ 21,820,297
Countrywide Home Loan,
Inc.
27,000 5.55%,
7/2/97..............
26,995,838
Creditanstalt Finance,
Inc.
69,419 5.55%,
7/3/97..............
69,397,596
30,000 5.60%,
7/28/97.............
29,874,000
CXC, Inc.
11,000(b) 5.65%,
8/5/97..............
10,939,576
</TABLE>
- -7-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description
(Note 1)
<C> <S>
<C>
Commercial Paper--
(cont'd)
CXC, Inc.
$ 5,000(b) 5.65%,
8/7/97.............. $
4,970,965
9,000(b) 5.65%,
8/8/97..............
8,946,325
6,000(b) 5.63%,
8/14/97.............
5,958,713
Enterprise Funding
Corp.
6,000 5.58%,
7/7/97..............
5,994,420
6,416 5.64%,
8/19/97.............
6,366,747
5,047 5.63%,
8/20/97.............
5,007,535
Finova Capital Corp.
47,000 5.60%,
7/7/97..............
46,956,133
7,000 5.70%,
7/7/97..............
6,993,350
13,000 5.71%,
7/15/97.............
12,971,133
First Chicago
Financial
Corp.
44,580 5.62%,
8/20/97.............
44,232,028
6,000 5.56%,
8/25/97.............
5,949,033
First Data Corp.
27,000 5.67%,
8/19/97.............
26,791,628
7,000 5.68%,
8/19/97.............
6,945,882
Ford Motor Credit
Corp.
150,000 5.55%,
7/7/97..............
149,861,250
73,000 5.55%,
7/8/97..............
72,921,221
80,000 5.55%,
7/9/97..............
79,901,333
General Electric
Capital
Corp.
95,000 5.71%,
11/3/97.............
93,116,493
50,000 5.74%,
11/4/97.............
48,995,500
65,000 5.70%,
11/5/97.............
63,692,958
100,000 5.70%,
1/12/98.............
96,912,500
13,000 5.70%,
1/13/98.............
12,596,567
General Motors
Acceptance
Corp.
184,000 5.59%,
7/7/97..............
183,828,573
19,000 5.82%,
11/7/97.............
18,603,755
GTE Corp.
11,000 5.55%,
7/7/97..............
10,989,825
50,000 5.60%,
9/11/97.............
49,440,000
9,730 5.60%,
9/12/97.............
9,619,510
IBM Credit Corp.
46,000 5.54%,
8/19/97.............
45,653,134
50,000 5.54%,
8/20/97.............
49,615,278
International Lease
Finance
Corp.
$ 3,238 5.35%,
7/30/97............. $
3,224,045
Internationale
Nederland
U.S.
Insurance Holdings,
Inc.
15,000 5.63%,
8/11/97.............
14,903,821
John Deere Capital
Corp.
18,000 5.54%,
7/9/97..............
17,977,840
Johnson Controls, Inc.
7,159 5.63%,
7/14/97.............
7,144,445
Lehman Brothers
Holdings,
Inc.
86,911 5.75%,
7/3/97..............
86,883,237
MCI Communications
Corp.
34,700 5.45%,
7/7/97..............
34,668,481
29,000 5.54%,
7/7/97..............
28,973,223
35,000 5.54%,
7/8/97..............
34,962,297
Mitsubishi
International
Corp.
14,000 5.75%,
7/8/97..............
13,984,347
10,000 5.60%,
7/16/97.............
9,976,667
National Bank of
Canada
67,000 5.41%,
7/7/97..............
66,939,588
NYNEX Corp.
30,000 5.55%,
7/7/97..............
29,972,250
19,000 5.60%,
8/5/97..............
18,896,556
Preferred Receivables
Funding Corp.
17,650 5.57%,
7/8/97..............
17,630,884
18,000 5.55%,
7/10/97.............
17,975,025
27,000 5.58%,
7/22/97.............
26,912,115
Rank Xerox Capital
(Europe), PLC
17,000 5.54%,
8/19/97.............
16,871,811
6,000 5.56%,
8/20/97.............
5,953,667
Sears Roebuck
Acceptance
Corp.
61,000 6.20%,
7/1/97..............
61,000,000
Smith Barney, Inc.
50,000 5.55%,
7/7/97..............
49,953,750
Triple A One Funding
Corp.
7,000 5.57%,
7/7/97..............
6,993,502
5,677 5.57%,
7/11/97.............
5,668,216
</TABLE>
- -8-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description
(Note 1)
<C> <S>
<C>
Commercial Paper--
(cont'd)
UBS Finance
(Delaware),
Inc.
$ 193,086 6.20%,
7/1/97.............. $
193,086,000
WCP Funding, Inc.
20,539 5.65%,
8/4/97..............
20,429,402
12,200 5.62%,
8/12/97.............
12,120,009
- --------------
Total Commercial Paper
(amortized cost
$3,271,039,683)..........
3,271,039,683
- --------------
Loan Participations--
1.2%
Bell Atlantic
Financial Services, Inc.
10,000 5.59%,
7/2/97..............
10,000,000
7,000 5.61%,
7/8/97..............
7,000,000
Countrywide Home Loan,
Inc.
11,211 5.73%,
7/8/97..............
11,211,000
Newell Co.
50,000(b) 5.72%,
7/18/97.............
50,000,000
- --------------
Total Loan
Participations
(amortized cost
$78,211,000).............
78,211,000
- --------------
Other Corporate
Obligations--18.0%
Abbey National
Treasury Services, PLC
24,000 5.50%,
11/21/97............
23,980,419
53,000 5.50%,
11/26/97............
52,978,295
15,000 6.185%,
4/7/98............. 14,992,866
American General
Finance
Corp.
3,000 7.00%,
10/1/97.............
3,008,141
5,200 7.70%,
11/15/97............
5,233,966
Avco Financial
Services,
Inc.
7,000(a) 5.7725%,
8/15/97........... 6,999,618
Bell Atlantic
Financial Services, Inc.
4,400 6.625%,
11/30/97........... 4,415,747
Beneficial Corp.
25,000(a) 5.8525%,
8/5/97............ 25,001,527
Capita Equipment
Receivable
Trust 1996-1 A1
23,419(a) 5.60%,
7/15/97.............
23,419,643
CIT Group Holdings,
Inc.
7,000 6.20%,
4/15/98.............
7,001,222
Ford Motor Credit
Corp.
5,000 7.05%,
11/19/97............
5,026,207
General Motors
Acceptance
Corp.
$ 41,000(a) 5.79641%,
8/4/97........... $ 40,991,132
5,000 5.75%,
10/8/97.............
4,999,067
Goldman Sachs Group
L.P.
268,000(a)(b) 5.69531%,
8/22/97.......... 268,000,000
Merrill Lynch & Co.,
Inc.
40,000(a) 5.66141%,
7/1/97........... 39,997,056
20,000(a) 5.7175%,
7/16/97........... 20,001,803
61,000(a) 5.6475%,
7/24/97........... 60,990,257
Morgan Guaranty Trust
Co.
41,000(a) 5.6875%,
8/14/97........... 40,988,863
Morgan Stanley Group,
Inc.
18,000(a) 5.95313%,
7/15/97.......... 18,000,000
33,000(a) 5.95313%,
8/15/97.......... 33,000,000
PNC Student Loan Trust
I
1997-2 A-1
12,000(a) 5.6275%,
7/25/97........... 12,000,000
Short-Term Repackaged
Asset
Trust
81,000(a) 5.6875%,
7/15/97........... 80,992,068
Short-Term Card
Account
Trust 1996-1
227,000(a) 5.7075%,
7/15/97........... 227,000,000
SMM Trust Notes 1997-Q
173,000(a) 5.6875%,
7/15/97........... 173,000,000
- --------------
Total Other Corporate
Obligations
(amortized cost
$1,192,017,897)..........
1,192,017,897
- --------------
Time Deposit -
Eurodollar--3.3%
First National Bank of
Chicago
217,000 6.25%, 7/1/97
(amortized cost
$217,000,000)............
217,000,000
- --------------
Total Investments--
99.1%
(amortized cost
$6,567,067,683)..........
