COMMAND GOVERNMENT FUND, 485BPOS, 1998-09-01

COMMAND GOVERNMENT FUND
485BPOS, 1998-09-01

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON SEPTEMBER 1, 1998

SECURITIES ACT REGISTRATION NO. 2-73901

INVESTMENT COMPANY ACT REGISTRATION NO. 811-3251
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /

PRE-EFFECTIVE AMENDMENT NO. / /

POST-EFFECTIVE AMENDMENT NO. 18 /X/

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /

AMENDMENT NO. 19 /X/

(Check appropriate box or boxes)
------------------------

COMMAND GOVERNMENT FUND
(Exact name of registrant as specified in charter)

GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
(Address of Principal Executive Offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (973) 367-7530

S. JANE ROSE, ESQ.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
(Name and Address of Agent for Service of Process)

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective
date of the Registration Statement.

It is proposed that this filing will become effective
(check appropriate box):

/X/ immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule
485.

If appropriate, check the following box:
/ / This post-effective amendment designates a new
effective date for a previously filed
post-effective amendment.

Titles of Securities Being Registered...Shares of beneficial interest, $.01 par
value per share.

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<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)

<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- ---------------------------------------------------------------------- ---------------------------------------------
<S> <C> <C>
PART A
Item 1. Cover Page................................................ Cover Page
Item 2. Synopsis.................................................. Fund Expenses; Fund Highlights
Item 3. Condensed Financial Information........................... Fund Expenses; Financial Highlights;
Calculation of Yield
Item 4. General Description of Registrant......................... Cover Page; Fund Highlights; How the Funds
Invest; General Information
Item 5. Management of Fund........................................ How the Funds are Managed; Financial
Highlights; General Information
Item 5A. Management's Discussion of Fund Performance............... Financial Highlights
Item 6. Capital Stock and Other Securities........................ Taxes, Dividends and Distributions; General
Information; Shareholder Guide
Item 7. Purchase of Securities Being Offered...................... Cover Page; How the Funds Value Their Shares;
Shareholder Guide
Item 8. Redemption or Repurchase.................................. Shareholder Guide; General Information
Item 9. Pending Legal Proceedings................................. Not Applicable

PART B

Item 10. Cover Page................................................ Cover Page
Item 11. Table of Contents......................................... Table of Contents
Item 12. General Information and History........................... General Information
Item 13. Investment Objectives and Policies........................ Investment Objectives and Policies;
Investment Restrictions
Item 14. Management of the Fund.................................... Trustees and Officers; Manager; Distributor
Item 15. Control Persons and Principal Holders of Securities....... Trustees and Officers
Item 16. Investment Advisory and Other Services.................... Manager; Distributor; Custodian, Transfer and
Dividend Disbursing Agent and Independent
Accountants
Item 17. Brokerage Allocation and Other Practices.................. Portfolio Transactions
Item 18. Capital Stock and Other Securities........................ Not Applicable
Item 19. Purchase, Redemption and Pricing of Securities Being Shareholder Guide; Shareholder Services
Offered...................................................
Item 20. Tax Status................................................ Taxes, Dividends and Distributions
Item 21. Underwriters.............................................. Distributor
Item 22. Calculation of Performance Data........................... Calculation of Yield
Item 23. Financial Statements...................................... Financial Statements

PART C
Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C to
this Post-Effective Amendment to the Registration Statement.
</TABLE>

<PAGE>
COMMAND MONEY FUND

COMMAND TAX-FREE FUND

COMMAND GOVERNMENT FUND

PROSPECTUS DATED SEPTEMBER 1, 1998

________________________________________________________________________________

COMMAND Money Fund (the Money Fund), COMMAND Tax-Free Fund (the Tax-Free Fund)
and the COMMAND Government Fund (the Government Fund), (each a Fund or,
collectively, the Funds) are each open-end, diversified management investment
companies.

The investment objectives of the Money Fund are to seek high current income,
preservation of capital and maintenance of liquidity. The Money Fund seeks to
achieve its objectives by investing in a diversified portfolio of money market
instruments maturing in thirteen months or less. The investment objectives of
the Tax-Free Fund are to seek high current income that is exempt from federal
income taxes, consistent with maintenance of liquidity and preservation of
capital. The Tax-Free Fund seeks to achieve its objectives by investing in a
diversified portfolio of short-term tax-exempt securities issued by states,
municipalities and their instrumentalities and authorities maturing in thirteen
months or less. (The income from some securities in which the Tax-Free Fund
invests may be subject to the federal Alternative Minimum Tax.) The investment
objectives of the Government Fund are to seek high current income, preservation
of capital and maintenance of liquidity. The Government Fund seeks to achieve
its objectives by investing in a portfolio of U.S. Government securities
maturing in thirteen months or less. See "How the Funds Invest" and "How the
Funds Value Their Shares." There can be no assurance that any of the Funds will
achieve their investment objective.

AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT ANY OF THE FUNDS WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. See "How the Funds Value
Their Shares."

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

This Prospectus sets forth concisely the information about each Fund that a
prospective investor should know before investing and is available at the Web
site of The Prudential Insurance Company of America (http://www.prudential.com).
Additional information about each Fund has been filed with the Securities and
Exchange Commission in a Statement of Additional Information, dated September 1,
1998, which information is incorporated herein by reference (is legally
considered a part of this Prospectus) and is available without charge upon
written request to any of the Funds at the address noted above. The Commission
maintains a Web site (http://www.sec.gov) that contains the Statement of
Additional Information, material incorporated by reference and other information
regarding the Fund.

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INVESTORS ARE ADVISED TO READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE
REFERENCE.
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AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF ANY BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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<PAGE>
FUND HIGHLIGHTS
The following summary is intended to highlight certain information in this
Prospectus and is qualified in its entirety by the more detailed information
appearing elsewhere herein.
WHAT ARE THE COMMAND FUNDS?

Each of the Money Fund, Tax-Free Fund and Government Fund is a mutual fund.
A mutual fund pools the resources of investors by selling its shares to the
public and investing the proceeds of such sale in a portfolio of securities
designed to achieve its investment objective. Technically, each Fund is an
open-end, diversified management investment company.

WHAT IS EACH FUND'S INVESTMENT OBJECTIVE?

The investment objectives of the Money Fund are to seek high current income,
preservation of capital and maintenance of liquidity. The investment objectives
of the Tax-Free Fund are to seek high current income that is exempt from federal
income taxes, consistent with maintenance of liquidity and the preservation of
capital. The investment objectives of the Government Fund are to seek high
current income, preservation of capital and maintenance of liquidity. There can
be no assurance that any of the Funds will achieve their investment objectives.
See "How the Funds Invest" at page 6.

WHAT ARE THE FUNDS' RISK FACTORS AND SPECIAL CHARACTERISTICS?
It is anticipated that the net asset value of each Fund will remain constant
at $1.00 per share, although this cannot be assured. In order to maintain such
constant net asset value, each Fund will value its portfolio securities at
amortized cost. While this method provides certainty in valuation, it may result
in periods during which the value of a security in a Fund's portfolio, as
determined by amortized cost, is higher or lower than the price the Fund would
receive if it sold such security. See "How the Funds Value Their Shares" at page
17.
WHO MANAGES THE FUNDS?

Prudential Investments Fund Management LLC (PIFM or the Manager) is the
Manager of each Fund and is compensated for its services at an annual rate of up
to .50% of the average daily net assets of each of the Money Fund and the
Tax-Free Fund and up to .40% of the average daily net assets of the Government
Fund. The Management Fee is reduced for Fund assets in excess of certain
specified levels. As of July 31, 1998, PIFM served as manager or administrator
to 67 investment companies, including 45 mutual funds, with aggregate assets of
approximately $66 billion. The Prudential Investment Corporation, doing business
as Prudential Investments (PI, the Subadviser or the investment adviser),
furnishes investment advisory services in connection with the management of each
Fund under a Subadvisory Agreement with PIFM. See "How the Funds Are
Managed--Manager" at page 14.

WHO DISTRIBUTES THE FUNDS' SHARES?

Prudential Investment Management Services LLC (the Distributor) acts as the
Distributor of each Fund's shares. Each Fund reimburses the Distributor for
expenses related to the distribution of the Fund's shares at an annual rate of
up to .125 of 1% of the Fund's average daily net assets. See "How the Funds Are
Managed-- Distributor" at page 15.

HOW DO I PURCHASE SHARES?

Shares of the Money Fund, Tax-Free Fund and Government Fund are offered
exclusively to (i) participants in the COMMAND-SM- Account and the COMMAND
Plus-SM- Account programs (collectively, the COMMAND program), which are
available through Prudential Securities Incorporated, and (ii) participants in
the Prudential BusinessEdge-SM- Account Program (the BusinessEdge program),
which is available through either Prudential Securities Incorporated or Pruco
Securities Corporation. For a more detailed description of the COMMAND program
or the BusinessEdge program, please contact your Prudential Securities Financial
Advisor or Pruco Securities Agent. See "Shareholder Guide--How to Buy Shares of
the Funds" at page 21.

HOW DO I SELL MY SHARES?

Shares may be redeemed (i) automatically by Prudential Securities to satisfy
debit balances in a Securities Account created by activity therein or arising
under the COMMAND program or BusinessEdge Program or (ii) by you at any time at
the net asset value (NAV) next determined after the Transfer Agent receives your
sell order. See "Shareholder Guide--How to Sell Your Shares" at page 22.

HOW ARE DIVIDENDS AND DISTRIBUTIONS PAID?
Each Fund expects to declare and pay daily dividends of any net investment
income and short-term capital gains. Dividends and distributions will be
automatically reinvested in additional shares of such Fund at NAV. See "Taxes,
Dividends and Distributions" at page 18.

2
<PAGE>
FUND EXPENSES

<TABLE>
<CAPTION>
MONEY FUND TAX-FREE FUND GOVERNMENT FUND
--------------- --------------- ---------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases......... None None None
Maximum Sales Load Imposed on Reinvested
Dividends...................................... None None None
Deferred Sales Load............................. None None None
Redemption Fees................................. None None None
Exchange Fee.................................... None None None
COMMAND Account Program Annual Fee.............. $100* $100* $100*
COMMAND Plus Account Program Annual Fee......... $150* $150* $150*
Prudential BusinessEdge Account Program Annual
Fee............................................ $250*** $250*** $250***
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees................................. .366% .443% .400%
12b-1 Fees+..................................... .125% .125% .125%
.049% .032% .035%
Other Expenses..................................
.54% .60% .56%
Total Fund Operating Expenses.................
.32% .13% .15%
COMMAND Account Program Annual Fee**............
.86% .73% .71%
Total Fund Operating Expenses and Account
Charge.......................................
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period:
Money Fund................................ $ 6 $ 17 $ 30 $ 68
Tax-Free Fund............................. $ 6 $ 19 $ 33 $ 75
Government Fund........................... $ 6 $ 18 $ 31 $ 70
If the annual program fee were included, you would
pay the following expenses on the same
investment:
Money Fund................................ $ 9 $ 27 $ 48 $106
Tax-Free Fund............................. $ 7 $ 23 $ 41 $ 91
Government Fund........................... $ 7 $ 23 $ 40 $ 88
</TABLE>

- --------------------------

The above examples are based on data for each Fund's fiscal year ended June
30, 1998. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that an investor in each Fund will bear, whether
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "How the Funds Are Managed."

"Other Expenses" includes operating expenses of a Fund, such as Trustees'
and professional fees, registration fees, reports to shareholders and transfer
agent and custodian fees.
- --------------------------

*Prudential Securities charges an annual program fee of $100 to most
participants in the COMMAND Account program whether or not they own shares in
any of the Funds. The program fee is $125 for COMMAND Corporate accounts, $60
for COMMAND Essentials accounts, $60 for COMMAND IRA accounts and $150 for
COMMAND Family and COMMAND Plus accounts. Prudential Securities may, in its
sole discretion, waive or reduce COMMAND program annual fees and/or the fee
associated with a particular product or service, as well as minimum
investment requirements to be eligible for participation in a COMMAND
program, generally or for specific accounts.

**In accordance with an interpretive position taken by the staff of the
Securities and Exchange Commission (SEC), the annual program fee is reflected
in the fee table. The annual program fee as a percentage of average net
assets is calculated by dividing $100 (the total fee for the COMMAND Account
program), $150 (the total fee for the COMMAND Plus Account program) or $250
(the total fee for the BusinessEdge Account program), by the average account
size in a Fund. The annual program fee is not prorated for purposes of this
calculation to give effect to COMMAND program or BusinessEdge program
participants who also own shares in or subscribe to various other services
offered by the respective programs. A major portion of the annual program fee
is not attributable to a Fund, but rather to non-fund services provided by
the programs. The fee table reflects the percentage of average net assets of
the COMMAND Account program annual fee. The annual fee for the COMMAND Plus
Account and BusinessEdge programs, expressed as a percentage of average net
assets, would be .47% and .79%, respectively for the Command Money Fund; .19%
and .32%, respectively for the Command Tax-Free Fund and .23% and .38%,
respectively for the Command Government Fund.

***The annual fee does not include charges for checks and deposits in excess of
BusinessEdge program limits, additional cash transfer services, additional
billpay services and charges relating to margin accounts, commercial lines of
credit and term loans that may be available in the BusinessEdge program. A
Broker/Dealer may, in its sole discretion, waive or reduce the annual fees of
the BusinessEdge program and/or the fee associated with a particular product
or service, as well as the minimum investment requirements for participation
in the BusinessEdge program, generally or for specific accounts.

+It is currently anticipated that the entire distribution fee will be used to
pay an account servicing fee to financial advisers. See "How the Funds Are
Managed--Distributor."

3
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH OF THE INDICATED PERIODS)

The following financial highlights have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose reports thereon were
unqualified. This information should be read in conjunction with the financial
statements and notes thereto, which appear in the Statement of Additional
Information. The following financial highlights contain selected data for a
share of beneficial interest outstanding, total return, ratios to average net
assets and other supplemental data for the period indicated. This information is
based on data contained in the financial statements. Further performance
information is contained in the annual report, which may be obtained without
charge. See "Shareholder Guide--Shareholder Services--Reports to Shareholders."

MONEY FUND

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <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 $ 1.000
Net investment income and net
realized gains............... 0.052 0.049 0.052 0.050 0.029 0.030
Dividends and distributions... (0.052) (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 $ 1.000
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
TOTAL RETURN (a):............. 5.31% 5.06% 5.30% 5.13% 2.98% 3.01%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000)........................ $9,090,289 $6,629,903 $5,309,842 $4,055,700 $2,448,201 $2,436,672
Average net assets (000)...... $7,936,219 $6,078,525 $4,896,794 $3,072,284 $2,570,195 $2,275,532
Ratios to average net assets:
Expenses, including
distribution fees.......... .54% .57% .58% .59% .59% .61%
Expenses, excluding
distribution fees.......... .42% .44% .46% .47% .47% .48%
Net investment income....... 5.19% 4.97% 5.15% 5.09% 2.92% 2.90%

1992 1991 1990 1989*
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
year......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net
realized gains............... 0.046 0.069 0.081 0.084
Dividends and distributions... (0.046) (0.069) (0.081) (0.084)
----------- ----------- ----------- -----------
Net asset value, end of
year......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
TOTAL RETURN (a):............. 4.71% 7.17% 8.42% 8.73%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000)........................ $2,125,430 $2,417,429 $2,668,970 $2,206,469
Average net assets (000)...... $2,377,108 $2,605,472 $2,680,212 $1,821,521
Ratios to average net assets:
Expenses, including
distribution fees.......... .64% .61% .59% .63%
Expenses, excluding
distribution fees.......... .51% .49% .46% .51%
Net investment income....... 4.57% 6.95% 8.08% 8.40%
</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 Footnote on next page.
TAX-FREE FUND

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <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 $ 1.000
Net investment income and net
realized gains............... 0.031 0.030 0.031 0.032 0.020 0.022
Dividends and distributions... (0.031) (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 $ 1.000
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
TOTAL RETURN (a):............. 3.16% 3.05% 3.12% 3.29% 1.98% 2.23%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000)........................ $1,332,985 $1,129,513 $1,156,935 $1,055,568 $847,602 $853,930
Average net assets (000)...... $1,279,188 $1,181,084 $1,134,257 $926,888 $908,421 $823,517
Ratios to average net assets:
Expenses, including
distribution fees.......... .60% .64% .66% .66% .65% .68%
Expenses, excluding
distribution fees.......... .47% .51% .54% .54% .53% .55%
Net investment income....... 3.11% 3.00% 3.06% 3.05% 1.96% 2.09%

1992 1991 1990 1989*
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
year......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net
realized gains............... 0.035 0.049 0.055 0.054
Dividends and distributions... (0.035) (0.049) (0.055) (0.054)
------------ ------------ ------------ ------------
Net asset value, end of
year......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
TOTAL RETURN (a):............. 3.53% 5.02% 5.66% 5.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000)........................ $729,122 $750,567 $714,650 $611,631
Average net assets (000)...... $751,458 $770,745 $699,559 $695,347
Ratios to average net assets:
Expenses, including
distribution fees.......... .69% .66% .68% .67%
Expenses, excluding
distribution fees.......... .56% .54% .55% .55%
Net investment income....... 3.47% 4.88% 5.57% 5.46%
</TABLE>

*See Footnote on next page.

4
<PAGE>
GOVERNMENT FUND

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <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 $ 1.000
Net investment income and net
realized gains............... 0.051 0.049 0.050 0.048 0.028 0.028
Dividends and distributions... (0.051) (0.049) (0.050) (0.048) (0.028) (0.028)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of
year......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
TOTAL RETURN (a):............. 5.20% 4.97% 5.12% 4.89% 2.86% 2.85%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000)........................ $ 608,727 $ 528,469 $ 487,485 $ 404,295 $ 325,257 $ 381,703
Average net assets (000)...... $ 562,693 $ 534,580 $ 477,168 $ 350,458 $ 376,159 $ 380,103
Ratios to average net assets:
Expenses, including
distribution fees.......... .56% .63% .68% .65% .63% .65%
Expenses, excluding
distribution fees.......... .44% .51% .56% .53% .51% .53%
Net investment income....... 5.08% 4.84% 4.97% 4.81% 2.79% 2.74%

1992 1991 1990 1989*
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
year......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net
realized gains............... 0.045 0.067 0.079 0.080
Dividends and distributions... (0.045) (0.067) (0.079) (0.080)
----------- ----------- ----------- -----------
Net asset value, end of
year......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
TOTAL RETURN (a):............. 4.56% 6.90% 8.17% 8.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(000)........................ $ 372,988 $ 414,978 $ 270,140 $ 181,559
Average net assets (000)...... $ 422,639 $ 398,971 $ 243,593 $ 175,179
Ratios to average net assets:
Expenses, including
distribution fees.......... .69% .65% .66% .71%
Expenses, excluding
distribution fees.......... .57% .53% .53% .58%
Net investment income....... 4.38% 6.54% 7.70% 7.97%
</TABLE>

*On October 31, 1988, Prudential Mutual Fund Management, Inc. (PMF) succeeded
The Prudential Insurance Company of America as investment adviser and has acted
as manager of the Fund. In 1996, PMF transferred all of its assets to
Prudential Mutual Fund Management LLC, which in May 1997, changed its name to
Prudential Investments Fund Management LLC.

CALCULATION OF YIELD

EACH FUND CALCULATES ITS "CURRENT YIELD" based on the net change, exclusive of
realized and unrealized gains or losses, in the value of a hypothetical account
over a seven calendar day base period. EACH FUND ALSO CALCULATES ITS "EFFECTIVE
ANNUAL YIELD" ASSUMING WEEKLY COMPOUNDING. IN ADDITION, THE TAX-FREE FUND
CALCULATES ITS TAX EQUIVALENT YIELD. Tax-equivalent yield shows the taxable
yield an investor would have to earn from a fully taxable investment in order to
equal the Fund's yield after taxes and is calculated by dividing the Fund's
current or effective yield by the result of one minus the maximum marginal
federal tax rate. The following is an example of the current and effective
annual yield calculation as of June 30, 1998 for each of the Funds and the tax
equivalent yield for the Tax-Free Fund:

<TABLE>
<CAPTION>
GOVERNMENT
MONEY FUND TAX-FREE FUND FUND
------------- ------------- -------------
<S> <C> <C> <C>
Value of hypothetical account at end of period......... $ 1.000975883 $ 1.000596432 $ 1.000993544
Value of hypothetical account at beginning of period... 1.000000000 1.000000000 1.000000000
------------- ------------- -------------
Base period return..................................... $ .000975883 $ .000596432 $ .000993544
------------- ------------- -------------
------------- ------------- -------------
CURRENT YIELD (Base Period Return x (365/7))........... 5.09% 3.11% 5.18%
EFFECTIVE ANNUAL YIELD, assuming daily compounding..... 5.22% 3.16% 5.32%
TAX EQUIVALENT YIELD (current yield DIVIDED BY
(1-.396))............................................. -- 5.23% --
</TABLE>

THE YIELD WILL FLUCTUATE FROM TIME TO TIME AND DOES NOT REPRESENT FUTURE INCOME
OR DIVIDENDS. YIELD IS COMPUTED WITHOUT TAKING INTO CONSIDERATION THE COMMAND
PROGRAM OR BUSINESSEDGE PROGRAM ANNUAL FEE.

The weighted average life to maturity of each of the Fund's portfolios on
June 30, 1998 was 62 days for the Money Fund, 52 days for the Tax-Free Fund and
47 days for the Government Fund.

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Yield is computed in accordance with a standardized formula described in the
Statement of Additional Information. Comparative performance information may be
used from time to time in advertising or marketing each of the Fund's shares,
including data from Lipper Analytical Services, Inc., Morningstar Publications,
Inc., IBC/Financial Data, Inc., The Bank Rate Monitor and other industry
publications, business periodicals and market indices.

HOW THE FUNDS INVEST

MONEY FUND

INVESTMENT OBJECTIVES AND POLICIES

THE INVESTMENT OBJECTIVES OF THE MONEY FUND ARE TO SEEK HIGH CURRENT INCOME,
PRESERVATION OF CAPITAL AND MAINTENANCE OF LIQUIDITY. THE MONEY FUND SEEKS TO
ACHIEVE THESE OBJECTIVES BY INVESTING PRIMARILY IN A PORTFOLIO OF U.S.
DOLLAR-DENOMINATED MONEY MARKET INSTRUMENTS. THE MONEY FUND SEEKS TO MAINTAIN A
$1.00 SHARE PRICE AT ALL TIMES. TO ACHIEVE THIS, THE MONEY FUND PURCHASES ONLY
SECURITIES WITH REMAINING MATURITIES OF THIRTEEN MONTHS OR LESS AND LIMITS THE
DOLLAR-WEIGHTED AVERAGE MATURITY OF ITS PORTFOLIO TO 90 DAYS OR LESS. THERE CAN
BE NO ASSURANCE THAT THE INVESTMENT OBJECTIVES OF THE MONEY FUND WILL BE
ATTAINED OR THAT THE MONEY FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE PER SHARE.

THE INVESTMENT OBJECTIVES OF THE MONEY FUND ARE FUNDAMENTAL POLICIES AND,
THEREFORE, MAY NOT BE CHANGED WITHOUT THE APPROVAL OF THE HOLDERS OF A MAJORITY
OF THE OUTSTANDING VOTING SECURITIES OF THE FUND, AS DEFINED IN THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED (THE INVESTMENT COMPANY ACT). THE MONEY FUND'S
INVESTMENT POLICIES ARE NOT FUNDAMENTAL AND MAY BE CHANGED BY THE TRUSTEES.

U.S. GOVERNMENT OBLIGATIONS. The Money Fund may invest in U.S. Treasury
bills and other obligations issued or guaranteed as to principal and interest by
the U.S. Government, its agencies or instrumentalities. Except for U.S. Treasury
securities, these obligations, even those which are guaranteed by Federal
agencies or instrumentalities, may not be backed by the "full faith and credit"
of the United States. In the case of securities not backed by the full faith and
credit of the United States, the Money Fund must look principally to the agency
issuing or guaranteeing the obligation for ultimate repayment, and may not be
able to assert a claim against the United States itself in the event the agency
or instrumentality does not meet its commitments.

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

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ASSET-BACKED SECURITIES. The Money Fund may invest in asset-backed
securities. Asset-backed securities include interests in pools of mortgages,
loans, receivables, or other assets. Payment of principal and interest may be
largely dependent upon the cash flows generated by assets backing the
securities.

OTHER MONEY MARKET INSTRUMENTS. The Money Fund may invest in commercial
paper, variable amount demand master notes, funding agreements, bills, notes and
other obligations issued by a U.S. company (trust or corporation), a foreign
company or a foreign government, or their agencies or instrumentalities. If such
obligations are guaranteed or supported by a letter of credit issued by a bank,
such bank (including a foreign bank) must meet the requirements set forth under
"Bank Obligations" above. If such obligations are guaranteed or insured by an
insurance company or other non-bank entity, such insurance company must
represent a credit of comparable quality as determined by the Money Fund's
investment adviser, under the supervision of the Trustees.

The Money Fund may not invest more than 25% of its net assets in any one
industry, except there is no limitation with respect to money market instruments
of domestic banks and obligations of the U.S. Government, its agencies and
instrumentalities, as described above.

The Money Fund intends to hold portfolio securities until maturity; however,
the Money Fund may sell any security at any time in order to meet redemption
requests or if such action, in the judgment of the investment adviser, is
appropriate based on the adviser's evaluation of the issuer or market
conditions.

In selecting portfolio securities for investment by the Money Fund, the
investment adviser considers ratings assigned by major rating services,
information concerning the financial history and condition of the issuer and its
revenue and expense prospects. The Trustees monitor the credit quality of
securities purchased for the Money Fund. If a portfolio security held by the
Money Fund is assigned a lower rating or ceases to be rated, the investment
adviser under the supervision of the Trustees will promptly reassess whether
that security presents minimal credit risks and whether the Money Fund should
continue to hold the security. If a portfolio security no longer presents
minimal credit risks or is in default, the Money Fund will dispose of the
security as soon as reasonably practicable unless the Trustees determine that to
do so is not in the best interest of the Money Fund and its shareholders.

The Money Fund utilizes the amortized cost method of valuation in accordance
with rules of the SEC. See "How the Funds Value Their Shares." Accordingly, the
Money Fund will limit its portfolio investments to those instruments which
present minimal credit risks and which are of "eligible quality," as determined
by the Money Fund's investment adviser under the supervision of the Trustees.
"Eligible quality" means (i) a security (or issuer) rated in one of the two
highest rating categories by at least two nationally recognized statistical
rating organizations assigning a rating to the security or issuer (or, if only
one such rating organization assigned a rating, that rating organization) or
(ii) an unrated security deemed of comparable quality by the Money Fund's
investment adviser under the supervision of the Trustees. For a description of
ratings, see "Description of Securities Ratings" in the Statement of Additional
Information.

As long as the Money Fund utilizes the amortized cost method of valuation,
it will also comply with certain diversification requirements and will invest no
more than 5% of the Money Fund's total assets in "second-tier securities," with
no more than 1% of the Money Fund's total assets in any one issuer of a
second-tier security. A "second-tier security," for this purpose, is a security
of "eligible quality" that does not have the highest rating from at least two
nationally recognized statistical rating organizations assigning a rating to
that security or issuer (or, if only one rating organization assigned a

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<PAGE>

rating, that rating organization) or an unrated security that is deemed of
comparable quality by the Money Fund's investment adviser under the supervision
of the Trustees, but does not include a security subject to a guarantee issued
by a non-controlled person.

The Money Fund may also purchase certain other investments and is subject to
certain policies as described in "Other Investments and Policies Applicable to
the Funds."

RISKS OF INVESTING IN FOREIGN SECURITIES. Since the Money Fund's portfolio
may contain U.S. dollar-denominated obligations of foreign branches of domestic
banks, foreign banks and domestic branches of foreign banks, an investment in
the Money Fund involves certain additional risks. Such investment risks include
future political and economic developments in the country of the issuer, the
possible imposition of withholding taxes on interest income payable on such
obligations held by the Money Fund, the possible seizure or nationalization of
foreign deposits and the possible establishment of exchange controls or other
foreign governmental laws or restrictions which might affect adversely the
payment of principal and interest on such obligations held by the Money Fund.
The Money Fund will not purchase obligations which the investment adviser
believes, at the time of purchase, will be subject to exchange controls or
withholding taxes; however, there can be no assurance that such laws may not
become applicable to certain of the Money Fund's investments. In addition, there
may be less publicly available information about a foreign bank, a foreign
branch of a domestic bank or a domestic branch of a foreign bank than about a
domestic bank, and foreign banks, foreign branches of domestic banks and
domestic branches of foreign banks may not be subject to the same accounting,
auditing and financial recordkeeping standards and requirements as domestic
banks.

TAX-FREE FUND

INVESTMENT OBJECTIVES AND POLICIES

THE INVESTMENT OBJECTIVES OF THE TAX-FREE FUND ARE TO SEEK HIGH CURRENT
INCOME THAT IS EXEMPT FROM FEDERAL INCOME TAXES, CONSISTENT WITH MAINTENANCE OF
LIQUIDITY AND PRESERVATION OF CAPITAL. THE TAX-FREE FUND WILL SEEK TO ACHIEVE
ITS OBJECTIVES BY INVESTING IN A DIVERSIFIED PORTFOLIO OF SHORT-TERM DEBT
OBLIGATIONS ISSUED BY STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES
AND BY THE DISTRICT OF COLUMBIA, AND THEIR POLITICAL SUBDIVISIONS, DULY
CONSTITUTED AUTHORITIES AND CORPORATIONS, THE INTEREST FROM WHICH IS WHOLLY
EXEMPT FROM FEDERAL INCOME TAX IN THE OPINION OF BOND COUNSEL TO THE ISSUER.
Such securities are generally known as "Municipal Bonds" or "Municipal Notes."
Interest on certain Municipal Bonds and Municipal Notes may be a preference item
for purposes of the federal Alternative Minimum Tax. The Tax-Free Fund may
invest up to 20% of its net assets in Municipal Bonds and Municipal Notes, the
interest on which would be a preference item for purposes of the federal
Alternative Minimum Tax. Under normal circumstances, the Tax-Free Fund will
invest at least 80% of its net assets in tax-exempt Municipal Bonds and
Municipal Notes which are not subject to the federal Alternative Minimum Tax.
THE TAX-FREE FUND SEEKS TO MAINTAIN A $1.00 SHARE PRICE AT ALL TIMES. TO ACHIEVE
THIS THE TAX-FREE FUND INVESTS IN MUNICIPAL BONDS OR NOTES WITH REMAINING
MATURITIES OF THIRTEEN MONTHS OR LESS AND LIMITS THE DOLLAR-WEIGHTED AVERAGE
MATURITY OF ITS PORTFOLIO TO 90 DAYS OR LESS. THERE CAN BE NO ASSURANCE THAT THE
INVESTMENT OBJECTIVES OF THE TAX-FREE FUND WILL BE ATTAINED OR THAT THE TAX-FREE
FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE PER SHARE.

THE INVESTMENT OBJECTIVES OF THE TAX-FREE FUND ARE FUNDAMENTAL POLICIES AND,
THEREFORE, MAY NOT BE CHANGED WITHOUT THE APPROVAL OF THE HOLDERS OF A MAJORITY
OF THE OUTSTANDING VOTING SECURITIES OF THE FUND, AS DEFINED IN THE INVESTMENT
COMPANY ACT. THE TAX-FREE FUND'S INVESTMENT POLICIES ARE NOT FUNDAMENTAL AND MAY
BE CHANGED BY THE TRUSTEES.

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<PAGE>
The Tax-Free Fund utilizes the amortized cost method of valuation in
accordance with rules of the SEC. See "How the Funds Value Their Shares."
Accordingly, the Tax-Free Fund will limit its portfolio investments to those
Municipal Bonds and Notes which present minimal credit risks and which are of
"eligible quality" (as defined above) as determined by the Tax-Free Fund's
investment adviser under the supervision of the Trustees.

In selecting Municipal Bonds and Notes for investment by the Tax-Free Fund,
the investment adviser considers ratings assigned by major rating services,
information concerning the financial history and condition of the issuer and its
revenue and expense prospects. If a Municipal Bond or a Municipal Note held by
the Tax-Free Fund is assigned a lower rating or ceases to be rated, the
investment adviser under the supervision of the Trustees will promptly reassess
whether that security continues to present minimal credit risks and whether the
Tax-Free Fund should continue to hold the security in its portfolio. If a
portfolio security no longer presents minimal credit risks or is in default, the
Tax-Free Fund will dispose of the security as soon as reasonably practicable
unless the Trustees determine that to do so is not in the best interests of the
Tax-Free Fund and its shareholders. For a description of ratings, see
"Description of Securities Ratings" in the Statement of Additional Information.

MUNICIPAL BONDS. Municipal Bonds are generally (i) issued to obtain funds
for various public purposes, including construction of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation, schools,
streets and water and sewer work or (ii) issued in certain instances as
private-activity bonds, by or on behalf of public authorities to obtain funds to
provide privately operated housing facilities, sports facilities, pollution
control facilities, convention or trade show facilities, industrial, port or
parking facilities and facilities for water supply, gas, electricity or waste
disposal. Such obligations are included within the term Municipal Bonds if the
interest paid thereon qualifies at the time of issuance, in the opinion of the
issuer's bond counsel, as exempt from federal income tax. Other types of
industrial development bonds, the proceeds of which are used for the
construction, equipment, repair or improvement of privately operated industrial
or commercial facilities, may constitute Municipal Bonds, although the current
federal tax laws place substantial limitations on the size of such issues.

Municipal Bonds may be general obligation or revenue bonds. General
obligation bonds are secured by the issuer's pledge of its good faith, credit
and taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenues derived from a particular facility or class of
facilities or from the proceeds of a special excise tax or other specific
revenue source but not from the general taxing power.

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

OTHER INVESTMENTS AND POLICIES APPLICABLE TO THE TAX-FREE FUND. The
Tax-Free Fund intends to hold portfolio securities to maturity; however the
Tax-Free Fund may dispose of any portfolio security prior to its maturity if, on
the basis of a revised credit evaluation of the issuer or of market conditions,
it

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<PAGE>
believes such disposition advisable. Also, the Tax-Free Fund may sell any
security at any time in order to meet redemption requests. The Tax-Free Fund may
also purchase certain other investments and engage in certain policies as
described in "Other Investments and Policies Applicable to the Funds."

The Tax-Free Fund anticipates being as fully invested as practicable in
Municipal Bonds and Notes; however, because the Tax-Free Fund does not intend to
invest in taxable obligations, there may be occasions when, as a result of
maturities of portfolio securities or sales of Tax-Free Fund shares or in order
to meet anticipated redemption requests, the Tax-Free Fund may hold cash which
is not earning income. In addition, there may be occasions when, in order to
raise cash to meet redemptions, the Tax-Free Fund might be required to sell
securities at a loss.

