<PAGE>
Prudential Securities
COMMAND Account
- ---------------------
COMMAND Money Fund
COMMAND Government Fund
COMMAND Tax-Free Fund
SEMI ANNUAL REPORT
December 31, 1998
(LOGO)
<PAGE>
Letter to Shareholders
February 4, 1999
Dear Shareholder:
Money market yields declined sharply during the six months
ended December
31, 1998 as overseas economic woes caused financial markets
to become
increasingly volatile. Consequently, the Federal Reserve
eased monetary
policy on three separate occasions. Despite the drop in
interest rates
and a dearth of municipal money market securities, the
COMMAND Money,
COMMAND Government and COMMAND Tax-Free funds provided
competitive
yields during the first half of their fiscal year. For the
seven-day
period ended December 31, 1998, the COMMAND Tax-Free Fund
provided
income equivalent to a 5.17% yield for investors in the
39.6% tax bracket.
<TABLE>
FUND FACTS
As of 12/31/98
<CAPTION>
7 Day Net Asset
Weighted Total Net
Current Yld. Value (NAV)
Avg. Mat. (WAM) Assets (mil.)
<S> <C> <C>
<C> <C>
Command Money 4.80% $1.00
67 days $ 11,516.94
IBC Financial Data 4.53% $1.00
61 days N/A
Money Fund Avg.
(All Taxable)1
Command 4.68% $1.00
43 days $ 715.54
Government
IBC Financial Data 4.39% $1.00
51 days N/A
Total Government
Universe2
Command 3.12% $1.00
38 days $ 1,381.27
Tax-Free3
IBC Financial Data 2.95% $1.00
44 days N/A
General Purpose Tax-Free
Money Funds4
</TABLE>
Note: Yields will fluctuate from time to time and past
performance is
not indicative of future results. An investment in the Funds
is not
insured or guaranteed by the Federal Deposit Insurance
Corporation
or any other government agency. Although the Funds seek to
preserve
the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Funds.
1. This is the average seven-day current yield, NAV and WAM
of all
funds in the International Business Communications Financial
Data
all taxable money market fund category for December 29,
1998,
which was the closest date to our reporting period.
2. This is the average seven-day current yield, NAV and WAM
of all
funds in IBC Financial Data's total government universe fund
category
for December 29, 1998, which was the closest date to our
reporting period.
3. Some investors may be subject to the federal alternative
minimum tax.
4. This is the average seven-day current yield, NAV and WAM
of all
funds in IBC Financial Data's stockbroker & general purpose
tax-free
money fund category for December 29, 1998, which was the
closest date
to our reporting period.
-1-
<PAGE>
Fund Objectives.
The COMMAND Money Fund seeks high current income,
preservation of
capital and maintenance of liquidity by investing in a
diversified
portfolio of money market instruments maturing in 13 months
or less.
The COMMAND Government Fund seeks high current income,
preservation
of capital and maintenance of liquidity by investing in a
portfolio
of U.S. government securities maturing in 13 months
or less.
The COMMAND Tax-Free Fund seeks high current income that is
exempt
from federal income taxes, consistent with the maintenance
of
liquidity and preservation of capital. The Fund invests in a
diversified portfolio of short-term, tax-exempt
securities with maturities of 13 months or less that are
issued
by states, municipalities and their agencies (or
authorities).
Some securities may be subject to the federal alternative
minimum
tax (AMT).
There can be no assurance that any of the
Funds will achieve their respective investment objectives.
Strategy Session.
Financial Markets Grew Increasingly Volatile.
When the six-month period began, the COMMAND Money Fund's
weighted
average maturity (WAM) was slightly longer than that
of its competition. The WAM takes into account the maturity
of each security held in a portfolio and is the measurement
tool
that determines a portfolio's sensitivity to changes in
interest
rates. The Fund's WAM began to shorten as continued brisk
U.S. economic growth led the portfolio manager to believe
short-term interest rates would eventually head higher.
Shortening the WAM would allow the Fund quick access to cash
to purchase any higher yielding money market securities that
became
available after rates rose. Meanwhile, the COMMAND
Government
Fund's WAM remained largely in line with that of its
competition
as the first half of our fiscal year began.