6,567,067,683
Other assets in excess
of
liabilities--
0.9%........ 62,834,889
- --------------
Net Assets--
100%........... $6,629,902,572
- --------------
- --------------
</TABLE>
- ---------------
(a) The maturity date presented for
these instruments is the later of
the next
date on which the security can
be redeemed at par or the next date
on which
the rate of interest is
adjusted.
(b) Indicates a security restricted
as to resale.
- -9-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
The industry classification of
portfolio holdings and other assets
in excess of liabilities shown as a
percentage of net assets as
of June 30, 1997 was as follows:
<TABLE>
<S>
<C>
Commercial
Banks............................
46.2%
Short-Term Business
Credit.................. 11.7
Security Brokers &
Dealers.................. 10.2
Asset Backed
Securities.....................
9.2
Finance
Lessors............................
. 5.2
Personal Credit
Institutions................ 4.0
Telephone &
Communications..................
3.6
Fire & Marine Casualty
Insurance............ 3.4
Bank Holding Companies -
Domestic........... 2.1
Home
Furnishings........................
.... 0.8
Mortgage
Banks..............................
0.6
Computer Rental &
Leasing................... 0.5
Commodity Trading
Firms..................... 0.4
Beverages..........................
......... 0.3
Pharmaceuticals....................
......... 0.3
Photographic
Equipment......................
0.3
Accidental & Health
Insurance............... 0.1
Equipment Rental &
Leasing.................. 0.1
Regulating
Controls.........................
0.1
- -----
99.1
Other assets in excess of
liabilities....... 0.9
- -----
100.0%
- -----
- -----
</TABLE>
- -10-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
COMMAND MONEY FUND
Statement of Assets and
Liabilities
<TABLE>
<CAPTION>
Assets
June 30, 1997
- --------------
<S>
<C>
Investments, at amortized cost
which approximates market
value..........................
$6,567,067,683
Receivable for Fund shares
sold...............................
..........................
207,161,908
Interest
receivable.........................
...................................
......... 28,092,443
Prepaid
expenses...........................
...................................
.......... 183,958
- --------------
Total
assets.............................
...................................
.......... 6,802,505,992
- --------------
Liabilities
Bank
overdraft..........................
...................................
............. 12,486
Payable for Fund shares
repurchased........................
.............................
168,915,632
Management fee
payable............................
...................................
... 1,992,918
Accrued expenses and other
liabilities........................
..........................
1,321,231
Distribution fee
payable............................
...................................
. 361,153
- --------------
Total
liabilities........................
...................................
.......... 172,603,420
- --------------
Net
Assets.............................
...................................
.............. $6,629,902,572
- --------------
- --------------
Net assets were comprised of:
Shares of beneficial interest, at
par................................
................. $ 66,299,026
Paid-in capital in excess of
par................................
......................
6,563,603,546
- --------------
Net assets, June 30,
1997...............................
................................
$6,629,902,572
- --------------
- --------------
Net asset value, offering price and
redemption price per share
($6,629,902,572 /
6,629,902,572 shares of
beneficial interest (.01 par value)
issued and outstanding)...
$1.00
- --------------
- --------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
- -11-
<PAGE>
COMMAND MONEY FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
June 30,
Net Investment Income
1997
<S>
<C>
Income
Interest...........................
.. $ 336,321,301
- ------------------
Expenses
Management
fee.......................
22,524,838
Distribution
fee.....................
7,598,156
Transfer agent's fees and
expenses... 2,080,000
Reports to
shareholders..............
1,015,000
Registration
fees....................
735,000
Custodian's fees and
expenses........ 205,000
Insurance
expense....................
104,000
Trustees' fees and
expenses..........
56,000
Audit
fee............................
30,000
Legal fees and
expenses..............
30,000
Miscellaneous......................
.. 36,669
- ------------------
Total
expenses.....................
34,414,663
- ------------------
Net investment
income..................
301,906,638
- ------------------
Realized Gain on Investments
Net realized gain on investment
transactions.......................
.. 168,167
- ------------------
Net Increase in Net Assets
Resulting from
Operations.............. $
302,074,805
- ------------------
- ------------------
</TABLE>
COMMAND MONEY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year
Ended June 30,
Increase in -------------
- ----------------------
Net Assets 1997
1996
-------------
- --- ----------------
<S> <C>
<C>
Operations
Net investment
income........... $
301,906,638 $ 252,390,009
Net realized gain
on investment
transactions.....
168,167 125,755
-------------
- --- ----------------
Net increase in net
assets resulting
from
operations.......
302,074,805 252,515,764
-------------
- --- ----------------
Dividends and
distributions to
shareholders (Note
1).................
(302,074,805) (252,515,764)
-------------
- --- ----------------
Fund share
transactions (at $1
per share)
Net proceeds from
shares
subscribed.......
30,172,770,064 24,708,980,727
Net asset value of
shares issued in
reinvestment of
dividends and
distributions....
302,074,805 252,515,764
Cost of shares
reacquired.......
(29,154,784,207) (23,707,354,464)
-------------
- --- ----------------
Net increase in net
assets from Fund
share
transactions.....
1,320,060,662 1,254,142,027
-------------
- --- ----------------
Total increase.......
1,320,060,662 1,254,142,027
Net Assets
Beginning of year....
5,309,841,910 4,055,699,883
-------------
- --- ----------------
End of year.......... $
6,629,902,572 $ 5,309,841,910
-------------
- --- ----------------
-------------
- --- ----------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
See Notes to
Financial Statements appearing on
page 29.
- -12-
<PAGE>
COMMAND MONEY FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
- -----------------------------------
- --------------------------------
1997 1996 1995
1994 1993
- ---------- ---------- ------
- ---- ---------- ----------
<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....... 0.049
0.052 0.050 0.029
0.030
Dividends and distributions to
shareholders........ (0.049)
(0.052) (0.050) (0.029)
(0.030)
- ---------- ---------- ------
- ---- ---------- ----------
Net asset value, end of
year....................... $
1.000 $ 1.000 $ 1.000
$ 1.000 $ 1.000
- ---------- ---------- ------
- ---- ---------- ----------
- ---------- ---------- ------
- ---- ---------- ----------
TOTAL
RETURN(a):.........................
.......... 5.06%
5.30% 5.13% 2.98%
3.01%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000)......................
$6,629,903 $5,309,842
$4,055,700 $2,448,201
$2,436,672
Average net assets
(000)...........................
$6,078,525 $4,896,794
$3,072,284 $2,570,195
$2,275,532
Ratios to average net assets:
Expenses, including distribution
fees............ .57%
.58% .59% .59%
.61%
Expenses, excluding distribution
fees............ .44%
.46% .47% .47%
.48%
Net investment
income............................
4.97% 5.15% 5.09%
2.92% 2.90%
</TABLE>
- ---------------
(a) Total return is calculated
assuming a purchase of shares on
the first day
and a sale on the last day of
each year reported and includes
reinvestment
of dividends and distributions.
See Notes to Financial Statements
appearing on page 29.
REPORT OF
INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Command Money Fund
In our opinion, the accompanying
statement of assets and
liabilities, including
the portfolio of investments, and
the related statements of
operations and of
changes in net assets and the
financial highlights present
fairly, in all
material respects, the financial
position of Command Money Fund (the
'Fund') at
June 30, 1997, 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, 1997 by
correspondence with the custodian,
provide a reasonable basis for the
opinion
expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
August 21, 1997
- -13-
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description
(Note 1)
<C> <S>
<C>
U.S. Government
Agencies--62.3%
Federal Farm Credit
Bank
$ 4,000 5.55%,
8/1/97................. $
3,999,251
6,000 5.85%,
8/1/97.................
6,001,590
3,500 5.32%,
12/17/97...............
3,412,589
- ------------
13,413,430
- ------------
Federal Home Loan Bank
20,000(a) 5.52641%,
7/2/97.............. 19,992,559
15,000(c) 5.78%,
7/7/98.................
14,983,500
1,000 6.645%,
8/28/97...............