From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Bonds and Notes and for providing state and local
governments with federal credit assistance. Reevaluation of the Tax-Free Fund's
investment objectives and structure might be necessary in the future due to
market conditions which may result from future changes in the tax laws.

GOVERNMENT FUND

INVESTMENT OBJECTIVES AND POLICIES

THE INVESTMENT OBJECTIVES OF THE GOVERNMENT FUND ARE TO SEEK HIGH CURRENT
INCOME, PRESERVATION OF CAPITAL AND MAINTENANCE OF LIQUIDITY. THE GOVERNMENT
FUND SEEKS TO ACHIEVE ITS OBJECTIVES BY INVESTING IN A PORTFOLIO OF U.S.
GOVERNMENT SECURITIES INCLUDING OBLIGATIONS ISSUED OR GUARANTEED AS TO PRINCIPAL
AND INTEREST BY THE U.S. GOVERNMENT, OR ITS AGENCIES OR INSTRUMENTALITIES AND
RELATED REPURCHASE AGREEMENTS. UNDER NORMAL CIRCUMSTANCES, THE GOVERNMENT FUND
WILL INVEST AT LEAST 65% OF ITS TOTAL ASSETS IN U.S. GOVERNMENT SECURITIES,
INCLUDING REPURCHASE AGREEMENTS WITH RESPECT TO SUCH SECURITIES. THE GOVERNMENT
FUND SEEKS TO MAINTAIN A $1.00 SHARE PRICE AT ALL TIMES. TO ACHIEVE THIS, THE
GOVERNMENT FUND PURCHASES ONLY SECURITIES WITH REMAINING MATURITIES OF THIRTEEN
MONTHS OR LESS AND LIMITS THE DOLLAR-WEIGHTED AVERAGE MATURITY OF ITS PORTFOLIO
TO 90 DAYS OR LESS. THERE CAN BE NO ASSURANCE THAT THE INVESTMENT OBJECTIVES OF
THE GOVERNMENT FUND WILL BE ATTAINED OR THAT THE GOVERNMENT FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE.

THE INVESTMENT OBJECTIVES OF THE GOVERNMENT FUND ARE FUNDAMENTAL POLICIES
AND, THEREFORE, MAY NOT BE CHANGED WITHOUT THE APPROVAL OF THE HOLDERS OF A
MAJORITY OF THE OUTSTANDING VOTING SECURITIES OF THE FUND, AS DEFINED IN THE
INVESTMENT COMPANY ACT. THE GOVERNMENT FUND'S INVESTMENT POLICIES ARE NOT
FUNDAMENTAL AND MAY BE CHANGED BY THE TRUSTEES.

U.S. TREASURY OBLIGATIONS. The Government Fund will invest in U.S. Treasury
obligations, including bills, notes, bonds and other debt obligations issued by
the U.S. Treasury. These instruments are direct obligations of the U.S.
Government and, as such, are backed by the full faith and credit of the United
States. They differ primarily in their interest rates, the lengths of their
maturities and the dates of their issuances.

OBLIGATIONS ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES. The Government Fund will invest in obligations issued by
agencies of the U.S. Government or instrumentalities established or sponsored by
the U.S. Government. These obligations, including those which are guaranteed by
federal agencies or instrumentalities, may or may not be backed by the full
faith and credit of the United States. Obligations of the Government National
Mortgage Association, the Farmers

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<PAGE>
Home Administration and the Small Business Administration are backed by the full
faith and credit of the United States. In the case of obligations not backed by
the full faith and credit of the United States, the Government Fund must look
principally to the agency issuing or guaranteeing the obligation for ultimate
repayment and may not be able to assert a claim against the United States if the
agency or instrumentality does not meet its commitments. Instruments in which
the Government Fund may invest which are not backed by the full faith and credit
of the United States include obligations issued by the Federal Home Loan Banks,
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, the Student Loan Marketing Association, Resolution Funding
Corporation and the Tennessee Valley Authority, each of which under certain
conditions has the right to borrow from the U.S. Treasury to meet its
obligations, and obligations of the Farm Credit System, the obligations of which
may be satisfied only by the individual credit of the issuing agency.

The Government Fund may invest in securities issued or guaranteed by any of
the foregoing entities or by any other agency or instrumentality established or
sponsored by the U.S. Government, and in participation interests in, and
instruments evidencing deposit or safekeeping for, any of the foregoing.

The Government Fund may invest in component parts of U.S. Treasury notes or
bonds, namely, either the corpus (principal) of such Treasury obligations or one
of the interest payments scheduled to be paid on such obligations. These
obligations may take the form of (i) Treasury obligations from which the
interest coupons have been stripped, (ii) the interest coupons that are
stripped, (iii) book-entries at a Federal Reserve member bank representing
ownership of Treasury obligation components or (iv) receipts evidencing the
component parts (corpus or coupons) of Treasury obligations that have not
actually been stripped. Such receipts evidence ownership of component parts of
Treasury obligations (corpus or coupons) purchased by a third party (typically
an investment banking firm) and held on behalf of the third party in physical or
book-entry form by a major commercial bank or trust company pursuant to a
custody agreement with the third party. Investments in such instruments may be
subject to greater fluctuations in price than investments in U.S. Treasury Notes
or bonds as a result of variation in interest rates.

The Government Fund intends normally to hold its portfolio securities to
maturity. Historically, securities issued or guaranteed by the U.S. Government
or its agencies and instrumentalities have involved minimal risk of loss of
principal or interest, if held to maturity.

OTHER INVESTMENTS AND POLICIES APPLICABLE TO THE GOVERNMENT FUND. The
Government Fund may also invest in obligations of the International Bank for
Reconstruction and Development (World Bank), which is not a U.S. Government
agency or instrumentality. World Bank obligations are supported by appropriated
but unpaid commitments of its member countries. There is no assurance that these
commitments will be honored in the future. The Government Fund may also purchase
certain other investments and engage in certain policies as described in "Other
Investments and Policies Applicable to the Funds."

RATING OF FUND SHARES

Duff & Phelps Credit Rating Co. (DCR) has given the Money Fund and
Government Fund each an AAA rating. According to DCR, the AAA ratings mean the
Funds' ability to meet redemption requests in a timely manner for $1.00 per
share are strong. These ratings are based on the Funds' risk management
procedures, internal control systems, limitations on market risk and experienced
management teams.

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<PAGE>
OTHER INVESTMENTS AND POLICIES APPLICABLE TO THE FUNDS

LIQUIDITY PUTS. A Fund may also purchase instruments of the types described
above under "Investment Objectives and Policies" for that Fund, with the right
to resell the instruments at an agreed-upon price or yield within a specified
period prior to the maturity date of the instruments. Such a right to resell is
commonly known as a "put," and the aggregate price which a Fund pays for
instruments with a put may be higher than the price that otherwise would be paid
for the instruments. A put may also include the right to demand repayment of
interest and principal. The Tax-Free Fund and Government Fund may also buy
securities with the right to demand principal and interest on a fixed date. For
a more detailed description, see "Investment Objectives and Policies--Liquidity
Puts" in the Statement of Additional Information.

Since the value of the put is dependent, in part, on the ability of the put
writer to meet its obligation to repurchase, a Fund's policy is to enter into
put transactions only with such brokers, dealers or financial institutions which
present minimal credit risks. There is a credit risk associated with the
purchase of puts in that the broker, dealer or financial institution might
default on its obligation to repurchase an underlying security. Changes in the
credit quality of these institutions could cause losses to the Fund and affect
its share price. In the event such a default should occur, a Fund is unable to
predict whether all or any portion of any loss sustained could subsequently be
recovered from the broker, dealer or financial institution.

VARIABLE RATE AND FLOATING RATE SECURITIES. Each Fund may invest in
"variable rate" and "floating rate" obligations. The interest rates on such
obligations fluctuate generally with changes in market interest rates and a Fund
is typically able to demand repayment of the principal amount of such
obligations at par plus accrued interest either, in some cases, at specified
intervals of less than one year or, in other cases, upon not less than seven
days' notice. For additional information concerning variable rate and floating
rate obligations, see "Investment Objectives and Policies--Variable and Floating
Rate Securities" in the Statement of Additional Information.

REPURCHASE AGREEMENTS. The Money Fund and Government Fund may enter into
repurchase agreements, whereby the seller of a security agrees to repurchase
that security from that Fund at a mutually agreed-upon time and price. The
repurchase date is usually within a day or two of the original purchase,
although it may extend over a number of months. The resale price is in excess of
the purchase price, reflecting an agreed-upon rate of return effective for the
period of time the Fund's money is invested in the security. Each Fund's
repurchase agreements will at all times be fully collateralized in an amount at
least equal to the resale price. The instruments held as collateral are valued
daily, and if the value of the instruments declines, a Fund will require
additional collateral. If the seller defaults and the value of the collateral
securing the repurchase agreement declines, the Fund may incur a loss. The Money
Fund and Government Fund each participate in a joint repurchase account with
other investment companies managed by Prudential Investments Fund Management LLC
pursuant to an order of the SEC. See "Investment Objectives and Policies --
Repurchase Agreements" in the Statement of Additional Information.

BORROWING AND REVERSE REPURCHASE AGREEMENTS. The Money Fund and Government
Fund may each borrow money from banks in an amount equal to no more than 20% of
the value of their total assets (computed at the time the loan is made) for
temporary or emergency purposes or for the clearance of transactions. Borrowing
for purposes other than meeting redemptions may not exceed 5% of the value of
the relevant Fund's total assets less liabilities, except that these borrowing
restrictions do not apply to reverse repurchase agreements engaged in by the
Money Fund. The Tax-Free Fund may

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<PAGE>
borrow for temporary purposes in amounts not exceeding 5% of its total assets.
None of the Funds will purchase securities while borrowings are outstanding. See
"Investment Restrictions" in the Statement of Additional Information.

The Money Fund may also enter into reverse repurchase agreements. Reverse
repurchase agreements involve the sale of securities held by the Money Fund with
an agreement by the Money Fund to repurchase the securities at a later date at a
fixed price. During the reverse repurchase agreement period, the Money Fund
continues to receive principal and interest payments on these securities. The
Money Fund intends only to use the reverse repurchase technique when it will be
to its advantage to do so. Such transactions are only advantageous if the Money
Fund has an opportunity to earn a greater rate of interest on the cash derived
from the transaction than the interest cost of obtaining that cash. Reverse
repurchase agreements may be considered speculative.

The Money Fund's Custodian will maintain in a separate account cash, U.S.
Government securities or other liquid unencumbered assets, marked-to-market
daily, having a value equal to or greater than the Fund's repurchase
commitments. Reverse repurchase agreements involve the risk that the market
value of the securities retained by the Money Fund may decline below the price
of the securities the Money Fund has sold but is obligated to repurchase under
the agreement. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, the Money Fund's use of the
proceeds from the agreement may be restricted pending a determination by the
other party or its trustee or receiver, whether to enforce the Money Fund's
obligation to repurchase the securities. See "Investment Restrictions" in the
Statement of Additional Information.

SECURITIES LENDING. The Money Fund and Government Fund may lend their
portfolio securities to brokers or dealers, banks or other recognized
institutional borrowers of securities, provided that the borrower at all times
maintains cash collateral in an amount equal to at least 100% of the market
value of the securities loaned. During the time portfolio securities are on
loan, the borrower will pay the Fund an amount equivalent to any dividends or
interest paid on such securities and the Fund may invest the cash collateral and
earn additional income or it may receive an agreed-upon amount of interest
income from the borrower who has delivered equivalent collateral or secured a
letter of credit. Loans are subject to termination at the option of the Fund or
the borrower. The Fund may pay reasonable administration and custodial fees in
connection with a loan. As a matter of fundamental policy, the Money Fund and
the Government Fund cannot lend more than 10% of their respective total assets.
The Tax-Free Fund may not lend its portfolio securities. See "Investment
Restrictions" in the Statement of Additional Information.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each Fund may purchase or sell
securities on a when-issued or delayed delivery basis. When-issued or delayed
delivery transactions arise when securities are purchased or sold by a Fund with
payment and delivery taking place in the future in order to secure what is
considered to be an advantageous price and yield to that Fund at the time of
entering into the transaction. The purchase price and the interest rate payable
on the securities are fixed on the transaction date. The securities so purchased
are subject to market fluctuations and no interest accrues to the Fund until
delivery and payment take place. The Funds' Custodian will maintain, in a
segregated account of each Fund, cash, U.S. Government securities or other
liquid unencumbered assets, marked-to-market daily, having a value equal to or
greater than that Fund's purchase commitments. The purchase of securities on a
"when-issued" basis may involve additional risks. For a more detailed
discussion, see "Investment Objectives and Policies--When-Issued and Delayed
Delivery Securities" in the Statement of Additional Information.

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<PAGE>

ILLIQUID SECURITIES. Each Fund may hold up to 10% of its net assets in
illiquid securities including securities with legal or contractual restrictions
on resale (restricted securities), securities that are not readily marketable in
securities markets either within or outside of the United States, privately
placed commercial paper and, except for the Tax-Free Fund, repurchase agreements
which have a maturity of longer than seven days. Restricted securities eligible
for resale pursuant to Rule 144A under the Securities Act of 1933, as amended
(the Securities Act) and privately placed commercial paper that have a readily
available market are not considered illiquid for purposes of this limitation.
Investing in Rule 144A securities could, however, have the effect of increasing
the level of Fund illiquidity to the extent that qualified institutional buyers
become, for a limited time, uninterested in purchasing these securities. The
investment adviser will monitor the liquidity of such restricted securities
under the supervision of the Trustees. Repurchase agreements subject to demand
are deemed to have a maturity equal to the applicable notice period. See
"Investment Objective and Policies--Illiquid Securities" in the Statement of
Additional Information.

INVESTMENTS IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Tax-Free Fund may invest up to 10% of its total assets in shares of
other investment companies. To the extent that the Fund does invest in
securities of other investment companies, shareholders of the Fund may be
subject to duplicate management and advisory fees.

INVESTMENT RESTRICTIONS

Each Fund is subject to certain investment restrictions which, like its
investment objectives, constitute fundamental policies. Fundamental policies
cannot be changed without the approval of the holders of a majority of the
outstanding voting securities of the Fund as defined above. See "Investment
Restrictions" in the Statement of Additional Information.

HOW THE FUNDS ARE MANAGED

THE TRUSTEES, IN ADDITION TO OVERSEEING THE ACTIONS OF THE FUNDS' MANAGER,
SUBADVISER AND DISTRIBUTOR, AS SET FORTH BELOW, DECIDE UPON MATTERS OF GENERAL
POLICY. THE FUNDS' MANAGER CONDUCTS AND SUPERVISES THE DAILY BUSINESS OPERATIONS
OF THE FUNDS. THE FUNDS' SUBADVISER FURNISHES DAILY INVESTMENT ADVISORY
SERVICES.

For the fiscal year ended June 30, 1998, total expenses of each of the
Funds, as a percentage of their respective average net assets, were .54% for the
Money Fund, .60% for the Tax-Free Fund and .56% for the Government Fund. See
"Financial Highlights."

MANAGER

PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC (PIFM OR THE MANAGER), GATEWAY
CENTER THREE, 100 MULBERRY STREET, NEWARK, NEW JERSEY 07102-4077, IS THE MANAGER
OF EACH OF THE FUNDS. PIFM IS ORGANIZED IN NEW YORK AS A LIMITED LIABILITY
COMPANY.

As of July 31, 1998, PIFM served as the manager to 67 open-end investment
companies, constituting all of the Prudential Mutual Funds, and as manager or
administrator to 22 closed-end investment companies, with aggregate assets of
approximately $66 billion.

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UNDER A MANAGEMENT AGREEMENT WITH EACH OF THE FUNDS, PIFM MANAGES THE
INVESTMENT OPERATIONS OF EACH FUND AND ALSO ADMINISTERS EACH FUND'S BUSINESS
AFFAIRS. See "Manager" in the Statement of Additional Information.

UNDER SEPARATE SUBADVISORY AGREEMENTS BETWEEN PIFM AND THE PRUDENTIAL
INVESTMENT CORPORATION (PIC), DOING BUSINESS AS PRUDENTIAL INVESTMENTS (PI, THE
SUBADVISER OR THE INVESTMENT ADVISER), PI FURNISHES INVESTMENT ADVISORY SERVICES
IN CONNECTION WITH THE MANAGEMENT OF EACH OF THE FUNDS AND IS REIMBURSED BY PIFM
FOR ITS REASONABLE COSTS AND EXPENSES INCURRED IN PROVIDING SUCH SERVICES. PIC's
address is Prudential Plaza, Newark, New Jersey 07102-3777. Under the Management
Agreements, PIFM continues to have responsibility for all investment advisory
services and supervises PI's performance of such services.

PIFM and PIC are indirect wholly-owned subsidiaries of The Prudential
Insurance Company of America (Prudential), a major diversified insurance and
financial services company.

Under the Management Agreements, the Money Fund pays PIFM a fee at an annual
rate of .50 of 1% of the Fund's average daily net assets up to and including
$500 million, .425 of 1% of the next $500 million, .375 of 1% of the next $500
million and .35 of 1% of the Fund's average daily net assets in excess of $1.5
billion; the Tax-Free Fund pays PIFM a fee at an annual rate of .50 of 1% of the
Fund's average daily net assets up to $500 million, .425 of 1% of the Fund's
average daily net assets in excess of $500 million and .375 of 1% of the Fund's
average daily net assets in excess of $1 billion; and the Government Fund pays
PIFM a fee at an annual rate of .40 of 1% of the Fund's average daily net assets
up to $1 billion and .375 of 1% of the Fund's average daily net assets in excess
of $1 billion.

For the fiscal year ended June 30, 1998, the Money Fund paid management fees
to PIFM of .37 of 1% of that Fund's average net assets, the Tax-Free Fund paid
management fees to PIFM of .44 of 1% of that Fund's average net assets and the
Government Fund paid management fees to PIFM of .40 of 1% of that Fund's average
net assets. See "Manager" in the Statement of Additional Information.

DISTRIBUTOR

PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC (THE DISTRIBUTOR), GATEWAY
CENTER THREE, 100 MULBERRY STREET, NEWARK, NEW JERSEY 07102-4077, IS A LIMITED
LIABILITY CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE AND
SERVES AS THE DISTRIBUTOR OF THE SHARES OF EACH OF THE FUNDS. PRUDENTIAL
SECURITIES INCORPORATED (PRUDENTIAL SECURITIES, ALSO REFERRED TO AS THE
DISTRIBUTOR), ONE SEAPORT PLAZA, NEW YORK, NEW YORK 10292, SERVED AS THE
DISTRIBUTOR OF FUND SHARES PRIOR TO JULY 1, 1998. IT IS AN INDIRECT WHOLLY-OWNED
SUBSIDIARY OF PRUDENTIAL.

UNDER SEPARATE DISTRIBUTION AND SERVICE PLANS ADOPTED BY EACH OF THE FUNDS
(EACH A PLAN AND COLLECTIVELY, THE PLANS) UNDER RULE 12B-1 UNDER THE INVESTMENT
COMPANY ACT AND A DISTRIBUTION AGREEMENT (THE DISTRIBUTION AGREEMENT), THE
DISTRIBUTOR INCURS THE EXPENSES OF DISTRIBUTING EACH FUND'S SHARES. These
expenses include account servicing fees paid to, or on account of, financial
advisers of Prudential Securities, account servicing fees paid to, or on account
of, other broker-dealers or financial institutions (other than national banks)
which have entered into agreements with the Distributor, advertising expenses,
the cost of printing and mailing prospectuses to potential investors and
indirect and overhead costs of the Distributor associated with the sale of
shares, including lease, utility, communications and sales promotion expenses.

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The distribution and/or service fees may also be used by the Distributor to
compensate Dealers on a continuing basis in consideration for the distribution,
marketing, administrative and other services and activities provided by Dealers
with respect to the promotion of the sale of the Fund's shares and the
maintenance of related shareholder accounts.

UNDER THE PLANS, EACH FUND REIMBURSES THE DISTRIBUTOR FOR ITS
DISTRIBUTION-RELATED EXPENSES AT AN ANNUAL RATE OF UP TO .125 OF 1% OF THAT
FUND'S AVERAGE DAILY NET ASSETS. SUCH AMOUNTS ARE ACCRUED DAILY AND PAID
MONTHLY. THE ENTIRE DISTRIBUTION FEE MAY BE USED TO PAY ACCOUNT SERVICING FEES.

Each Plan provides that it shall continue in effect from year to year,
provided that each such continuance is approved annually by a majority vote of
the Trustees, including a majority of the Trustees who are not interested
persons of the relevant Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to the Plan
(the Rule 12b-1 Trustees). The Trustees are provided with and review quarterly
reports of expenditures under the Plans. A plan may be terminated at any time by
vote of the majority of the Rule 12b-1 Trustees or a majority of the outstanding
shares of the relevant Fund. A Fund will not be obligated to pay distribution
and service fees under a Plan if it is terminated or not continued.

For the fiscal year ended June 30, 1998, the Distributor incurred
distribution expenses for the Money Fund of $9,920,274, for the Tax-Free Fund of
$1,598,985 and for the Government Fund of $703,367, all of which were recovered
through the distribution fee paid by each Fund to the Distributor. The Funds
record all payments made under the Plans as expenses in the calculation of net
investment income.

For more detailed information concerning the foregoing matters, see
"Distributor" in the Statement of Additional Information, a copy of which may be
obtained at no cost by calling (800) 225-1852.

The Funds are not affected by the financial condition of, and are entirely
separate legal entities from, the Distributor, which has no beneficial ownership
in the Funds, and the Funds' assets, which are held by State Street Bank and
Trust Company, an independent custodian, are separate and distinct from the
Distributor.

FEE WAIVERS AND SUBSIDY

PIFM may from time to time waive all or a portion of its management fee and
subsidize all or a portion of the operating expenses of a Fund. Fee waivers and
expense subsidies will increase a Fund's total return. The voluntary waivers or
subsidies may be terminated at any time without notice.

PORTFOLIO TRANSACTIONS

Affiliates of the Distributor may also act as brokers or futures commission
merchants for the Funds, provided that the commissions, fees or other
remuneration they receive are fair and reasonable. See "Portfolio Transactions"
in the Statement of Additional Information.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for the Funds' portfolio securities and
cash and, in that capacity, maintains certain financial and accounting books and
records pursuant to an agreement with each of the Funds. Its mailing address is
P.O. Box 1713, Boston, Massachusetts 02205.

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Prudential Mutual Fund Services LLC (the Transfer Agent), Raritan Plaza One,
Edison, New Jersey 08837, serves as Transfer and Dividend Disbursing Agent for
the Funds and in those capacities maintains certain books and records for each
of the Funds. Its mailing address is P.O. Box 15005, New Brunswick, New Jersey
08906-5005. The Transfer Agent is a wholly-owned subsidiary of PIFM.

YEAR 2000

The services provided to the Funds and the shareholders by the Manager, the
Distributor, the Transfer Agent and the Custodian depend on the smooth
functioning of their computer systems and those of outside service providers.
Many computer software systems in use today cannot distinguish the year 2000
from the year 1900 because of the way dates are encoded and calculated. Such
event could have a negative impact on handling securities trades, payments of
interest and dividends, pricing and account services. Although, at this time,
there can be no assurance that there will be no adverse impact on the Funds, the
Manager, the Distributor, the Transfer Agent and the Custodian have advised the
Funds that they have been actively working on necessary changes to their
computer systems to prepare for the year 2000 and expect that their systems, and
those of outside service provides, will be adapted in time for the event.

HOW THE FUNDS VALUE THEIR SHARES

EACH FUND'S NET ASSET VALUE PER SHARE OR NAV IS DETERMINED BY SUBTRACTING ITS
LIABILITIES FROM THE VALUE OF ITS ASSETS AND DIVIDING THE REMAINDER BY THE
NUMBER OF OUTSTANDING SHARES. THE TRUSTEES HAVE FIXED THE SPECIFIC TIME OF DAY
FOR THE COMPUTATION OF EACH OF THE FUND'S NAV TO BE AS OF 4:30 P.M., NEW YORK
TIME, IMMEDIATELY AFTER THE DAILY DECLARATION OF DIVIDENDS.

Each Fund will compute its NAV once daily on the days that the New York
Stock Exchange is open for trading, except on days on which no orders to
purchase, sell or redeem Fund shares have been received or days on which changes
in the value of a Fund's portfolio securities do not materially affect the net
asset value. The New York Stock Exchange is closed on the following holidays:
New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

Each Fund determines the value of its portfolio securities by the amortized
cost method. This method involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price a Fund would receive if it sold the instrument.
During these periods, the yield to an existing shareholder may differ somewhat
from that which could be obtained from a similar fund which marks its portfolio
securities to market each day. For example, during periods of declining interest
rates, if the use of the amortized cost method resulted in a lower value of a
Fund's portfolio on a given day, a prospective investor in the Fund would be
able to obtain a somewhat higher yield and existing shareholders would receive
correspondingly less income. The converse would apply during periods of rising
interest rates. The Trustees have established procedures designed to stabilize,
to the extent reasonably possible, the net asset value of the shares of each
Fund at $1.00 per share.

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TAXES, DIVIDENDS AND DISTRIBUTIONS

TAXATION OF THE FUNDS

EACH FUND IS TREATED AS A SEPARATE ENTITY FOR FEDERAL INCOME TAX PURPOSES.
EACH FUND HAS ELECTED TO QUALIFY AND INTENDS TO REMAIN QUALIFIED AS A REGULATED
INVESTMENT COMPANY UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
INTERNAL REVENUE CODE). AS A REGULATED INVESTMENT COMPANY, A FUND WILL NOT BE
SUBJECT TO FEDERAL INCOME TAXES ON ITS INVESTMENT INCOME AND CAPITAL GAINS, IF
ANY, REALIZED DURING ANY YEAR, WHICH IT DISTRIBUTES TO ITS SHAREHOLDERS,
PROVIDED THAT AT LEAST 90% OF ITS NET INVESTMENT INCOME AND NET SHORT-TERM
CAPITAL GAIN EARNED IN THE YEAR IS DISTRIBUTED. SEE "TAXES, DIVIDENDS AND
DISTRIBUTIONS" IN THE STATEMENT OF ADDITIONAL INFORMATION.

The Funds may be subject to tax in certain states where they do business.
Further, in those states which have income tax laws, the tax treatment of the
Funds and of shareholders with respect to distributions by the Funds may differ
from the federal tax treatment.

TAXATION OF SHAREHOLDERS

With respect to the Money Fund and Government Fund, distributions of net
investment income and net short-term capital gains are taxable to the
shareholder as ordinary dividend income regardless of whether the shareholder
receives such distributions in additional shares or in cash. These distributions
will not be eligible for the dividends-received deduction generally allowed to
corporate shareholders. Distributions of net long-term capital gains (i.e., the
excess of net long-term capital gains over net short-term capital losses), if
any, are taxable as long-term capital gains regardless of whether the
shareholder receives such distribution in additional shares or in cash and
regardless of how long the investor has held his or her Fund shares.

The Tax-Free Fund intends to qualify to pay "exempt-interest dividends" to
its shareholders by having, at the close of each quarter of its taxable year, at
least 50% of the value of its total assets consist of tax-exempt securities. An
exempt-interest dividend is that part of dividend distributions made by the
Tax-Free Fund which consist of interest received by the Tax-Free Fund on
tax-exempt securities. Shareholders will generally not incur any federal income
tax on the amount of exempt-interest dividends received by them from the
Tax-Free Fund. In view of the Tax-Free Fund's investment policies, it is
expected that all of the Tax-Free Fund's dividends will be exempt-interest
dividends, although it is possible that the Tax-Free Fund may from time to time
realize and distribute net short-term capital gains, market discount or other
minor amounts of taxable income. Such distributions of short-term capital gains,
market discount and other taxable income will be taxable to shareholders
(whether the distributions are received in cash or reinvested in additional
shares) and will not be eligible for the dividends received deduction available
to corporations.

Interest on indebtedness incurred or continued by a shareholder of the
Tax-Free Fund, whether a corporation or an individual, to purchase or carry
shares of the Tax-Free Fund is not deductible. Entities or persons who are
"substantial users" (or related persons) of facilities financed by industrial
development bonds should consult their tax advisers before purchasing shares of
the Tax-Free Fund.

Interest on certain private activity tax-exempt obligations is a preference
item to shareholders for purposes of the Alternative Minimum Tax. In the event
that the Tax-Free Fund invests in such obligations, the portion of an
exempt-interest dividend of the Tax-Free Fund that is allocable to such

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obligations will be treated as a preference item to shareholders for purposes of
the Alternative Minimum Tax. Moreover, exempt-interest dividends paid to a
corporate shareholder by the Tax-Free Fund (whether or not from interest on
private activity bonds) will be taken into account (i) in determining the
Alternative Minimum Tax imposed on 75% of the excess of adjusted current
earnings over alternative minimum taxable income, (ii) in calculating the
environmental tax equal to 0.12% of a corporation's modified alternative minimum
taxable income in excess of $2 million and (iii) in determining the foreign
branch profits tax imposed on the effectively connected earnings and profits
(with adjustments) of United States branches of foreign corporations.

The exemption of interest income for federal income tax purposes does not
necessarily result in exemption under the income or other tax laws of any state
or local taxing authority. Thus, shareholders of the Tax-Free Fund may be
subject to state and local taxes on exempt-interest dividends. Shareholders
should consult their tax advisers about the status of dividends from the
Tax-Free Fund in their own states and localities. The Tax-Free Fund will report
annually to shareholders the percentage of interest income, on a state-by-state
basis, received by the Fund during the preceding year.

Under the laws of certain states, distributions of net income may be taxable
to shareholders of the Funds as income even though a portion of such
distributions may be derived from interest on U.S. Government obligations which,
if realized directly, would be exempt from state income taxes. Distributions may
be subject to additional state and local taxes.

Shareholders are urged to consult their own tax advisers regarding specific
questions as to federal, state or local taxes. See "Taxes, Dividends and
Distributions" in the Statement of Additional Information.

WITHHOLDING TAXES

Under U.S. Treasury Regulations, the Money Fund and Government Fund are
required to withhold and remit to the U.S. Treasury 31% of dividend and capital
gain income and payments of redemption proceeds and the Tax-Free Fund is
required to withhold and remit to the U.S. Treasury 31% of taxable income and
payments of redemption proceeds on the accounts of those shareholders who fail
to furnish their tax identification numbers on IRS Form W-9 (or IRS Form W-8 in
the case of certain foreign shareholders) with the required certification
regarding the shareholder's status under the Internal Revenue Code. Withholding
at this rate is also required on dividends and capital gains distributions (but
not redemption proceeds) payable to shareholders who are otherwise subject to
backup withholding. Dividends paid to foreign shareholders from taxable net
investment income and net short-term capital gains will generally be subject to
U.S. withholding tax at the rate of 30% (or a lower applicable treaty rate).

DIVIDENDS AND DISTRIBUTIONS

Each Fund will declare a dividend, immediately prior to 4:30 P.M., New York
time, on each day that net asset value per share is determined, of all of its
daily net investment income to shareholders of record as of 4:30 P.M., New York
time, on the preceding business day. The amount of the dividend may fluctuate
from day to day and may be omitted on some days if net realized losses on
portfolio securities exceed a Fund's net investment income. Dividends are
accrued and paid daily in additional full or fractional shares of the Fund at
the net asset value per share determined on the date of declaration. Each
shareholder will receive periodically a summary of his or her account from
Prudential Securities, including information as to dividends paid.

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Net investment income, for dividend purposes, includes accrued interest and
amortization of discounts and premiums, plus or minus any gains or losses
realized on sales of portfolio securities, less the estimated expenses of a
Fund. The Funds do not expect to realize long-term capital gains or losses.

The Trustees of each Fund may revise the above dividend policy, or postpone
the payment of dividends, if a Fund should have or anticipate any large
unexpected expense, loss or fluctuation in net assets which in the opinion of
the Trustees might have a significant adverse effect on shareholders.

GENERAL INFORMATION

DESCRIPTION OF SHARES

EACH OF THE FUNDS WAS ORGANIZED ON JUNE 5, 1981 AS AN UNINCORPORATED
BUSINESS TRUST UNDER THE LAWS OF MASSACHUSETTS.

The shareholders of each Fund are entitled to one vote for each full share
held (and fractional votes for fractional shares). The Trustees themselves have
the power to alter the number and the terms of office of the Trustees, and they
may at any time lengthen their own terms or make their terms of unlimited
duration (subject to certain removal procedures) and appoint their own
successors, provided that at all times at least a majority of the Trustees has
been elected by the shareholders of the Funds. The voting rights of shareholders
are not cumulative, so that holders of more than 50% of the shares voting can,
if they choose, elect all Trustees being selected, while the holders of the
remaining shares would be unable to elect any Trustees.

THE FUNDS DO NOT INTEND TO HOLD ANNUAL MEETINGS OF SHAREHOLDERS.
SHAREHOLDERS HAVE CERTAIN RIGHTS INCLUDING THE RIGHT TO CALL A MEETING UPON A
VOTE OF 10% OF EACH FUND'S OUTSTANDING SHARES FOR THE PURPOSE OF VOTING ON THE
REMOVAL OF ONE OR MORE OF THE TRUSTEES OR TO TRANSACT ANY OTHER BUSINESS. SEE
"GENERAL INFORMATION--VOTING RIGHTS" IN THE STATEMENT OF ADDITIONAL INFORMATION.

The Declaration of Trust and the By-Laws of each of the Funds are designed
to make each Fund similar in certain respects to a Massachusetts business
corporation. The principal distinction between the two forms relates to
shareholder liability. Under Massachusetts law, shareholders of a business trust
may, under certain circumstances, be held personally liable as partners for the
obligations of a Fund, which is not the case with a corporation. The Declaration
of Trust of each Fund provides that shareholders shall not be subject to any
personal liability for the acts or obligations of that Fund and that every
written obligation, contract, instrument or undertaking made by that Fund shall
contain a provision to the effect that the shareholders are not individually
bound thereunder.

ADDITIONAL INFORMATION

This Prospectus, including the Statement of Additional Information which has
been incorporated by reference herein, does not contain all the information set
forth in the Registration Statement filed by each of the Funds with the
Securities and Exchange Commission under the Securities Act. Copies of each
Registration Statement may be obtained at a reasonable charge from the
Commission or may be examined, without charge, at the office of the Commission
in Washington, D.C. Because this Prospectus relates to each of the Funds, there
is a possibility that one Fund may become liable for any misstatement,
inaccuracy or incomplete disclosure in the Prospectus relating to any other
Fund.