In August, a financial crisis spread from Asia to Russia and
Latin
America. Investors reacted by purchasing safe securities
such as
U.S. Treasury bills and avoiding assets that carried greater
credit
risk. This trend caused Treasury bills to become overvalued
compared
with other money market securities. The COMMAND Government
Fund's
WAM was lengthened through purchases of federal government
agency
securities that had cheapened relative to Treasuries. By
contrast,
the COMMAND Money Fund's WAM continued to shorten because
its
portfolio manager avoided buying longer-term money market
securities
as increasingly volatile conditions impaired market
liquidity. That
is, it became difficult to sell securities at a reasonable
price.
-2-
<PAGE>
Federal Reserve Calmed Financial Markets.
Nevertheless, as the turmoil in global financial markets
deepened
in late September, many investors continued to buy
Treasuries and
sell other types of securities. Had this reluctance to buy
the
stocks and bonds of corporations continued, the U.S economic
expansion
could have been endangered. Therefore, the Federal Reserve
took
steps on September 29 to calm financial markets and
encourage
economic activity. It cut the federal funds rate by a
quarter
percentage point to 5.25%. That move was followed by a
reduction of the same magnitude on October 15 and November
17, leaving the key rate at 4.75%. When it became clear
that the Federal Reserve would push rates lower, the COMMAND
Money Fund extended its WAM to be more in line with its
competition.
The Supply of Munis Declined.
Lengthening the COMMAND Tax-Free Fund's WAM proved to be
challenging because there were fewer longer-term municipal
money market securities available. For example, the volume
of newly issued tax-exempt notes in 1998 was down by 25%
from
1997, according to Municipal Market Data. Tax-exempt notes
are generally securities that mature in 12 months or less.
State and local governments issued fewer notes as strong
economic growth decreased their short-term
borrowing needs. Some also preferred to issue longer-term
municipal bonds instead of notes in order to lock in the
unusually low yields for a lengthier period of time.
Consequently, short-term tax-exempt yields began to
decline prior to the reductions in the federal funds rate.
Yields on municipal money market securities also fell in
July as investors quickly reinvested money they had received
from bond maturities, coupon payments and bonds that were
retired early. Therefore, the impact of the federal funds
rate cuts in the fall were less dramatic on the municipal
money market.
What Went Well.
We Went Bargain Hunting.
As you remember, the flight-to-quality trend caused yields
of
federal government agency securities to reach bargain levels
relative to U.S. Treasury bills. This was viewed as a
golden
opportunity to shift some of the COMMAND Government Fund's
assets from lower-yielding repurchase agreements into
attractively
priced federal government agency securities. These
purchases
positioned the Fund's WAM longer than its competition for
most
of the six-month period.
Although the three cuts in the federal funds rate had pushed
taxable money market yields sharply lower, companies anxious
to
borrow money
-3-
<PAGE>
over year end still paid handsomely to do so in
early December. In fact, throughout that month money market
securities of corporations and banks provided yields that
were
very attractive relative to the federal funds rate. We
believed
these yields would fall to more normal levels in early 1999.
Therefore, we went bargain hunting in December and bought
variable-rate securities as well as securities maturing in
two months, three months and one-year. These purchases
helped
position the COMMAND Money Fund's WAM longer than that of
its competition late in the year.
As the year drew to a close, yields on short-term municipal
money
market securities climbed as they were sold to raise money
to
meet shareholder redemptions. The COMMAND Tax-Free Fund,
which
was heavily invested in these securities, benefited as their
yields rose.
And Not So Well.
Flight To Quality Drove Down Rates.
In hindsight, the COMMAND Government Fund should have more
aggressively purchased the higher yielding federal
government
agency securities. Had this occurred, its performance would
have been even stronger. In 1999, yields on federal
government
agency securities have fallen more in line with yields on
comparable Treasuries, confirming that the attractive yields
available last year were indeed a market aberration.
With regard to the COMMAND Money Fund, we were too
conservative,
allowing its WAM to shorten dramatically compared to that
of its
competition from August through mid-September. We adopted
this
strategy because heightened volatility in the financial
markets
had temporarily impaired liquidity. Our concerns led us to
pass up several buying opportunities, which detracted from
the Fund's performance.