1,001,433
1,000 5.46%,
9/24/97................
987,108
10,000 5.997%,
9/30/97...............
9,999,925
725 7.93%,
1/20/98................
733,695
4,600 5.99%,
2/9/98.................
4,605,705
2,290 6.04%,
5/6/98.................
2,290,623
6,580 5.23%,
7/10/97................
6,571,397
- ------------
61,165,945
- ------------
Federal Home Loan
Mortgage
Corporation
2,000 5.95%,
7/15/97................
2,000,092
13,000 5.17%,
8/14/97................
12,917,854
- ------------
14,917,946
- ------------
Federal National
Mortgage
Association
35,000(a) 5.27%,
7/1/97.................
34,998,693
25,575(a) 5.27%,
8/14/97................
25,570,235
8,695(a) 5.27%,
8/22/97................
8,694,275
25,000 5.5275%,
7/3/97............... 24,992,757
600 8.95%,
7/10/97................
600,455
1,500(a) 5.5175%,
7/12/97.............. 1,499,785
12,900 5.54%,
8/5/97.................
12,830,519
19,000(a) 5.6325%,
8/19/97.............. 18,994,511
19,200 9.55%,
9/10/97................
19,333,585
$ 25,000 5.45%,
9/15/97................ $
24,712,361
17,000 5.59%,
10/7/97................
16,741,307
8,000 5.79%,
10/16/97...............
7,998,444
5,000 5.40%,
12/5/97................
4,996,976
1,400 7.56%,
2/6/98.................
1,413,747
15,000(d) 5.89%,
5/21/98................
14,985,666
- ------------
218,363,316
- ------------
Student Loan Marketing
Association
1,000(a) 5.24%,
7/1/97.................
999,730
- ------------
United States Treasury
Notes
5,000 5.75%,
9/30/97................
5,004,120
15,000 5.125%,
2/28/98...............
14,947,252
- ------------
19,951,372
- ------------
Total U.S. Government
Agencies
(amortized cost
$328,811,739)...............
328,811,739
- ------------
Repurchase
Agreements(b)--36.6%
Bear, Stearns & Co.,
5.53%,
dated 6/26/97, due
7/3/97 in
the amount of
$10,010,753
(cost $10,000,000),
value of
collateral including
accrued
10,000 interest--
$10,231,600....... 10,000,000
Bear, Stearns & Co.,
5.50%,
dated 6/27/97, due
7/7/97 in
the amount of
$12,732,423
(cost $12,713,000),
value of
collateral including
accrued
12,713 interest--
$12,932,568....... 12,713,000
Chase Manhattan Bank,
5.55%,
dated 6/3/97, due
7/3/97, in
the amount of
$30,138,750
(cost $30,000,000),
the
value of collateral
including accrued
30,000 interest--
$30,941,169....... 30,000,000
</TABLE>
- -14-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount
Value
(000) Description
(Note 1)
<C> <S>
<C>
Repurchase
Agreements(b)--(cont'd)
Goldman Sachs & Co.,
Inc.,
5.55%, dated
6/25/97, due
7/1/97 in the amount
of
$49,588,321 (cost
$48,616,000), value
of
collateral including
accrued
$ 48,616 interest--
$49,588,321....... $ 48,616,000
Goldman Sachs & Co.,
Inc.,
5.55%, dated
6/26/97, due
7/1/97 in the amount
of
$3,078,371 (cost
$3,076,000), value
of
collateral including
accrued
$ 3,076 interest--
$3,137,520........ 3,076,000
Merrill Lynch, Pierce,
Fenner
& Smith, Inc.,
5.67%, dated
6/30/97, due 7/7/97
in the
amount of
$27,029,768 (cost
$27,000,000), value
of
collateral including
accrued
27,000 interest--
$27,543,717....... 27,000,000
Morgan Stanley & Co.,
5.54%,
dated 6/20/97, due
7/3/97,
in the amount of
$11,109,180
(cost $11,087,000),
value of
collateral including
accrued
11,087 interest--
$11,394,391....... 11,087,000
Morgan Stanley & Co.,
5.55%,
dated 6/26/97, due
7/3/97 in
the amount of
$42,045,325
(cost $42,000,000)
value of
collateral including
accrued
$ 42,000 interest--
$43,164,467....... $ 42,000,000
Smith Barney Inc.,
5.55%,
dated 6/19/97, due
7/2/97 in
the amount of
$9,118,238
(cost $9,100,000),
value of
collateral including
accrued
9,100 interest--
$9,282,773........ 9,100,000
- ------------
Total Repurchase
Agreements
(amortized cost
$193,592,000)...............
193,592,000
- ------------
Total Investments--
98.9%
(amortized cost
$522,403,739)...............
522,403,739
Other assets in excess
of
liabilities--
1.1%........... 6,065,746
- ------------
Net Assets--
100%.............. $528,469,485
- ------------
- ------------
</TABLE>
- ---------------
(a) The maturity date presented for
these instruments is the later of
the next
date on which the security can
be redeemed at par or the next date
on which
the rate of interest is
adjusted.
(b) Repurchase agreements are
collateralized by U.S. Treasury or
Federal agency
obligations.
(c) Represents when-issued or
extended settlement security.
(d) Pledged as collateral for when-
issued security or extended
settlement
security.
- -15-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
COMMAND GOVERNMENT FUND
Statement of Assets and
Liabilities
<TABLE>
<CAPTION>
Assets
June 30, 1997
- -------------
<S>
<C>
Investments, at amortized cost
which approximates market
value............................
$ 522,403,739
Cash...............................
...................................
....................
2,244
Receivable for investments
sold...............................
............................
15,176,852
Receivable for Fund shares
sold...............................
............................
14,738,967
Interest
receivable.........................
...................................
........... 3,288,053
Prepaid
expenses...........................
...................................
............ 16,460
- -------------
Total
assets.............................
...................................
............ 555,626,315
- -------------
Liabilities
Payable for investments
purchased..........................
...............................
14,983,500
Payable for Fund shares
repurchased........................
...............................
11,474,558
Accrued expenses and other
liabilities........................
............................
491,299
Management fee
payable............................
...................................
..... 178,502
Distribution fee
payable............................
...................................
... 28,971
- -------------
Total
liabilities........................
...................................
............ 27,156,830
- -------------
Net
Assets.............................
...................................
................ $ 528,469,485
- -------------
- -------------
Net assets were comprised of:
Shares of beneficial interest, at
par................................
................... $ 5,284,695
Paid-in capital in excess of
par................................
........................
523,184,790
- -------------
Net assets, June 30,
1997...............................
..................................
$ 528,469,485
- -------------
- -------------
Net asset value, offering price and
redemption price per share
($528,469,485 / 528,469,485
shares of
beneficial interest (.01 par
value) issued and
outstanding).......................
...... $1.00
- -------------
- -------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
- -16-
<PAGE>
COMMAND GOVERNMENT FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
June 30,
Net Investment Income
1997
<S>
<C>
Income
Interest...........................
... $ 29,279,865
- -------------
Expenses
Management
fee........................
2,138,318
Distribution
fee......................
668,224
Registration
fees.....................
230,000
Custodian's fees and
expenses......... 100,000
Transfer agent's fees and
expenses.... 88,000
Reports to
shareholders...............
65,000
Trustees' fees and
expenses........... 36,000
Audit
fee.............................
27,000
Legal fees and
expenses...............
20,000
Insurance
expense.....................
10,000
Miscellaneous......................
... 1,124
- -------------
Total
expenses......................
3,383,666
- -------------
Net investment
income...................
25,896,199
- -------------
Realized Gain on Investments
Net realized gain on investment
transactions.......................
... 100,048
- -------------
Net Increase in Net Assets
Resulting from
Operations............... $
25,996,247
- -------------
- -------------
</TABLE>
COMMAND GOVERNMENT FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year
Ended June 30,
Increase in -----------
- ----------------------
Net Assets 1997
1996
-----------
- ---- ---------------
<S> <C>
<C>
Operations
Net investment
income............... $
25,896,199 $ 23,722,473
Net realized gain on
investment
transactions.......