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SHAREHOLDER GUIDE

HOW TO BUY SHARES OF THE FUNDS

THE SHARES OF THE FUNDS ARE OFFERED TO PARTICIPANTS IN THE COMMAND ACCOUNT
AND COMMAND PLUS ACCOUNT PROGRAMS (COLLECTIVELY, THE COMMAND PROGRAM) WHO HAVE
PLACED A MINIMUM OF $10,000 IN CASH AND/OR SECURITIES IN A COMMAND ACCOUNT OR
HAVE PLACED A MINIMUM OF $2,000 IN CASH AND/OR SECURITIES IN A COMMAND
ESSENTIALS ACCOUNT (THE MINIMUM INITIAL INVESTMENT FOR EMPLOYEES OF PRUDENTIAL
AND ITS SUBSIDIARIES AND AFFILIATES IS $2,500). THE SHARES OF THE FUNDS ARE ALSO
AVAILABLE TO PARTICIPANTS IN THE BUSINESSEDGE PROGRAM WHO HAVE PLACED A MINIMUM
OF $10,000 IN CASH AND/OR SECURITIES IN A PRUDENTIAL BUSINESSEDGE ACCOUNT. (THE
COMMAND PROGRAM AND THE BUSINESSEDGE PROGRAM ARE INDIVIDUALLY REFERRED TO AS THE
PROGRAM AND COLLECTIVELY, THE PROGRAMS). A participant in either Program will
have any free credit cash balances in his or her Securities Account invested in
shares of one of the Funds, the U.S. Treasury Series of the Prudential
Government Securities Trust, the California Money Market Series of the
Prudential California Municipal Fund or the New Jersey Money Market Series, New
York Money Market Series, Connecticut Money Market Series or Massachusetts Money
Market Series of the Prudential Municipal Series Fund (collectively, the Account
Funds) depending upon which of the Account Funds has been designated by the
participant as his or her Primary Fund. Each Program offers a variety of
products or services, which may, from time to time, be added to, modified or
terminated by Prudential Securities or, with respect to the BusinessEdge
program, by either Prudential Securities or Prusec, in their sole discretion.
This includes the ability of Prudential Securities or Prusec, in their sole
discretion, to waive or reduce the Program annual fees and/or the fee associated
with a particular product or service, as well as minimum investment requirements
to be eligible for participation in the Program, generally or for specific
accounts. Although a participant will have his or her free credit cash balances
invested automatically in only his or her Primary Fund, the participant may
purchase shares in any of the Account Funds at any time. A participant in either
Program has the option to change the designation of his or her Primary Fund at
any time by notifying his or her Prudential Securities Financial Adviser or
Preferred Agent, as the case may be. Upon such notification, shares of the
Primary Fund will be redeemed and the proceeds reinvested in shares of the
newly-designated Primary Fund. For information regarding products and services
available through the COMMAND program, please contact your Prudential Securities
Financial Advisor. For information regarding the BusinessEdge program, including
the selection of various BusinessEdge program options, contact your Financial
Adviser or Preferred Agent.

Purchases of shares of the Primary Fund will be made pursuant to the
automatic purchase procedures described below. A purchase of shares of a fund
other than the Primary Fund can be made by placing an order with the
participant's Prudential Securities Financial Adviser or Preferred Agent, as the
case may be.

The purchase price for shares of any of the Funds, whether purchased
directly or through the Automatic Purchase Procedures described below, is the
NAV per share next determined after receipt by a Fund of a purchase order and
payment in proper form (I.E., a free credit cash balance in a participant's
Securities Account, or a check or federal funds wired to Prudential Securities).

The Funds do not issue physical share certificates. Shares are registered in
the name of Prudential Securities on behalf of its clients and maintained in
book-entry form by the Transfer Agent.

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AUTOMATIC PURCHASE PROCEDURES. Free credit cash balances of $1.00 or more
held in a Securities Account will automatically be invested in shares of the
Primary Fund as described below. Specifically, an order to purchase shares of a
Primary Fund is placed (i) in the case of a free credit cash balance resulting
from the proceeds of a securities sale, on the settlement date of the securities
sale, and (ii) in the case of a free credit cash balance resulting from a
non-trade related credit (E.G., receipt of a dividend or interest payment,
maturity of a bond or a cash payment by the participant into his or her
Securities Account), on the business day after the receipt by Prudential
Securities of the non-trade related credit.

All shares purchased pursuant to these automatic purchase procedures will
begin earning dividends on the business day after the order is placed.
Prudential Securities will arrange for investment in Fund shares at 4:30 P.M.,
New York time, on the business day the order is placed and cause payment to be
made in federal funds for the shares prior to 4:30 P.M., New York time, on the
next business day. Prudential Securities will have the use of free credit cash
balances until delivery to the Funds.

HOW TO SELL YOUR SHARES

Each Fund is obligated to redeem for cash all full and fractional shares of
that Fund. The redemption price is the NAV per share next determined after
receipt by the Transfer Agent of proper notice of redemption as described below.
If such notice is received by the Transfer Agent prior to the determination of
net asset value on any day, the redemption will be effective as of 4:30 P.M.,
New York time, on such day. Payment of the redemption proceeds will be made on
the same day the redemption becomes effective. If the notice is received after
the net asset value is determined, the redemption will be effective as of 4:30
P.M., New York time, on the next day that net asset value is determined, and
payment will be made on such next day.

AUTOMATIC REDEMPTION. Redemptions will be automatically effected by
Prudential Securities to satisfy debit balances in a Securities Account created
by activity therein or arising under the Program, such as those incurred by use
of the Visa-Registered Trademark- Gold Debit Card Account, including ATM
transaction purchases, cash advances and Program Account checks. Each Program
Securities Account will be automatically scanned for debits each business day as
of the close of business on that day and after application of any free credit
cash balances in the account to such debits, a sufficient number of shares of
the Primary Fund and, if necessary, shares of other Program Account Funds owned
by the Program participant which have not been selected as his or her primary
fund or shares of a participant's money market funds managed by PMF which are
not Primary Funds, will be redeemed as of that business day to satisfy any
remaining debits in the Securities Account. Margin loans will be utilized to
satisfy debits remaining after the liquidation of all Fund shares in a
Securities Account, and shares may not be purchased until all debits, margin
loans and other requirements in the Securities Account are satisfied. In the
event of an automatic redemption of shares, the participant will be entitled to
dividends declared on the redeemed shares through the business day preceding the
day on which the redemption is effective. Participants will not be entitled to
dividends declared on the date of redemption.

For purposes of effecting an automatic redemption of Fund shares,
participants in the BusinessEdge program may use a BusinessEdge Visa-Registered
Trademark- Debit Card Account. If margin loans are available and selected as a
program option, BusinessEdge participants may utilize such margin loans to
satisfy debits to their program Securities Account after the liquidation of all
Fund shares in a Securities Account.

MANUAL REDEMPTION. A shareholder may redeem shares of a Fund other than the
fund selected as the participant's Primary Fund, by submitting a written request
for redemption directly to Prudential Securities or by calling his or her
Prudential Securities Financial Adviser or Preferred Agent, who will

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submit the request to the Fund's Transfer Agent. The proceeds from a manual
redemption will immediately become free credit cash balances in the
participant's Program Securities Account and will be automatically invested in
the Primary Fund selected as the participant's primary fund. Redemption requests
should not be sent to the Transfer Agent. If inadvertently sent to the Transfer
Agent, they will be forwarded to Prudential Securities. Each Program requires
the written request to be signed by all persons in whose names the shares are
registered, exactly as their names appear on their Program Account Client
Statement. In certain instances, additional documents such as, but not limited
to, trust instruments, death certificates, appointments as executor or
administrator or certificates of corporate authority may be required.

In the event all of a shareholder's shares are redeemed, the proceeds of
such redemption will equal the NAV of the shares redeemed plus the amount of all
dividends declared up to and including the date of redemption.

A Fund may suspend the right of redemption or postpone the date of payment
for a period of up to seven days. Suspensions or postponements may not exceed
seven days except (1) for any period (a) during which the New York Stock
Exchange is closed other than customary weekend and holiday closings or (b)
during which trading on the New York Stock Exchange is restricted; (2) for any
period during which an emergency exists as a result of which (a) disposal by a
Fund of securities owned by it is not reasonably practicable or (b) it is not
reasonably practicable for a Fund fairly to determine the value of its net
assets; or (3) for such other periods as the SEC may by order permit for the
protection of shareholders of a Fund. The SEC by rules and regulations
determines the conditions under which (i) trading shall be deemed to be
restricted and (ii) an emergency is deemed to exist within the meaning of clause
(2) above.

If the Trustees of a Fund determine that it would be detrimental to the best
interests of the remaining shareholders of that Fund to make payment wholly or
partly in cash, that Fund may pay the redemption price in whole or in part by a
distribution in kind of securities from the portfolio of that Fund, in lieu of
cash, in conformity with applicable rules of the Commission. If shares are
redeemed in kind, the redeeming shareholder might incur brokerage costs in
converting the assets into cash. The method of valuing portfolio securities is
described under "How the Funds Value Their Shares," and such valuation will be
made as of the same time the redemption price is determined. Each Fund, however,
has elected to be governed by Rule 18f-1 under the Investment Company Act
pursuant to which each Fund is obligated to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the net asset value of that Fund during any
90-day period for any one shareholder.

The total value of a shareholder's investment in a Fund at the time of
redemption may be more or less than his or her cost, depending on the value of
the securities held by that Fund at such time and income earned.

Under either the COMMAND program or the BusinessEdge program, Prudential
Securities has the right to terminate a Program Securities Account for any
reason. In such event, all shares held in a shareholder's account will be
redeemed.

SHAREHOLDER SERVICES

THE PRUTECTOR PROGRAM--OPTIONAL GROUP TERM LIFE INSURANCE. Prudential makes
available optional group term life insurance coverage to purchasers of shares of
certain Prudential Mutual Funds which are held in an eligible brokerage account.
This insurance protects the value of your mutual fund

23
<PAGE>

investment for your beneficiaries against market downturns. The insurance
benefit is based on the difference at the time of death of the insured between
the "protected value" and the then current market value of the shares. This
coverage is not available in all states and is subject to various restrictions
and limitations. For more complete information about this program, including
charges and expenses, please telephone your Prudential representative.

- REPORTS TO SHAREHOLDERS. The fiscal year of each Fund ends on June 30.
Each Fund will send to its shareholders, at least semi-annually, reports showing
the Fund's portfolio and other information. An annual report containing
financial statements audited by independent accountants will be sent to
shareholders each year.

In order to reduce duplicate mailing and printing expenses, the Funds will
provide one annual and semi-annual shareholder report and annual prospectus per
household. Shareholders may request additional copies of such reports by writing
to the appropriate Fund at Gateway Center Three, 100 Mulberry Street, Newark,
New Jersey 07102-4077.

- SHAREHOLDER INQUIRIES. Shareholder inquiries should be addressed to
COMMAND Money Fund, COMMAND Tax-Free Fund or COMMAND Government Fund, at Gateway
Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077.

24
<PAGE>
THE PRUDENTIAL MUTUAL FUND FAMILY

Prudential offers a broad range of mutual funds designed to meet your
individual needs. We welcome you to review the investment options available
through our family of funds. For more information on the Prudential Mutual
Funds, including charges and expenses, contact your Prudential Securities
Financial Adviser or Prusec representative or telephone the Funds at (800)
225-1852 for a free prospectus. Read the prospectus carefully before you invest
or send money.

TAXABLE BOND FUNDS
Prudential Diversified Bond Fund, Inc.
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential High Yield Total Return Fund, Inc.
Prudential Mortgage Income Fund, Inc.
Prudential Structured Maturity Fund, Inc.
Income Portfolio
TAX-EXEMPT BOND FUNDS
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
Intermediate Series
Prudential Municipal Series Fund
Florida Series
Maryland Series
Massachusetts Series
Michigan Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
GLOBAL FUNDS
Prudential Developing Markets Fund
Prudential Developing Markets Equity Fund
Prudential Latin America Equity Fund
Prudential Europe Growth Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Global Limited Maturity Fund, Inc.
Limited Maturity Portfolio
Prudential Intermediate Global Income Fund, Inc.
Prudential International Bond Fund, Inc.
Prudential Natural Resources Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Global Series
International Stock Series
Global Utility Fund, Inc.
The Global Total Return Fund, Inc.

EQUITY FUNDS
Prudential Balanced Fund
Prudential Distressed Securities Fund, Inc.
Prudential Emerging Growth Fund, Inc.
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
Prudential Index Series Fund
Prudential Bond Market Index Fund
Prudential Europe Index Fund
Prudential Pacific Index Fund
Prudential Small-Cap Index Fund
Prudential Stock Index Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund
Prudential Jennison Growth Fund
Prudential Jennison Growth & Income Fund
Prudential Mid-Cap Value Fund
Prudential Real Estate Securities Fund
Prudential Small-Cap Quantum Fund, Inc.
Prudential Small Company Value Fund, Inc.
Prudential 20/20 Focus Fund
Prudential Utility Fund, Inc.
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund

MONEY MARKET FUNDS
- -TAXABLE MONEY MARKET FUNDS
Cash Accumulation Trust
Liquid Assets Fund
National Money Market Fund
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund, Inc.
Money Market Series
Prudential MoneyMart Assets, Inc.

- -TAX-FREE MONEY MARKET FUNDS
Prudential Tax-Free Money Fund, Inc.
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
- -COMMAND FUNDS
COMMAND Money Fund
COMMAND Government Fund
COMMAND Tax-Free Fund
- -INSTITUTIONAL MONEY MARKET FUNDS
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series

25
<PAGE>

No dealer, sales representative or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, in connection with the offer contained herein, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Funds or the Distributor. This Prospectus does not
constitute an offer by the Funds or by the Distributor to sell or a solicitation
of any offer to buy any of the securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such offer in such jurisdiction.

- ------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<S> <C>
FUND HIGHLIGHTS........................................................... 2
What are the Funds' Risk Factors and Special Characteristics?........... 2
FUND EXPENSES............................................................. 3
FINANCIAL HIGHLIGHTS...................................................... 4
CALCULATION OF YIELD...................................................... 5
HOW THE FUNDS INVEST...................................................... 6
Money Fund.............................................................. 6
Tax-Free Fund........................................................... 8
Government Fund......................................................... 10
Rating of Fund Shares................................................... 11
Other Investments and Policies
Applicable to the Funds................................................ 12
Investment Restrictions................................................. 14
HOW THE FUNDS ARE MANAGED................................................. 14
Manager................................................................. 14
Distributor............................................................. 15
Fee Waivers and Subsidy................................................. 16
Portfolio Transactions.................................................. 16
Custodian and Transfer and Dividend Disbursing Agent.................... 16
Year 2000............................................................... 17
HOW THE FUNDS VALUE THEIR SHARES.......................................... 17
TAXES, DIVIDENDS AND DISTRIBUTIONS........................................ 18
GENERAL INFORMATION....................................................... 20
Description of Shares................................................... 20
Additional Information.................................................. 20
SHAREHOLDER GUIDE......................................................... 21
How to Buy Shares of the Funds.......................................... 21
How to Sell Your Shares................................................. 22
Shareholder Services.................................................... 23
THE PRUDENTIAL MUTUAL FUND FAMILY......................................... 25
</TABLE>

<TABLE>
<S> <C> <C>
CUSIP Nos.: CMF: 20050F-10-3
CTF: 20050R-10-7
CGF: 20050D-10-8
</TABLE>

COMMAND-SM-
COMMAND Money Fund
COMMAND Tax-Free Fund
COMMAND Government Fund

Prospectus dated September 1, 1998

-----------------------------------------------

THE ENCLOSED PROSPECTUS DESCRIBES THREE FULLY MANAGED MONEY MARKET FUNDS.
SHARES OF THE FUNDS ARE OFFERED EXCLUSIVELY TO PARTICIPANTS IN THE COMMAND
ACCOUNT AND COMMAND PLUS ACCOUNT PROGRAMS, WHICH ARE AVAILABLE THROUGH
PRUDENTIAL SECURITIES INCORPORATED, AND THE PRUDENTIAL BUSINESSEDGE
ACCOUNT PROGRAM, WHICH IS AVAILABLE THROUGH EITHER PRUDENTIAL SECURITIES
INCORPORATED OR PRUCO SECURITIES CORPORATION. INVESTORS SHOULD BE AWARE
THAT THESE PROGRAMS ARE NOT BANK ACCOUNTS. AS WITH ANY INVESTMENT IN
SECURITIES, THE VALUE OF A SHAREHOLDER'S INVESTMENT IN THE FUNDS WILL
FLUCTUATE. THE PRINCIPAL OFFICE OF EACH FUND IS:

GATEWAY CENTER THREE, 100 MULBERRY STREET, NEWARK, NEW JERSEY 07102-4077.

[LOGO]
<PAGE>
COMMAND MONEY FUND
COMMAND TAX-FREE FUND
COMMAND GOVERNMENT FUND

Statement of Additional Information
dated September 1, 1998

COMMAND Money Fund (the Money Fund), COMMAND Tax-Free Fund (the Tax-Free
Fund) and COMMAND Government Fund (the Government Fund) (each a Fund or,
collectively, the Funds) are each open-end, diversified management investment
companies whose shares are offered exclusively to: (i) participants in the
COMMAND-SM- Account and the COMMAND Plus-SM- Account programs (collectively, the
COMMAND program), which are available through Prudential Securities Incorporated
(Prudential Securities), and (ii) participants in the Prudential
BusinessEdge-SM- Account Program (the BusinessEdge program), which is available
through either Prudential Securities or Pruco Securities Corporation.

The investment objectives of the Money Fund are to seek high current income,
preservation of capital and maintenance of liquidity. The Money Fund seeks to
achieve its objectives by investing in a diversified portfolio of money market
instruments maturing in thirteen months or less. The investment objectives of
the Tax-Free Fund are to seek high current income that is exempt from federal
income taxes, consistent with maintenance of liquidity and preservation of
capital. The Tax-Free Fund seeks to achieve its objectives by investing in a
diversified portfolio of short-term tax-exempt securities issued by states,
municipalities and their instrumentalities and authorities maturing in thirteen
months or less. The investment objectives of the Government Fund are high
current income, preservation of capital and maintenance of liquidity. The
Government Fund seeks to achieve its objectives by investing in a portfolio of
U.S. Government securities maturing in thirteen months or less. See "How the
Funds Invest" and "How the Funds Value Their Shares" in the Prospectus.

This Statement of Additional Information sets forth information about the
Funds. This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Prospectus of the Funds dated September 1, 1998,
a copy of which may be obtained from the Funds, Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102-4077. The telephone number is (800)
225-1852.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
CROSS-REFERENCE
TO PAGE IN
PAGE PROSPECTUS
--------- -------------------
<S> <C> <C>
General Information..................................................................... B-2 20
The Funds............................................................................. B-2 20
Description of Shares................................................................. B-2 20
Voting Rights......................................................................... B-3 20
Investment Objectives and Policies...................................................... B-3 6
Investment Restrictions................................................................. B-7 14
Money Fund............................................................................ B-8 14
Tax-Free Fund......................................................................... B-9 14
Government Fund....................................................................... B-10 14
Trustees and Officers................................................................... B-11 14
Manager................................................................................. B-15 14
Distributor............................................................................. B-17 15
Calculation of Yield.................................................................... B-18 5
Portfolio Transactions.................................................................. B-19 16
Taxes, Dividends and Distributions...................................................... B-20 18
Custodian, Transfer and Dividend Disbursing Agent and Independent Accountants........... B-20 16
Shareholder Investment Account.......................................................... B-21 21
Description of Securities Ratings....................................................... B-22 --
COMMAND Money Fund
Financial Statements.................................................................. B-24 --
Report of Independent Accountants..................................................... B-31 --
COMMAND Government Fund
Financial Statements.................................................................. B-32 --
Report of Independent Accountants..................................................... B-36 --
COMMAND Tax-Free Fund
Financial Statements.................................................................. B-37 --
Report of Independent Accountants..................................................... B-47 --
Notes to Financial Statements........................................................... B-48 --
Appendix--General Investment Information................................................ APP-1 --
Appendix--Information Relating to The Prudential........................................ APP-2 --
</TABLE>

<PAGE>
GENERAL INFORMATION

THE FUNDS

COMMAND Money Fund (Money Fund), COMMAND Tax-Free Fund (Tax-Free Fund) and
COMMAND Government Fund (Government Fund) (collectively, the Funds) were each
organized as an unincorporated business trust under the laws of Massachusetts on
June 5, 1981. The Declaration of Trust and the By-Laws of each of the Funds are
designed to make the Funds similar in most respects to a Massachusetts business
corporation. The principal distinction between the two forms relates to
shareholder liability. Under Massachusetts law, shareholders of such a trust
may, under certain circumstances, be held personally liable as partners for the
obligations of a Fund, which is not the case with a corporation. Each
Declaration of Trust provides that shareholders shall not be subject to any
personal liability for the acts or obligations of the Fund and that every
written obligation, contract, instrument or undertaking made by the Fund shall
contain a provision to the effect that the shareholders are not personally
liable thereunder.

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

The Declaration of Trust of each of the Funds further provides that no
Trustee, officer, employee or agent of the Fund is liable to the Fund or to a
shareholder, nor is any Trustee, officer, employee or agent liable to any third
person in connection with the affairs of the Fund, except as such liability may
arise from the bad faith, willful misfeasance, gross negligence or reckless
disregard of the duties of such Trustee, officer, employee or agent. It also
provides that all third persons shall look solely to Fund property for
satisfaction of claims arising in connection with the affairs of the Fund. With
the exceptions stated, the Declaration of Trust provides that a Trustee,
officer, employee or agent is entitled to be indemnified against all liabilities
arising in connection with the affairs of the Fund.

Each Fund shall continue without limitation of time subject to the
provisions in the Declaration of Trust concerning termination by action of the
shareholders or by action of the Trustees upon notice to the shareholders.

DESCRIPTION OF SHARES

The Declaration of Trust of each of the Funds permits the Trustees to issue
an unlimited number of full and fractional shares of a single class and to
divide or combine the shares into a greater or lesser number of shares without
thereby changing the proportionate beneficial interests in the Fund. Each share
represents an equal proportional interest in the Fund with each other share.
Upon liquidation of the Fund, by either Trustee or shareholder action,
shareholders are entitled to share pro rata in the net assets of the Fund
available for distribution to shareholders. Shares have no pre-emptive or
conversion rights. The rights of redemption are described elsewhere herein.
Shares are fully paid and non-assessable by the Fund.

Pursuant to the Declaration of Trust of each of the Funds, the Trustees may
also authorize the creation of additional series of shares (the proceeds of
which would be invested in separate, independently managed portfolios) and
additional classes of shares within any series (which would be used to
distinguish among the rights of different categories of shareholders, as might
be required by future regulations or other unforeseen circumstances); however,
the Trustees have not authorized any such additional series or classes of
shares.

B-2
<PAGE>
VOTING RIGHTS

The shareholders of the Funds are entitled to one vote for each full share
held (and fractional votes for fractional shares). The Trustees themselves have
the power to alter the number and the terms of office of the Trustees, and they
may at any time lengthen their own terms or make their terms of unlimited
duration (subject to certain removal procedures) and appoint their own
successors, provided that always at least a majority of the Trustees has been
elected by the shareholders of the Funds. The voting rights of shareholders are
not cumulative, so that holders of more than 50% of the shares voting can, if
they choose, elect all Trustees being selected, while the holders of the
remaining shares would be unable to elect any Trustees. It is the intention of
the Funds not to hold annual meetings of shareholders. The Trustees may call
special meetings of shareholders for action by shareholder vote as may be
required by the Investment Company Act of 1940, as amended (the Investment
Company Act), or the respective Declarations of Trust.

Each Fund may reduce the number of its outstanding shares in order to
maintain a constant net asset value of $1.00 per share. The shareholders of each
Fund will be deemed, by their investment in such Fund, to have agreed to a
proportionate reduction of their shares.

As defined in the Investment Company Act and as used herein, the term
"majority" of the outstanding voting shares of each Fund means the vote of (a)
67% or more of the Fund's voting shares represented at a meeting at which more
than 50% of the outstanding voting shares are present in person or represented
by proxy or (b) more than 50% of the Fund's outstanding voting shares, whichever
is less.

INVESTMENT OBJECTIVES AND POLICIES

The Money Fund, Tax-Free Fund and Government Fund each operates as a
separate fund with its own investment objectives and policies. The investment
objectives of the Money Fund are to seek high current income, preservation of
capital and maintenance of liquidity. The investment objectives of the Tax-Free
Fund are to seek high current income that is exempt from federal income taxes,
consistent with maintenance of liquidity and preservation of capital. The
investment objectives of the Government Fund are to seek high current income,
preservation of capital and maintenance of liquidity. For a further description
of the investment objectives and policies of each Fund, see "How the Funds
Invest" in the Prospectus.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. From time to time, in the
ordinary course of business, the Money Fund, Tax-Free Fund or Government Fund
may purchase securities on a when-issued or delayed delivery basis, I.E.,
delivery and payment can take place a month or more after the date of the
transaction. At the time a Fund makes the commitment to purchase securities on a
when-issued or delayed delivery basis, it will record the transaction and
thereafter reflect the value, each day, of such securities in determining its
net asset value. Each Fund will make commitments for such when-issued
transactions only with the intention of actually acquiring the securities and,
to facilitate such acquisitions, the Funds' custodian will maintain, in a
separate account of each Fund, cash, U.S. Government securities or other liquid
unencumbered assets, marked-to-market daily, having a value equal to or greater
than the Fund's purchase commitments. On the delivery dates for such
transactions, each Fund will meet its obligations from maturities or sales of
the securities held in the separate account and/or from then-available cash
flow. If a Fund chooses to dispose of the right to acquire a when-issued
security prior to its acquisition, it could, as with the disposition of any
other portfolio obligation, incur a gain or loss due to market fluctuation. No
when-issued commitments will be made if, as a result, more than 15% of a Fund's
net assets would be committed. There is a risk that the securities may not be
delivered and the Fund may incur a loss.

REPURCHASE AGREEMENTS. The Government Fund's and Money Fund's repurchase
agreements will be collateralized by U.S. Government obligations. Each Fund will
enter into repurchase transactions only with parties meeting creditworthiness
standards approved by the Fund's Trustees. Each Fund's investment adviser will
monitor the creditworthiness of

B-3
<PAGE>
such parties, under the general supervision of the Trustees. In the event of a
default or bankruptcy by a seller, realization of the collateral by the Fund may
be delayed or limited and the Fund would promptly seek to liquidate the
collateral. To the extent that the proceeds from any sale of such collateral
upon a default in the obligation to repurchase are less than the repurchase
price, the Fund will suffer a loss.

The Government Fund and Money Fund participate in a joint repurchase account
with other investment companies managed by Prudential Investments Fund
Management LLC (PIFM), pursuant to an order of the Securities and Exchange
Commission (the SEC). On a daily basis, any uninvested cash balances of each
Fund may be aggregated with those of such investment companies and invested in
one or more repurchase agreements. Each Fund participates in the income earned
or accrued in the joint account based on the percentage of its investment.

The Government Fund and the Money Fund may invest in repurchase agreements,
without limit, consistent with applicable regulations.

LENDING OF PORTFOLIO SECURITIES. The Money Fund or Government Fund may each
lend its portfolio securities to broker-dealers, banks and other recognized
institutional borrowers of securities, provided that the borrower at all times
maintains cash or equivalent collateral or secures a letter of credit in favor
of the Fund equal in value to at least 100% of the market value of the
securities loaned. During the time portfolio securities are on loan, the
borrower pays the Money Fund or Government Fund an amount equivalent to any
interest paid on such securities, and the Money Fund or Government Fund may
invest the cash collateral and earn additional income, or the Fund may receive
an agreed-upon amount of interest income from the borrower who has delivered
equivalent collateral or secured a letter of credit. Loans are subject to
termination at the option of the Money Fund or Government Fund or the borrower,
respectively. The Money Fund or Government Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent collateral
to the borrower or placing broker. The Money Fund or Government Fund will make
loans of portfolio securities only under the direction of the Fund's Trustees
and in accordance with guidelines established by the SEC, or otherwise in
accordance with any applicable rule or order of the SEC. As a matter of
fundamental policy, each of the Money Fund and the Government Fund will not lend
more than 10% of the value of its total assets.

ILLIQUID SECURITIES. The Funds may not hold more than 10% of their net
assets in illiquid securities, including securities that are illiquid by virtue
of the absence of a readily available market or legal or contractual
restrictions on resale and repurchase agreements which have a maturity of longer
than seven days, provided that the Tax-Free Fund may not invest in repurchase
agreements. Historically, illiquid securities have included securities subject
to contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (the Securities Act),
securities which are otherwise not readily marketable and repurchase agreements
having a maturity of longer than seven days. Securities which have not been
registered under the Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer or in the
secondary market. Mutual funds do not typically hold a significant amount of
these restricted or other illiquid securities because of the potential for
delays on resale and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.

In recent years, however, a large institutional market has developed for
certain securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered

B-4
<PAGE>
security can be readily resold or on an issuer's ability to honor a demand for
repayment. The fact that there are contractual or legal restrictions on resale
to the general public or to certain institutions may not be indicative of the
liquidity of such investments.

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

Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act and commercial paper and municipal lease obligations for which
there is a readily available market will not be deemed to be illiquid. The
investment adviser will monitor the liquidity of such restricted securities
subject to the supervision of the Trustees. In reaching liquidity decisions, the
investment adviser will consider, INTER ALIA, the following factors: (1) the
frequency of trades and quotes for the security; (2) the number of dealers
wishing to purchase or sell the security and the number of other potential
purchasers; (3) dealer undertakings to make a market in the security; and (4)
the nature of the security and the nature of the marketplace trades (E.G., the
time needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer). In addition, in order for commercial paper that is
issued in reliance on Section 4(2) of the Securities Act to be considered
liquid, (i) it must be rated in one of the two highest rating categories by at
least two nationally recognized statistical rating organizations (NRSRO), or if
only one NRSRO rates the securities, by that NRSRO, or, if unrated, be of
comparable quality in the view of the investment adviser; and (ii) it must not
be ``traded flat" (I.E., without accrued interest) or in default as to principal
or interest. With respect to municipal lease obligations, the investment adviser
also considers: (1) the willingness of the municipality to continue, annually or
biannually, to appropriate funds for payment of the lease; (2) the general
credit quality of the municipality and the essentiality to the municipality of
the property covered by the lease; (3) in the case of unrated municipal lease
obligations, an analysis of factors similar to that performed by nationally
recognized statistical rating organizations in evaluating the credit quality of
a municipal lease obligation, including (i) whether the lease can be cancelled;
(ii) if applicable, what assurance there is that the assets represented by the
lease can be sold; (iii) the strength of the lessee's general credit (E.G., its
debt, administrative, economic and financial characteristics); (iv) the
likelihood that the municipality will discontinue appropriating funding for the
leased property because the property is no longer deemed essential to the
operations of the municipality (E.G., the potential for an event of
nonappropriation); (v) the legal recourse in the event of failure to
appropriate; and (4) any other factors unique to municipal lease obligations as
determined by the investment adviser. Repurchase agreements subject to demand
are deemed to have a maturity equal to the notice period.

VARIABLE AND FLOATING RATE SECURITIES. Each of the Funds may purchase
floating rate and variable rate securities. Investments in floating or variable
rate securities normally provide that the rate of interest is set as a specific
percentage of a designated base rate, such as rates on Treasury bonds or bills
or the prime rate at a major commercial bank, and that the purchaser can demand
payment of the obligation at specified intervals or after a specified notice
period (in each case of less than one year) at par plus accrued interest, which
amount may be more or less than the amount paid for them. Variable rate
securities provide for a specified periodic adjustment in the interest rate,
while floating rate securities have an interest rate which changes whenever
there is a change in the designated base interest rate. Usually such securities
are secured by credit arrangements provided by banks and insurance companies.
The quality of the bank, insurance company or other underlying credit of the
issuer, as the case may be, must meet the investment quality requirements
described under "How the Funds Invest--Money Fund--Investment Objectives and
Policies--Other Money Market Instruments" in the Prospectus.

B-5
<PAGE>
PURCHASE OF MUNICIPAL BONDS AND NOTES. The Tax-Free Fund will invest in
Municipal Bonds and Notes with short-term maturities, as described in the
Prospectus under "How the Funds Invest--Tax-Free Fund--Investment Objectives and
Policies."

Municipal Bonds are generally issued to obtain funds for various public
purposes, including construction of public facilities such as airports, bridges,
highways, housing, hospitals, mass transportation, schools, streets and water
and sewer works. They may also be issued to refund outstanding obligations, to
meet general operating expenses or to obtain funds to lend to other public
institutions and facilities. Municipal Bonds may also include private-activity
bonds issued by or on behalf of public authorities to obtain funds to provide
privately operated housing facilities, sports facilities, pollution control
facilities, convention or trade show facilities, industrial, port or parking
facilities and facilities for water supply, gas, electricity or waste disposal.
Such obligations are included within the term Municipal Bonds if the interest
paid thereon qualifies at the time of issuance, in the opinion of the issuer's
bond counsel, as exempt from federal income tax. Other types of industrial
development bonds, the proceeds of which are used for the construction,
equipment, repair or improvement of privately operated industrial or commercial
facilities, may constitute Municipal Bonds, although the current federal tax
laws place substantial limitations on the size of such issues. These bonds are
typically revenue bonds and generally do not carry the pledge of the issuer's
credit.

Municipal Bonds may be general obligation or revenue bonds. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenues derived from a particular facility or class of
facilities or from the proceeds of a special excise tax or other specific
revenue source but not from the general taxing power.

Municipal Notes are short-term obligations, generally with a maturity, at
the time of issuance, ranging from six months to three years. The principal
types of Municipal Notes include tax anticipation notes, bond anticipation notes
and revenue anticipation notes. Notes sold in anticipation of collection of
taxes, a bond sale, or receipt of other revenues are usually general obligations
of the issuing municipality or agency. Municipal Notes also include tax-exempt
or municipal commercial paper, which is likely to be issued to meet seasonal
working capital needs of a municipality or interim construction financing and to
be paid from general revenues of the municipality or refinanced with long-term
debt. In most cases, municipal commercial paper is backed by letters of credit,
lending agreements, note repurchase agreements or other credit facility
agreements offered by banks or other institutions.

For purposes of diversification and concentration under the Investment
Company Act, the identification of the issuer of Municipal Bonds or Notes
depends on the terms and conditions of the obligation. If the assets and
revenues of an agency, authority, instrumentality or other political subdivision
are separate from those of the government creating the subdivision and the
obligation is backed only by the assets and revenues of the subdivision, such
subdivision would be regarded as the sole issuer. Similarly, in the case of an
industrial development revenue bond or pollution control revenue bond, if the
bond is backed only by the assets and revenues of the nongovernmental user, the
nongovernmental user would be regarded as the sole issuer. If in either case the
creating government or another entity guarantees an obligation, the guarantee
would be regarded as a separate security and treated as an issue of such
government or entity.

The Tax-Free Fund will treat an investment in a municipal security refunded
with escrowed U.S. Government securities as U.S. Government securities for
purposes of the Investment Company Act's diversification requirements provided:
(i) the escrowed securities are "government securities" as defined in the
Investment Company Act, (ii) the escrowed securities are irrevocably pledged
only to payment of debt service on the refunded securities, except to the extent
there are amounts in excess of funds necessary for such debt service, (iii)
principal and interest on the escrowed securities will be sufficient to satisfy
all scheduled principal, interest and any premiums on the refunded securities
and a verification report prepared by a party acceptable to a nationally
recognized statistical rating agency, or counsel to the holders of the refunded
securities, so verifies, (iv) the escrow agreement provides that the issuer of
the refunded securities

B-6
<PAGE>
grants and assigns to the escrow agent, for the equal and ratable benefit of the
holders of the refunded securities, an express first lien on, pledge of and
perfected security interest in the escrowed securities and the interest income
thereon, (v) the escrow agent had no lien of any type with respect to the
escrowed securities for payment of its fees or expenses except to the extent
there are excess securities, as described in (ii) above. The Tax-Free Fund will
not, however, invest more than 25% of its total assets in securities of
governmental units in any one state, territory or possession of the United
States other than in industrial development and pollution control obligations.
See "Investment Restrictions" below.

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

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

Since the value of the put is dependent on the ability of the put writer to
meet its obligation to repurchase, each Fund's policy is to enter into put
transactions only with such brokers, dealers or financial institutions which
present minimal credit risks. There is a credit risk associated with the
purchase of puts in that the broker, dealer or financial institution might
default on its obligation to repurchase an underlying security. In the event
such a default should occur, each Fund is unable to predict whether all or any
portion of any loss sustained could subsequently be recovered from the broker,
dealer or financial institution.

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

INVESTMENT RESTRICTIONS

Each of the Funds has adopted certain investment restrictions which cannot
be changed without the approval of the holders of a majority of the outstanding
voting securities of the Fund as defined in the Investment Company Act.

B-7
<PAGE>
MONEY FUND

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

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

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

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

4. Purchase securities on margin or sell short;

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

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

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

8. Underwrite securities of other issuers;

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

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

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

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

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

B-8
<PAGE>

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

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

TAX-FREE FUND

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

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

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

3. Make short sales of securities;

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

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

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

7. Engage in the underwriting of securities;

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

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

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

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

B-9
<PAGE>
12. Write, purchase or sell puts, calls, or combinations thereof, except
that it may obtain rights to resell Municipal Bonds and Notes, as set forth
under "How the Funds Invest--Tax-Free Fund--Investment Objectives and Policies"
in the Prospectus and in this Statement of Additional Information;

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

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

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

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

GOVERNMENT FUND

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

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

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

3. Make loans to others, except through the purchase of the debt
obligations and repurchase agreements and loans of portfolio securities referred
to under "How the Funds Invest--Other Investments and Policies Applicable to the
Funds--Securities Lending." Loans of portfolio securities will be limited to 10%
of the value of the Government Fund's total assets and will be made according to
guidelines established by the Trustees, including maintenance of collateral of
the borrower equal at all times to the current market value of the securities
loaned;

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

5. Purchase securities on margin or sell short;

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

7. Underwrite securities of other issuers;

B-10
<PAGE>
8. Purchase the securities of any other investment company, except in
connection with a merger, consolidation, reorganization or acquisition of
assets; and

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

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

TRUSTEES AND OFFICERS

<TABLE>
<CAPTION>
POSITION PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE (1) WITH FUNDS DURING PAST FIVE YEARS
- ------------------------------ ------------- --------------------------------------------------
<S> <C> <C>
Edward D. Beach (73) Trustee President and Director of BMC Fund, Inc., a
closed-end investment company; previously Vice
Chairman of Broyhill Furniture Industries, Inc.;
Certified Public Accountant; Secretary and
Treasurer of Broyhill Family Foundation, Inc.;
Member of the Board of Trustees of Mars Hill
College; and Director of The High Yield Income
Fund, Inc.
Stephen C. Eyre (75) Trustee Executive Director (May 1985 through December
1997) of The John A. Hartford Foundation, Inc.
(charitable foundation); and Trustee Emeritus of
Pace University.
Delayne Dedrick Gold (59) Trustee Marketing and Management Consultant; Director of
The High Yield Income Fund, Inc.
*Robert F. Gunia (51) Trustee Vice President of Prudential Investments (since
September 1997); Executive Vice President and
Treasurer (since December 1996) of Prudential
Investments Fund Management LLC (PIFM); Senior
Vice President (since March 1987) of Prudential
Securities Incorporated (Prudential Securities);
formerly Chief Administrative Officer (July
1990-September 1996), Director (January
1989-September 1996) and Executive Vice President,
Treasurer and Chief Financial Officer (June
1987-September 1996) of Prudential Mutual Fund
Management, Inc. (PMF); Vice President and
Director (since May 1989) of The Asia Pacific
Fund, Inc.; Director of The High Yield Income
Fund, Inc.
Don G. Hoff (62) Trustee Chairman and Chief Executive Officer (since 1980)
of Intertec, Inc. (investments); Chairman and
Chief Executive Officer of The Lamaur Corporation;
Director of Innovative Capital Management, Inc.
and The Greater China Fund, Inc.; and Chairman and
Director of The Asia Pacific Fund, Inc.
</TABLE>

B-11
<PAGE>

<TABLE>
<CAPTION>
POSITION PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE (1) WITH FUNDS DURING PAST FIVE YEARS
- ------------------------------ ------------- --------------------------------------------------
Robert E. LaBlanc (63) Trustee President (since 1981) of Robert E. LaBlanc
Associates, Inc. (telecommunications); formerly
General Partner at Salomon Brothers and
Vice-Chairman of Continental Telecom; Director of
Storage Technology Corporation, Titan Corporation,
Salient 3 Communications, Inc. and Tribune
Company; and Trustee of Manhattan College.
<S> <C> <C>
*Mendel A. Melzer, CFA (37) Trustee Chief Investment Officer (since October 1996) of
751 Broad Street Prudential Mutual Funds; formerly Chief Financial
Newark, NJ 07102 Officer (November 1995-September 1996) of
Prudential Investments, Senior Vice President and
Chief Financial Officer of Prudential Preferred
Financial Services, (April 1993-November 1995)
Managing Director of Prudential Investment
Advisors (April 1991-April 1993) and Senior Vice
President of Prudential Capital Corporation (July
1989-April 1991); Chairman and Director of
Prudential Series Fund, Inc.; and Director of The
High Yield Income Fund, Inc.
*Richard A. Redeker (55) President and Employee of Prudential Investments; formerly
751 Broad Street Trustee President, Chief Executive Officer and Director
Newark, NJ 07102 (October 1993-September 1996) of PMF; Executive
Vice President, Director and Member of the
Operating Committee (October 1993-September 1996)
of Prudential Securities; Director (October
1993-September 1996) of Prudential Securities
Group, Inc. (PSG); Executive Vice President of the
Prudential Investment Corporation (July
1994-September 1996), Director (January
1994-September 1996) of Prudential Mutual Fund
Distributors, Inc. and Prudential Mutual Fund
Services, Inc.; and Senior Executive Vice
President and Director of Kemper Financial
Services, Inc. (September 1978-September 1993);
and Director and President of The High Yield
Income Fund, Inc.
Robin B. Smith (58) Trustee Chairman and Chief Executive Officer (since August
1996) of Publishers Clearing House; formerly
President and Chief Executive Officer (January
1988-August 1996) and President and Chief
Operating Officer (September 1981-December 1988)
of Publishers Clearing House; Director of
BellSouth Corporation, Texaco Inc., Springs
Industries Inc. and Kmart Corporation.
Langdon R. Stevenson (63) Trustee Independent Contractor to the American Birding
Association Director, Point Reyes Bird
Observatory; former Treasurer and Development
Director of American Birding Association Inc.;
faculty member (economics and history) Hackley
School, Tarrytown, New York; formerly Senior Vice
President (1985-1989) and Director (1978-1986) of
Prudential Securities; President of P-B Trade
Finance Ltd. (1985-1987).
</TABLE>

B-12
<PAGE>

<TABLE>
<CAPTION>
POSITION PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE (1) WITH FUNDS DURING PAST FIVE YEARS
- ------------------------------ ------------- --------------------------------------------------
Stephen Stoneburn (54) Trustee President and Chief Executive Officer (since June
1996) of Quadrant Media Corp. (a publishing
Company); formerly President (June 1995-June 1996)
of Argus Integrated Media, Inc.; Senior Vice
President and Managing Director (January
1993-1995), Cowles Business Media, Senior Vice
President (January 1991-1992) and Publishing Vice
President (May 1989-December 1990) of Gralla
Publications, (a division of United Newspapers,
U.K.) and Senior Vice President of Fairchild
Publications, Inc.
<S> <C> <C>
Nancy H. Teeters (66) Trustee Economist; Director of Inland Steel Industries;
formerly, Vice President and Chief Economist of
International Business Machines; Member of the
Board of Governors of the Federal Reserve System
(1984-1990), Assistant Director of the Committee
on the Budget of the US House of Representatives;
Senior Fellow at the Library of Congress; Senior
Fellow at the Brookings Institution; staff at
Office of Management and Budget, Council of
Economics Advisors and the Federal Reserve Board.
S. Jane Rose (52) Secretary Senior Vice President (since December 1996) of
PIFM; Senior Vice President and Senior Counsel
(since July 1992) of Prudential Securities;
formerly Senior Vice President (January
1991-September 1996) and Senior Counsel (June
1987-December 1990) of PMF.
Robert C. Rosselot (38) Assistant Assistant General Counsel (since September 1997)
Secretary of PIFM; formerly, partner with the firm of Howard
& Howard, Bloomfield Hills, Michigan (December
1995-September 1997) and Corporate Counsel,
Federated Investors (1990-1995).
Grace C. Torres (38) Treasurer and First Vice President (since December 1996) of
Principal PIFM; First Vice President (since March 1994) of
Financial and Prudential Securities; formerly First Vice
Accounting President (March 1994-September 1996) of
Officer Prudential Mutual Fund Management Inc. and Vice
President (July 1989-March 1994) of Bankers Trust.
Stephen M. Ungerman (44) Assistant Vice President and Tax Director (since March 1996)
Treasurer of Prudential Investments; formerly First Vice
President of Prudential Mutual Fund Management,
Inc. (February 1993-September 1996).
</TABLE>

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

* "Interested" Director of the Fund, as defined in the Investment Company Act
of 1940 (the Investment Company Act) by reason of his affiliation with
Prudential, Prudential Securities or PIFM.

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

B-13
<PAGE>
The officers conduct and supervise the daily business operations of each
Fund, while the Trustees, in addition to their functions set forth under
"Manager" and "Distributor," review such actions and decide on general policy.

Each Fund pays each Trustee who is not an affiliated person of the Manager
annual compensation as follows: COMMAND Government Fund, $2,500, COMMAND Money
Fund, $5,500 and COMMAND Tax-Free Fund, $3,000, in addition to certain
out-of-pocket expenses.

The Trustees have adopted a retirement policy which calls for the retirement
of Trustees on December 31 of the year in which they reach the age of 72, except
that retirement is being phased in for Trustees who were age 68 or older as of
December 31, 1993. Under this phase-in provision, Messrs. Beach and Eyre are
scheduled to retire on December 31, 1999 and 1998, respectively.

Pursuant to the terms of the Management Agreement with the Fund, the Manager
pays all compensation of officers and employees of the Fund as well as the fees
and expenses of all Trustees of the Fund who are affiliated persons of the
Manager. The amount of annual compensation paid to each Trustee may change as a
result of the introduction of additional funds on the boards of which the
Trustee will be asked to serve.

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

The following table sets forth the aggregate compensation paid by the Funds
for the fiscal year ended June 30, 1998 to the Trustees who are not affiliated
with the Manager and the aggregate compensation paid to such Trustees for
service on the Funds' Boards and that of all other investment companies managed
by PIFM (Fund Complex) for the calendar year ended December 31, 1997.

<TABLE>
<CAPTION>
COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------
PENSION OR
RETIREMENT ESTIMATED
BENEFITS ANNUAL AND TOTAL COMPENSATION
AGGREGATE ACCRUED AS FUND BENEFITS FROM FUNDS AND FUND
COMPENSATION PART OF FUND UPON COMPLEX PAID TO
NAME AND POSITION FROM FUNDS@ EXPENSES RETIREMENT TRUSTEES (2)
- ------------------------------------------- ------------ -------------- -------------- ---------------------
<S> <C> <C> <C> <C>
Edward D. Beach, Trustee................... $ 11,000 None N/A $ 135,000 (38/63)*
Stephen C. Eyre, Trustee................... $ 11,000 None N/A $ 45,000 (12/13)*
Delayne Dedrick Gold, Trustee.............. $ 11,000 None N/A $ 135,000 (38/63)*
Robert F. Gunia(1), Trustee................ -- None N/A --
Don G. Hoff, Trustee....................... $ 11,000 None N/A $ 45,000 (12/13)*
Robert E. LaBlanc, Trustee................. $ 11,000 None N/A $ 45,000 (12/13)*
Mendel A. Melzer(1), Trustee............... -- None N/A --
Richard A. Redeker(1), Trustee............. -- None N/A --
Robin B. Smith, Trustee.................... $ 11,000 None N/A $ 90,000 (27/34)*
Langdon R. Stevenson, Trustee.............. $ 11,000 None N/A $ 11,000 (3/3)*
Stephen Stoneburn, Trustee................. $ 11,000 None N/A $ 45,000 (12/13)*
Nancy H. Teeters, Trustee.................. $ 11,000 None N/A $ 90,000 (23/42)*
</TABLE>

- ------------

B-14
<PAGE>
@ Effective January 1997, the annual compensation paid to each Trustee was
reduced to $2,500, $5,500 and $3,000, for the Command Government Fund,
Command Money Fund and Command Tax-Free Fund, respectively in addition to
certain out-of-pocket expenses.

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

(1) Robert F. Gunia, Mendel A. Melzer and Richard A. Redeker, who are interested
Directors, do not receive compensation from the Fund or any fund in the Fund
Complex.

(2) Total compensation from all the funds in the Fund Complex for the calendar
year ended December 31, 1997, including amounts deferred at the election of
Trustees under the funds' deferred compensation plans. Including accrued
interest total deferred compensation amounted to $139,081 for Trustee Robin
B. Smith. Currently, Ms. Smith has agreed to defer some of her fees at the
T-Bill rate and other fees at the Fund rate.

As of August 7, 1998, the Trustees and officers of each Fund, as a group,
owned less than 1% of the outstanding shares of each Fund and there were no
beneficial owners of greater than 5% of the outstanding shares of any Fund.

As of August 7, 1998, Prudential Securities was record holder of 709,926,450
shares (or 100%), 9,944,066,789 shares (or 100%) and 1,447,422,008 shares (or
100%) of the outstanding shares of the COMMAND Government Fund, COMMAND Money
Fund and COMMAND Tax-Free Fund, respectively. In the event of any meetings of
shareholders, Prudential Securities will forward, or cause the forwarding of,
proxy materials to the beneficial owners for which it is the record holder.

MANAGER

The manager of each of the Funds is Prudential Investments Fund Management
LLC (PIFM or the Manager) Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077. PIFM serves as manager of all of the other investment
companies that, together with the Funds, comprise the Prudential Mutual Funds.
See "How the Funds Are Managed--Manager" in the Prospectus. As of July 31, 1998,
PIFM managed and/or administered open-end and closed-end management investment
companies with assets of approximately $66 billion. According to the Investment
Company Institute, as of December 31, 1997, the Prudential Mutual Funds were the
th largest family of mutual funds in the United States.

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

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

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

B-15
<PAGE>

Fund's average daily net assets up to and including $1 billion and .375 of 1% of
the Fund's average daily net assets in excess of $1 billion. The Tax-Free Fund
pays a fee at an annual rate of .50 of 1% of the Fund's average daily net assets
up to $500 million, .425 of 1% of the Fund's average daily net assets of the
next $500 million and .375 of 1% of the Fund's average daily net assets in
excess of $1 billion. In the event the expenses of the Funds (including the fees
of the Manager but excluding interest, taxes, brokerage commissions,
distribution fees, litigation and indemnification expenses and other
extraordinary expenses) for any fiscal year exceed the lowest applicable annual
expense limitation established and enforced pursuant to the statutes or
regulations of any jurisdictions in which shares of the Funds are then qualified
for offer and sale, the Manager will reduce its fee by the amount of such
excess, or, if such reduction exceeds the compensation payable to the Manager,
the Manager will pay to the Fund the amount of such reduction which exceeds the
amount of such compensation. Any such reductions or payments will be made
monthly and are subject to readjustment during the year. No jurisdiction
currently limits the Funds' expenses.

In connection with the services it renders, PIFM bears the following
expenses:

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

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

(c) the costs and expenses payable to The Prudential Investment Corporation
(PIC), doing business as Prudential Investments (PI, the Subadvisor or the
investment advisor), pursuant to each Subadvisory Agreement between PIFM and PI
(the Subadvisory Agreement).

Under the terms of the Management Agreements, each Fund is responsible for
the payment of the following expenses, including (a) the fee payable to the
Manager, (b) the fees and expenses of Trustees who are not affiliated with PMF
or PI, (c) the fees and certain expenses of each Fund's Custodian and Transfer
and Dividend Disbursing Agent, including the cost of providing records to the
Manager in connection with its obligation of maintaining required records of
each Fund and of pricing each Fund's shares, (d) the fees and expenses of the
Fund's legal counsel and independent accountants, (e) brokerage commissions and
any issue or transfer taxes chargeable to the Fund in connection with its
securities transactions, (f) all taxes and corporate fees payable by the Fund to
governmental agencies, (g) the fees of any trade association of which the Fund
is a member, (h) the cost of share certificates representing shares of the Fund,
(i) the cost of fidelity, directors and officers and errors and omissions
insurance, (j) the fees and expenses involved in registering and maintaining
registration of the Fund and of its shares with the Commission, registering the
Fund and qualifying its shares under state securities laws, including the
preparation and printing of the Fund's registration statements and prospectuses
for such purposes, (k) allocable communications expenses with respect to
investor services and all expenses of shareholders' and Trustees' meetings and
of preparing, printing and mailing reports to shareholders, (l) litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Fund's business and (m) distribution fees.

The Management Agreements provide that PIFM will not be liable to the Funds
for any error of judgment by the Manager or for any loss sustained by the Funds
except in the case of a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages will be limited as
provided in the Investment Company Act) or of wilful misfeasance, bad faith,
gross negligence or reckless disregard of duty on the part of the Manager. Each
Management Agreement also provides that it will terminate automatically if
assigned and that it may be terminated without penalty by either party upon no
more than 60, nor less than 30, days' written notice. The Management Agreements
will continue in effect from year to year so long as such continuance is
specifically approved at least annually in conformity with the Investment
Company Act. The Management Agreements were last approved by the Trustees,
including all of the

B-16
<PAGE>

Trustees who are not interested persons as defined in the Investment Company
Act, on May 13, 1998 and by a majority of the outstanding shares of the
Government Fund and Tax-Free Fund on August 18, 1988 and by a majority of the
outstanding shares of the Money Fund on October 18, 1988.

For the fiscal years ended June 30, 1998, 1997, and 1996, the Money Fund
paid PIFM management fees of $29,026,767, $22,524,838, and $18,388,779,
respectively. For the fiscal years ended June 30, 1998, 1997, and 1996, the
Tax-Free Fund paid PIFM management fees of $5,671,955, $5,304,067, and
$5,128,465, respectively. For the fiscal years ended June 30, 1998, 1997, and
1996, the Government Fund paid PIFM management fees of $2,250,774, $2,138,318,
and $1,908,673, respectively.

For each of the Funds, PIFM has entered into a subadvisory agreement with
PI. The Subadvisory Agreements provide that PI will furnish investment advisory
services in connection with the management of each of the Funds. In connection
therewith, PI is obligated to keep certain books and records for each of the
Funds. PIFM continues to have responsibility for all investment advisory
services pursuant to the Management Agreements and supervises PI's performance
of those services. PI is reimbursed by PIFM for the reasonable costs and
expenses incurred by PI in furnishing those services. Investment advisory
services are provided to each Fund by a unit of the subadviser, known as
Prudential Mutual Fund Investment Management.

The Subadvisory Agreements were last approved by the Trustees, including a
majority of the Trustees who are not interested persons as defined in the
Investment Company Act, on May 13, 1998; the shareholders of the Government Fund
and Tax-Free Fund approved their respective Subadvisory Agreements on August 18,
1988 and the shareholders of the Money Fund approved their Subadvisory Agreement
on October 18, 1988.

Each Subadvisory Agreement provides that it will terminate in the event of
its assignment or upon the termination of the respective Management Agreement.
Each Subadvisory Agreement may be terminated by the Fund, PIFM or PI upon not
less than 30 days', or more than 60 days', written notice. Each Subadvisory
Agreement provides that it will continue in effect for a period of more than two
years from its execution only so long as such continuance is specifically
approved at least annually in accordance with the requirements of the Investment
Company Act.

DISTRIBUTOR

Prudential Investment Management Services LLC (the Distributor), Gateway
Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077, acts as the
distributor of the shares of the Funds. Prior to July 1, 1998, Prudential
Securities (also referred to as the Distributor) was the distributor of the
shares of the Funds.

PLANS OF DISTRIBUTION

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

For the fiscal year ended June 30, 1998, the Distributor incurred
distribution expenses of $9,920,274 for the Money Fund, $703,367 for the
Government Fund and $1,598,985 for the Tax-Free Fund, all of which was recovered
through the distribution fees paid by the Funds. It is estimated that of the
distribution fees received by the Distributor from each Fund for the fiscal year
ended June 30, 1998, commission credits to Prudential Securities branch offices
for payments of commissions to account executives amounted to approximately 80%
($7,936,219) for the Money Fund; 80% ($562,694)

B-17
<PAGE>

for the Government Fund; and 80% ($1,279,188) for the Tax-Free Fund; and
overhead and other branch office distribution-related expenses amounted to
approximately 20% ($1,984,055) for the Money Fund; approximately 20% ($140,673)
for the Government Fund; and approximately 20% ($319,797) for the Tax-Free Fund.

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

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

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

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

CALCULATION OF YIELD

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

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

The Tax-Free Fund may also calculate the tax equivalent yield over a 7-day
period. The tax equivalent yield will be determined by first computing the
current yield as discussed above. The Fund will then determine what portion of
the yield is attributable to securities, the income of which is exempt for
federal income tax purposes. This portion of the yield will

B-18
<PAGE>

then be divided by one minus 39.6% (the assumed maximum tax rate for individual
taxpayers not subject to Alternative Minimum Tax) and then added to the portion
of the yield that is attributable to taxable securities. The Fund's 7-day tax
equivalent yield as of June 30, 1998 was 5.23%.

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

Each Fund's yield fluctuates, and an annualized yield quotation is not a
representation by a Fund as to what an investment in the Fund will actually
yield for any given period.

ISSUANCE OF FUND SHARES FOR SECURITIES

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

PORTFOLIO TRANSACTIONS

The Manager is responsible for decisions to buy and sell securities for the
Funds and for arranging the execution of portfolio transactions. For purposes of
this section, the term "Manager" includes the "Subadviser." The Manager
purchases portfolio securities for each Fund from dealers, underwriters and
issuers. Any sales of portfolio securities made prior to maturity are made to
dealers and issuers. The Funds do not normally incur any brokerage commission
expense on such transactions. The instruments purchased by the Funds are
generally traded on a "net" basis with dealers acting as principal for their own
accounts without a stated commission, although the price of the security usually
includes a profit to the dealer. Securities purchased in underwritten offerings
include a fixed amount of compensation to the underwriter, generally referred to
as the underwriter's concession or discount. When securities are purchased or
sold directly from or to an issuer, no commissions or discounts are paid. The
Funds will not deal with Prudential Securities in any transaction in which
Prudential Securities acts as principal. There were no brokerage commissions
paid by the Funds during the fiscal years ended June 30, 1998, 1997 and 1996.

The policy of the Funds regarding purchases and sales of securities for
their respective portfolios is that primary consideration will be given to
obtaining the most favorable price and efficient execution of transactions. This
means that the Manager will seek to execute each transaction at a price and
commission, if any, which provide the most favorable total cost or proceeds
reasonably attainable under the circumstances. While the Manager generally seeks
reasonably competitive spreads or commissions, the Funds will not necessarily be
paying the lowest spread or commission available. Within the framework of the
policy of obtaining best price and execution, the Manager may consider research
and investment services provided by brokers or dealers who effect or are parties
to portfolio transactions of the Funds, the Manager or the Manager's other
clients. Such research and investment services are those which brokerage houses
customarily provide to institutional investors and include statistical and
economic data and research reports on particular companies and industries.

Such services are used by the Manager in connection with all of its
investment activities, and some of such services obtained in connection with the
execution of transactions for the Funds may be used in managing other investment
accounts. Conversely, brokers furnishing such services may be selected for the
execution of transactions of such other accounts, whose aggregate assets are
larger than the Funds, and the services furnished by such brokers may be used by
the Manager in providing investment management for the Funds. While such
services are useful and important in

B-19
<PAGE>
supplementing its own research and facilities, the Manager believes that the
value of such services is not determinable and does not significantly reduce
expenses. The Funds do not reduce the fees they pay to the Manager by any amount
that may be attributable to the value of such services.

TAXES, DIVIDENDS AND DISTRIBUTIONS

Each Fund has elected to qualify and intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the Code).

Qualification as a regulated investment company under the Code requires,
among other things, that a Fund (a) derive at least 90% of its annual gross
income (without offset for losses from the sale or other disposition of
securities or foreign currencies) from interest, payments with respect to
securities loans, dividends and gains from the sale or other disposition of
securities of foreign currencies and certain financial futures, options and
forward contracts; (b) diversify its holdings so that, at the end of each
quarter of the taxable year, (i) at least 50% of the value of the Fund's assets
is represented by cash, U.S. Government securities and other securities limited
in respect of any one issuer to an amount not greater than 5% of the market
value of the Fund's assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than U.S. Government securities); and (c)
distribute to its shareholders at least 90% of its net investment income
(including net tax-exempt interest income) and net short-term gains (i.e. the
excess of net short-term capital gains over net long-term capital losses) in
each year.

The Internal Revenue Code imposes a 4% nondeductible excise tax to the
extent the Funds do not meet certain minimum distribution requirements by the
end of each calendar year. The Funds intend to make timely distributions in
order to avoid this excise tax. For this purpose, dividends declared in October,
November and December payable to shareholders of record on a specified date in
October, November and December and paid in the following January will be treated
as having been received by shareholders on December 31 of the calendar year in
which declared. Under this rule, therefore, a shareholder may be taxed in the
prior year on dividends or distributions actually received in January of the
following year.

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT AND
INDEPENDENT ACCOUNTANTS

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

Prudential Mutual Fund Services LLC (PMFS), Raritan Plaza One, Edison, New
Jersey 08837, serves as Transfer and Dividend Disbursing Agent and in those
capacities maintains certain books and records for each Fund. PMFS is a wholly-
owned subsidiary of PIFM. PMFS provides customary transfer agency services to
each Fund, including the handling of shareholder communications, the processing
of shareholder transactions, the maintenance of shareholder account records,
payment of dividends and distributions and related functions. For these
services, PMFS receives an annual fee per shareholder account, a new account
set-up fee for each manually established account and a monthly inactive zero
balance account fee per shareholder account. PMFS is also reimbursed for its
out-of-pocket expenses, including but not limited to postage, stationery,
printing, allocable communications expenses, and other costs. For the fiscal
year ended June 30, 1998, fees of approximately $2,800,400, $93,700 and $184,500
were incurred by COMMAND Money Fund, COMMAND Government Fund and COMMAND
Tax-Free Fund, respectively, for such services.

PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York,
serves as each of the Fund's independent accountants, and in that capacity have
audited each Fund's financial statements for the fiscal year ended June 30,
1998.

B-20
<PAGE>

SHAREHOLDER INVESTMENT ACCOUNT

TAX-DEFERRED RETIREMENT ACCOUNTS

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

TAX-DEFERRED COMPOUNDING(1)

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

- ------------

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

COMMANDSM, COMMAND PLUSSM AND BUSINESSEDGESM ACCOUNT PROGRAMS

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

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

The COMMAND program offers various other products or services. From time to
time, the COMMAND program annual fee and/or the fee associated with a particular
product or service may be waived or reduced. Currently, Prudential Securities
may waive or reduce fees for clients who participate in the COMMAND program for
the following products or services: the Valued Investor Program-C- (VIP),
Transfer on Death Account (TOD), Dividend Reinvestment Program, Prudential
Securities OnlineSM and Flexible Reserve Program. Products and services offered
through the COMMAND program, and the associated fees, and waivers or reductions
thereto, are subject to change. For information regarding products and services
available through the COMMAND program, please contact your Prudential Securities
Financial Adviser.

B-21
<PAGE>

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

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

DESCRIPTION OF SECURITIES RATINGS

CORPORATE AND TAX-EXEMPT BOND RATINGS

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

The four highest ratings of Standard & Poor's Ratings Group (Standard &
Poor's) for corporate or municipal debt are AAA, AA, A and BBB. Debt rated AAA
bear the highest rating assigned by Standard & Poor's to a debt obligation and
indicate an extremely strong capacity to pay principal and interest. Debt rated
AA also qualify as high-quality debt obligations. Capacity to pay principal and
interest is very strong, and in the majority of instances they differ from AAA
issues only in small degrees. Debt rated A have a strong capacity to pay
principal and interest, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions. The BBB
rating, which is the lowest "investment grade" security rating by Standard &
Poor's, indicates an adequate capacity to pay principal and interest. Whereas
they normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay principal and interest for debt in this category than for debt
in the A category. The foregoing ratings are sometimes followed by a "p"
indicating that the rating is provisional. A provisional rating assumes the
successful completion of the project being financed by the debt being

B-22
<PAGE>
rated and indicates that payment of debt service requirements is largely or
entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to completion
of the project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion.

TAX-EXEMPT NOTE RATINGS

The ratings of Moody's for short-term obligations are MIG 1, MIG 2, MIG 3
and MIG 4. Short-term obligations bearing the designation MIG 1 are judged to be
of the best quality, enjoying strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing. Short-term obligations bearing the designation MIG 2 are
judged to be of high quality, with margins of protection which are ample
although not so large as in the preceding group. Short-term obligations
designated MIG 3 are judged to be of favorable quality, but lack the undeniable
strength of the preceding grades because liquidity and cash flow protection may
be narrow and market access for refinancing is likely to be less well
established. Short-term obligations designated MIG 4 are judged to be of
adequate quality. Though protection commonly regarded as required of an
investment security is present, and such obligations are not distinctly or
predominantly speculative, there is specific risk.