100,048 60,771
-----------
- ---- ---------------
Net increase in net
assets resulting
from operations....
25,996,247 23,783,244
-----------
- ---- ---------------
Dividends and
distributions to
shareholders (Note
1)...................
(25,996,247) (23,783,244)
-----------
- ---- ---------------
Fund share transactions
(at $1 per share)
Net proceeds from
shares
subscribed.........
2,583,554,167 2,100,249,743
Net asset value of
shares issued in
reinvestment of
dividends and
distributions......
25,996,247 23,783,244
Cost of shares
reacquired...........
(2,568,565,639) (2,040,843,422)
-----------
- ---- ---------------
Net increase in net
assets from Fund
share
transactions.......
40,984,775 83,189,565
-----------
- ---- ---------------
Total increase.........
40,984,775 83,189,565
Net Assets
Beginning of year......
487,484,710 404,295,145
-----------
- ---- ---------------
End of year............ $
528,469,485 $ 487,484,710
-----------
- ---- ---------------
-----------
- ---- ---------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
See Notes to
Financial Statements appearing on
page 29.
- -17-
<PAGE>
COMMAND GOVERNMENT FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
- -----------------------------------
- ----------------------
1997 1996 1995
1994 1993
- -------- -------- --------
- -------- --------
<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..............
0.049 .050 .048
0.028 0.028
Dividends and distributions to
shareholders...............
(0.049) (.050) (.048)
(0.028) (0.028)
- -------- -------- --------
- -------- --------
Net asset value, end of
year..............................
$ 1.000 $ 1.000 $ 1.000
$ 1.000 $ 1.000
- -------- -------- --------
- -------- --------
- -------- -------- --------
- -------- --------
TOTAL
RETURN(a)..........................
................. 4.97%
5.12% 4.89% 2.86%
2.85%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000).............................
$528,469 $487,485 $404,295
$325,257 $381,703
Average net assets
(000)..............................
.... $534,580 $477,168
$350,458 $376,159 $380,103
Ratios to average net assets:
Expenses, including distribution
fees................... 0.63%
.68% .65% .63%
.65%
Expenses, excluding distribution
fees................... 0.51%
.56% .53% .51%
.53%
Net investment
income.............................
...... 4.84% 4.97%
4.81% 2.79% 2.74%
</TABLE>
- ---------------
(a) Total return is calculated
assuming a purchase of shares on
the first day
and a sale on the last day of
each year reported and includes
reinvestment
of dividends and distributions.
See Notes to Financial Statements
appearing on page 29.
REPORT OF
INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Command Government Fund
In our opinion, the accompanying
statement of assets and
liabilities, including
the portfolio of investments, and
the related statements of
operations and of
changes in net assets and the
financial highlights present
fairly, in all
material respects, the financial
position of Command Government Fund
(the
'Fund') at June 30, 1997, 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, 1997 by correspondence with the
custodian and brokers, provide a
reasonable
basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
August 21, 1997
- -18-
<PAGE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000)
Description (a) (Note 1)
<C> <C> <S>
<C>
ALABAMA--
0.9%
Mcintosh
Ind. Dev. Bus.,
Ciba
Geigy Corp,
F.R.W.D.,
4.25%,
7/2/97, Ser.
A-1+* $ 10,100
90.................... $
10,100,000
- --------------
ARIZONA--
3.2%
Pima
Cnty. Ind. Dev.
Auth.,
F.R.W.D.,
4.35%,
7/3/97, Ser.
A-1+* 14,945
96B...................
14,945,000
Salt
River Agr. Proj.,
Imp. &
Pwr., T.E.C.P.,
3.80%,
7/18/97, Ser.
P-1 20,850
80....................
20,847,413
- --------------
35,792,413
- --------------
CALIFORNIA--1.8%
California Higher Ed.
Ln.
Auth.,
Student
Ln. Rev.,
A.N.N.M.T.,
4.00%,
7/1/98, Ser.
VMIG1 9,100
87A...................
9,100,000
California Student Ln.
Mktg.
Corp.,
Student
Ln. Rev.,
A.N.N.M.T.,
3.85%,
11/1/97, Ser.
VMIG1 10,800
93A...................
10,800,000
- --------------
19,900,000
- --------------
COLORADO-
- -3.7%
Avon
Cnty. Ind. Dev.
Rev.,
Beaver
Creek Proj.,
F.R.M.D.,
4.25%,
7/15/97, Ser.
P-1 9,000
84....................
9,000,000
Colorado
Hsg. Fin.
Auth.,
Eagle
Trust,
F.R.W.D.S.,
4.30%,
7/3/97, Ser.
A-1* 21,700
94C...................
21,700,000
Denver
City & Cnty.
Airport
Rev.,
F.R.W.D.,
4.45%,
7/2/97, Ser
VMIG1 $ 11,300
91B................... $
11,300,000
- --------------
42,000,000
- --------------
CONNECTICUT--2.7%
Connecticut St.,
F.R.W.D.,
4.10%,
7/3/97, Ser.
VMIG1 30,900
97B...................
30,900,000
- --------------
DELAWARE-
- -1.8%
Delaware
Econ. Dev.
Auth.,
Star
Enterprise,
F.R.W.D.,
4.25%,
7/2/97, Ser.
A-1+* 20,400
96A...................
20,400,000
- --------------
DISTRICT
OF COLUMBIA--2.2%
Dist. of
Columbia Hsg.
Fin.
Agcy.,
Carmel
Plaza,
F.R.W.D.,
4.15%,
7/3/97, Ser.
VMIG1 8,830
91....................
8,830,000
Dist. of
Columbia Rev.,
F.R.D.D.,
4.30%,
7/1/97, Ser.
VMIG1 1,100 92A-
5................. 1,100,000
Metro.
Wash. Airport
Rev.,
T.E.C.P.,
A-1* 14,500 4.00%,
11/17/97......... 14,500,000
- --------------
24,430,000
- --------------
FLORIDA--
1.2%
TEB Muni
Trust.,
Ambassador Apt. Inc.,
F.R.W.D.S.,
A-1+* 13,500 4.32%,
7/3/97, Ser. 1... 13,500,000
- --------------
GEORGIA--
8.4%
Burke
Cnty. Dev. Auth.,
Poll.
Ctrl. Rev.,
Oglethorpe Pwr. Corp.,
3.60%,
12/1/97, Ser.
Aaa 10,000
97A...................
10,000,000
</TABLE>
- -19-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000)
Description (a) (Note 1)
<C> <C> <S>
<C>
GEORGIA--
(cont'd)
Burke
Cnty. Dev. Auth.,
Poll.
Ctrl. Rev.,
Pwr.
Plant Vogtle
Proj.,
F.R.D.D.,
4.05%,
7/1/97, Ser.
VMIG1 $ 10,700 96-
1.................. $ 10,700,000
Oglethorpe Pwr. Corp.,
S.E.M.O.T.,
3.875%,
10/31/97, Ser.
NR 14,215
96....................
14,215,000
Cobb
Cnty. Hsg. Auth.,
Terrell
Mill II
Assoc.,
F.R.W.D.,
4.25%,
7/3/97, Ser.
A-1+* 10,600
93....................
10,600,000
De Kalb
Cnty.,
T.A.N.,
MIG1 9,000 4.00%,
12/31/97......... 9,013,994
Monroe
Cnty. Dev. Auth.,
Oglethorpe Sherer
Proj.,
S.E.M.O.T.,
3.875%,
10/31/97, Ser.
NR 13,670
96....................
13,670,000
Roswell
Hsg. Auth.,
Post
Canyon Proj.,
F.R.W.D.,
4.10%,
7/2/97, Ser.
A-1+* 9,345
96....................
9,345,000
Willacoochie Dev. Auth.,
Poll.
Ctrl. Rev.,
Langboard Inc. Proj.,
F.R.W.D.,
4.20%,
7/3/97, Ser.
Aa2 17,000
97....................
17,000,000
- --------------
94,543,994
- --------------
ILLINOIS-
- -19.8%
Chicago,
Equipment Notes,
S.E.M.M.T.,
3.60%,
12/4/97, Ser.