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

CORPORATE AND TAX-EXEMPT COMMERCIAL PAPER RATINGS

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

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

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

B-23
<PAGE>

COMMAND MONEY FUND Portfolio of Investments
June 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Bank Notes--4.3%
American Express Centurion
Bank
$ 12,000(a) 5.61625%, 7/13/98.......... $ 11,999,562
First Union National Bank
86,000 5.59%, 2/19/99............. 86,000,000
First USA Bank
10,000(a) 5.96406%, 7/9/98........... 10,009,144
Key Bank N.A.
16,000(a) 5.65406%, 7/13/98.......... 16,004,808
38,000(a) 5.54%, 7/29/98............. 37,988,276
122,000(a) 5.52%, 9/18/98............. 121,949,639
U.S. Bank N.A.
103,000(a) 5.55235%, 7/15/98.......... 102,978,331
--------------
386,929,760
--------------
Certificates of Deposit - Domestic--2.6%
Chase Manhattan Bank
100,000 5.62%, 7/6/98.............. 100,000,000
55,000 5.57%, 8/24/98............. 55,000,000
First Tennessee Bank N.A.
27,000 5.55%, 7/13/98............. 26,999,724
27,000 5.56%, 8/6/98.............. 26,999,035
27,000 5.57%, 9/8/98.............. 26,998,159
Morgan Guaranty Trust Co.
3,000 5.87%, 8/6/98.............. 2,999,915
--------------
238,996,833
--------------
Certificates of Deposit - Eurodollar--2.2%
Abbey National Treasury
Services PLC
100,000 5.75%, 3/5/99.............. 100,000,000
Bayerische Hypotheken und
Weschel Bank
55,000 5.58%, 8/10/98............. 55,000,501
Westdeutsche Landesbank
Girozentrale
$ 48,000 5.82%, 8/3/98.............. $ 47,996,638
--------------
202,997,139
--------------
Certificates of Deposit - Yankee--19.2%
Barclays Bank PLC
191,000(a) 5.52125%, 7/2/98........... 190,861,040
50,000 5.56%, 2/25/99............. 49,981,157
Bayerische Hypotheken und
Wechsel Bank
23,000 5.94%, 10/22/98............ 22,995,917
15,000 5.675%, 3/3/99............. 14,995,658
Bayerische Landesbank
Girozentrale
50,000(a) 5.5525%, 7/30/98........... 49,960,110
Canadian Imperial Bank of
Commerce
12,000 5.57%, 8/3/98.............. 12,000,000
114,000 5.55%, 2/10/99............. 113,966,439
43,000 5.705%, 3/30/99............ 42,970,850
Credit Agricole Indosuez
82,000 5.87%, 8/10/98............. 81,995,704
50,000 5.90%, 10/19/98............ 49,992,798
20,000 5.95%, 10/21/98............ 19,997,067
50,000 5.66%, 3/23/99............. 49,982,604
50,000 5.74%, 4/26/99............. 49,976,474
Credit Communal De Belgique
S.A.
21,000 5.58%, 8/13/98............. 21,000,000
42,000 5.58%, 8/18/98............. 42,000,000
103,000 5.58%, 8/24/98............. 103,000,000
25,000 5.575%, 8/28/98............ 24,999,112
Deutsche Bank
10,000 5.94%, 10/23/98............ 9,998,209
150,000 5.54%, 2/24/99............. 149,953,076
</TABLE>
B-24
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND MONEY FUND

<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Certificates of Deposit - Yankee--(cont'd.)
Deutsche Bank
$ 25,000 5.57%, 2/26/99............. $ 24,992,116
47,000 5.62%, 2/26/99............. 46,985,185
47,000 5.63%, 2/26/99............. 46,973,346
50,000 5.66%, 3/3/99.............. 49,983,917
Dresdner Bank AG
6,000 5.76%, 7/31/98............. 5,999,317
Rabobank Nederland N.V.
92,000 5.50%, 2/9/99.............. 91,956,850
Societe Generale
50,000 5.97%, 9/15/98............. 49,995,026
29,295 5.56%, 1/19/99............. 29,253,236
Svenska Handelsbanken
77,000 5.60%, 9/24/98............. 77,000,896
Westdeutsche Landesbank
Girozentrale
224,000 5.55%, 7/8/98.............. 224,000,000
--------------
1,747,766,104
--------------
Commercial Paper--55.7%
American General Corp.
12,000 5.53%, 8/31/98............. 11,887,557
20,000 5.53%, 9/18/98............. 19,757,294
American Honda Finance
Corp.
19,000 5.57%, 9/10/98............. 18,791,280
6,000 5.57%, 9/11/98............. 5,933,160
Aon Corp.
10,054 5.52%, 7/7/98.............. 10,044,750
17,100 5.62%, 7/9/98.............. 17,078,644
25,000 5.55%, 7/23/98............. 24,915,208
5,000 5.55%, 7/24/98............. 4,982,271
773 5.56%, 7/31/98............. 769,418
5,853 5.56%, 8/3/98.............. 5,823,169
Aristar, Inc.
21,000 5.57%, 7/31/98............. 20,902,525
14,000 5.60%, 8/11/98............. 13,910,711
Associates Corp. of North
America
$ 82,000 5.53%, 7/29/98............. $ 81,647,309
42,000 5.52%, 8/10/98............. 41,742,400
62,000 5.52%, 9/10/98............. 61,325,027
Associates First Capital
Corp.
64,000 5.52%, 8/18/98............. 63,528,960
44,000 5.52%, 9/9/98.............. 43,527,733
Atlantic Richfield Co.
50,000 5.55%, 9/14/98............. 49,421,875
Bank Austria Finance, Inc.
163,038 5.53%, 8/17/98............. 161,860,911
Bank of Montreal
50,000 5.473%, 7/15/98............ 49,893,581
Bank of New York Co., Inc.
61,146 5.52%, 9/17/98............. 60,414,694
Barton Capital Corp.
15,000 5.75%, 7/8/98.............. 14,983,229
15,598 5.70%, 7/14/98............. 15,565,894
6,387 5.61%, 8/13/98............. 6,344,202
11,271 5.60%, 8/21/98............. 11,181,583
26,192 5.62%, 8/28/98............. 25,954,846
BBL North America, Inc.
95,000 5.52%, 8/14/98............. 94,359,067
65,000 5.52%, 8/21/98............. 64,491,700
Bell Atlantic Network
Funding Corp.
19,000 5.56%, 7/30/98............. 18,914,901
Beneficial Corp.
18,000 5.59%, 7/24/98............. 17,935,715
Centric Capital Corp.
20,000 5.55%, 7/10/98............. 19,972,250
60,000 5.70%, 7/20/98............. 59,819,500
6,000 5.63%, 7/27/98............. 5,975,603
5,750 5.57%, 8/20/98............. 5,705,517
8,700 5.57%, 8/24/98............. 8,627,312
22,000 5.54%, 9/22/98............. 21,718,999
49,000 5.55%, 9/29/98............. 48,320,125
</TABLE>
B-25
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND MONEY FUND

<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Commercial Paper--(cont'd.)
CIT Group Holdings, Inc.
$ 37,000 5.56%, 8/5/98.............. $ 36,799,994
Coca-Cola Enterprises, Inc.
20,000 5.55%, 7/21/98............. 19,938,333
6,000 5.55%, 8/7/98.............. 5,965,775
Commercial Credit Co.
39,000 5.53%, 8/19/98............. 38,706,449
22,000 5.53%, 8/20/98............. 21,831,028
22,000 5.53%, 9/8/98.............. 21,766,818
Commerzbank U.S. Finance,
Inc.
36,000 5.53%, 8/26/98............. 35,690,320
Corestates Capital Corp.
40,000(a) 5.61234%, 7/1/98........... 40,000,000
Corporate Receivables Corp.
10,000 5.60%, 7/27/98............. 9,959,556
Countrywide Home Loan, Inc.
9,616 5.60%, 7/28/98............. 9,575,613
4,000 5.60%, 7/29/98............. 3,982,578
47,000 5.60%, 7/31/98............. 46,780,667
14,000 5.60%, 8/4/98.............. 13,925,956
Du Pont (E.I.) De Nemours &
Co., Inc.
35,000 5.60%, 8/12/98............. 34,771,333
Eastman Kodak Co.
2,000 5.57%, 8/26/98............. 1,982,671
20,000 5.57%, 8/28/98............. 19,820,522
5,000 5.57%, 9/1/98.............. 4,952,036
10,000 5.57%, 9/2/98.............. 9,902,525
First Chicago Financial
Corp.
73,000 5.52%, 8/18/98............. 72,462,720
11,000 5.53%, 9/10/98............. 10,880,030
20,000 5.53%, 9/11/98............. 19,778,800
First Data Corp.
26,000 5.57%, 7/21/98............. 25,919,544
26,000 5.57%, 7/28/98............. 25,891,385
Ford Motor Credit Co.
$ 95,000 5.54%, 7/2/98.............. $ 94,985,381
262,000 5.53%, 7/10/98............. 261,637,785
General Electric Capital
Corp.
133,000 5.48%, 7/9/98.............. 132,838,036
75,000 5.53%, 7/16/98............. 74,827,188
6,000 5.52%, 8/19/98............. 5,954,920
100,000 5.51%, 9/3/98.............. 99,020,444
30,000 5.51%, 9/10/98............. 29,673,992
45,000 5.53%, 9/11/98............. 44,502,300
General Motors Acceptance
Corp.
150,000 5.53%, 7/17/98............. 149,631,333
91,310 5.58%, 7/23/98............. 90,998,633
86,188 5.52%, 8/17/98............. 85,566,872
88,000 5.52%, 8/18/98............. 87,352,320
Hertz Corp.
24,000 5.55%, 9/3/98.............. 23,763,200
Household Finance Corp.
20,000 6.00%, 7/8/98.............. 19,976,667
ING America Insurance Holdings, Inc.
30,718 5.51%, 7/13/98............. 30,661,581
10,000 5.47%, 8/3/98.............. 9,949,858
11,000 5.54%, 8/21/98............. 10,913,668
Martin Marietta Material
9,000 5.60%, 8/6/98.............. 8,949,600
Merrill Lynch & Co., Inc.
53,000 5.53%, 8/14/98............. 52,641,779
93,000 5.55%, 8/25/98............. 92,211,438
Mont Blanc Capital Corp.
35,000 5.60%, 8/27/98............. 34,689,667
62,592 5.57%, 9/9/98.............. 61,914,094
Monte Rosa Capital Corp.
117,000 5.60%, 8/25/98............. 115,999,000
14,696 5.60%, 8/27/98............. 14,565,695
56,000 5.63%, 8/27/98............. 55,500,807
</TABLE>
B-26
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND MONEY FUND

<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Commercial Paper--(cont'd.)
Morgan (J.P.) & Co., Inc.
$ 23,000 5.54%, 8/24/98............. $ 22,808,870
21,000 5.52%, 9/10/98............. 20,771,380
Newell Co.
32,433 5.55%, 7/17/98............. 32,352,999
Nordbanken North America,
Inc.
69,000 5.52%, 8/4/98.............. 68,640,280
56,000 5.52%, 9/18/98............. 55,321,653
Old Line Funding Corp.
50,000 5.60%, 7/24/98............. 49,821,111
20,000 5.60%, 7/28/98............. 19,916,000
36,361 5.59%, 8/5/98.............. 36,163,388
9,590 5.66%, 8/28/98............. 9,502,550
Preferred Receivables
Funding Corp.
16,975 5.55%, 10/5/98............. 16,723,770
Quincy Capital Corp.
21,870 5.60%, 7/22/98............. 21,798,558
Safeco Corp.
36,000 5.54%, 8/21/98............. 35,717,460
80,000 5.54%, 8/25/98............. 79,322,889
57,000 5.54%, 9/14/98............. 56,342,125
Salomon Smith Barney Holdings, Inc.
38,000 5.53%, 8/17/98............. 37,725,651
30,000 5.55%, 8/24/98............. 29,750,250
117,000 5.53%, 9/17/98............. 115,598,145
SBC Finance (Delaware),
Inc.
300,000 5.53%, 8/24/98............. 297,511,500
Special Purpose Accounts
Recreation Cooperative
Corp.
17,000 5.62%, 8/24/98............. 16,856,690
22,000 5.66%, 8/27/98............. 21,802,843
Svenska Handelsbanken
89,000 5.55%, 7/9/98.............. 88,890,233
39,000 5.53%, 8/10/98............. 38,760,367
50,000 5.52%, 9/3/98.............. 49,509,333
Thunder Bay Funding, Inc.
$ 51,000 5.68%, 7/10/98............. $ 50,927,580
15,162 5.63%, 7/31/98............. 15,090,865
Triple A One Funding Corp.
2,394 5.65%, 9/4/98.............. 2,369,578
UBS Finance (Delaware),
Inc.
46,434 5.53%, 8/7/98.............. 46,170,087
56,000 5.53%, 8/10/98............. 55,655,911
Windmill Funding Corp.
98,000 5.60%, 7/27/98............. 97,603,644
57,000 5.63%, 7/30/98............. 56,741,489
7,482 5.59%, 8/7/98.............. 7,439,014
26,000 5.62%, 8/28/98............. 25,764,584
Xerox Capital (Europe) PLC
55,000 5.52%, 7/14/98............. 54,890,367
Xerox Credit Corp.
984 5.56%, 8/10/98............. 977,921
--------------
5,063,278,916
--------------
Loan Participations--0.4%
Cooper Industries, Inc.
24,000(b) 5.65%, 7/13/98
(cost $24,000,000;
purchased 6/12/98)....... 24,000,000
Halliburton Corp.
10,000(b) 5.80%, 7/21/98
(cost $10,000,000;
purchased 6/29/98)....... 10,000,000
--------------
34,000,000
--------------
Other Corporate Obligations--15.8%
Abbey National Treasury
Services PLC
22,000 5.50%, 2/5/99.............. 21,989,757
75,000 5.72%, 6/11/99............. 74,945,694
Associates Corp. of North
America
10,000(a) 5.75%, 11/15/98............ 10,003,165
General Motors Acceptance
Corp.
31,000(a) 5.69875%, 8/3/98........... 30,994,671
Goldman Sachs Group L.P.
268,000(a)(b) 5.8125%, 7/21/98
(cost $268,000,000;
purchased 6/26/98)....... 268,000,000
</TABLE>
B-27
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND MONEY FUND

<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Other Corporate Obligations--(cont'd.)
John Deere Capital Corp.
$ 54,000(a) 5.5575%, 8/10/98........... $ 53,980,205
Liquid Asset Backed Securities Trust
102,623(a) 5.65625%, 7/22/98.......... 102,623,017
72,500(a) 5.65625%, 7/27/98.......... 72,499,690
Merrill Lynch & Co., Inc.
47,000(a) 5.61625%, 7/8/98........... 46,998,753
Morgan Stanley Dean Witter
Discover & Co., Inc.
18,000(a) 5.85156%, 7/15/98.......... 18,000,000
33,000(a) 5.85938%, 8/14/98.......... 33,000,000
Restructured Asset
Securities
172,000(a) 5.64625%, 7/28/98.......... 172,000,000
23,000(a)(b) 5.6875%, 7/31/98
(cost $23,000,000;
purchased 4/3/98)........ 23,000,000
Short Term Repackaged Asset Trust
94,000(a)(b) 5.67825%, 7/15/98
(cost $94,000,000;
purchased 12/15/97)...... 94,000,000
SMM Trust Notes 1997-X
127,000(a) 5.65625%, 7/13/98.......... 127,000,000
Strategic Money Market Trust 1997-A
195,000(a) 5.6875%, 9/23/98........... 195,000,000
Strategic Money Market Trust 1998-B
88,000(a) 5.65625%, 7/6/98........... 88,000,000
--------------
1,432,034,952
--------------
Total Investments--100.2%
(amortized cost
$9,106,003,704).......... 9,106,003,704
Liabilities in excess of
other assets--(0.2%)..... (15,714,833)
--------------
Net Assets--100%........... $9,090,288,871
--------------
--------------
</TABLE>
- ---------------
(a) Variable rate instrument. The maturity date presented for these instruments
is the later of the next date on which the security can be redeemed at par
or the next date on which the rate of interest is adjusted.
(b) Indicates a security restricted as to resale. The aggregate cost of such
securities is $419,000,000. The aggregate value of $419,000,000 is
approximately 4.6% of net assets.
The industry classification of portfolio holdings and other assets in excess of
liabilities shown as a percentage of net assets as of June 30, 1998 was as
follows:
<TABLE>
<S> <C>
Commercial Banks............................ 50.8%
Asset Backed Securities..................... 11.9
Short-Term Business Credit.................. 8.6
Security Brokers & Dealers.................. 7.7
Personal Credit Institutions................ 5.3
Finance Lessors............................. 3.9
Fire & Marine Casualty Insurance............ 2.4
Bank Holding Companies - Domestic........... 2.1
Photographic Equipment...................... 1.0
Motor Vehicle Parts......................... 1.0
Mortgage Bankers............................ 0.8
Accidental & Health Insurance............... 0.7
Farm Machinery & Equipment.................. 0.6
Computer Rental & Leasing................... 0.6
Petroleum Refining.......................... 0.5
Plastic Material - Synthetic................ 0.4
Miscellaneous Furniture..................... 0.4
Life Insurance.............................. 0.3
Beverages................................... 0.3
Miscellaneous Electronics, Equipment &
Supplies.................................. 0.3
Auto Rent & Leasing......................... 0.3
Telephone & Communications.................. 0.2
Mining & Quarry............................. 0.1
-----
100.2
Liabilities in excess of other assets....... -0.2
-----
100.0%
-----
-----
</TABLE>
B-28
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND MONEY FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>

Assets June 30, 1998
--------------
<S> <C>
Investments, at amortized cost which approximates market value.......................... $9,106,003,704
Cash.................................................................................... 20,423
Receivable for Fund shares sold......................................................... 333,778,046
Interest receivable..................................................................... 46,097,349
Prepaid expenses........................................................................ 85,162
--------------
Total assets.......................................................................... 9,485,984,684
--------------
Liabilities
Payable for Fund shares repurchased..................................................... 391,137,256
Management fee payable.................................................................. 2,712,753
Accrued expenses and other liabilities.................................................. 1,346,323
Distribution fee payable................................................................ 499,481
--------------
Total liabilities..................................................................... 395,695,813
--------------
Net Assets.............................................................................. $9,090,288,871
--------------
--------------
Net assets were comprised of:
Shares of beneficial interest, at par................................................. $ 90,902,889
Paid-in capital in excess of par...................................................... 8,999,385,982
--------------
Net assets, June 30, 1998............................................................... $9,090,288,871
--------------
--------------
Net asset value, offering price and redemption price per share ($9,090,288,871 /
9,090,288,871 shares of beneficial interest ($.01 par value) issued and
outstanding).......................................................................... $1.00
--------------
--------------
</TABLE>

See Notes to Financial Statements appearing on page B-48.
B-29

<PAGE>

COMMAND MONEY FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
June 30,
Net Investment Income 1998
<S> <C>
Income
Interest............................. $ 454,539,249
--------------
Expenses
Management fee....................... 29,026,767
Distribution fee..................... 9,920,274
Transfer agent's fees and expenses... 2,801,000
Registration fees.................... 465,000
Reports to shareholders.............. 269,000
Custodian's fees and expenses........ 185,000
Insurance expense.................... 98,000
Trustees' fees....................... 50,000
Audit fee............................ 30,000
Legal fees and expenses.............. 20,000
Miscellaneous........................ 46,242
--------------
Total expenses..................... 42,911,283
--------------
Net investment income.................. 411,627,966
--------------
Realized Gain on Investments
Net realized gain on investment
transactions......................... 76,865
--------------
Net Increase in Net Assets
Resulting from Operations.............. $ 411,704,831
--------------
--------------
</TABLE>

COMMAND MONEY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended June 30,
in Net Assets 1998 1997
<S> <C> <C>
Operations
Net investment
income........... $ 411,627,966 $ 301,906,638
Net realized gain
on investment
transactions..... 76,865 168,167
---------------- ----------------
Net increase in net
assets resulting
from
operations....... 411,704,831 302,074,805
---------------- ----------------
Dividends and
distributions to
shareholders (Note
1)................... (411,704,831) (302,074,805)
---------------- ----------------
Fund share
transactions (at $1
per share)
Net proceeds from
shares
subscribed....... 40,246,065,983 30,172,770,064
Net asset value of
shares issued in
reinvestment of
dividends and
distributions.... 411,704,831 302,074,805
Cost of shares
reacquired....... (38,197,384,515) (29,154,784,207)
---------------- ----------------
Net increase in net
assets from Fund
share
transactions..... 2,460,386,299 1,320,060,662
---------------- ----------------
Total increase....... 2,460,386,299 1,320,060,662
Net Assets
Beginning of year.... 6,629,902,572 5,309,841,910
---------------- ----------------
End of year.......... $ 9,090,288,871 $ 6,629,902,572
---------------- ----------------
---------------- ----------------
</TABLE>

See Notes to Financial Statements appearing on page B-48.
See Notes to Financial Statements appearing on page B-48.
B-30

<PAGE>

COMMAND MONEY FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year.................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net realized gains........ 0.052 0.049 0.052 0.050 0.029
Dividends and distributions to shareholders......... (0.052) (0.049) (0.052) (0.050) (0.029)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year........................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN(a):.................................... 5.31% 5.06% 5.30% 5.13% 2.98%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)....................... $9,090,289 $6,629,903 $5,309,842 $4,055,700 $2,448,201
Average net assets (000)............................ $7,936,219 $6,078,525 $4,896,794 $3,072,284 $2,570,195
Ratios to average net assets:
Expenses, including distribution fees............. .54% .57% .58% .59% .59%
Expenses, excluding distribution fees............. .42% .44% .46% .47% .47%
Net investment income............................. 5.19% 4.97% 5.15% 5.09% 2.92%
</TABLE>
- ---------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes reinvestment
of dividends and distributions.
See Notes to Financial Statements appearing on page B-48.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Trustees of
Command Money Fund

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Command Money Fund (the "Fund") at
June 30, 1998, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statments") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
August 18, 1998
B-31

<PAGE>

COMMAND GOVERNMENT FUND Portfolio of Investments
June 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
U.S. Government Agencies--54.7%
Federal Farm Credit Bank--3.7%
$ 2,000 5.46%, 7/1/98................. $ 2,000,000
1,305 5.75%, 7/1/98................. 1,305,000
19,000 5.70%, 9/2/98................. 18,996,074
------------
22,301,074
------------
Federal Home Loan Bank--23.6%
43,000(a) 5.42625%, 7/4/98.............. 42,995,883
40,000(a) 5.42625%, 7/23/98............. 39,997,361
2,500(a) 5.581%, 9/24/98............... 2,499,397
6,000 5.80%, 10/27/98............... 5,999,069
17,000 5.81%, 11/4/98................ 16,996,791
10,000 5.58%, 3/11/99................ 10,001,183
5,000 5.56%, 3/25/99................ 4,996,577
8,000 5.50%, 3/26/99................ 7,991,549
12,000 5.54%, 4/7/99................. 11,979,958
------------
143,457,768
------------
Federal Home Loan Mortgage
Corporation--3.7%
22,500(a) 5.45625%, 7/26/98............. 22,491,070
------------
Federal National Mortgage
Association--18.8%
25,000(a) 5.43625%, 7/15/98............. 24,999,114
25,000(a) 5.596%, 7/20/98............... 24,996,693
10,000 5.63%, 8/14/98................ 9,997,456
20,000 5.531%, 9/16/98............... 19,992,931
9,500 7.05%, 12/10/98............... 9,556,933
18,000 5.41%, 2/23/99................ 17,984,233
7,000 5.37%, 2/26/99................ 6,988,134
------------
114,515,494
------------
Student Loan Marketing Association--4.9%
$ 12,000(a) 5.441%, 7/16/98............... $ 11,998,904
5,150(a) 5.321%, 8/10/98............... 5,145,919
2,000 5.79%, 9/16/98................ 2,000,958
11,034 5.58%, 3/11/99................ 11,032,104
------------
30,177,885
------------
Total U.S. Government Agencies
(amortized cost
$332,943,291)............... 332,943,291
------------
Repurchase Agreements(b)--44.2%
50,000 Bear, Stearns & Co., 5.63%,
dated 6/25/98, due 7/2/98 in
the amount of $50,054,736
(cost $50,000,000), value of
collateral including accrued
interest--$51,317,770....... 50,000,000

2,700 Goldman, Sachs & Co., 5.57%,
dated 6/17/98, due 7/17/98
in the amount of $2,712,533
(cost $2,700,000), value of
collateral including accrued
interest--$2,754,074........ 2,700,000

41,208 Goldman, Sachs & Co., 5.53%,
dated 6/8/98, due 7/8/98 in
the amount of $41,397,900
(cost $41,208,000), value of
collateral including accrued
interest--$42,033,282....... 41,208,000

1,108 Merrill Lynch, Pierce, Fenner
& Smith, Inc., 5.75%, dated
6/29/98, due 7/6/98 in the
amount of $1,109,239 (cost
$1,108,000), value of
collateral including
accru+ed
interest--$1,131,647........ 1,108,000

38,017 Merrill Lynch, Pierce, Fenner
& Smith, Inc., 5.72%, dated
6/30/98, due 7/7/98 in the
amount of $38,059,283 (cost
$38,017,000), value of
collateral including accrued
interest--$38,778,219....... 38,017,000
</TABLE>

B-32
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND GOVERNMENT FUND

<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
$ 11,335 Morgan (J.P.) Securities,
Inc., 5.53%, dated 4/23/98,
due 7/29/98 in the amount of
$11,503,895 (cost
$11,335,000), value of
collateral including accrued
interest--$11,682,469....... $ 11,335,000

5,000 Morgan (J.P.) Securities,
Inc., 5.53%, dated 4/24/98,
due 7/29/98 in the amount of
$5,073,733 (cost
$5,000,000), value of
collateral including accrued
interest--$5,152,489........ 5,000,000

60,000 Morgan Stanley & Co., 5.58%,
dated 6/24/98, due 7/1/98 in
the amount of $60,065,100
(cost $60,000,000), value of
collateral including accrued
interest--$61,286,043....... 60,000,000

4,000 Salomon Smith Barney, 5.70%,
dated 6/26/98, due 7/2/98 in
the amount of $4,003,800
(cost $4,000,000), value of
collateral including accrued
interest--$4,080,329........ 4,000,000

$18,388 Salomon Smith Barney, 5.58%,
dated 6/24/98, due 7/1/98 in
the amount of $18,407,951
(cost $18,388,000), value of
collateral including accrued
interest--$18,757,272....... $ 18,388,000

37,479 Salomon Smith Barney, 5.61%,
dated 6/25/98, due 7/2/98 in
the amount of $37,519,883
(cost $37,479,000), value of
collateral including accrued
interest--$38,231,663....... 37,479,000
------------
Total Repurchase Agreements
(amortized cost
$269,235,000)............... 269,235,000
------------
Total Investments--98.9%
(amortized cost
$602,178,291)............... 602,178,291
Other assets in excess of
liabilities--1.1%........... 6,549,112
------------
Net Assets--100%.............. $608,727,403
------------
------------
</TABLE>
- ---------------
(a) Variable rate instrument. The maturity date presented for these instruments
is the later of the next date on which the security can be redeemed at par
or the next date on which the rate of interest is adjusted.
(b) Repurchase agreements are collateralized by U.S. Treasury or Federal agency
obligations.
B-33
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND GOVERNMENT FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets June 30, 1998
-------------
<S> <C>
Investments, at amortized cost which approximates market value............................ $ 332,943,291
Repurchase agreements..................................................................... 269,235,000
Cash...................................................................................... 2,092
Receivable for Fund shares sold........................................................... 21,658,793
Interest receivable....................................................................... 3,573,084
Prepaid expenses.......................................................................... 7,568
-------------
Total assets............................................................................ 627,419,828
-------------
Liabilities
Payable for Fund shares repurchased....................................................... 18,083,570
Accrued expenses and other liabilities.................................................... 376,723
Management fee payable.................................................................... 198,834
Distribution fee payable.................................................................. 33,298
-------------
Total liabilities....................................................................... 18,692,425
-------------
Net Assets................................................................................ $ 608,727,403
-------------
-------------
Net assets were comprised of:
Shares of beneficial interest, at par................................................... $ 6,087,274
Paid-in capital in excess of par........................................................ 602,640,129
-------------
Net assets, June 30, 1998................................................................. $ 608,727,403
-------------
-------------
Net asset value, offering price and redemption price per share ($608,727,403 / 608,727,403
shares of beneficial interest ($.01 par value) issued and outstanding).................. $1.00
-------------
-------------
</TABLE>

See Notes to Financial Statements appearing on page B-48.
B-34

<PAGE>

COMMAND GOVERNMENT FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
June 30,
Net Investment Income 1998
<S> <C>
Income
Interest............................. $ 31,712,681
--------------
Expenses
Management fee....................... 2,250,774
Distribution fee..................... 703,367
Transfer agent's fees and expenses... 94,000
Custodian's fees and expenses........ 30,000
Reports to shareholders.............. 28,000
Audit fee............................ 27,000
Trustees' fees....................... 23,000
Insurance expense.................... 9,000
Legal fees and expenses.............. 8,000
Miscellaneous........................ 5,819
--------------
Total expenses..................... 3,178,960
--------------
Net investment income.................. 28,533,721
--------------
Realized Gain on Investments
Net realized gain on investment
transactions......................... 50,018
--------------
Net Increase in Net Assets
Resulting from Operations.............. $ 28,583,739
--------------
--------------
</TABLE>

COMMAND GOVERNMENT FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended June 30,
in Net Assets 1998 1997
<S> <C> <C>
Operations
Net investment
income............. $ 28,533,721 $ 25,896,199
Net realized gain
on investment
transactions..... 50,018 100,048
---------------- ----------------
Net increase in net
assets resulting
from
operations....... 28,583,739 25,996,247
---------------- ----------------
Dividends and
distributions to
shareholders (Note
1)................... (28,583,739) (25,996,247)
---------------- ----------------
Fund share
transactions (at $1
per share)
Net proceeds from
shares
subscribed....... 2,601,216,630 2,583,554,167
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions.... 28,583,739 25,996,247
Cost of shares
reacquired......... (2,549,542,451) (2,568,565,639)
---------------- ----------------
Net increase in net
assets from Fund
share
transactions..... 80,257,918 40,984,775
---------------- ----------------
Total increase....... 80,257,918 40,984,775
Net Assets
Beginning of year.... 528,469,485 487,484,710
---------------- ----------------
End of year.......... $ 608,727,403 $ 528,469,485
---------------- ----------------
---------------- ----------------
</TABLE>

See Notes to Financial Statements appearing on page B-48.
See Notes to Financial Statements appearing on page B-48.
B-35

<PAGE>

COMMAND GOVERNMENT FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net realized gains............... 0.051 0.049 0.050 0.048 0.028
Dividends and distributions to shareholders................ (0.051) (0.049) (0.050) (0.048) (0.028)
-------- -------- -------- -------- --------
Net asset value, end of year............................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL RETURN(a)............................................ 5.20% 4.97% 5.12% 4.89% 2.86%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000).............................. $608,727 $528,469 $487,485 $404,295 $325,257
Average net assets (000)................................... $562,693 $534,580 $477,168 $350,458 $376,159
Ratios to average net assets:
Expenses, including distribution fees.................... .56% .63% .68% .65% .63%
Expenses, excluding distribution fees.................... .44% .51% .56% .53% .51%
Net investment income.................................... 5.08% 4.84% 4.97% 4.81% 2.79%
</TABLE>
- ---------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes reinvestment
of dividends and distributions.
See Notes to Financial Statements appearing on page B-48.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Trustees of
Command Government Fund

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Command Government Fund (the
"Fund") at June 30, 1998, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statments") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at June
30, 1998 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
August 18, 1998
B-36

<PAGE>

COMMAND TAX-FREE FUND Portfolio of Investments
June 30, 1998
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<S> <C> <C> <C>
ALASKA--1.7%
Valdez Marine Air
Terminal Rev., Arco
Trans. Proj.,
T.E.C.P.,
3.55%, 7/15/98, Ser.
A-1(c) $ 15,900 94A................... $ 15,900,000
3.70%, 7/9/98, Ser.
VMIG1 7,000 94C................... 7,000,000
--------------
22,900,000
--------------
CALIFORNIA--3.8%
California St., Gen.
Oblig., T.E.C.P.,
P-1 25,000 3.85%, 7/16/98.......... 25,000,000
California Student Ln.
Mktg. Corp., Student
Ln. Rev., A.N.N.M.T.,
3.85%, 11/1/98, Ser.
VMIG1 25,800 93A................... 25,800,000
--------------
50,800,000
--------------
COLORADO--2.4%
Colorado Hsg. Fin.
Auth., Eagle Trust,
F.R.W.D.S.,
3.78%, 7/2/98, Ser.
A-1(c) 31,700 94C................... 31,700,000
--------------
CONNECTICUT--0.4%
Connecticut St. Hlth. &
Ed. Facs. Auth. Rev.,
Yale Univ., T.E.C.P.
VMIG1 3,600 3.50%, 7/8/98, Ser. S... 3,600,000
Connecticut St. Spec.
Tax Oblig.,
Trans. Infrastructure
Rev., F.R.W.D.,
3.50%, 7/1/98, Ser.
VMIG1 1,500 90I................... 1,500,000
--------------
5,100,000
--------------
DISTRICT OF COLUMBIA--4.6%
Dist. of Columbia Rev.,
Consortium Issue,
F.R.W.D.,
3.55%, 7/2/98, Ser.
A-1(c) $ 15,000 98.................... $ 15,000,000
Dist. of Columbia Gen.
Oblig.,
F.R.D.D.,
4.00%, 7/1/98, Ser.
VMIG1 5,878 92A-5................. 5,878,000
F.R.D.D.,
4.00%, 7/1/98, Ser.
VMIG1 1,100 92A-6................. 1,100,000
T.R.A.N.,
4.50%, 9/30/98, Ser.
MIG1 24,300 98B................... 24,336,693
Metro. Wash. Airport
Rev., T.E.C.P.,
A-1(c) 15,500 3.80%, 10/26/98......... 15,500,000
--------------
61,814,693
--------------
FLORIDA--2.3%
Capital Proj. Fin. Auth.
Rev., Florida Hosp.
Assoc., F.R.W.D.,
4.00%, 7/1/98, Ser.
A-1+(c) 5,000 98A................... 5,000,000
Highlands Cnty. Hlth.
Fac., Adventist Hlth.
Sys., F.R.W.D.,
3.55%, 7/2/98, Ser.
VMIG1 9,800 96A................... 9,800,000
Putnam Cnty. Dev. Auth.,
Poll. Ctrl. Rev.,
Seminole Elec. H-3,
S.E.M.O.T.,
P-1 15,285 3.50%, 9/15/98.......... 15,280,239
--------------
30,080,239
--------------
</TABLE>

B-37
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND TAX-FREE FUND

<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<S> <C> <C> <C>
GEORGIA--8.6%
Atlanta Urban Res.,
Greystone, F.R.W.D.S.,
A.M.T.,
3.85%, 7/2/98, Ser.
A-1+(c) $ 11,662 98B................... $ 11,662,000
Burke Cnty. Dev. Auth.,
Poll. Ctrl. Rev.,
Oglethorpe Pwr. Corp.,
T.E.C.P.,
3.60%, 8/14/98, Ser.
VMIG1 18,900 98.................... 18,900,000
Cobb Cnty. Dev. Auth.,
Institute of Nuclear
Pwr., F.R.W.D.,
3.60%, 7/1/98, Ser.
NR 10,000 98.................... 10,000,000
Cobb Cnty. Hsg. Auth.,
Post Bridge Proj.,
F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1+(c) 10,000 96.................... 10,000,000
Terrell Mill II Assoc.,
F.R.W.D.,
3.75%, 7/2/98, Ser.
A-1+(c) 10,600 93.................... 10,600,000
De Kalb Cnty. Hsg.
Auth., Single Family
Mtge. Rev.,
F.R.W.D.S., A.M.T.,
A-1+(c) 4,550 3.80%, 7/2/98, Ser. A... 4,550,000
Monroe Cnty. Dev. Auth.,
Poll. Ctrl. Rev.,
Oglethorpe Pwr. Corp.,
S.E.M.O.T.,
3.80%, 11/2/98, Ser.
NR 11,000 96.................... 11,000,000
Municipal Elec. Auth.,
F.R.W.D.S.,
3.73%, 7/2/98, Ser.
VMIG1 12,000 39.................... 12,000,000
Roswell Hsg. Auth., Post
Canyon Proj.,
F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1+(c) 9,345 96.................... 9,345,000
Willacoochee Dev. Auth.,
Poll. Ctrl. Rev.,
Langboard Inc. Proj.,
F.R.W.D., A.M.T.,
3.65%, 7/2/98, Ser.
Aa2 $ 17,000 97.................... $ 17,000,000
--------------
115,057,000
--------------
ILLINOIS--16.0%
Chicago, Equipment
Notes, A.N.N.M.T.,
3.80%, 12/3/98, Ser.
VMIG1 14,000 97.................... 14,000,000
Chicago Single Fam.
Mtge. Rev.,
A.N.N.M.T., A.M.T.,
3.70%, 4/1/99, Ser.
MIG1 6,500 98B................... 6,500,000
Chicago Stockyards Indl.
Proj., F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1+(c) 13,300 96A................... 13,300,000
Gurnee Ind. Dev. Rev.,
Sterigenics Intl.
Proj., F.R.W.D.,
A.M.T.,
3.70%, 7/1/98, Ser.
A-1(c) 7,750 96.................... 7,750,000
Illinois Community Sch. Dist.,
Kane, McHenry, Cook & De
Kalb, T.A.N.,
4.30%, 9/23/98, Ser.
NR 7,000 97.................... 7,006,280
Illinois Dev. Fin. Auth.
Rev., Adventist Hlth.
Sys., F.R.W.D.,
3.55%, 7/2/98, Ser.
VMIG1 40,165 97A................... 40,165,000
American College of
Surgeons, F.R.W.D.,
3.60%, 7/3/98, Ser.
A-1+(c) 15,200 96.................... 15,200,000
Illinois Hlth. Fac.
Auth., Children's Mem.
Hosp., T.E.C.P.,
3.70%, 9/10/98, Ser.
VMIG1 14,500 90A................... 14,500,000
</TABLE>

B-38
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND TAX-FREE FUND

<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<S> <C> <C> <C>
ILLINOIS--(cont'd.)
Illinois Hlth. Fac.
Auth.,
Evanston Hosp. Corp.
Prog., A.N.N.M.T.,
3.80%, 4/30/99, Ser.
VMIG1 $ 18,000 95.................... $ 18,000,000
3.85%, 11/30/98, Ser.
VMIG1 19,000 92.................... 19,000,000
Servant Cor Falcon II,
F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1+(c) 16,000 96A................... 16,000,000
Illinois Hlth. Fac. Dev.
Auth., Riverside Hlth.
Sys., F.R.W.D.,
3.55%, 7/2/98, Ser.
VMIG1 13,300 94.................... 13,300,000
SSM Health Care,
T.E.C.P.,
3.70%, 8/25/98, Ser.
A-1+(c) 20,000 98B................... 20,000,000
Illinois Student Asst.
Commission, Student
Ln. Rev., F.R.W.D.,
A.M.T.,
3.65%, 7/1/98, Ser.
VMIG1 9,000 98A................... 9,000,000
--------------
213,721,280
--------------
INDIANA--1.8%
Indiana Ed. Fac. Auth.,
Wesleyan Univ.,
F.R.W.D.,
3.55%, 7/2/98, Ser.
NR 8,750 93.................... 8,750,000
Indianapolis, Citizen
Gas & Coke, T.E.C.P.,
P-1 6,500 3.55%, 7/16/98.......... 6,500,000
Mount Vernon Poll. Ctrl.
Rev., General Elec.
Co., T.E.C.P.,
3.75%, 8/14/98, Ser.
P-1 3,790 89A................... 3,790,000
Tippecanoe Sch. Corp.,
T.A.N.,
NR 5,500 4.00%, 12/30/98......... 5,506,878
--------------
24,546,878
--------------
IOWA--0.7%
Sergeant Bluff Dev.
Rev., Sioux City Brick
& Tile Proj.,
F.R.W.D., A.M.T.,
3.75%, 7/2/98, Ser.
NR $ 8,795 96.................... $ 8,795,000
--------------
KENTUCKY--0.8%
Pendleton Cnty., Lease
Rev. Prog., T.E.C.P.,
3.55%, 8/14/98, Ser.
A-1+(c) 10,000 89.................... 10,000,000
--------------
LOUISIANA--1.5%
Calcasieu Parish Ind.
Dev., Board Citgo
Corp., F.R.D.D.,
A.M.T.,
4.00%, 7/1/98, Ser.
VMIG1 2,000 96.................... 2,000,000
West Baton Rouge Parish
Ind. Dist. #3
Rev.,
Dow Chemical Co.
Proj., F.R.D.D.,
A.M.T.,
4.05%, 7/1/98, Ser.
P-1 3,300 95.................... 3,300,000
Dow Chemical Co. Proj.,
T.E.C.P.,
3.70%, 7/7/98, Ser.
P-1 14,200 91.................... 14,200,000
--------------
19,500,000
--------------
MARYLAND--1.4%
Gaithersburg Econ. Dev. Rev.,
Asbury Methodist Village,
F.R.W.D.,
3.55%, 7/2/98, Ser.
A-1+(c) 8,200 97A................... 8,200,000
</TABLE>

B-39
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND TAX-FREE FUND

<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<S> <C> <C> <C>
MARYLAND--(cont'd.)
Montgomery Cnty., First
Chicago Tender Option
Certificates,
F.R.W.D.S.,
3.70%, 7/1/98, Ser.
VMIG1 $ 10,990 98C................... $ 10,990,000
--------------
19,190,000
--------------
MASSACHUSETTS--1.6%
First Chicago Tender
Option Certificate,
Comnwlth. of
Massachusetts,
S.E.M.O.T.S.,
3.95%, 12/1/98, Ser.
VMIG1 7,025 98B................... 7,025,000
Massachusetts Hsg. Fin.
Agy.,
Single Fam. Hsg. Rev.,
Ser. 5-Eagle Trust,
Q.T.R.O.T.S.,
3.80%, 9/1/98, Ser.
A-1+(c) 6,925 2103.................. 6,925,000
Massachusetts Port
Auth., T.E.C.P.,
3.60%, 7/14/98, Ser.
P-1 7,000 96.................... 7,000,000
--------------
20,950,000
--------------
MINNESOTA--1.6%
Avon Ind. Dev. Rev.,
Vesper Corp. Proj.,
F.R.W.D., A.M.T.,
3.80%, 7/1/98, Ser.
NR 7,225 98.................... 7,225,000
Bloomington Port Auth.
Tax Rev., F.R.W.D.,
3.60%, 7/3/98, Ser.
VMIG1 14,000 95A................... 14,000,000
--------------
21,225,000
--------------
MISSISSIPI--1.3%
Harrison Cnty. Poll.
Ctrl. Rev.,
Mississippi Pwr. Co.
Proj., F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1(c) $ 16,750 92.................... $ 16,750,000
--------------
MISSOURI--1.6%
Missouri Hsg. Dev.
Commission Mtge.,
Single Fam. Mtge.
Rev., A.N.N.M.T.,
A.M.T.,
3.90%, 4/1/99, Ser.
SP-1+(c) 7,565 98C................... 7,565,000
St. Charles Cnty. Ind.
Dev. Auth., Cedar
Ridge Apts., F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1+(c) 14,225 88A................... 14,225,000
--------------
21,790,000
--------------
NEW HAMPSHIRE--0.8%
New Hampshire Bus. Fin. Auth.,
New England Pwr. Co. Proj.,
T.E.C.P.,
3.75%, 7/31/98, Ser.
VMIG1 10,500 90B................... 10,500,000
--------------
NEW JERSEY--0.8%
New Jersey Econ. Dev.
Auth. Rev., 865
Centennial Ave. Proj.,
F.R.W.D., A.M.T.,
3.68%, 7/2/98, Ser.
A-1+(c) 3,050 85.................... 3,050,000
Newark Recycling Fac.,
A.N.N.M.T.,
3.95%, 12/15/98, Ser.
A-1+(c) 7,700 97.................... 7,700,000
--------------
10,750,000
--------------
</TABLE>
B-40
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND TAX-FREE FUND

<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<S> <C> <C> <C>
NEW YORK--2.7%
Long Island Pwr. & Elec.
Auth.,
3.68%, 7/1/98, Ser.
A-1(c) $ 6,000 1998-52............... $ 6,000,000
New York City, Gen.
Oblig., T.E.C.P.,
3.55%, 8/27/98, Ser.
VMIG1 17,000 J3.................... 17,000,000
New York Pwr. Auth.,
T.E.C.P.,
3.75%, 8/10/98, Ser.
P-1 12,650 2..................... 12,650,000
--------------
35,650,000
--------------
NORTH CAROLINA--0.5%
Rockingham Cnty. Ind.
Facs.,
Poll. Ctrl. Rev.,
Phillip Morris Proj.,
F.R.W.D.,
P-1 7,200 3.80%, 7/1/98........... 7,200,000
--------------
OHIO--3.8%
Cincinnati, T.A.N.,
NR 6,720 4.08%, 12/31/98......... 6,735,640
Clinton Cnty. Hosp.
Rev., Ohio Hosp.
Capital Inc.,
F.R.W.D.,
3.65%, 7/1/98, Ser.
A-1+(c) 8,000 98.................... 8,000,000
Mahoning Cnty. Hosp.
Rev., Forum Hlth.
Oblig. Grp. B,
F.R.W.D.,
3.55%, 7/2/98, Ser.
VMIG1 11,600 97B................... 11,600,000
Medina Cnty. Hsg. Rev.,
Oaks At Medina Proj.,
F.R.W.D.,
NR 9,650 3.60%, 7/2/98........... 9,650,000
Montgomery Cnty. Rev.,
Miami Valley Hosp.,
T.E.C.P.,
3.55%, 7/16/98, Ser.
VMIG1 $ 15,000 98B................... $ 15,000,000
--------------
50,985,640
--------------
OKLAHOMA--0.4%
Muskogee Ind. Trust,
Muskogee Mall Proj.,
F.R.W.D.,
3.85%, 7/1/98, Ser.
VMIG1 5,200 85.................... 5,200,000
--------------
OREGON--3.0%
Klamath Falls Elec.
Rev., Salt Caves
Hydroelectric,
A.N.N.M.T.,
3.80%, 5/3/99, Ser.
SP-1+(c) 40,000 86A................... 40,000,000
--------------
PENNSYLVANIA--5.1%
Dauphin Cnty. Gen. Auth. Rev.,
Ed. & Hlth. Prog., F.R.W.D.,
3.60%, 7/2/98, Ser.
VMIG1 23,800 97.................... 23,800,000
Emmaus Gen. Auth.,
F.R.W.D.,
3.55%, 7/1/98, Ser.
A-1+(c) 11,900 96.................... 11,900,000
Montgomery Cnty., Higher
Ed. & Hlth. Auth.
Rev., F.R.W.D.,
3.60%, 7/1/98, Ser.
A-1(c) 19,790 96A................... 19,790,000
Philadelphia Water &
Waste Proj.,
A.N.N.M.T.,
VMIG1 12,900 3.82%, 8/5/98, Ser. B... 12,899,951
--------------
68,389,951
--------------
PUERTO RICO--0.6%
Puerto Rico Elec. Pwr.
Auth., F.R.W.D.S.,
3.45%, 7/1/98, Ser.
A-1+(c) 8,000 SGA43................. 8,000,000
--------------
</TABLE>
B-41
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND TAX-FREE FUND

<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<S> <C> <C> <C>
RHODE ISLAND--0.8%
Rhode Island Student Ln.
Auth., Student Ln.
Pgrm. Rev. Proj.,
F.R.W.D., A.M.T.,
3.55%, 7/1/98, Ser.
A-1+(c) $ 10,000 96-2.................. $ 10,000,000
--------------
SOUTH CAROLINA--4.7%
South Carolina Ed. Fac. Auth.,
Presbyterian College, F.R.W.D.,
3.60%, 7/9/98, Ser.
NR 11,630 98.................... 11,630,000
South Carolina Pub. Svc.
Auth., T.E.C.P.,
P-1 15,000 3.55%, 7/16/98.......... 15,000,000
P-1 10,000 3.55%, 7/24/98.......... 10,000,000
P-1 25,900 3.55%, 8/13/98.......... 25,900,000
--------------
62,530,000
--------------
SOUTH DAKOTA--2.3%
Brookings Sch. Dist.,
Cert. of Part.,
Q.T.R.M.T.,
3.85%, 10/29/98, Ser.
NR 12,210 97.................... 12,210,000
South Dakota Hlth. & Ed.
Fac. Auth., Sioux
Valley Hosp. & Hlth.
Rev., F.R.W.D.,
3.60%, 7/3/98, Ser.
VMIG1 9,860 97.................... 9,860,000
South Dakota Hsg. Dev. Auth.,
Homeownership Mtg., A.M.T.,
3.95%, 8/13/98, Ser.
MIG1 8,000 G..................... 8,000,000
--------------
30,070,000
--------------
TENNESSEE--3.6%
Dickson Cnty.,
Renaissance Learning
Cent. Rev., F.R.W.D.,
3.60%, 7/1/98, Ser.
Aa3 $ 7,000 97.................... $ 7,000,000
Montgomery Cnty. Pub.
Bldg. Auth., Cnty. Ln.
Pool, F.R.W.D.,
3.60%, 7/2/98, Ser.
VMIG1 17,250 97.................... 17,250,000
Nashville & Davidson
Co., Crossing
Multifam. Hsg. Proj.,
F.R.W.D.,
A-1+(c) 8,540 3.65%, 7/2/98, Ser. A... 8,540,000
Shelby Cnty., T.E.C.P.,
3.55%, 7/24/98, Ser.
A-1+(c) 15,000 A..................... 15,000,000
--------------
47,790,000
--------------
TEXAS--8.6%
Brazos Harbor Nav.
Dist., Dow Chemical
Co. Proj., T.E.C.P.,
3.85%, 7/1/98, Ser.
P-1 16,100 91.................... 16,100,000
F.R.D.D., A.M.T.,
4.05%, 7/1/98, Ser.
P-1 1,300 97.................... 1,300,000
Collin Cnty. Hsg. Fin.
Corp., Huntington
Apts. Proj., F.R.W.D.,
3.68%, 7/2/98, Ser.
A-1(c) 6,155 96.................... 6,155,000
Greater Texas Student
Ln. Rev. Rfdg.,
A.N.N.M.T., A.M.T.,
3.60%, 3/1/99, Ser.
VMIG1 30,500 96A................... 30,500,000
</TABLE>
B-42
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND TAX-FREE FUND

<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<S> <C> <C> <C>
TEXAS--(cont'd.)
Guadalupe Blanco River Auth.,
BOC Group Inc., F.R.W.D.,
3.55%, 7/2/98, Ser.
NR $ 13,800 1993.................. $ 13,800,000
Houston Water & Swr.
Sys., Eagle Trust
Proj., F.R.W.D.S.,
3.68%, 7/2/98, Ser.
A-1+(c) 14,005 4305.................. 14,005,000
San Antonio Elec. & Gas,
T.E.C.P.,
3.75%, 8/18/98, Ser.
P-1 8,100 A..................... 8,100,000
Texas State, T.R.A.N.,
4.75%, 8/31/98, Ser.
MIG1 18,000 97.................... 18,030,585
Waller Cnty. Ind. Dev.
Corp., McKesson Water
Prod., F.R.W.D.,
A.M.T.,
4.45%, 7/1/98, Ser.
A-2(c) 6,000 96.................... 6,000,000
--------------
113,990,585
--------------
UTAH--2.3%
Intermountain Pwr. Agy.,
T.E.C.P.,
3.70%, 7/10/98, Ser.
A-1(c) 7,000 B..................... 7,000,000
3.80%, 7/28/98, Ser.
A-1(c) 11,300 B..................... 11,300,000
Utah, Gen. Oblig.,
T.E.C.P.,
P-1 12,600 3.55%, 7/14/98.......... 12,600,000
--------------
30,900,000
--------------
VIRGINIA--1.6%
Campbell Cnty. Ind. Dev.
Auth. Rev., Hadson
Pwr., F.R.D.D.,
A.M.T.,
4.05%, 7/1/98, Ser.
Aa2 2,700 90A................... 2,700,000
Harrisonburg Redev. &
Hsg. Auth., Multifam.
Hsg. Rev., F.R.W.D.,
3.55%, 7/2/98, Ser.
VMIG1 $ 18,555 91A................... $ 18,555,000
--------------
21,255,000
--------------
WASHINGTON--2.5%
Pierce Cnty. Econ. Dev.
Corp., Sealand Inc.,
F.R.W.D.,
3.55%, 7/2/98, Ser.
NR 10,000 96.................... 10,000,000
Seattle Hsg. Auth. Rev.,
Holly Park Proj.,
F.R.W.D., A.M.T.,
3.75%, 7/1/98, Ser.
Aa2 9,200 97.................... 9,200,000
Washington Hsg. Fin.
Commission, Anchor
Village Apts. Proj.,
F.R.W.D., A.M.T.,
3.70%, 7/2/98, Ser.
A-1+(c) 10,750 97.................... 10,750,000
Yakima Cnty. Pub. Corp.
Ind. Rev., Cowiche
Grovers Proj.,
F.R.W.D., A.M.T.,
3.75%, 7/2/98, Ser.
NR 4,000 98.................... 4,000,000
--------------
33,950,000
--------------
WEST VIRGINIA--1.4%
Grant Cnty. Solid Waste
Rev., Vepco, T.E.C.P.,
A.M.T.,
3.80%, 7/30/98, Ser.
VMIG1 10,000 96.................... 10,000,000
West Virginia Pub.
Energy Auth. Rev.,
Morgantown Energy,
T.E.C.P., A.M.T.,
3.80%, 8/14/98, Ser.
A-1+(c) 9,000 89A................... 9,000,000
--------------
19,000,000
--------------
</TABLE>
B-43
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND TAX-FREE FUND

<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<S> <C> <C> <C>
WISCONSIN--0.7%
Wisconsin State, Gen.
Oblig., T.E.C.P.,
3.55%, 7/15/98, Ser.
P-1 $ 9,878 97A................... $ 9,878,000
--------------
WYOMING--1.4%
Converse Cnty. Poll. Ctrl. Rev.,
Pacificorp, T.E.C.P.,
3.70%, 7/28/98, Ser.
VMIG1 10,000 92.................... 10,000,000
Sweetwater Cnty. Poll.
Ctrl. Rev., Pacificorp
Proj., T.E.C.P.,
VMIG1 9,335 3.55%, 7/29/98.......... 9,335,000
--------------
19,335,000
--------------
Total Investments--99.7%
(cost $1,329,294,266)... 1,329,294,266
Other assets in excess
of
liabilities--0.3%..... 3,690,988
--------------
Net Assets--100%........ $1,332,985,254
--------------
--------------
</TABLE>
- ---------------
(a) The following abbreviations are used in portfolio descriptions:
A.M.T.--Alternative Minimum Tax.
A.N.N.M.T.--Annual Mandatory Tender.
B.A.N.--Bond Anticipation Note.
F.R.D.D.--Floating Rate (Daily) Demand Note(b).
F.R.W.D.--Floating Rate (Weekly) Demand Note(b).
F.R.W.D.S.--Floating Rate (Weekly) Demand--Synthetic Note(b).
Q.T.R.M.T.--Quarterly Monthly Tender.
Q.T.R.O.T.S.--Quarterly Optional Tender--Synthetic(b).
S.E.M.O.T.--Semi-Annual Optional Tender.
S.E.M.O.T.S.--Quarterly Optional Tender--Synthetic.
T.A.N.--Tax Anticipation Note.
T.E.C.P.--Tax Exempt Commercial Paper.
T.R.A.N.--Tax and Revenue Anticipation Note.
(b) For purposes of amortized cost valuation, the maturity date of Floating Rate
Demand Notes is considered to be the later of the next date on which the
security can be redeemed at par or the next date on which the rate of
interest is adjusted.
(c) Standard & Poor's rating.
NR--Not Rated by Moody's or Standard & Poor's.
B-44
See Notes to Financial Statements appearing on page B-48.

<PAGE>

COMMAND TAX-FREE FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets June 30, 1998
--------------
<S> <C>
Investments, at amortized cost which approximates market value.......................... $1,329,294,266
Receivable for Fund shares sold......................................................... 31,058,909
Interest receivable..................................................................... 10,125,728
Receivable for investments sold......................................................... 9,100,000
Prepaid expenses........................................................................ 17,291
--------------
Total assets.......................................................................... 1,379,596,194
--------------
Liabilities
Payable for Fund shares repurchased..................................................... 30,000,917
Bank overdraft.......................................................................... 13,326,944
Payable for investments purchased....................................................... 2,200,000
Accrued expenses........................................................................ 518,408
Management fee payable.................................................................. 490,516
Distribution fee payable................................................................ 74,155
--------------
Total liabilities..................................................................... 46,610,940
--------------
Net Assets.............................................................................. $1,332,985,254
--------------
--------------
Net assets were comprised of:
Shares of beneficial interest, at par................................................. $ 13,329,853
Paid-in capital in excess of par...................................................... 1,319,655,401
--------------
Net assets, June 30, 1998............................................................... $1,332,985,254
--------------
--------------
Net asset value, offering price and redemption price per share ($1,332,985,254 /
1,332,985,254 shares of beneficial interest ($.01 par value) issued and
outstanding).......................................................................... $1.00
--------------
--------------
</TABLE>

See Notes to Financial Statements appearing on page B-48.
B-45

<PAGE>

COMMAND TAX-FREE FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
June 30,
Net Investment Income 1998
<S> <C>
Income
Interest............................. $ 47,366,829
--------------
Expenses
Management fee....................... 5,671,955
Distribution fee..................... 1,598,985
Transfer agent's fees................ 185,000
Custodian's fees and expenses........ 70,000
Reports to shareholders.............. 32,000
Trustees' fees....................... 27,000
Audit fee............................ 27,000
Insurance expense.................... 17,000
Legal fees and expenses.............. 10,000
Miscellaneous........................ 8,343
--------------
Total expenses..................... 7,647,283
Less: custodian fee credit......... (74,021)
--------------
Net expenses....................... 7,573,262
--------------
Net investment income.................. 39,793,567
--------------
Realized Gain on Investments
Net realized gain on investment
transactions......................... 6,522
--------------
Net Increase in Net Assets
Resulting from Operations.............. $ 39,800,089
--------------
--------------
</TABLE>

COMMAND TAX-FREE FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended June 30,
in Net Assets 1998 1997
<S> <C> <C>
Operations
Net investment
income............. $ 39,793,567 $ 35,446,503
Net realized gain
on investment
transactions..... 6,522 8,700
---------------- ----------------
Net increase in net
assets resulting
from
operations....... 39,800,089 35,455,203
---------------- ----------------
Dividends and
distributions to
shareholders (Note
1)................... (39,800,089) (35,455,203)
---------------- ----------------
Fund share
transactions (at $1
per share)
Net proceeds from
shares
subscribed....... 5,269,527,972 4,862,507,754
Net asset value of
shares issued in
reinvestment of
dividends and
distributions.... 39,800,089 35,455,203
Cost of shares
reacquired......... (5,105,855,856) (4,925,385,345)
---------------- ----------------
Net increase
(decrease) in net
assets from Fund
share
transactions..... 203,472,205 (27,422,388)
---------------- ----------------
Total increase
(decrease)........... 203,472,205 (27,422,388)
Net Assets
Beginning of year.... 1,129,513,049 1,156,935,437
---------------- ----------------
End of year.......... $ 1,332,985,254 $ 1,129,513,049
---------------- ----------------
---------------- ----------------
</TABLE>

See Notes to Financial Statements appearing on page B-48.
See Notes to Financial Statements appearing on page B-48.
B-46

<PAGE>

COMMAND TAX-FREE FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year.................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net realized gains........ 0.031 0.030 0.031 0.032 0.020
Dividends and distributions to shareholders......... (0.031) (0.030) (0.031) (0.032) (0.020)
---------- ---------- ---------- ---------- --------
Net asset value, end of year........................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- --------
---------- ---------- ---------- ---------- --------
TOTAL RETURN(a)..................................... 3.16% 3.05% 3.12% 3.29% 1.98%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)....................... $1,332,985 $1,129,513 $1,156,935 $1,055,568 $847,602
Average net assets (000)............................ $1,279,188 $1,181,084 $1,134,257 $ 926,888 $908,421
Ratios to average net assets:
Expenses, including distribution fees............. .60% .64% .66% .66% .65%
Expenses, excluding distribution fees............. .47% .51% .54% .54% .53%
Net investment income............................. 3.11% 3.00% 3.06% 3.05% 1.96%
</TABLE>
- ---------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes reinvestment
of dividends and distributions.
See Notes to Financial Statements appearing on page B-48.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Trustees of
Command Tax-Free Fund

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Command Tax-Free Fund (the "Fund")
at June 30, 1998, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statments") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
August 18, 1998
B-47

<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 policies
followed by the Funds in the preparation of
their financial statements.

SECURITIES VALUATION: Portfolio securities are valued at amortized cost, which
approximates market value. The amortized cost method involves valuing a security
at its cost on the date of purchase and thereafter assuming a constant
amortization to maturity of any discount or premium. If the amortized cost
method is determined not to represent fair value, the value shall be determined
by or under the direction of the Board of Trustees. All securities are valued as
of 4:30 p.m., New York time.

In connection with transactions in repurchase agreements, it is the Funds'
policy that its custodian or designated subcustodians, as the case may be under
triparty repurchase agreements, take possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. If the seller defaults and the value of
the collateral declines or if bankruptcy proceedings are commenced with respect
to the seller of the security, realization of the collateral by the Funds may be
delayed or limited.

The Fund may hold up to 10% of its net assets in illiquid securities, inlcuding
those which are restricted as to disposition under securities law ("restricted
securities"). None of the issues of restricted securities held by the Fund at
June 30, 1998 include registration rights under which the Fund may demand
registration by the issuer.

SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Interest income is recorded on the
accrual basis. Expenses are recorded on the accrual basis, which may require the
use of certain estimates by management. The cost of portfolio securities for
federal income tax purposes is substantially the same as for financial reporting
purposes.

FEDERAL INCOME TAXES: Each Fund intends to continue to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its net income to its shareholders.
Therefore, no federal income tax provision is required.

DIVIDENDS: Each Fund declares all of its net investment income as dividends
daily to its shareholders of record at the time of such declaration. Dividends
are reinvested daily into additional full and fractional shares of the
respective Fund at the net asset value per share determined on the date of
declaration. Net investment income for dividend purposes includes accrued
interest and amortization of premiums and discounts, plus or minus any gains or
losses realized on sales of portfolio securities, and less the estimated
expenses of the Fund applicable to the dividend period.

CUSTODY FEE CREDITS: The Command Tax-Free Fund has an arrangement with its
custodian bank, whereby uninvested money earns credits which reduce the fees
charged by the custodian.

NOTE 2. AGREEMENTS Each Fund has a manage-
ment agreement with Prudential Investments Fund
Management LLC (PIFM). Pursuant to this agreement, PIFM has responsibility for
all investment
B-48

<PAGE>

advisory services and supervises the subadviser's performance of such services.
PIFM has entered into a subadvisory agreement with the Prudential Investment
Corporation (PIC); PIC furnishes investment advisory services in connection with
the management of the Funds. PIFM pays for the cost of the subadvisor's
services, the compensation of officers of the Funds, occupancy and certain
clerical and bookkeeping costs of the Funds. The Funds bear all other costs and
expenses.

The management fee paid to PIFM is computed daily and payable monthly on the
following basis:
<TABLE>
<CAPTION>
Average Daily Command Command Command
Net Assets Money Government Tax-Free
- ------------------------------------ ------- ---------- -------
<S> <C> <C> <C>
First $500 million.................. .500% .400% .500%
Second $500 million................. .425% .400% .425%
Third $500 million.................. .375% .375% .375%
Excess of $1.5 billion.............. .350% .375% .375%
</TABLE>

Each Fund had a distribution agreement with Prudential Securities
Incorporated ("PSI"), which acted as the distributor of the shares of each Fund.
Each Fund compensated PSI for distributing and servicing each Fund's shares,
pursuant to the plan of distribution at an annual rate of .125 of 1% of the
average daily net assets of each Fund's shares. The distribution fees are
accrued daily and payable monthly. Effective July 1, 1998, Prudential Investment
Management Services LLC ("PIMS") became the distributor of the Funds and is
serving the Funds under the same terms and conditions as under the arrangement
with PSI.

PIFM, PSI, PIC and PIMS are indirect, wholly owned subsidiaries of The
Prudential Insurance Company of America.

NOTE 3. OTHER Prudential Mutual Fund Ser-
TRANSACTIONS vices LLC (PMFS), a wholly
WITH AFFILIATES owned subsidiary of PIFM,
serves as the Funds' transfer agent. During the
year ended June 30, 1998 the Funds incurred fees for the services of PMFS of
approximately:
<TABLE>
<S> <C>
Command Money.................................. $2,800,400
Command Government............................. $ 93,700
Command Tax-Free............................... $ 184,500
</TABLE>

As of June 30, 1998, the following amounts were due to PMFS from the Funds:
<TABLE>
<S> <C>
Command Money.................................... $278,322
Command Government............................... $ 8,408
Command Tax-Free................................. $ 15,788
</TABLE>
B-49

<PAGE>
APPENDIX A--GENERAL INVESTMENT INFORMATION

The following terms are used in mutual fund investing.

ASSET ALLOCATION

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

DIVERSIFICATION

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

DURATION

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

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

MARKET TIMING

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

POWER OF COMPOUNDING

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

STANDARD DEVIATION

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

APP-1
<PAGE>
APPENDIX--INFORMATION RELATING TO PRUDENTIAL

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

INFORMATION ABOUT PRUDENTIAL

The Manager and PIC(1) are subsidiaries of Prudential, which is one of the
largest diversified financial services institutions in the world and, based on
total assets, the largest insurance company in North America as of December 31,
1996. Principal products and services include life and health insurance, other
healthcare products, property and casualty insurance, securities brokerage,
asset management, investment advisory services and real estate brokerage.
Prudential (together with its subsidiaries) employs almost 79,000 persons
worldwide, and maintains a sales force of approximately 10,100 agents and 6,500
financial advisors. Prudential is a major issuer of annuities, including
variable annuities. Prudential seeks to develop innovative products and services
to meet consumer needs in each of its business areas. Prudential uses the rock
of Gibraltar as its symbol. The Prudential rock is a recognized brand name
throughout the world.

INSURANCE. Prudential has been engaged in the insurance business since
1875. It insures or provides financial services to nearly 40 million people
worldwide. Long one of the largest issuers of individual life insurance, the
Prudential has 22 million life insurance policies and group certificates in
force today with a face value of almost $1 trillion. Prudential has the largest
capital base ($12.3 billion) of any life insurance company in the United States.
Prudential provides auto insurance for approximately 1.5 million cars and
insures approximately 1.2 million homes.

MONEY MANAGEMENT. Prudential is one of the largest pension fund managers in
the country, providing pension services to 1 in 3 Fortune 500 firms. It manages
$36 billion of individual retirement plan assets, such as 401(k) plans. As of
December 31, 1997, Prudential had more than $370 billion in assets under
management. Prudential Investments, a business group of Prudential (of which
Prudential Mutual Funds is a key part) manages over $211 billion in assets of
institutions and individuals. In PENSIONS & INVESTMENTS, May 12, 1997,
Prudential was ranked third in terms of total assets under management.

REAL ESTATE. The Prudential Real Estate Affiliates, the fourth largest real
estate brokerage network in the United States, has more than 37,000 brokers and
agents across the United States.

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

FINANCIAL SERVICES. The Prudential Bank, a wholly-owned subsidiary of
Prudential, has over $4 billion in assets and serves nearly 1.5 million
customers across 50 states.

INFORMATION ABOUT THE PRUDENTIAL MUTUAL FUNDS

As of December 31, 1998 Prudential Investments Fund Management LLC was the
eighteenth largest mutual fund company in the country, with over 2.5 million
shareholders invested in more than 50 mutual fund portfolios and variable
annuities with more than 3.7 million shareholder accounts.

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

- -------------

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

APP-2
<PAGE>
From time to time, there may be media coverage of portfolio managers and
other investment professionals associated with the Manager and the Subadviser in
national and regional publications, on television and in other media.
Additionally, individual mutual fund portfolios are frequently cited in surveys
conducted by national and regional publications and media organizations such as
THE WALL STREET JOURNAL, THE NEW YORK TIMES, BARRON'S and USA TODAY.

EQUITY FUNDS. FORBES magazine listed Prudential Equity Fund among twenty
mutual funds on its Honor Roll in its mutual fund issue of August 28, 1995.
Honorees are chosen annually among mutual funds (excluding sector funds) which
are open to new investors and have had the same management for at least five
years. FORBES considers, among other criteria, the total return of a mutual fund
in both bull and bear markets as well as a fund's risk profile. Prudential
Equity Fund is managed with a "value" investment style by PIC. In 1995,
Prudential Securities introduced Prudential Jennison Fund, a growth-style equity
fund managed by Jennison Associates Capital Corp., a premier institutional
equity manager and a subsidiary of Prudential.

HIGH YIELD FUNDS. Investing in high yield bonds is a complex and research
intensive pursuit. A separate team of high yield bond analysts monitor the
approximately 200 issues held in the Prudential High Yield Fund (currently the
largest fund of its kind in the country) along with 100 or so other high yield
bonds, which may be considered for purchase.(2) Non-investment grade bonds, also
known as junk bonds or high yield bonds, are subject to a greater risk of loss
of principal and interest including default risk than higher-rated bonds.
Prudential high yield portfolio managers and analysts meet face-to-face with
almost every bond issuer in the High Yield Fund's portfolio annually, and have
additional telephone contact throughout the year.

Prudential's portfolio managers are supported by a large and sophisticated
research organization. Fourteen investment grade bond analysts monitor the
financial viability of approximately 1,750 different bond issuers in the
investment grade corporate and municipal bond markets--from IBM to small
municipalities, such as Rockaway Township, New Jersey. These analysts consider
among other things sinking fund provisions and interest coverage ratios.

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

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

Prudential Mutual Funds trade approximately $31 billion in U.S. and foreign
government securities a year. PIC seeks information from government policy
makers. In 1995, Prudential's portfolio managers met with several senior U.S.
and foreign government officials, on issues ranging from economic conditions in
foreign countries to the viability of index-linked securities in the United
States.

Prudential Mutual Funds' portfolio managers and analysts met with over 1,200
companies in 1995, often with the Chief Executive Officer (CEO) or Chief
Financial Officer (CFO). They also attended over 250 industry conferences.

Prudential Mutual Fund global equity managers conducted many of their visits
overseas, often holding private meetings with a company in a foreign language
(our global equity managers speak 7 different languages, including Mandarin
Chinese).

TRADING DATA(3) On an average day, Prudential Mutual Funds' U.S. and
foreign equity trading desks traded $77 million in securities representing over
3.8 million shares with nearly 200 different firms. Prudential Mutual Funds'
bond trading desks traded $157 million in government and corporate bonds on an
average day. That represents more in daily trading than most bond

- -------------

(2)As of December 31, 1995. The number of bonds and the size of the Fund are
subject to change.

(3)Trading data represents average daily transactions for portfolios of the
Prudential Mutual Funds for which PIC serves as the subadviser, portfolios of
the Prudential Series Fund and institutional and non-U.S. accounts managed by
Prudential Mutual Fund Investment Management, a division of PIC, for the year
ended December 31, 1995.

APP-3
<PAGE>

funds by Lipper even have in assets.(4) Prudential Mutual Funds' money market
desk traded $3.2 billion in money market securities on an average day, or over
$800 billion a year. They made a trade every 3 minutes of every trading day. In
1994, the Prudential Mutual Funds effected more than 40,000 trades in money
market securities and held on average $20 billion of money market securities.(5)

Based on complex-wide data, on an average day, over 7,250 shareholders
telephoned Prudential Mutual Fund Services, Inc., the Transfer Agent of the
Prudential Mutual Funds, on the Prudential Mutual Funds' toll-free number. On an
annual basis, that represents approximately 1.8 million telephone calls
answered.

INFORMATION ABOUT PRUDENTIAL SERVICES

Prudential Securities is the fifth largest retail brokerage firm in the
United States with approximately 6,000 financial advisors. It offers to its
clients a wide range of products, including Prudential Mutual Funds and
annuities. As of December 31, 1997, assets held by Prudential Securities for its
clients approximated $235 billion.

During 1997, approximately 29,000 new customer accounts were opened each
month at Prudential Securities.

Prudential Securities has a two-year Financial Advisor training program plus
advanced education programs, including Prudential Securities "university," which
provides advanced education in a wide array of investment areas. Prudential
Securities is the only Wall Street firm to have its own in-house Certified
Financial Planner (CFP) program. In the December 1995 issue of Registered Rep,
an industry publication, Prudential Securities Financial Advisor training
programs received a grade of A- (compared to an industry average of B+).

In 1995, Prudential Securities equity research team ranked 8th in
INSTITUTIONAL INVESTOR magazine's 1995 "All America Research Team" survey. Five
Prudential Securities' analysts were ranked as first-team finishers.(6)

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

Standard & Poor's rates Prudential Securities Incorporated BBB+, with a
"stable outlook."

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

- -------------

(4)Based on 669 funds in Lipper Analytical Services catagories of Short U.S.
Treasury, Short U.S. Government, Intermediate U.S. Treasury, Intermediate U.S.
Government, Short Investment Grade Debt, Intermediate Investment Grade Debt,
General U.S. Treasury, General U.S. Government and Mortgage funds.

(5)As of December 31, 1994.

(6)In 1995, INSTITUTIONAL INVESTOR magazine surveyed more than 700
institutional money managers, chief investment officers and research directors,
asking them to evaluate analysts in approximately 80 industry sectors. Scores
were produced by taking the number of votes awarded to an individual analyst and
weighting them based on the size of the voting institution. In total, the
magazine sent its survey to more than 2,000 institutions, including a group of
European and Asian instititions. This survey is conducted annually.