VMIG1 10,000
97....................
10,000,000
A.N.N.M.T.,
3.65%,
2/5/98, Ser.
VMIG1 37,000
97....................
37,000,000
Stockyards Indl. Proj.,
F.R.W.D.,
4.25%,
7/2/97, Ser.
A-1+* $ 13,300
96A................... $
13,300,000
Gurnee
Ind. Dev. Rev.,
Sterigenics Intl.
Proj.,
F.R.W.D.,
4.40%,
7/2/97, Ser.
A-1* 7,750
96....................
7,750,000
Illinois
Dev. Fin.
Auth.,
Poll. Ctrl.
Rev.,
Commonwealth Edison
Proj.,
F.R.W.D.,
4.15%,
7/2/97, Ser
VMIG1 9,000
96A...................
9,000,000
Pwr Co.
Proj., F.R.W.D.,
4.30%,
7/2/97, Ser.
VMIG1 5,000
97A...................
5,000,000
Illinois
Dev. Fin. Auth.
Rev.,
Adventist Hlth. Sys.,
F.R.W.D.,
4.20%,
7/3/97, Ser.
VMIG1 28,500
97A...................
28,500,000
Illinois
Dev. Fin.
Auth.,
Multifamily Hsg. Rev.
Proj.,
F.R.W.D.,
4.50%,
7/4/97, Ser.
A-1* 18,900
92....................
18,900,000
Illinois
Hlth. Fac.
Auth.,
Servant
Cor. Falcon
II,
F.R.W.D.,
4.25%,
7/2/97, Ser.
A1+* 16,000
96A...................
16,000,000
Children's Mem. Hosp.,
S.E.M.M.T.,
3.55%,
8/5/97, Ser.
VMIG1 15,000
90A...................
15,000,000
Evanston
Hosp. Corp.
Prog.,
A.N.N.M.T.,
4.00%,
5/15/98, Ser.
VMIG1 18,000
95....................
18,000,000
Evanston
Hosp. Corp.
Proj.,
A.N.N.M.T.,
3.70%,
12/1/97, Ser.
VMIG1 12,000
92....................
12,000,000
Victory
Hlth. Svcs.
Proj.,
M.T.H.M.T.,
3.85%,
7/17/97, Ser.
VMIG1 11,300
91....................
11,300,000
</TABLE>
- -20-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000)
Description (a) (Note 1)
<C> <C> <S>
<C>
ILLINOIS-
- -(cont'd)
Illinois
Hlth. Fac. Dev.
Auth.,
Riverside Hlth. Sys.,
F.R.W.D.,
4.20%,
7/2/97, Ser.
VMIG1 $ 11,500
94.................... $
11,500,000
Kane Mc
Henry Cook &
Dekalb
Cnty.,
Tax
Ant. Wts.,
4.05%,
9/26/97, Ser.
NR 10,000
96....................
10,009,357
- --------------
223,259,357
- --------------
INDIANA--
2.0%
Elkhart
Comm. Sch.,
Tax
Ant. Wts., T.L.N.,
NR 6,000 3.90%,
12/31/97......... 6,002,611
Indiana
Ed. Fac. Auth.,
Wesleyan Univ.,
F.R.W.D.,
4.20%,
7/3/97, Ser.
NR 9,600
93....................
9,600,000
Indiana
Hlth. Fac. Fin.
Auth.
Rev.,
Baptist Homes of
Indiana, F.R.W.D.,
4.20%,
7/3/97, Ser.
NR 6,960
95....................
6,960,000
- --------------
22,562,611
- --------------
IOWA--
2.6%
Louisa
Cnty. Poll. Ctrl.
Rev.,
Mid
American Energy,
F.R.W.D.,
4.20%,
7/2/97, Ser.
VMIG1 20,000
85....................
20,000,000
Sergeant
Bluff Dev.
Rev.,
Sioux
City Brick &
Tile
Proj., F.R.W.D.,
4.35%,
7/3/97, Ser.
NR 9,100
96....................
9,100,000
- --------------
29,100,000
- --------------
KENTUCKY-
- -3.1%
Louisville & Jefferson
Cnty.,
Sewer &
Drainage
Sub.
Notes, F.R.W.D.,
SP-1* $ 35,000 4.20%,
7/3/97........... $ 35,000,000
- --------------
LOUISIANA-
- -1.5%
Calcasieu
Parish Ind.
Dev.
Board,
Citgo.
Corp.,
F.R.D.D.,
4.30%,
7/1/97, Ser.
VMIG1 1,100
94....................
1,100,000
Louisiana
Pub. Facs.
Auth.
Rev.,
Multifamily Hsg.
Shadow
Lake
Apts., F.R.W.D.,
4.40%,
7/3/97, Ser.
A-1* 5,000
93....................
5,000,000
Louisiana
Pub. Facs.
Auth.,
Hosp.
Equip.,
F.R.W.D.,
4.45%,
7/2/97, Ser.
VMIG1 6,900
85A...................
6,900,000
West
Baton Rouge Parish
Ind.
Dist Pound3 Rev.,
Dow
Chemical Co.
Proj.,
T.E.C.P.,
3.80%,
8/1/97, Ser.
P1 3,000
91....................
3,000,000
F.R.D.D.,
4.15%,
7/1/97, Ser
P1 1,100
94B...................
1,100,000
- --------------
17,100,000
- --------------
MASSACHUSETTS--6.5%
Massachusetts Bay
Transit
Auth.,
4.25%,
2/27/98, Ser.
MIG2 29,000
97A...................
29,041,058
</TABLE>
- -21-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000)
Description (a) (Note 1)
<C> <C> <S>
<C>
MASSACHUSETTS--(cont'd)
Massachusetts Hsg. Fin.
Agcy.,
Single Family
Hsg.
Rev., Ser.
5-Eagle
Trust,
Q.T.R.O.T.S.,
3.70%,
9/1/97, Ser.
A-1+* $ 8,000
96.................... $
8,000,000
Methuen,
Gen. Oblig.,
B.A.N.,
4.25%,
12/18/97, Ser.
MIG1 15,000
97....................
15,033,744
Revere
Hsg. Auth.,
Multifamily Mtge.
Rev.,
Waters Edge
Apts.
Proj., F.R.W.D.,
4.50%,
7/4/97, Ser.
A-1* 22,000
91C...................
22,000,000
- --------------
74,074,802
- --------------
MICHIGAN-
- -2.2%
Charter
Co. of Wayne,
Detroit
Metro Wayne
Co.
Airport, F.R.W.D.,
4.25%,
7/2/97, Ser.
P-1 9,400
96A...................
9,400,000
Detroit
City Sch. Dist.,
Tax
Gen. Oblig.,
4.50%,
5/1/98, Ser.
SP-1+* 15,000
97....................
15,072,600
- --------------
24,472,600
- --------------
MINNESOTA-
- -0.5%
Bloomington Comm. Dev.
Rev.,
94th
Street Assoc.
Proj.,
F.R.W.D.,
4.20%,
7/4/97, Ser.
A-1+* 5,375
85....................
5,375,000
- --------------
MISSISSIPPI--1.5%
Harrison
Cnty. Poll.
Ctrl.
Rev.,
Mississippi Pwr. Co.
Proj.,
F.R.W.D.,
4.20%,
7/2/97, Ser.
A-1* $ 16,750
92.................... $
16,750,000
- --------------
MISSOURI-
- -1.8%
Missouri
Environ. Impvt.
&
Energy Res. Auth.,
Union
Elec. Co.,
A.N.N.O.T.,
3.95%,
6/1/98, Ser.
P-1 7,120
84A...................
7,120,000
St.
Charles Cnty. Ind.
Dev.
Auth., Cedar
Ridge
Apts., F.R.W.D.,
4.30%,
7/2/97, Ser.
A-1+* 13,775
88A...................
13,775,000
- --------------
20,895,000
- --------------
NEVADA--
0.3%
Washoe
Cnty. Wtr. Facs.
Rev.,
Sierra
Pacific Pwr.
Co.
Proj., F.R.D.D.,
4.25%,
7/1/97, Ser.