APP-4
<PAGE>
PART C
OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(A) FINANCIAL STATEMENTS:

(1) Financial statements for the ten-year period ended June 30, 1998,
included in the Prospectus constituting Part A of this Registration
Statement:

Financial Highlights

(2) Financial statements included in the Statement of Additional
Information constituting Part B of this Registration Statement:

Report of Independent Accountants

Portfolio of Investments at June 30, 1998

Statement of Assets and Liabilities at June 30, 1998

Statement of Operations for the year ended June 30, 1998

Statement of Changes in Net Assets for the fiscal years
ended June 30, 1998 and June 30, 1997

Financial Highlights for each of the five years in the
period ended June 30, 1998

Notes to Financial Statements

(B) EXHIBITS:

1. Amended and Restated Declaration of Trust, incorporated by reference
to Exhibit No. 1 to Post-Effective Amendment No. 17 to the
Registration Statement on Form N-1A filed via EDGAR on August 27,
1997 (File No. 2-73901).

2. By-Laws, as amended, incorporated by reference to Exhibit No. 2 to
Post-Effective Amendment No. 17 to the Registration Statement on Form
N-1A filed via EDGAR on August 27, 1997 (File No. 2-73901).

5. (a) Management Agreement between the Registrant and Prudential
Mutual Fund Management, Inc., incorporated by reference to Exhibit
No. 5(a) to Post-Effective Amendment No. 17 to the Registration
Statement on Form N-1A filed via EDGAR on August 27, 1997 (File No.
2-73901).

(b) Subadvisory Agreement between Prudential Mutual Fund Management,
Inc. and The Prudential Investment Corporation, incorporated by
reference to Exhibit No. 5(b) to Post-Effective Amendment No. 17 to
the Registration Statement on Form N-1A filed via EDGAR on August 27,
1997 (File No. 2-73901).

6. (a) Distribution Agreement between the Registrant and Prudential
Mutual Fund Distributors, Inc., amended and restated as of April 12,
1995, incorporated by reference to Exhibit No. 6 to Post-Effective
Amendment No. 15 to the Registration Statement on Form N-1A filed via
EDGAR on August 31, 1995 (File No. 2-73901).

(b) Amendment to Distribution Agreement incorporated by reference to
Exhibit 6(b) to Post-Effective Amendment No. 16 to the Registration
Statement on Form N-1A filed via EDGAR on August 29, 1996.

(d) Form of Dealer Agreement.*

C-1
<PAGE>

8. Custody Agreement between the Registrant and State Street Bank and
Trust Co., incorporated by reference to Exhibit No. 8 to
Post-Effective Amendment No. 17 to the Registration Statement on Form
N-1A filed via EDGAR on August 27, 1997 (File No. 2-73901).

9. Administration Agreement between the Registrant and Prudential
Mutual Fund Management, Inc., incorporated by reference to Exhibit
No. 9 to Post-Effective Amendment No. 17 to the Registration
Statement on Form N-1A filed via EDGAR on August 27, 1997 (File No.
2-73901).

11. (a) Consent of Independent Accountants.*

(b) Consent of Duff and Phelps Credit Rating Co.*

15. (a) Restated Distribution and Service Plan pursuant to Rule 12b-1,
incorporated by reference to Exhibit No. 15 to Post-Effective
Amendment No. 13 to the Registration Statement on Form N-1A (File No.
2-73901) filed via EDGAR on August 30, 1993.

(b) Amended and Restated Distribution and Service Plan.*

16. Schedule of Yield Calculation, incorporated by reference to Exhibit
No. 16 to Post-Effective Amendment No. 17 to the Registration
Statement on Form N-1A filed via EDGAR on August 27, 1997 (File No.
2-73901).

17. Financial Data Schedule.*

- ------------
*Filed herewith.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

As of August 7, 1998 there were 13,024 record holders of shares of beneficial
interest, $.01 par value per share, of the Registrant.

ITEM 27. INDEMNIFICATION.

As permitted by Section 17(h) and (i) of the Investment Company Act of 1940,
as amended (the 1940 Act) and pursuant to Article V of the Fund's Declaration of
Trust (Exhibit 1 to the Registration Statement) with respect to trustees,
officers, employees and agents thereof and Article VII of the Fund's By-Laws
(Exhibit 2 to the Registration Statement) trustees, officers, employees and
agents of the Fund may be indemnified against certain liabilities in connection
with the Trust. As permitted by Section 17(i) of the 1940 Act, pursuant to
Section 10 of the Distribution Agreement (Exhibit 6(c) to the Registration
Statement), the Distributor of the Registrant may be indemnified against
liabilities which it may incur, except liabilities arising from bad faith, gross
negligence, willful misfeasance or reckless disregard of duties. Such Article V
of the Declaration of Trust, Article VII of the By-Laws and Section 10 of the
Distribution Agreement are hereby incorporated by reference in their entirety.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the Securities Act) may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing provisions
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the 1940 Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the 1940 Act and will be governed by the final
adjudication of such issue.

C-2
<PAGE>
The Registrant intends to purchase an insurance policy insuring its officers
and directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers and directors under certain circumstances.

Section 9 of the Management Agreement (Exhibit 5(a) to the Registration
Statement) and Section 4 of the Subadvisory Agreement (Exhibit 5(b) to the
Registration Statement) limit the liability of Prudential Investments Fund
Management LLC (PIFM) and The Prudential Investment Corporation (PIC),
respectively, to liabilities arising from willful misfeasance, bad faith or
gross negligence in the performance of their respective duties or from reckless
disregard by them of their respective obligations and duties under the
agreements.

The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws and each Distribution Agreement in a manner consistent
with Release No. 11330 of the Securities and Exchange Commission under the 1940
Act so long as the interpretation of Sections 17(h) and 17(i) of such Act
remains in effect and is consistently applied.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

(i) Prudential Investments Fund Management LLC (PIFM)

See "How the Funds are Managed--Manager" in the Prospectus constituting Part
A of this Post-Effective Amendment to the Registration Statement and "Manager"
in the Statement of Additional Information constituting Part B of this
Post-Effective Amendment to the Registration Statement.

The business and other connections of the officers of PIFM are listed in
Schedules A and D of Form ADV of PIFM as currently on file with the Securities
and Exchange Commission, the text of which is hereby incorporated by reference
(File No. 801-31104).

The business and other connections of PIFM's directors and principal
executive officers are set forth below. Except as otherwise indicated, the
address of each person is Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077.

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIFM PRINCIPAL OCCUPATIONS
- ----------------------------- ------------------------- --------------------------------------------------------
<S> <C> <C>
Frank W. Giordano Executive Vice President, Executive Vice President, Secretary and General Counsel,
Secretary and General PIFM; Senior Vice President, Prudential Securities
Counsel Incorporated (Prudential Securities)

Robert F. Gunia Executive Vice President Vice President, Prudential Investments; Executive Vice
and Treasurer President and Treasurer, PIFM; Senior Vice President,
Prudential Securities

Neil A. McGuinness Executive Vice President Executive Vice President and Director of Marketing,
Prudential Mutual Fund and Annuities (PMF&A); Executive
Vice President, PIFM

Brian Storms Officer-in-Charge, President, PMF&A; Officer-in-Charge, President, Chief
President, Chief Executive Officer and Chief Operating Officer, PIFM
Executive Officer and
Chief Operating Officer

Robert J. Sullivan Executive Vice President Executive Vice President, PMF&A; Executive Vice
President, PIFM
</TABLE>

(ii) The Prudential Investment Corporation (PIC)

See "How the Fund is Managed--Manager" in the Prospectus constituting Part A
of this Post-Effective Amendment to the Registration Statement and "Manager" in
the Statement of Additional Information constituting Part B of this Post-
Effective Amendment to the Registration Statement.

C-3
<PAGE>

The business and other connections of PIC's directors and executive officers
are as set forth below. The address of each person is Prudential Plaza, Newark,
New Jersey 07102-4077.

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIC PRINCIPAL OCCUPATIONS
- ----------------------------- ------------------------- --------------------------------------------------------
<S> <C> <C>
E. Michael Caulfield Chairman of the Board, Chief Executive Officer of Prudential Investments of The
President and Chief Prudential Insurance Company of America (Prudential)
Executive Officer and
Director
Jonathan M. Greene Senior Vice President President--Investment Management of Prudential
and Director Investments of Prudential
John R. Strangfeld Vice President and President of Private Asset Management Group of
Director Prudential; Senior Vice President of Prudential
</TABLE>

ITEM 29. PRINCIPAL UNDERWRITER

(a) Prudential Investment Management Services LLC is distributor for Cash
Accumulation Trust, COMMAND Government Fund, COMMAND Money Fund, COMMAND
Tax-Free Fund, Prudential Government Securities Trust (Intermediate Term Series,
Money Market Series and U.S. Treasury Money Market Series), Prudential MoneyMart
Assets, Inc., Prudential Institutional Liquidity Portfolio, Inc., Prudential
Special Money Market Fund, Inc., Prudential Tax-Free Money Fund, Inc., The
Prudential Investment Portfolios, Inc., The Target Portfolio Trust, Prudential
Balanced Fund, Prudential California Municipal Fund, Prudential Developing
Markets Fund, Prudential Distressed Securities Fund, Inc., Prudential
Diversified Bond Fund, Inc., Prudential Index Series Fund, Prudential Emerging
Growth Fund, Inc., Prudential Equity Fund, Inc., Prudential Equity Income Fund,
Prudential Europe Growth Fund Inc., Prudential Global Genesis Fund, Inc.,
Prudential Global Limited Maturity Fund, Inc., Prudential Mid-Cap Value Fund,
Prudential Natural Resources Fund, Inc., Prudential Real Estate Securities Fund,
Prudential Government Income Fund, Inc., Prudential Small-Cap Quantum Fund,
Inc., Prudential Small Company Value Fund, Inc., Prudential High Yield Fund,
Prudential High Yield Total Return Fund, Inc., Prudential Intermediate Global
Income Fund, Inc., Prudential Mortgage Income Fund, Inc., Prudential Municipal
Bond Fund, Prudential Municipal Series Fund, Prudential National Municipals
Fund, Inc., Prudential Pacific Growth Fund, Inc., Prudential Structured Maturity
Fund, Inc., Prudential Utility Fund, Inc., Prudential World Fund, Inc.,
Prudential International Bond Fund, Inc., The Global Total Return Fund, Inc.,
Global Utility Fund, Inc., Nicholas-Applegate Fund, Inc. (Nicholas-Applegate
Growth Equity Fund) and Prudential 20/20 Focus Fund. Prudential Investment
Management Services LLC is also a depositor for the following unit investment
trust:

The Corporate Investment Trust Fund
Prudential Equity Trust Shares
National Equity Trust
Prudential Unit Trusts
Government Securities Equity Trust
National Municipal Trust

C-4
<PAGE>

(b) Information concerning the Directors and officers of Prudential
Investment Management Services LLC is set forth below:

<TABLE>
<CAPTION>
POSITIONS AND
POSITIONS AND OFFICES OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ---------------------------------- ----------------------------------------------------- ------------------
<S> <C> <C>
E. Michael Caulfield.............. President None
Mark R. Fetting................... Executive Vice President None
Jonathan M. Greene................ Executive Vice President None
Jean D. Hamilton.................. Executive Vice President None
Ronald P. Joelson................. Executive Vice President None
Brian M. Storms................... Executive Vice President None
John R. Strangfeld................ Executive Vice President None
Mario A. Mosse.................... Senior Vice President and Chief Operating Officer None
Scott S. Wallner.................. Vice President, Secretary and Chief Legal Officer None
Michael G. Williamson............. Vice President, Comptroller and Chief Financial None
Officer
C. Edward Chaplin................. Treasurer None
</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the Rules thereunder are maintained at the offices of
State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy,
Massachusetts, The Prudential Investment Corporation, Prudential Plaza, 751
Broad Street, Newark, New Jersey, the Registrant, Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102, and Prudential Mutual Fund Services
LLC, Raritan Plaza One, Edison, New Jersey 08837. Documents required by Rules
31a-1(b)(4), (5), (6), (7), (9), (10) and (11) and 31a-1(d) and (f) will be kept
at Gateway Center Three, Newark, New Jersey 07102-4077, and the remaining
accounts, books and other documents required by such other pertinent provisions
of Section 31(a) and the Rules promulgated thereunder will be kept by State
Street Bank and Trust Company and Prudential Mutual Fund Services LLC.

ITEM 31. MANAGEMENT SERVICES

Other than as set forth under the captions "How the Funds Are
Managed--Manager" and "How the Funds Are Managed--Distributor" in the Prospectus
and the captions "Manager" and "Distributor" in the Statement of Additional
Information, constituting Parts A and B, respectively, of this Post-Effective
Amendment to the Registration Statement, Registrant is not a party to any
management-related service contract.

ITEM 32. UNDERTAKINGS

None.

C-5
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Newark, and State of New Jersey, on the 31st day of August, 1998.

COMMAND GOVERNMENT FUND

By: /s/ RICHARD A. REDEKER

-----------------------------------
(Richard A. Redeker, PRESIDENT)

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.

<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ---------------------------------------------- ---------------------------------------------- -----------------
/s/ EDWARD D. BEACH
------------------------------------ Trustee August 31, 1998
Edward D. Beach

/s/ STEPHEN C. EYRE
------------------------------------ Trustee August 31, 1998
Stephen C. Eyre

/s/ DELAYNE D. GOLD
------------------------------------ Trustee August 31, 1998
Delayne D. Gold

/s/ ROBERT F. GUNIA
------------------------------------ Trustee August 31, 1998
Robert F. Gunia

/s/ DON G. HOFF
------------------------------------ Trustee August 31, 1998
Don G. Hoff

/s/ ROBERT E. LABLANC
------------------------------------ Trustee August 31, 1998
Robert E. LaBlanc

/s/ MENDEL A. MELZER
------------------------------------ Trustee August 31, 1998
Mendel A. Melzer

/s/ RICHARD A. REDEKER
------------------------------------ President and Trustee August 31, 1998
Richard A. Redeker

/s/ ROBIN B. SMITH
------------------------------------ Trustee August 31, 1998
Robin B. Smith

/s/ LANGDON R. STEVENSON
------------------------------------ Trustee August 31, 1998
Langdon R. Stevenson

/s/ STEPHEN STONEBURN
------------------------------------ Trustee August 31, 1998
Stephen Stoneburn

/s/ NANCY H. TEETERS
------------------------------------ Trustee August 31, 1998
Nancy H. Teeters

/s/ GRACE C. TORRES
------------------------------------ Treasurer and Principal Financial and August 31, 1998
Grace C. Torres Accounting Officer
</TABLE>

C-6
<PAGE>
COMMAND GOVERNMENT FUND
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------------
<S> <C>
1. Amended and Restated Declaration of Trust, incorporated by reference to Exhibit No. 1 to Post-Effective
Amendment No. 17 to the Registration Statement on Form N-1A filed via EDGAR on August 27, 1997 (File No.
2-73901).
2. By-Laws, as amended, incorporated by reference to Exhibit No. 2 to Post-Effective Amendment No. 17 to the
Registration Statement on Form N-1A filed via EDGAR on August 27, 1997 (File No. 2-73901).
5.(a) Management Agreement between the Registrant and Prudential Mutual Fund Management, Inc., incorporated by
reference to Exhibit No. 5(a) to Post-Effective Amendment No. 17 to the Registration Statement on Form
N-1A filed via EDGAR on August 27, 1997 (File No. 2-73901).
5.(b) Subadvisory Agreement between Prudential Mutual Fund Management, Inc. and The Prudential Investment
Corporation, incorporated by reference to Exhibit No. 5(b) to Post-Effective Amendment No. 17 to the
Registration Statement on Form N-1A filed via EDGAR on August 27, 1997 (File No. 2-73901).
6.(a) Distribution Agreement between the Registrant and Prudential Mutual Fund Distributors, Inc., amended and
restated as of April 12, 1995, incorporated by reference to Exhibit No. 6 to Post-Effective Amendment No.
15 to the Registration Statement on Form N-1A filed via EDGAR on August 31, 1995 (File No. 2-73901).
6.(b) Amendment to Distribution Agreement incorporated by reference to Exhibit No. 6(b) to Post-Effective Amend-
ment No. 16 to the Registration Statement on Form N-1A filed via EDGAR on August 29, 1996.
6.(c) Distribution Agreement between the Registrant and Prudential Investment Management Services LLC.*
6.(d) Form of Dealer Agreement.*
8. Custody Agreement between the Registrant and State Street Bank and Trust Co., incorporated by reference to
Exhibit No. 8 to Post-Effective Amendment No. 17 to the Registration Statement on Form N-1A filed via
EDGAR on August 27, 1997 (File No. 2-73901).
9. Administration Agreement between the Registrant and Prudential Mutual Fund Management, Inc., incorporated
by reference to Exhibit No. 9 to Post-Effective Amendment No. 17 to the Registration Statement on Form
N-1A filed via EDGAR on August 27, 1997 (File No. 2-73901).
11.(a) Consent of Independent Accountants.*
11.(b) Consent of Duff and Phelps Credit Rating Co.*
15.(a) Restated Distribution and Service Plan pursuant to Rule 12b-1, incorporated by reference to Exhibit No. 15
to Post-Effective Amendment No. 13 to the Registration Statement on Form N-1A (File No. 2-73901) filed via
EDGAR on August 30, 1993.
15.(b) Amended and Restated Distribution and Service Plan.*
16. Schedule of Yield Calculation, incorporated by reference to Exhibit No. 16 to Post-Effective Amendment No.
17 to the Registration Statement on Form N-1A filed via EDGAR on August 27, 1997 (File No. 2-73901).
17. Financial Data Schedule.*
</TABLE>

- ------------
*Filed herewith.

<PAGE>

COMMAND GOVERNMENT FUND

DISTRIBUTION AGREEMENT

Agreement made as of June 1, 1998, between Command Government Fund
(the Fund), and Prudential Investment Management Services LLC, a Delaware
limited liability company (the Distributor).

WITNESSETH

WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the Investment Company Act), as a diversified, open-end,
management investment company and it is in the interest of the Fund to offer its
shares for sale continuously;

WHEREAS, the shares of the Fund may be divided into classes and/or
series (all such shares being referred to herein as Shares) and the Fund
currently is authorized to offer Shares without class designation;

WHEREAS, the Distributor is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended, and is engaged in the business of
selling shares of registered investment companies either directly or through
other broker-dealers;

WHEREAS, the Fund and the Distributor wish to enter into an agreement
with each other, with respect to the continuous offering of the Fund's Shares
from and after the date hereof in order to promote the growth of the Fund and
facilitate the distribution of its Shares; and

WHEREAS, the Fund has adopted a plan (or plans) of distribution
pursuant to Rule 12b-1 under the Investment Company Act with respect to certain
of its classes and/or series of Shares (the Plans) authorizing payments by the
Fund to the Distributor with respect to the distribution of such classes and/or
series of Shares and the maintenance of related shareholder accounts.

NOW, THEREFORE, the parties agree as follows:

Section 1. APPOINTMENT OF THE DISTRIBUTOR

The Fund hereby appoints the Distributor as the principal underwriter
and distributor of the Shares of the Fund to sell Shares to the public on behalf
of the Fund and the Distributor hereby accepts such appointment and agrees to
act hereunder. The Fund hereby agrees during the term of this Agreement to sell
Shares of the Fund through the Distributor on the terms and conditions set forth
below.

<PAGE>

Section 2. EXCLUSIVE NATURE OF DUTIES

The Distributor shall be the exclusive representative of the Fund to
act as principal underwriter and distributor of the Fund's Shares, except that:

2.1 The exclusive rights granted to the Distributor to sell Shares of
the Fund shall not apply to Shares of the Fund issued in connection with the
merger or consolidation of any other investment company or personal holding
company with the Fund or the acquisition by purchase or otherwise of all (or
substantially all) the assets or the outstanding shares of any such company by
the Fund.

2.2 Such exclusive rights shall not apply to Shares issued by the
Fund pursuant to reinvestment of dividends or capital gains distributions or
through the exercise of any conversion feature or exchange privilege.

2.3 Such exclusive rights shall not apply to Shares issued by the
Fund pursuant to the reinstatement privilege afforded redeeming shareholders.

2.4 Such exclusive rights shall not apply to purchases made through
the Fund's transfer and dividend disbursing agent in the manner set forth in the
currently effective Prospectus of the Fund. The term "Prospectus" shall mean
the Prospectus and Statement of Additional Information included as part of the
Fund's Registration Statement, as such Prospectus and Statement of Additional
Information may be amended or supplemented from time to time, and the term
"Registration Statement" shall mean the Registration Statement filed by the Fund
with the Securities and Exchange Commission and effective under the Securities
Act of 1933, as amended (Securities Act), and the Investment Company Act, as
such Registration Statement is amended from time to time.

Section 3. PURCHASE OF SHARES FROM THE FUND

3.1 The Distributor shall have the right to buy from the Fund on
behalf of investors the Shares needed, but not more than the Shares needed
(except for clerical errors in transmission) to fill unconditional orders for
Shares placed with the Distributor by investors or registered and qualified
securities dealers and other financial institutions (selected dealers).

3.2 The Shares shall be sold by the Distributor on behalf of the Fund
and delivered by the Distributor or selected dealers, as described in Section
6.4 hereof, to investors at the offering price as set forth in the Prospectus.

3.3 The Fund shall have the right to suspend the sale of any or all
classes and/or series of its Shares at times when redemption is suspended
pursuant to the conditions in Section 4.3 hereof or at such other times as may
be determined by the Board. The Fund shall also have the right to suspend the
sale of any or all classes

2
<PAGE>

and/or series of its Shares if a banking moratorium shall have been declared by
federal or New Jersey authorities.

3.4 The Fund, or any agent of the Fund designated in writing by the
Fund, shall be promptly advised of all purchase orders for Shares received by
the Distributor. Any order may be rejected by the Fund; provided, however, that
the Fund will not arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of Shares. The Fund (or its agent) will confirm
orders upon their receipt, will make appropriate book entries and upon receipt
by the Fund (or its agent) of payment therefor, will deliver deposit receipts
for such Shares pursuant to the instructions of the Distributor. Payment shall
be made to the Fund in New York Clearing House funds or federal funds. The
Distributor agrees to cause such payment and such instructions to be delivered
promptly to the Fund (or its agent).

Section 4. REPURCHASE OR REDEMPTION OF SHARES BY THE FUND

4.1 Any of the outstanding Shares may be tendered for redemption at
any time, and the Fund agrees to repurchase or redeem the Shares so tendered in
accordance with its Declaration of Trust as amended from time to time, and in
accordance with the applicable provisions of the Prospectus. The price to be
paid to redeem or repurchase the Shares shall be equal to the net asset value
determined as set forth in the Prospectus. All payments by the Fund hereunder
shall be made in the manner set forth in Section 4.2 below.

4.2 The Fund shall pay the total amount of the redemption price as
defined in the above paragraph pursuant to the instructions of the Distributor
on or before the seventh day subsequent to its having received the notice of
redemption in proper form. The proceeds of any redemption of Shares shall be
paid by the Fund as follows: (i) in the case of Shares subject to a contingent
deferred sales charge, any applicable contingent deferred sales charge shall be
paid to the Distributor, and the balance shall be paid to or for the account of
the redeeming shareholder, in each case in accordance with applicable provisions
of the Prospectus; and (ii) in the case of all other Shares, proceeds shall be
paid to or for the account of the redeeming shareholder, in each case in
accordance with applicable provisions of the Prospectus.

4.3 Redemption of any class and/or series of Shares or payment may be
suspended at times when the New York Stock Exchange is closed for other than
customary weekends and holidays, when trading on said Exchange is restricted,
when an emergency exists as a result of which disposal by the Fund of securities
owned by it is not reasonably practicable or it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or during any
other period when the Securities and Exchange Commission, by order, so permits.

3
<PAGE>

Section 5. DUTIES OF THE FUND

5.1 Subject to the possible suspension of the sale of Shares as
provided herein, the Fund agrees to sell its Shares so long as it has Shares of
the respective class and/or series available.

5.2 The Fund shall furnish the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Shares, and this shall
include one certified copy, upon request by the Distributor, of all financial
statements prepared for the Fund by independent public accountants. The Fund
shall make available to the Distributor such number of copies of its Prospectus
and annual and interim reports as the Distributor shall reasonably request.

5.3 The Fund shall take, from time to time, but subject to the
necessary approval of the Board and the shareholders, all necessary action to
fix the number of authorized Shares and such steps as may be necessary to
register the same under the Securities Act, to the end that there will be
available for sale such number of Shares as the Distributor reasonably may
expect to sell. The Fund agrees to file from time to time such amendments,
reports and other documents as may be necessary in order that there will be no
untrue statement of a material fact in the Registration Statement, or necessary
in order that there will be no omission to state a material fact in the
Registration Statement which omission would make the statements therein
misleading.

5.4 The Fund shall use its best efforts to notify such states as the
Distributor and the Fund may approve of its intention to sell any appropriate
number of its Shares; provided that the Fund shall not be required to amend its
Articles of Incorporation or By-Laws to comply with the laws of any state, to
maintain an office in any state, to change the terms of the offering of its
Shares in any state from the terms set forth in its Registration Statement, to
qualify as a foreign corporation in any state or to consent to service of
process in any state other than with respect to claims arising out of the
offering of its Shares. Any such notification may be withheld, terminated or
withdrawn by the Fund at any time in its discretion. As provided in Section 9
hereof, the expense of notification and maintenance of notification shall be
borne by the Fund. The Distributor shall furnish such information and other
material relating to its affairs and activities as may be required by the Fund
in connection with such notifications.

4
<PAGE>

Section 6. DUTIES OF THE DISTRIBUTOR

6.1 The Distributor shall devote reasonable time and effort to effect
sales of Shares, but shall not be obligated to sell any specific number of
Shares. Sales of the Shares shall be on the terms described in the Prospectus.
The Distributor may enter into like arrangements with other investment
companies. The Distributor shall compensate the selected dealers as set forth
in the Prospectus.

6.2 In selling the Shares, the Distributor shall use its best efforts
in all respects duly to conform with the requirements of all federal and state
laws relating to the sale of such securities. Neither the Distributor nor any
selected dealer nor any other person is authorized by the Fund to give any
information or to make any representations, other than those contained in the
Registration Statement or Prospectus and any sales literature approved by
appropriate officers of the Fund.

6.3 The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and selected dealers, the collection of
amounts payable by investors and selected dealers on such sales and the
cancellation of unsettled transactions, as may be necessary to comply with the
requirements of Securities Exchange Act Rule 10b-10 and the rules of the
National Association of Securities Dealers, Inc. (NASD).

6.4 The Distributor shall have the right to enter into selected
dealer agreements with registered and qualified securities dealers and other
financial institutions of its choice for the sale of Shares, provided that the
Fund shall approve the forms of such agreements. Within the United States, the
Distributor shall offer and sell Shares only to such selected dealers as are
members in good standing of the NASD or are institutions exempt from
registration under applicable federal securities laws. Shares sold to selected
dealers shall be for resale by such dealers only at the offering price
determined as set forth in the Prospectus.

Section 7. PAYMENTS TO THE DISTRIBUTOR

7.1 With respect to classes and/or series of Shares which impose a
front-end sales charge, the Distributor shall receive and may retain any portion
of any front-end sales charge which is imposed on such sales and not reallocated
to selected dealers as set forth in the Prospectus, subject to the limitations
of Rule 2830 of the Conduct Rules of the NASD. Payment of these amounts to the
Distributor is not contingent upon the adoption or continuation of any
applicable Plans.

7.2 With respect to classes and/or series of Shares which impose a
contingent deferred sales charge, the Distributor shall receive and may retain
any contingent deferred sales charge which is imposed on such sales as set forth
in the Prospectus, subject to the limitations of Rule 2830 of the Conduct Rules
of the NASD. Payment of these amounts to the Distributor is not contingent upon
the adoption or

5
<PAGE>

continuation of any Plan.

Section 8. PAYMENT OF THE DISTRIBUTOR UNDER THE PLAN

8.1 The Fund shall pay to the Distributor as compensation for
services under any Plans adopted by the Fund and this Agreement a distribution
and service fee with respect to the Fund's classes and/or series of Shares as
described in each of the Fund's respective Plans and this Agreement.

8.2 So long as a Plan or any amendment thereto is in effect, the
Distributor shall inform the Board of the commissions and account servicing fees
with respect to the relevant class and/or series of Shares to be paid by the
Distributor to account executives of the Distributor and to broker-dealers,
financial institutions and investment advisers which have dealer agreements with
the Distributor. So long as a Plan (or any amendment thereto) is in effect, at
the request of the Board or any agent or representative of the Fund, the
Distributor shall provide such additional information as may reasonably be
requested concerning the activities of the Distributor hereunder and the costs
incurred in performing such activities with respect to the relevant class and/or
series of Shares.

Section 9. ALLOCATION OF EXPENSES

The Fund shall bear all costs and expenses of the continuous offering
of its Shares (except for those costs and expenses borne by the Distributor
pursuant to a Plan and subject to the requirements of Rule 12b-1 under the
Investment Company Act), including fees and disbursements of its counsel and
auditors, in connection with the preparation and filing of any required
Registration Statements and/or Prospectuses under the Investment Company Act or
the Securities Act, and all amendments and supplements thereto, and preparing
and mailing annual and periodic reports and proxy materials to shareholders
(including but not limited to the expense of setting in type any such
Registration Statements, Prospectuses, annual or periodic reports or proxy
materials). The Fund shall also bear the cost of expenses of making notice
filings for the Shares for sale, and, if necessary or advisable in connection
therewith, of qualifying the Fund as a broker or dealer, in such states of the
United States or other jurisdictions as shall be selected by the Fund and the
Distributor pursuant to Section 5.4 hereof and the cost and expense payable to
each such state for continuing notification therein until the Fund decides to
discontinue such notification pursuant to Section 5.4 hereof. As set forth in
Section 8 above, the Fund shall also bear the expenses it assumes pursuant to
any Plan, so long as such Plan is in effect.

Section 10. INDEMNIFICATION

10.1 The Fund agrees to indemnify, defend and hold the Distributor,
its

6
<PAGE>

officers and directors and any person who controls the Distributor within the
meaning of Section 15 of the Securities Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) which the Distributor,
its officers, members or any such controlling person may incur under the
Securities Act, or under common law or otherwise, arising out of or based upon
any untrue statement of a material fact contained in the Registration Statement
or Prospectus or arising out of or based upon any alleged omission to state a
material fact required to be stated in either thereof or necessary to make the
statements in either thereof not misleading, except insofar as such claims,
demands, liabilities or expenses arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information furnished by the Distributor to the Fund
for use in the Registration Statement or Prospectus; provided, however, that
this indemnity agreement shall not inure to the benefit of any such officer,
member or controlling person unless a court of competent jurisdiction shall
determine in a final decision on the merits, that the person to be indemnified
was not liable by reason of willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of its reckless disregard of its
obligations under this Agreement (disabling conduct), or, in the absence of such
a decision, a reasonable determination, based upon a review of the facts, that
the indemnified person was not liable by reason of disabling conduct, by (a) a
vote of a majority of a quorum of directors or directors who are neither
"interested persons" of the Fund as defined in Section 2(a)(19) of the
Investment Company Act nor parties to the proceeding, or (b) an independent
legal counsel in a written opinion. The Fund's agreement to indemnify the
Distributor, its officers and members and any such controlling person as
aforesaid is expressly conditioned upon the Fund's being promptly notified of
any action brought against the Distributor, its officers or members, or any such
controlling person, such notification to be given by letter or telegram
addressed to the Fund at its principal business office. The Fund agrees
promptly to notify the Distributor of the commencement of any litigation or
proceedings against it or any of its officers or directors in connection with
the issue and sale of any Shares.

10.2 The Distributor agrees to indemnify, defend and hold the Fund,
its officers and directors and any person who controls the Fund, if any, within
the meaning of Section 15 of the Securities Act, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending against such claims, demands or liabilities
and any reasonable counsel fees incurred in connection therewith) which the
Fund, its officers and directors or any such controlling person may incur under
the Securities Act or under common law or otherwise, but only to the extent that
such liability or expense incurred by the Fund, its directors or officers or
such controlling person resulting from such claims or demands shall arise out of
or be based upon any alleged untrue statement of a material fact contained in
information furnished by the Distributor to the Fund for use in the Registration
Statement or Prospectus or shall arise out of or be based upon any alleged

7
<PAGE>

omission to state a material fact in connection with such information required
to be stated in the Registration Statement or Prospectus or necessary to make
such information not misleading. The Distributor's agreement to indemnify the
Fund, its officers and directors and any such controlling person as aforesaid,
is expressly conditioned upon the Distributor's being promptly notified of any
action brought against the Fund, its officers and directors or any such
controlling person, such notification being given to the Distributor at its
principal business office.

Section 11. DURATION AND TERMINATION OF THIS AGREEMENT

11.1 This Agreement shall become effective as of the date first above
written and shall remain in force for two years from the date hereof and
thereafter, but only so long as such continuance is specifically approved at
least annually by (a) the Board of the Fund, or by the vote of a majority of the
outstanding voting securities of the applicable class and/or series of the Fund,
and (b) by the vote of a majority of those directors who are not parties to this
Agreement or interested persons of any such parties and who have no direct or
indirect financial interest in this Agreement or in the operation of any of the
Fund's Plans or in any agreement related thereto (Independent directors), cast
in person at a meeting called for the purpose of voting upon such approval.

11.2 This Agreement may be terminated at any time, without the payment
of any penalty, by a majority of the independent directors or by vote of a
majority of the outstanding voting securities of the applicable class and/or
series of the Fund, or by the Distributor, on sixty (60) days' written notice to
the other party. This Agreement shall automatically terminate in the event of
its assignment.

11.3 The terms "affiliated person," "assignment," "interested person"
and "vote of a majority of the outstanding voting securities", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.

Section 12. AMENDMENTS TO THIS AGREEMENT

This Agreement may be amended by the parties only if such amendment is
specifically approved by (a) the Board of the Fund, or by the vote of a majority
of the outstanding voting securities of the applicable class and/or series of
the Fund, and (b) by the vote of a majority of the independent directors cast in
person at a meeting called for the purpose of voting on such amendment.

Section 13. SEPARATE AGREEMENT AS TO CLASSES AND/OR SERIES

The amendment or termination of this Agreement with respect to any
class and/or series shall not result in the amendment or termination of this
Agreement

8
<PAGE>

with respect to any other class and/or series unless explicitly so provided.

Section 14. GOVERNING LAW

The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New Jersey as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New Jersey, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year above written.

Prudential Investment Management Services LLC

By: /s/ Jonathan M. Greene
-------------------------------
Jonathan M. Greene
Executive Vice President

Command Government Fund

By: /s/ Richard A. Redeker
-------------------------------
Richard A. Redeker
President

[cad 228]

<PAGE>

FORM OF
DEALER AGREEMENT

PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC

Prudential Investment Management Services LLC ("Distributor") and
_________________ ("Dealer") have agreed that Dealer will participate in the
distribution of shares ("Shares") of all the funds and series thereof (as they
may exist from time to time) comprising the Prudential Mutual Fund Family (each
a "Fund" and collectively the "Funds") and any classes thereof for which
Distributor now or in the future serves as principal underwriter and
distributor, subject to the terms of this Dealer Agreement ("Agreement"). Any
such additional Funds will be included in this Agreement upon Distributor's
written notification to Dealer.

1. LICENSING

a. Dealer represents and warrants that it is: (i) a broker-dealer
registered with the Securities and Exchange Commission ("SEC"); (ii) a member in
good standing of the National Association of Securities Dealers, Inc. ("NASD");
and (iii) licensed by the appropriate regulatory agency of each state or other
jurisdiction in which Dealer will offer and sell Shares of the Funds, to the
extent necessary to perform the duties and activities contemplated by this
Agreement.

b. Dealer represents and warrants that each of its partners,
directors, officers, employees, and agents who will be utilized by Dealer with
respect to its duties and activities under this Agreement is either
appropriately licensed or exempt from such licensing requirements by the
appropriate regulatory agency of each state or other jurisdiction in which
Dealer will offer and sell Shares of the Funds.

c. Dealer agrees that: (i) termination or suspension of its
registration with the SEC; (ii) termination or suspension of its membership with
the NASD; or (iii) termination or suspension of its license to do business by
any state or other jurisdiction or federal regulatory agency shall immediately
cause the termination of this Agreement. Dealer further agrees to immediately
notify Distributor in writing of any such action or event.

d. Dealer agrees that this Agreement is in all respects subject to
the Conduct Rules of the NASD and such Conduct Rules shall control any provision
to the contrary in this Agreement.

e. Dealer agrees to be bound by and to comply with all applicable
state and federal laws and all rules and regulations promulgated thereunder
generally affecting the sale or distribution of mutual fund shares.

2. ORDERS

a. Dealer agrees to offer and sell Shares of the Funds (including
those of each of its classes) only at the regular public offering price
applicable to such Shares and in effect at the time of each transaction. The
procedures relating to all orders and the handling of each order (including the
manner of computing the net asset value of Shares and the effective time of
orders

A-1

<PAGE>

received from Dealer) are subject to: (i) the terms of the then current
prospectus and statement of additional information (including any supplements,
stickers or amendments thereto) relating to each Fund, as filed with the SEC
("Prospectus"); (ii) the new account application for each Fund, as supplemented
or amended from time to time; and (iii) Distributor's written instructions and
multiple class pricing procedures and guidelines, as provided to Dealer from
time to time. To the extent that the Prospectus contains provisions that are
inconsistent with this Agreement or any other document, the terms of the
Prospectus shall be controlling.

b. Distributor reserves the right at any time, and without notice to
Dealer, to suspend the sale of Shares or to withdraw or limit the offering of
Shares. Distributor reserves the unqualified right not to accept any specific
order for the purchase or sale of Shares.

c. In all offers and sales of the Shares to the public, Dealer is
not authorized to act as broker or agent for, or employee of, Distributor, any
Fund or any other dealer, and Dealer shall not in any manner represent to any
third party that Dealer has such authority or is acting in such capacity.
Rather, Dealer agrees that it is acting as principal for Dealer's own account or
as agent on behalf of Dealer's customers in all transactions in Shares, except
as provided in Section 3.i. hereof. Dealer acknowledges that it is solely
responsible for all suitability determinations with respect to sales of Shares
of the Funds to Dealer's customers and that Distributor has no responsibility
for the manner of Dealer's performance of, or for Dealer's acts or omissions in
connection with, the duties and activities Dealer provides under this Agreement.

d. All orders are subject to acceptance by Distributor in its sole
discretion and become effective only upon confirmation by Distributor.

e. Distributor agrees that it will accept from Dealer orders placed
through a remote terminal or otherwise electronically transmitted via the
National Securities Clearing Corporation ("NSCC") Fund/Serv Networking program,
provided, however, that appropriate documentation thereof and agreements
relating thereto are executed by both parties to this Agreement, including in
particular the standard NSCC Networking Agreement and any other related
agreements between Distributor and Dealer deemed appropriate by Distributor, and
that all accounts opened or maintained pursuant to that program will be governed
by applicable NSCC rules and procedures. Both parties further agree that, if
the NSCC Fund/Serv Networking program is used to place orders, the standard NSCC
Networking Agreement will control insofar as there is any conflict between any
provision of the Dealer Agreement and the standard NSCC Networking Agreement.

3. DUTIES OF DEALER

a. Dealer agrees to purchase Shares only from Distributor or from
Dealer's customers.

b. Dealer agrees to enter orders for the purchase of Shares only
from Distributor and only for the purpose of covering purchase orders Dealer has
already received from its customers or for Dealer's own bona fide investment.

A-2

<PAGE>

c. Dealer agrees to date and time stamp all orders received by
Dealer and promptly, upon receipt of any and all orders, to transmit to
Distributor all orders received prior to the time described in the Prospectus
for the calculation of each Fund's net asset value so as to permit Distributor
to process all orders at the price next determined after receipt by Dealer, in
accordance with the Prospectus. Dealer agrees not to withhold placing orders for
Shares with Distributor so as to profit itself as a result of such inaction.

d. Dealer agrees to maintain records of all purchases and sales of
Shares made through Dealer and to furnish Distributor or regulatory authorities
with copies of such records upon request. In that regard, Dealer agrees that,
unless Dealer holds Shares as nominee for its customers or participates in the
NSCC Fund/Serv Networking program, at certain matrix levels, it will provide
Distributor with all necessary information to comply properly with all federal,
state and local reporting requirements and backup and nonresident alien
withholding requirements for its customer accounts including, without
limitation, those requirements that apply by treating Shares issued by the Funds
as readily tradable instruments. Dealer represents and agrees that all Taxpayer
Identification Numbers ("TINs") provided are certified, and that no account that
requires a certified TIN will be established without such certified TIN. With
respect to all other accounts, including Shares held by Dealer in omnibus
accounts and Shares purchased or sold through the NSCC Fund/Serv Networking
program, at certain matrix levels, Dealer agrees to perform all federal, state
and local tax reporting with respect to such accounts, including without
limitation redemptions and exchanges.

e. Dealer agrees to distribute or cause to be delivered to its
customers Prospectuses, proxy solicitation materials and related information and
proxy cards, semi-annual and annual shareholder reports and any other materials
in compliance with applicable legal requirements, except to the extent that
Distributor expressly undertakes to do so in writing.

f. Dealer agrees that if any Share is repurchased by any Fund or is
tendered for redemption within seven (7) business days after confirmation by
Distributor of the original purchase order from Dealer, Dealer shall forfeit its
right to any concession or commission received by Dealer with respect to such
Share and shall forthwith refund to Distributor the full concession allowed to
Dealer or commission paid to Dealer on the original sale. Distributor agrees to
notify Dealer of such repurchase or redemption within a reasonable time after
settlement. Termination or cancellation of this Agreement shall not relieve
Dealer from its obligation under this provision.

g. Dealer agrees that payment for Shares ordered from Distributor
shall be in Fed Funds, New York clearinghouse or other immediately available
funds and that such funds shall be received by Distributor by the earlier of:
(i) the end of the third (3rd) business day following Dealer's receipt of the
customer's order to purchase such Shares; or (ii) the settlement date
established in accordance with Rule 15c6-1 under the Securities Exchange Act of
1934, as amended. If such payment is not received by Distributor by such date,
Dealer shall forfeit its right to any concession or commission with respect to
such order, and Distributor reserves the right, without notice, forthwith to
cancel the sale, or, at its option, to sell the Shares ordered back to the Fund,
in which case Distributor may hold Dealer responsible for any loss, including
loss of profit, suffered by Distributor resulting from Dealer's failure to make
payment as aforesaid. If a purchase is made by check, the purchase is deemed
made upon conversion of the purchase instrument into Fed Funds, New York
clearinghouse or other immediately available funds.

A-3

<PAGE>

h. Dealer agrees that it: (i) shall assume responsibility for any
loss to the Fund caused by a correction to any order placed by Dealer that is
made subsequent to the trade date for the order, provided such order correction
was not based on any negligence on Distributor's part; and (ii) will immediately
pay such loss to the Fund upon notification.

i. Dealer agrees that in connection with orders for the purchase of
Shares on behalf of any IRAs, 401(k) plans or other retirement plan accounts, by
mail, telephone, or wire, Dealer shall act as agent for the custodian or trustee
of such plans (solely with respect to the time of receipt of the application and
payments), and Dealer shall not place such an order with Distributor until it
has received from its customer payment for such purchase and, if such purchase
represents the first contribution to such a retirement plan account, the
completed documents necessary to establish the retirement plan. Dealer agrees
to indemnify Distributor and its affiliates for any claim, loss, or liability
resulting from incorrect investment instructions received by Distributor from
Dealer.

j. Dealer agrees that it will not make any conditional orders for
the purchase or redemption of Shares and acknowledges that Distributor will not
accept conditional orders for Shares.

k. Dealer agrees that all out-of-pocket expenses incurred by it in
connection with its activities under this Agreement will be borne by Dealer.

l. Dealer agrees that it will keep in force appropriate broker's
blanket bond insurance policies covering any and all acts of Dealer's partners,
directors, officers, employees, and agents adequate to reasonably protect and
indemnify the Distributor and the Funds against any loss which any party may
suffer or incur, directly or indirectly, as a result of any action by Dealer or
Dealer's partners, directors, officers, employees, and agents.

m. Dealer agrees that it will maintain the required net capital as
specified by the rules and regulations of the SEC, NASD and other regulatory
authorities.

4. DEALER COMPENSATION

a. On each purchase of Shares by Dealer from Distributor, the total
sales charges and dealer concessions or commissions, if any, payable to Dealer
shall be as stated on Schedule A to this Agreement, which may be amended by
Distributor from time to time. Distributor reserves the right, without prior
notice, to suspend or eliminate such dealer concession or commissions by
amendment, sticker or supplement to the then current Prospectus for each Fund.
Such sales charges and dealer concessions or commissions, are subject to
reduction under a variety of circumstances as described in each Fund's then
current Prospectus. For an investor to obtain any reduction, Distributor must
be notified at the time of the sale that the sale qualifies for the reduced
sales charge. If Dealer fails to notify Distributor of the applicability of a
reduction in the sales charge at the time the trade is placed, neither
Distributor nor any Fund will be liable for amounts necessary to reimburse any
investor for the reduction that should have been effected. Dealer acknowledges
that no sales charge or concession or commission will be paid to Dealer on the
reinvestment of dividends or capital gains reinvestment or on Shares acquired in
exchange for Shares of another Fund, or class thereof, having the same

A-4

<PAGE>

sales charge structure as the Fund, or class thereof, from which the exchange
was made, in accordance with the Prospectus.

b. In accordance with the Funds' Prospectuses, Distributor or any
affiliate may, but is not obligated to, make payments to dealers from
Distributor's own resources as compensation for certain sales that are made at
net asset value ("Qualifying Sales"). If Dealer notifies Distributor of a
Qualifying Sale, Distributor may make a contingent advance payment up to the
maximum amount available for payment on the sale. If any of the Shares
purchased in a Qualifying Sale are redeemed within twelve (12) months of the end
of the month of purchase, Distributor shall be entitled to recover any advance
payment attributable to the redeemed Shares by reducing any account payable or
other monetary obligation Distributor may owe to Dealer or by making demand upon
Dealer for repayment in cash. Distributor reserves the right to withhold
advances to Dealer, if for any reason Distributor believes that it may not be
able to recover unearned advances from Dealer.

c. With respect to any Fund that offers Shares for which
distribution plans have been adopted under Rule 12b-1 under the Investment
Company Act of 1940, as amended ("Rule 12b-1 Plans"), Distributor also is
authorized to pay the Dealer continuing distribution and/or service fees, as
specified in Schedule A and the relevant Fund Prospectus, with respect to Shares
of any such Fund, to the extent that Dealer provides distribution, marketing,
administrative and other services and activities regarding the promotion of such
Shares and the maintenance of related shareholder accounts.

d. In connection with the receipt of distribution fees and/or
service fees under Rule 12b-1 Plans applicable to Shares purchased by Dealer's
customers, Distributor directs Dealer to provide enhanced shareholder services
such as: processing purchase and redemption transactions; establishing
shareholder accounts; and providing certain information and assistance with
respect to the Funds. (Redemption levels of shareholder accounts assigned to
Dealer will be considered in evaluating Dealer's continued ability to receive
payments of distribution and/or service fees.) In addition, Dealer agrees to
support Distributor's marketing efforts by, among other things, granting
reasonable requests for visits to Dealer's office by Distributor's wholesalers
and marketing representatives, including all Funds covered by a Rule 12b-1 Plan
on Dealer's "approved," "preferred" or other similar product lists, if
applicable, and otherwise providing satisfactory product, marketing and sales
support. Further, Dealer agrees to provide Distributor with supporting
documentation concerning the shareholder services provided, as Distributor may
reasonably request from time to time.

e. All Rule 12b-1 Plan distribution and/or servicing fees shall be
based on the value of Shares attributable to Dealer's customers and eligible for
such payment, and shall be calculated on the basis of and at the rates set forth
in the compensation schedule then in effect. Without prior approval by a
majority of the outstanding shares of a Fund, the aggregate annual fees paid to
Dealer pursuant to any Rule 12b-1 Plan shall not exceed the amounts stated as
the "annual maximums" in each Fund's Prospectus, which amount shall be a
specified percent of the value of the Fund's net assets held in Dealer's
customers' accounts that are eligible for payment pursuant to the Rule 12b-1
Plans (determined in the same manner as each Fund uses to compute its net assets
as set forth in its then current Prospectus).

A-5

<PAGE>

f. The provisions of any Rule 12b-1 Plan between the Funds and the
Distributor shall control over this Agreement in the event of any inconsistency.
Each Rule 12b-1 Plan in effect on the date of this Agreement is described in the
relevant Fund's Prospectus. Dealer hereby acknowledges that all payments under
Rule 12b-1 Plans are subject to limitations contained in such Rule 12b-1 Plans
and may be varied or discontinued at any time.

5. REDEMPTIONS, REPURCHASES AND EXCHANGES

a. The Prospectus for each Fund describes the provisions whereby the
Fund, under all ordinary circumstances, will redeem Shares held by shareholders
on demand. Dealer agrees that it will not make any representations to
shareholders relating to the redemption of their Shares other than the
statements contained in the Prospectus and the underlying organizational
documents of the Fund, to which it refers, and that Dealer will pay as
redemption proceeds to shareholders the net asset value, minus any applicable
deferred sales charge or redemption fee, determined after receipt of the order
as discussed in the Prospectus.

b. Dealer agrees not to repurchase any Shares from its customers at
a price below that next quoted by the Fund for redemption or repurchase, I.E.,
at the net asset value of such Shares, less any applicable deferred sales
charge, or redemption fee, in accordance with the Fund's Prospectus. Dealer
shall, however, be permitted to sell Shares for the account of the customer or
record owner to the Funds at the repurchase price then currently in effect for
such Shares and may charge the customer or record owner a fair service fee or
commission for handling the transaction, provided Dealer discloses the fee or
commission to the customer or record owner. Nevertheless, Dealer agrees that it
shall not under any circumstances maintain a secondary market in such
repurchased Shares.

c. Dealer agrees that, with respect to a redemption order it has
made, if instructions in proper form, including any outstanding certificates,
are not received by Distributor within the time customary or the time required
by law, the redemption may be canceled forthwith without any responsibility or
liability on Distributor's part or on the part of any Fund, or Distributor, at
its option, may buy the shares redeemed on behalf of the Fund, in which latter
case Distributor may hold Dealer responsible for any loss, including loss of
profit, suffered by Distributor resulting from Distributor's failure to settle
the redemption.

d. Dealer agrees that it will comply with any restrictions and
limitations on exchanges described in each Fund's Prospectus, including any
restrictions or prohibitions relating to frequent purchases and redemptions
(i.e., market timing).

6. MULTIPLE CLASSES OF SHARES

Distributor may, from time to time, provide Dealer with written
guidelines or standards relating to the sale or distribution of Funds offering
multiple classes of Shares with different sales charges and distribution-related
operating expenses.

7. FUND INFORMATION

a. Dealer agrees that neither it nor any of its partners, directors,
officers, employees, and agents is authorized to give any information or make
any representations

A-6

<PAGE>

concerning Shares of any Fund except those contained in the Fund's then current
Prospectus or in materials provided by Distributor.

b. Distributor will supply to Dealer Prospectuses, reasonable
quantities of sales literature, sales bulletins, and additional sales
information as provided by Distributor. Dealer agrees to use only advertising
or sales material relating to the Funds that: (i) is supplied by Distributor, or
(ii) conforms to the requirements of all applicable laws or regulations of any
government or authorized agency having jurisdiction over the offering or sale of
Shares of the Funds and is approved in writing by Distributor in advance of its
use. Such approval may be withdrawn by Distributor in whole or in part upon
written notice to Dealer, and Dealer shall, upon receipt of such notice,
immediately discontinue the use of such sales literature, sales bulletins and
advertising. Dealer is not authorized to modify or translate any such materials
without Distributor's prior written consent.

8. SHARES

a. Distributor acts solely as agent for the Fund and Distributor
shall have no obligation or responsibility with respect to Dealer's right to
purchase or sell Shares in any state or jurisdiction.

b. Distributor shall periodically furnish Dealer with information
identifying the states or jurisdictions in which it is believed that all
necessary notice, registration or exemptive filings for Shares have been made
under applicable securities laws such that offers and sales of Shares may be
made in such states or jurisdictions. Distributor shall have no obligation to
make such notice, registration or exemptive filings with respect to Shares in
any state or jurisdiction.

c. Dealer agrees not to transact orders for Shares in states or
jurisdictions in which it has been informed that Shares may not be sold or in
which it and its personnel are not authorized to sell Shares.

d. Distributor shall have no responsibility, under the laws
regulating the sale of securities in the United States or any foreign
jurisdiction, with respect to the qualification or status of Dealer or Dealer's
personnel selling Fund Shares. Distributor shall not, in any event, be liable
or responsible for the issue, form, validity, enforceability and value of such
Shares or for any matter in connection therewith.

e. Dealer agrees that it will make no offers or sales of Shares in
any foreign jurisdiction, except with the express written consent of
Distributor.

9. INDEMNIFICATION

a. Dealer agrees to indemnify, defend and hold harmless Distributor
and the Funds and their predecessors, successors, and affiliates, each current
or former partner, officer, director, employee, shareholder or agent and each
person who controls or is controlled by Distributor from any and all losses,
claims, liabilities, costs, and expenses, including attorney fees, that may be
assessed against or suffered or incurred by any of them howsoever they arise,
and as they are incurred, which relate in any way to: (i) any alleged violation
of any statute or

A-7

<PAGE>

regulation (including without limitation the securities laws and regulations of
the United States or any state or foreign country) or any alleged tort or breach
of contract, related to the offer or sale by Dealer of Shares of the Funds
pursuant to this Agreement (except to the extent that Distributor's negligence
or failure to follow correct instructions received from Dealer is the cause of
such loss, claim, liability, cost or expense); (ii) any redemption or exchange
pursuant to instructions received from Dealer or its partners, affiliates,
officers, directors, employees or agents; or (iii) the breach by Dealer of any
of its representations and warranties specified herein or the Dealer's failure
to comply with the terms and conditions of this Agreement, whether or not such
action, failure, error, omission, misconduct or breach is committed by Dealer or
its predecessor, successor, or affiliate, each current or former partner,
officer, director, employee or agent and each person who controls or is
controlled by Dealer.

b. Distributor agrees to indemnify, defend and hold harmless Dealer
and its predecessors, successors and affiliates, each current or former partner,
officer, director, employee or agent, and each person who controls or is
controlled by Dealer from any and all losses, claims, liabilities, costs and
expenses, including attorney fees, that may be assessed against or suffered or
incurred by any of them which arise, and which relate to any untrue statement of
or omission to state a material fact contained in the Prospectus or any written
sales literature or other marketing materials provided by the Distributor to the
Dealer, required to be stated therein or necessary to make the statements
therein not misleading.

c. Dealer agrees to notify Distributor, within a reasonable time, of
any claim or complaint or any enforcement action or other proceeding with
respect to Shares offered hereunder against Dealer or its partners, affiliates,
officers, directors, employees or agents, or any person who controls Dealer,
within the meaning of Section 15 of the Securities Act of 1933, as amended.

d. Dealer further agrees promptly to send Distributor copies of
(i) any report filed pursuant to NASD Conduct Rule 3070, including, without
limitation quarterly reports filed pursuant to Rule 3070(c), (ii) reports filed
with any other self-regulatory organization in lieu of Rule 3070 reports
pursuant to Rule 3070(e) and (iii) amendments to Dealer's Form BD.

e. Each party's obligations under these indemnification provisions
shall survive any termination of this Agreement.

10. TERMINATION; AMENDMENT

a. In addition to the automatic termination of this Agreement
specified in Section 1.c. of this Agreement, each party to this Agreement may
unilaterally cancel its participation in this Agreement by giving thirty (30)
days prior written notice to the other party. In addition, each party to this
Agreement may terminate this Agreement immediately by giving written notice to
the other party of that other party's material breach of this Agreement. Such
notice shall be deemed to have been given and to be effective on the date on
which it was either delivered personally to the other party or any officer or
member thereof, or was mailed postpaid or delivered to a telegraph office for
transmission to the other party's designated person at the addresses shown
herein or in the most recent NASD Manual.

A-8

<PAGE>

b. This Agreement shall terminate immediately upon the appointment
of a Trustee under the Securities Investor Protection Act or any other act of
insolvency by Dealer.

c. The termination of this Agreement by any of the foregoing means
shall have no effect upon transactions entered into prior to the effective date
of termination and shall not relieve Dealer of its obligations, duties and
indemnities specified in this Agreement. A trade placed by Dealer subsequent to
its voluntary termination of this Agreement will not serve to reinstate the
Agreement. Reinstatement, except in the case of a temporary suspension of
Dealer, will only be effective upon written notification by Distributor.

d. This Agreement is not assignable or transferable and will
terminate automatically in the event of its "assignment," as defined in the
Investment Company Act of 1940, as amended and the rules, regulations and
interpretations thereunder. The Distributor may, however, transfer any of its
duties under this Agreement to any entity that controls or is under common
control with Distributor.

e. This Agreement may be amended by Distributor at any time by
written notice to Dealer. Dealer's placing of an order or accepting payment of
any kind after the effective date and receipt of notice of such amendment shall
constitute Dealer's acceptance of such amendment.

11. DISTRIBUTOR'S REPRESENTATIONS AND WARRANTIES

Distributor represents and warrants that:

a. It is a limited liability company duly organized and existing and
in good standing under the laws of the state of Delaware and is duly registered
or exempt from registration as a broker-dealer in all states and jurisdictions
in which it provides services as principal underwriter and distributor for the
Funds.

b. It is a member in good standing of the NASD.

c. It is empowered under applicable laws and by Distributor's
charter and by-laws to enter into this Agreement and perform all activities and
services of the Distributor provided for herein and that there are no
impediments, prior or existing, regulatory, self-regulatory, administrative,
civil or criminal matters affecting Distributor's ability to perform under this
Agreement.

d. All requisite actions have been taken to authorize Distributor to
enter into and perform this Agreement.

12. ADDITIONAL DEALER REPRESENTATIONS AND WARRANTIES

In addition to the representations and warranties found elsewhere in
this Agreement, Dealer represents and warrants that:

a. It is duly organized and existing and in good standing under the
laws of the state, commonwealth or other jurisdiction in which Dealer is
organized and that Dealer will

A-9

<PAGE>

not offer Shares of any Fund for sale in any state or jurisdiction where such
Shares may not be legally sold or where Dealer is not qualified to act as a
broker-dealer.

b. It is empowered under applicable laws and by Dealer's
organizational documents to enter into this Agreement and perform all activities
and services of the Dealer provided for herein and that there are no
impediments, prior or existing, regulatory, self-regulatory, administrative,
civil or criminal matters affecting Dealer's ability to perform under this
Agreement.

c. All requisite actions have been taken to authorize Dealer to
enter into and perform this Agreement.

d. It is not, at the time of the execution of this Agreement,
subject to any enforcement or other proceeding with respect to its activities
under state or federal securities laws, rules or regulations.

13. SETOFF; DISPUTE RESOLUTION; GOVERNING LAW

a. Should any of Dealer's concession accounts with Distributor have
a debit balance, Distributor shall be permitted to offset and recover the amount
owed from any other account Dealer has with Distributor, without notice or
demand to Dealer.
b. In the event of a dispute concerning any provision of this
Agreement, either party may require the dispute to be submitted to binding
arbitration under the commercial arbitration rules and procedures of the NASD.
The parties agree that, to the extent permitted under such arbitration rules and
procedures, the arbitrators selected shall be from the securities industry.
Judgment upon any arbitration award may be entered by any state or federal court
having jurisdiction.

c. This Agreement shall be governed and construed in accordance with
the laws of the state of New Jersey, not including any provision which would
require the general application of the law of another jurisdiction.

14. INVESTIGATIONS AND PROCEEDINGS

The parties to this Agreement agree to cooperate fully in any
securities regulatory investigation or proceeding or judicial proceeding with
respect to each's activities under this Agreement and promptly to notify the
other party of any such investigation or proceeding.

15. CAPTIONS

All captions used in this Agreement are for convenience only, are not
a party hereof, and are not to be used in construing or interpreting any aspect
hereof.

16. ENTIRE UNDERSTANDING

This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter contained herein and supersedes all previous
agreements. This

A-10

<PAGE>

Agreement shall be binding upon the parties hereto when signed by Dealer and
accepted by Distributor.

A-11

<PAGE>

17. SEVERABILITY

Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
If, however, any provision of this Agreement is held under applicable law to be
invalid, illegal, or unenforceable in any respect, such provision shall be
ineffective only to the extent of such invalidity, and the validity, legality
and enforceability of the remaining provisions of this Agreement shall not be
affected or impaired in any way.

18. ENTIRE AGREEMENT

This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter contained herein and supersedes all previous
agreements and/or understandings of the parties. This Agreement shall be
binding upon the parties hereto when signed by Dealer and accepted by
Distributor.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year set forth below.

PRUDENTIAL INVESTMENT MANAGEMENT
SERVICES LLC

By:________________________________________
Name:______________________________________
Title:_____________________________________

Date:______________________________________

DEALER: _________________________________

By: _________________________________
(Signature)
Name: _________________________________
Title: _________________________________
Address: _________________________________
_________________________________
_________________________________
Telephone:_________________________________
NASD CRD # ________________________________
Prudential Dealer #________________________
(Internal Use Only)

Date:______________________________________

A-12

<PAGE>

Exhibit 11(a)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 18 to the registration
statement on Form N-1A (the "Registration Statement") of our reports dated
August 18, 1998, relating to the financial statements and financial
highlights of Command Government Fund, Command Money Fund and Command
Tax-Free Fund, which appear in such Statement of Additional Information, and
to the incorporation by reference of our reports into the Prospectus which
constitutes part of this Registration Statement. We also consent to the
reference to us under the heading "Custodian, Transfer and Dividend
Disbursing Agent and Independent Accountants" in such Statement of Additional
Information and to the references to us under the heading "Financial
Highlights" in such Prospectus.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
August 28, 1998

<PAGE>

DCR
- -------------------------------------------------------------------------------
DUFF & PHELPS CREDIT RATING CO.
55 East Monroe Street
Chicago, Illinois 60603
(312) 368-3100
Fax (312) 368-3155

Exhibit 11(b)

CONSENT OF DUFF & PHELPS CREDIT RATING CO.

We hereby consent to the references to our name under the Caption
"Rating of Fund Shares" in the form of prospectus to be included in
Post-Effective Amendment No. 18 to the Registration Statements on Form N-1A
of Command Government Fund and Command Money Fund (the "Fund's") and to the
filing of this consent with the Securities and Exchange Commission as an
exhibit to such Post-Effective Amendment.

August 21, 1998 DUFF & PHELPS CREDIT RATING CO.

By: /s/ Robert N.M. Upton
------------------------------
Name: Robert N.M. Upton, CFA
Title: Vice President

<PAGE>

COMMAND GOVERNMENT FUND

Amended and Restated
Distribution and Service Plan

INTRODUCTION

The Distribution and Service Plan (the Plan) set forth below which is
designed to conform to the requirements of Rule 12b-1 under the Investment
Company Act of 1940 (the Investment Company Act) and Rule 2830 of the Conduct
Rules of the National Association of Securities Dealers, Inc. (NASD) has been
adopted by Command Government Fund (the Fund) and by Prudential Investment
Management Services LLC, the Fund's distributor (the Distributor).

The Fund has entered into a distribution agreement pursuant to which the
Fund will employ the Distributor to distribute shares issued by the Fund
(shares). Under the Plan, the Fund intends to pay to the Distributor, as
compensation for its services, a distribution and service fee with respect to
shares.

A majority of the Board of Trustees of the Fund, including a majority of
those Trustees who are not "interested persons" of the Fund (as defined in the
Investment Company Act) and who have no direct or indirect financial interest in
the operation of this Plan or any agreements related to it (the Rule 12b-1
Trustees), have determined by votes cast in person at a meeting called for the
purpose of voting on this Plan that there is a reasonable likelihood that
adoption and continuation of this Plan will benefit the Fund and its
shareholders. Expenditures under this Plan by the Fund for Distribution
Activities (defined below) are primarily intended to result in the sale of
shares of the Fund within the meaning of paragraph (a)(2) of Rule 12b-1
promulgated under the

1
<PAGE>

Investment Company Act.

The purpose of the Plan is to create incentives to the Distributor and/or
other qualified broker-dealers and their account executives to provide
distribution assistance to their customers who are investors in the Fund, to
defray the costs and expenses associated with the preparation, printing and
distribution of prospectuses and sales literature and other promotional and
distribution activities and to provide for the servicing and maintenance of
shareholder accounts.

THE PLAN

The material aspects of the Plan are as follows:

1. DISTRIBUTION ACTIVITIES

The Fund shall engage the Distributor to distribute shares of the Fund and
to service shareholder accounts using all of the facilities of the Distributor's
distribution network, including sales personnel and branch office and central
support systems, and also using such other qualified broker-dealers and
financial institutions as the Distributor may select, including Prudential
Securities Incorporated (Prudential Securities) and Pruco Securities Corporation
(Prusec). Services provided and activities undertaken to distribute shares of
the Fund are referred to herein as "Distribution Activities."

2. PAYMENT OF SERVICE FEE

The Fund shall reimburse the Distributor for costs incurred by it in
providing personal service and/or maintaining shareholder accounts at a rate not
to exceed .125 of 1% per annum of the average daily net assets of the shares
(service fee). The Fund shall calculate and accrue daily amounts reimbursable
by the shares of the Fund

2
<PAGE>

hereunder and shall pay such amounts monthly or at such other intervals as the
Board of Trustees may determine. Costs of the Distributor subject to
reimbursement hereunder include account servicing fees and indirect and overhead
costs associated with providing personal service and/or maintaining shareholder
accounts.

3. PAYMENT FOR DISTRIBUTION ACTIVITIES

The Fund shall reimburse the Distributor for costs incurred by it in
performing Distribution Activities at a rate which, together with the service
fee (described in Section 2 hereof), shall not exceed .125 of 1% per annum
of the average daily net assets of the shares of the Fund. The Fund shall
calculate and accrue daily amounts reimbursable by the shares of the Fund
hereunder and shall pay such amounts monthly or at such other intervals as
the Board of Trustees may determine.

Costs of the Distributor subject to reimbursement hereunder are costs of
performing Distribution Activities and may include, among others:

(a) amounts paid to Prudential Securities or Prusec in
reimbursement of costs incurred by Prudential Securities or
Prusec in performing services under a dealer agreement
between Prudential Securities or Prusec and the Distributor
for sale of shares of the Fund, including sales commissions,
trailer commissions paid to, or on account of, account
executives or agents and indirect and overhead costs
associated with Distribution Activities, including central
office and branch expenses;

(b) advertising for the Fund in various forms through any
available medium, including the cost of printing and mailing
Fund prospectuses, statements of additional information and
periodic financial reports and sales literature to persons
other than current shareholders of the Fund; and

(c) sales commissions (including trailer commissions) paid to,
or on account of, broker-dealers and financial institutions
(other than Prudential Securities or Prusec) which have
entered into dealer agreements with the Distributor with
respect to

3
<PAGE>

shares of the Fund.

4. QUARTERLY REPORTS; ADDITIONAL INFORMATION

An appropriate officer of the Fund will provide to the Board of Trustees of
the Fund for review, at least quarterly, a written report specifying in
reasonable detail the amounts expended for Distribution Activities (including
payment of the service fee) and the purposes for which such expenditures were
made in compliance with the requirements of Rule 12b-1. The Distributor will
provide to the Board of Trustees of the Fund such additional information as the
Board shall from time to time reasonably request, including information about
Distribution Activities undertaken or to be undertaken by the Distributor.

The Distributor will inform the Board of Trustees of the Fund of the
commissions and account servicing fees to be paid by the Distributor to account
executives of the Distributor and to broker-dealers and financial institutions
which have dealer agreements with the Distributor.

5. EFFECTIVENESS; CONTINUATION

The Plan shall not take effect until it has been approved by a vote of a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of the shares of the Fund.

If approved by a vote of a majority of the outstanding voting securities of
the shares of the Fund, the Plan shall, unless earlier terminated in accordance
with its terms, continue in full force and effect thereafter for so long as such
continuance is specifically approved at least annually by a majority of the
Board of Trustees of the Fund and a majority of the Rule 12b-1 Trustees by votes
cast in person

4
<PAGE>

at a meeting called for the purpose of voting on the continuation of the Plan.

6. TERMINATION

This Plan may be terminated at any time, without the payment of any
penalty, by a majority of the Rule 12b-1 Trustees or by vote of a majority of
the outstanding voting securities (as defined in the Investment Company Act) of
the shares of the Fund, or by the Distributor, on sixty (60) days' written
notice to the other party. This Plan shall automatically terminate in the event
of its assignment.

7. AMENDMENTS

The Plan may not be amended to change the combined service and distribution
fees to be paid as provided for in Sections 2 and 3 hereof so as to increase
materially the amounts payable under this Plan unless such amendment shall be
approved by the vote of a majority of the outstanding voting securities (as
defined in the Investment Company Act) of the shares of the Fund. All material
amendments of the Plan shall be approved by a majority of the Board of Trustees
of the Fund and a majority of the Rule 12b-1 Trustees by votes cast in person at
a meeting called for the purpose of voting on the Plan.

8. RULE 12b-1 TRUSTEES

While the Plan is in effect, the selection and nomination of the Trustees
shall be committed to the discretion of the Rule 12b-1 Trustees.

5
<PAGE>

9. RECORDS

The Fund shall preserve copies of the Plan and any related agreements and
all reports made pursuant to Section 4 hereof, for a period of not less than six
years from the date of effectiveness of the Plan, such agreements or reports,
and for at least the first two years in an easily accessible place.

Amended: June 1, 1998

<PAGE>
<ARTICLE> 6
<CIK> 0000355349
<NAME> COMMAND GOVERNMENT FUND

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