P-1 3,000
90,...................
3,000,000
- --------------
NEW
HAMPSHIRE--2.1%
New
Hampshire Bus. Fin.
Auth.,
New
England Pwr. Co.
Proj.,
T.E.C.P.,
3.75%,
10/1/97, Ser.
VMIG1 24,200
90B...................
24,200,000
- --------------
NEW
MEXICO--0.2%
Farmington Poll. Ctrl.
Rev.,
Pub.
Serv. Proj.,
F.R.D.D.,
4.25%,
7/1/97, Ser.
P1 1,900
94C,..................
1,900,000
- --------------
</TABLE>
- -22-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000)
Description (a) (Note 1)
<C> <C> <S>
<C>
NEW YORK-
- -2.5%
New York
City
Gen
Oblig., T.E.C.P.,
3.60%,
7/24/97, Ser.
VMIG1 $ 6,800 94H-
3................. $ 6,800,000
3.75%,
8/13/97, Ser.
VMIG1 4,500 94H-
2................. 4,500,000
New York
Med. Care Facs.
Fin.
Agcy., Hosp &
Nursing
Home Proj.,
8.10%,
2/15/98, Ser.
Aaa 16,050
88B...................
16,772,109
- --------------
28,072,109
- --------------
NORTH
CAROLINA--1.7%
Cabarrus
Cnty. Ind.
Facs.
Auth., Poll.
Ctrl.
Rev.,
Philip
Morris Proj.,
F.R.W.D.,
4.35%,
7/2/97, Ser.
P1 5,000
92....................
5,000,000
Charlotte
Airport Rev.,
Rfdg.,
F.R.W.D.,
4.25%,
7/2/97, Ser.
VMIG1 14,500
97....................
14,500,000
- --------------
19,500,000
- --------------
OHIO--
2.7%
Hamilton
Cnty. Hosp. Facs. Rev.,
Health
Alliance, F.R.W.D.,
VMIG1 10,000 4.15%,
7/3/97, Ser. B... 10,000,000
Medina
Cnty. Hsg. Rev.,
Oaks At
Medina Proj.,
F.R.W.D.,
NR 9,650 4.20%,
7/3/97........... 9,650,000
Ohio Wtr.
Dev. Auth.,
Poll.
Ctrl. Facs.,
Ohio
Edison Co. Proj.,
A.N.N.O.T.,
4.10%,
5/1/98, Ser.
VMIG1 10,480
88A...................
10,480,000
- --------------
30,130,000
- --------------
OKLAHOMA-
- -0.5%
Muskogee
Ind. Trust,
Muskogee Mall Proj.,
F.R.W.D.,
4.40%,
7/2/97, Ser.
VMIG1 $ 5,400
85.................... $
5,400,000
- --------------
PENNSYLVANIA--3.4%
Emmaus
Gen. Auth., F.R.W.D.,
4.45%,
7/2/97, Ser.
A-1+* 3,500
96....................
3,500,000
Montgomery Cnty., Higher
Ed.,
F.R.W.D.,
4.45%,
7/2/97, Ser.
A-1+* 15,700
96A...................
15,700,000
Northeastern Hosp. & Ed.
Auth.,
Hlth. Fin.
Prog.,
F.R.W.D.,
4.25%,
7/2/97, Ser.
VMIG1 19,900
96....................
19,900,000
- --------------
39,100,000
- --------------
RHODE
ISLAND--1.3%
Rhode
Island Hsg. & Mtg.
Fin.
Corp.,
Homeownership Op.
Proj.,
A.N.N.M.T.,
3.70%,
12/2/97, Ser.
VMIG1 4,985 22-
B.................. 4,985,000
Rhode
Island Student Ln.
Auth.,
Student
Loan Program
Rev.
Proj., F.R.W.D.,
4.25%,
7/2/97, Ser.
A-1+* 10,000 96-
2.................. 10,000,000
- --------------
14,985,000
- --------------
SOUTH
CAROLINA--1.2%
York
Cnty. Poll. Ctrl.
Rev.,
North
Carolina
Electric Proj.,
S.E.M.O.T.,
3.55%,
9/15/97, Ser.
VMIG1 13,500 84N-
3................. 13,500,000
- --------------
</TABLE>
- -23-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000)
Description (a) (Note 1)
<C> <C> <S>
<C>
SOUTH
DAKOTA--1.3%
South
Dakota Hsg. Dev.
Auth.,
Home
Ownership Mtg.,
A.N.N.M.T.,
3.85%,
3/26/98, Ser.
VMIG1 $ 9,180
97C................... $
9,180,000
F.R.W.D.S.,
4.40%,
7/3/97, Ser.
A-1+* 5,760 PT-
85................. 5,760,000
- --------------
14,940,000
- --------------
TENNESSEE-
- -2.0%
Nashville
& Davidson
Cnty.
Ind. Dev. Brd.
Rev.,
F.R.W.D.,
A-1+* 8,540 4.25%,
7/3/97, Ser. A... 8,540,000
Montgomery Cnty. Tax
Pub.
Auth.,
F.R.W.D.,
4.20%,
7/3/97, Ser.
A-1+* 14,600
95....................
14,600,000
- --------------
23,140,000
- --------------
TEXAS--
7.4%
Brazos
River Harbor Nav.
Dist.,
Dow
Chemical Co.
Proj.,
T.E.C.P.,
3.80%,
8/1/97, Ser.
P-1 6,100
91....................
6,100,000
Collin
Cnty. Hsg. Fin.
Corp.,
Huntington
Apts.
Proj., F.R.W.D.,
4.30%,
7/3/97, Ser.
A-1* 6,155
96....................
6,155,000
Dallas
Area Rapid Trans.
Auth.,
T.E.C.P.,
3.80%,
8/22/97, Ser.
P-1 7,500
A.....................
7,500,000
DeSoto
Ind. Dev. Auth.,
Nat'l.
Svc. Inds. Inc.
Proj.,
F.R.W.D.,
4.20%,
7/3/97, Ser.
CPS1 $ 7,150
91.................... $
7,150,000
Greater
East Texas
Student
Ln. Rev.,
A.N.N.O.T.,
4.10%,
5/1/98, Ser.
VMIG1 10,500
95A...................
10,500,000
Gulf
Coast Ind. Dev.
Auth.,
Citgo
Petro. Proj.,
F.R.D.D.,
4.30%,
7/1/97, Ser.
VMIG1 1,100
94....................
1,100,000
Houston,
Gen. Oblig.,
T.E.C.P.,
3.75%,
8/20/97, Ser.
P-1 16,700
A.....................
16,700,000
Water &
Sewer Proj.,
T.E.C.P.,
P-1 8,000 3.75%,
8/7/97, Ser. A... 8,000,000
3.85%,
8/19/97, Ser.
P-1 7,400
A.....................
7,400,000
Texas
State, T.R.A.N.,
4.75%,
8/29/97, Ser.
MIG1 7,000
96....................
7,008,487
Waller
Cnty. Ind. Dev.
Corp.,
Mckesson Water
Prod.,
F.R.W.D.,
4.45%,
7/2/97, Ser.
A-1* 6,000
96....................
6,000,000
- --------------
83,613,487
- --------------
VIRGINIA-
- -1.6%
Harrisonburg Redev. &
Hsg.
Auth.,
Multifamily Hsg. Rev.,
F.R.W.D.,
4.15%,
7/3/97, Ser.
VMIG1 18,555
91A...................
18,555,000
- --------------
</TABLE>
- -24-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
Value
(Unaudited) (000)
Description (a) (Note 1)
Description (a)
<C> <C> <S>
<C>
WASHINGTON--1.7%
Pierce
Cnty. Econ. Dev.
Corp.,
Sealand Inc.,
F.R.W.D.,
4.20%,
7/3/97, Ser.
CPS1 $ 10,000
96.................... $
10,000,000
Washington Hsg. Fin.
Comm.,
Mills Plains
Crossing Proj.,
F.R.W.D.,
4.25%,
7/1/97, Ser.
A-1+* 7,800
88....................
7,800,000
Canyon
Lakes II Proj.,
F.R.D.D.,
5.50%,
7/1/97, Ser.
VMIG1 1,150
94....................
1,150,000
- --------------
18,950,000
- --------------
WEST
VIRGINIA--0.9%
Marshall
Cnty.,
Pollution Cntrl. Rev.
Proj.,
F.R.D.D.,
4.15%,
7/1/97, Ser.
P-1 1,500
85....................
1,500,000
West
Virginia Public
Energy
Auth. Rev.,
Morgantown Energy,
T.E.C.P.,
3.75%,
8/12/97, Ser.
A-1+* 9,000
89A...................
9,000,000
- --------------
10,500,000
- --------------
Total
Investments--98.2%
(cost
$1,109,641,373)... $1,109,641,373
Other
assets in excess
of
liabilities--1.8%.....
19,871,676
- --------------
Net
Assets--100%........ $1,129,513,049
- --------------
- --------------
</TABLE>
- ---------------
(a) The following abbreviations are
used in portfolio descriptions:
A.N.N.M.T.--Annual Mandatory
Tender.
A.N.N.O.T.--Annual Optional
Tender.
F.R.D.D.--Floating Rate (Daily)
Demand Note(b).
F.R.M.D.--Floating Rate (Monthly)
Demand Note(b).
F.R.W.D.--Floating Rate (Weekly)
Demand Note(b).
F.R.W.D.S.--Floating Rate
(Weekly) Demand--Synthetic Note(b).
M.T.H.M.T.--Monthly Mandatory
Tender.
Q.T.R.O.T.S.--Quarterly Optional
Tender--Synthetic (b).
S.E.M.M.T.--Semi-Annual Mandatory
Tender.
S.E.M.O.T.--Semi-Annual Optional
Tender.
T.A.N.--Tax Anticipation Note.
T.E.C.P.--Tax Exempt Commercial
Paper.
T.L.N.--Temporary Loan Note.
T.R.A.N.--Tax and Revenue
Anticipation Note.
(b) For purposes of amortized cost
valuation, the maturity date of
Floating Rate
Demand Notes is considered to
be the later of the next date on
which the
security can be redeemed at par
or the next date on which the rate
of
interest is adjusted.
* Standard & Poor's rating.
NR--Not Rated by Moody's or
Standard & Poor's.
- -25-
See Notes
to Financial Statements appearing
on page 29.
<PAGE>
COMMAND TAX-FREE FUND
Statement of Assets and
Liabilities
<TABLE>
<CAPTION>
Assets
June 30, 1997
- --------------
<S>
<C>
Investments, at amortized cost
which approximates market
value..........................
$1,109,641,373
Cash...............................
...................................
.................. 39,930
Receivable for investments
sold...............................
..........................
30,500,000
Receivable for Fund shares
sold...............................
..........................
29,811,393
Interest
receivable.........................
...................................
......... 7,402,901
Prepaid
expenses...........................
...................................
.......... 35,108
- --------------
Total
assets.............................
...................................
.......... 1,177,430,705
- --------------
Liabilities
Payable for Fund shares
repurchased........................
.............................
22,672,071
Payable for investments
purchased..........................
.............................
24,172,600
Accrued
expenses...........................
...................................
.......... 580,110
Management fee
payable............................
...................................
... 429,992
Distribution fee
payable............................
...................................
. 62,883
- --------------
Total
liabilities........................
...................................
.......... 47,917,656
- --------------
Net
Assets.............................
...................................
.............. $1,129,513,049
- --------------
- --------------
Net assets were comprised of:
Shares of beneficial interest, at
par................................
................. $ 11,295,130
Paid-in capital in excess of
par................................
......................
1,118,217,919
- --------------
Net assets, June 30,
1997...............................
................................
$1,129,513,049
- --------------
- --------------
Net asset value, offering price and
redemption price per share
($1,129,513,049 /
1,129,513,049 shares of
beneficial interest ($.01 par
value) issued and
outstanding).......................
...................................
................ $1.00
- --------------
- --------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
- -26-
<PAGE>
COMMAND TAX-FREE FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
June 30,
Net Investment Income
1997
<S>
<C>
Income
Interest...........................
... $ 42,898,304
- -------------
Expenses
Management
fee........................
5,304,067
Distribution
fee......................
1,476,356
Registration
fees.....................
200,000
Transfer agent's fees and
expenses.... 185,000
Reports to
shareholders...............
115,000
Custodian's fees and
expenses......... 100,000
Trustees' fees and
expenses........... 42,000
Insurance
expense.....................
22,000
Audit fee
............................
27,000
Legal fees and
expenses...............
20,000
Miscellaneous......................
... 16,431
- -------------
Total
expenses......................
7,507,854
Less: custodian fee
credit.......... (56,053)
- -------------
Net
expenses........................
7,451,801
- -------------
Net investment
income...................
35,446,503
- -------------
Realized Gain on Investments
Net realized gain on investment
transactions.......................
... 8,700
- -------------
Net Increase in Net Assets
Resulting from
Operations............... $
35,455,203
- -------------
- -------------
</TABLE>
COMMAND TAX-FREE FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year
Ended June 30,
Increase in -----------
- ----------------------
Net Assets 1997
1996
-----------
- ---- ---------------
<S> <C>
<C>
Operations
Net investment
income............... $
35,446,503 $ 34,755,227
Net realized gain on
investment
transactions.......
8,700 14,814
-----------
- ---- ---------------
Net increase in net
assets resulting
from operations....
35,455,203 34,770,041
-----------
- ---- ---------------
Dividends and
distributions to
shareholders (Note
1)...................
(35,455,203) (34,770,041)
-----------
- ---- ---------------
Fund share transactions
(at $1 per share)
Net proceeds from
shares
subscribed.........
4,862,507,754 4,980,375,440
Net asset value of
shares issued in
reinvestment of
dividends and
distributions......
35,455,203 34,770,041
Cost of shares
reacquired...........
(4,925,385,345) (4,913,777,690)
-----------
- ---- ---------------
Net increase
(decrease) in net
assets from Fund
share
transactions.......
(27,422,388) 101,367,791
-----------
- ---- ---------------
Total increase
(decrease)...........
(27,422,388) 101,367,791
Net Assets
Beginning of year......
1,156,935,437 1,055,567,646
-----------
- ---- ---------------
End of year............ $
1,129,513,049 $ 1,156,935,437
-----------
- ---- ---------------
-----------
- ---- ---------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
See Notes to
Financial Statements appearing on
page 29.
- -27-
<PAGE>
COMMAND TAX-FREE FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
- -----------------------------------
- ----------------------------
1997 1996 1995
1994 1993
- ---------- ---------- ------
- ---- -------- --------
<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..........
0.030 0.031 0.032
0.020 0.022
Dividends and distributions to
shareholders...........
(0.030) (0.031)
(0.032) (0.020) (0.022)
- ---------- ---------- ------
- ---- -------- --------
Net asset value, end of
year.......................... $
1.000 $ 1.000 $ 1.000
$ 1.000 $ 1.000
- ---------- ---------- ------
- ---- -------- --------
- ---------- ---------- ------
- ---- -------- --------
TOTAL
RETURN(a)..........................
............. 3.05%
3.12% 3.29% 1.98%
2.23%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000).........................
$1,129,513 $1,156,935
$1,055,568 $847,602 $853,930
Average net assets
(000)..............................
$1,181,084 $1,134,257 $
926,888 $908,421 $823,517
Ratios to average net assets:
Expenses, including distribution
fees............... .64%
.66% .66% .65%
.68%
Expenses, excluding distribution
fees............... .51%
.54% .54% .53%
.55%
Net investment
income.............................
.. 3.00% 3.06%
3.05% 1.96% 2.09%
</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 29.
REPORT OF
INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Command Tax-Free Fund
In our opinion, the accompanying
statement of assets and
liabilities, including
the portfolio of investments, and
the related statements of
operations and of
changes in net assets and the
financial highlights present
fairly, in all
material respects, the financial
position of Command Tax-Free Fund
(the 'Fund')
at June 30, 1997, 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, 1997 by
correspondence with the custodian
and brokers, provide a reasonable
basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
August 21, 1997
- -28-
<PAGE>
COMMAND FUNDS
Notes to Financial Statements
Command Money Fund, Command
Government Fund, and Command Tax-
Free Fund (each
a 'Fund' and collectively, the
'Funds') are each registered under
the Investment
Company Act of 1940 as an open-end,
diversified management investment
company
whose shares are offered
exclusively to participants in the
Prudential
Securities Command Account Program
of Prudential Securities
Incorporated
(Prudential Securities). The
Command Money Fund seeks high
current income,
preservation of capital and
maintenance of liquidity by
investing in a
diversified portfolio of money
market instruments maturing in 13
months or less.
The Command Government Fund seeks
high current income, preservation
of capital
and maintenance of liquidity by
investing in a portfolio of U.S.
government
securities maturing in 13 months or
less. The Command Tax-Free Fund
seeks high
current income that is exempt from
federal income taxes, consistent
with the
preservation of capital and
maintenance of liquidity. The Fund
invests in a
diversified portfolio of short-
term, tax-exempt securities with
maturities of 13
months or less that are issued by
states, municipalities and their
agencies (or
authorities). Some securities may
be subject to the federal
alternative minimum
tax (AMT). The Funds invest in a
portfolio of money market
instruments whose
ratings are within the two highest
ratings categories by a nationally
recognized
statistical rating agency or, if
not rated, are of comparable
quality. The
ability of the issuers of the
securities held by the Funds to
meet their
obligations may be affected by
economic and/or political
developments in a
specific industry, state or region.
Note 1. Accounting The
following is a summary
Policies of
significant accounting poli-
cies
followed by the Funds in the
preparation of
their financial statements.
Securities Valuation: Portfolio
securities are valued at amortized
cost, which
approximates market value. The
amortized cost method involves
valuing a security
at its cost on the date of purchase
and thereafter assuming a constant
amortization to maturity of any
discount or premium. If the
amortized cost
method is determined not to
represent fair value, the value
shall be determined
by or under the direction of the
Board of Trustees. All securities
are valued as
of 4:30 p.m., New York time.
In connection with transactions
in repurchase agreements, it is the
Funds'
policy that its custodian or
designated subcustodians, as the
case may be under
triparty repurchase agreements,
take possession of the underlying
collateral
securities, the value of which
exceeds the principal amount of the
repurchase
transaction, including accrued
interest. If the seller defaults
and the value of
the collateral declines or if
bankruptcy proceedings are
commenced with respect
to the seller of the security,
realization of the collateral by
the Funds may be
delayed or limited.
Securities Transactions and
Investment Income: Securities
transactions are
recorded on the trade date.
Realized gains and losses on sales
of investments
are calculated on the identified
cost basis. Interest income is
recorded on the
accrual basis. Expenses are
recorded on the accrual basis which
may require the
use of certain estimates by
management. The cost of portfolio
securities for
federal income tax purposes is
substantially the same as for
financial reporting
purposes.
Federal Income Taxes: Each Fund
intends to continue to comply with
the
requirements of the Internal
Revenue Code applicable to
regulated investment
companies and to distribute all of
its net income to its shareholders.
Therefore, no federal income tax
provision is required.
Dividends: Each Fund declares all
of its net investment income as
dividends
daily to its shareholders of record
at the time of such declaration.
Dividends
are reinvested daily into
additional full and fractional
shares of the
respective Fund at the net asset
value per share determined on the
date of
declaration. Net investment income
for dividend purposes includes
accrued
interest and amortization of
premiums and discounts, plus or
minus any gains or
losses realized on sales of
portfolio securities, and less the
estimated
expenses of the Fund applicable to
the dividend period.
Custody Fee Credits: The Command
Tax-Free Fund has an arrangement
with its
custodian bank, whereby uninvested
money earn credits which reduce the
fees
charged by the custodian.
Note 2. Agreements Each
Fund has a manage-
ment
agreement with Prudential
Investments Fund
Management LLC (PIFM). Pursuant to
this agreement PIFM has
responsibility for
all investment advisory services
and supervises the subadviser's
performance of
such services. PIFM has entered
into a subadvisory agreement with
the Prudential
Investment Corporation (PIC); PIC
furnishes investment advisory
services in
connection with the management of
the Funds. PIFM pays for the cost
of the
subadvisor's services, the
compensation of officers of the
Funds, occupancy and
certain clerical and bookkeeping
- -29-
<PAGE>
costs of the Funds. The Funds bear
all other costs and expenses.
The management fee paid PIFM is
computed daily and payable monthly
on the
following basis:
<TABLE>
<CAPTION>
Average Daily
Command Command Command
Net Assets
Money Government Tax-Free
- -----------------------------------
- - ------- ---------- -------
<S>
<C> <C> <C>
First $500
million.................. .500%
.400% .500%
Second $500
million................. .425%
.400% .425%
Third $500
million.................. .375%
.375% .375%
Excess of $1.5
billion.............. .350%
.375% .375%
</TABLE>
Each Fund has a distribution
agreement with Prudential
Securities
Incorporated ('PSI'), which acts as
the distributor of the shares of
each Fund.
Each Fund compensates PSI for
distributing and servicing each
Funds shares,
pursuant the plan of distribution
at an annual rate of .125 of 1% of
the average
daily net assets of each Fund's
shares. The distribution fees for
shares are
accrued daily and payable monthly.
Note 3. Other
Prudential Mutual Fund Ser-
Transactions vices
LLC (PMFS), a wholly-
with Affiliates owned
subsidiary of PMF,
serves as the Funds' transfer
agent. During the
year ended June 30, 1997 the Funds
incurred fees for the services of
PMFS of
approximately:
<TABLE>
<S>
<C>
Command
Money..............................
.... $2,041,700
Command
Government.........................
.... $ 85,000
Command Tax-
Free...............................
$ 179,700
</TABLE>
As of June 30, 1997, the
following amounts were due to PMFS
from the Funds:
<TABLE>
<S>
<C>
Command
Money..............................
...... $197,477
Command
Government.........................
...... $ 7,474
Command Tax-
Free...............................
.. $ 15,216
</TABLE>
- -30-
<PAGE>
FEDERAL
INCOME TAX INFORMATION
(UNAUDITED)
COMMAND TAX-FREE FUND:
We are required by the Internal
Revenue Code to advise you within
60 days of
the Command Tax-Free Fund's fiscal
year end (June 30, 1997) as to the
federal
tax status of dividends and
distributions paid by the Fund
during such fiscal
year. Accordingly, we are advising
you that for the year ended June
30, 1997,
dividends paid from net investment
income totalling $.030 per share
were all
federally tax-exempt interest
dividends.
COMMAND GOVERNMENT FUND AND COMMAND
MONEY FUND:
IMPORTANT NOTICE FOR CERTAIN
SHAREHOLDERS
We are required by
Massachusetts, Missouri and Oregon
to inform you that
dividends which have been derived
from interest on federal
obligations are not
taxable to shareholders providing
the mutual fund meets certain
requirements
mandated by the respective state's
taxing authorities. We are pleased
to report
that 20.2% and 1.8% of the
dividends paid by the Command
Government Fund and
Command Money Fund, respectively,
qualify for such deduction.
For more detailed information
regarding your state and local
taxes, you
should contact your tax advisor or
the state/local taxing authorities.
- -31-
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Toll free (800) 222-4324
(LOGO)
Trustees
Edward D. Beach
Stephen C. Eyre
Delayne Dedrick Gold
Robert F. Gunia
Don G. Hoff
Robert E. LaBlanc
Mendel A. Melzer
Richard A. Redeker
Robin B. Smith
Langdon R. Stevenson
Stephen Stoneburn
Nancy H. Teeters
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice President
Grace Torres, Treasurer
S. Jane Rose, Secretary
Manager
Prudential Investments Fund
Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment
Corporation
Prudential Plaza
Newark, NJ 07101
Distributor
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
This report is not authorized for
distribution to prospective
investors
unless preceded or accompanied by a
current prospectus.