Ideally, we would have preferred the COMMAND Tax-Free Fund's
WAM to be longer than it was before the first federal funds
rate reduction. A longer WAM would have allowed the Fund to
lock in higher yields, helping to insulate the Fund from the
sharp drop in tax-exempt money market yields that typically
occurs in January.
-4-
<PAGE>
Looking Ahead.
The U.S. economy remains surprisingly resilient. Therefore,
we do not expect another federal funds rate reduction in the
near future. For the longer term, however, the absence of
inflationary pressures in the United States and the spread
of global financial turmoil to Latin America suggest the
next major change in monetary policy will likely be a
short-term rate cut.
With this in mind, we plan to keep the Funds' WAMs longer
than
those of their competition by purchasing term securities "on
weakness" or when yields temporarily rise. Maintaining a
longer
WAM in the COMMAND Tax-Free Fund could still prove
challenging, however, because we expect the supply of
municipal
money market securities to remain very limited until later
in
the first quarter.
Sincerely,
Michelle Errico Gonnella Bernard D. Whitsett, II
Richard S. Lynes
Portfolio Manager Portfolio Manager
Portfolio Manager
COMMAND Money Fund COMMAND Government Fund
COMMAND Tax-Free Fund
Brian M. Storms
President
-5-
<PAGE>
COMMAND MONEY FUND Portfolio of
Investments
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Bank Notes--9.1%
Comerica Bank N.A.
$ 50,000(a) 5.42438%, 1/19/99........ $ 49,983,898
FCC National Bank
65,000 5.19%, 1/15/99........... 65,000,000
125,000 4.885%, 12/16/99......... 124,924,997
66,000 4.90%, 12/16/99.......... 65,969,537
First Union National Bank
86,000 5.59%, 2/19/99........... 86,000,000
Key Bank N.A.
16,000(a) 5.33%, 1/13/99........... 16,000,294
38,000(a) 4.67%, 1/29/99........... 37,998,452
122,000(a) 4.65%, 3/18/99........... 121,985,279
Nationsbank N.A.
376,000 5.05%, 2/16/99........... 376,000,000
108,000 4.90%, 12/14/99.......... 107,950,438
---------------
1,051,812,895
---------------
Certificates Of Deposit - Domestic--1.0%
Chase Manhattan Bank
115,000 5.25%, 2/8/99............ 115,000,000
---------------
Certificates Of Deposit - Eurodollar--2.4%
Abbey National Treasury
Services PLC
100,000 5.75%, 3/5/99............ 100,000,000
Deutsche Bank
175,000 5.20%, 2/26/99........... 175,000,000
---------------
275,000,000
---------------
Certificates Of Deposit - Yankee--15.6%
ABN-Amro Bank N.A.
131,000 4.88%, 12/22/99.......... 130,913,895
100,000 4.92%, 12/23/99.......... 99,952,927
Barclays Bank PLC
191,000(a) 5.486%, 1/4/99........... 190,937,137
50,000 5.56%, 2/25/99........... 49,995,664
Bayerische Hypotheken und
Vereinsbank AG
$ 15,000 5.675%, 3/3/99........... $ 14,998,919
Bayerische Landesbank
Girozentrale
50,000(a) 5.494%, 1/30/99.......... 49,980,274
195,000 4.885%, 12/20/99......... 194,881,685
Canadian Imperial Bank of
Commerce
5,000 5.12%, 1/19/99........... 5,000,000
114,000 5.55%, 2/10/99........... 113,994,007
54,000 5.705%, 3/30/99.......... 53,988,868
Credit Agricole Indosuez
50,000 5.66%, 3/23/99........... 49,994,683
50,000 5.74%, 4/26/99........... 49,990,952
Deutsche Bank
150,000 5.54%, 2/24/99........... 149,989,353
25,000 5.57%, 2/26/99........... 24,998,160
47,000 5.62%, 2/26/99........... 46,996,543
47,000 5.63%, 2/26/99........... 46,993,781
50,000 5.66%, 3/3/99............ 49,995,996
National Bank of Canada
96,000 5.23%, 3/2/99............ 96,000,000
50,000 5.19%, 5/7/99............ 50,000,000
Rabobank Nederland N.V.
92,000 5.50%, 2/9/99............ 91,992,454
Royal Bank of Canada
118,000(a) 5.467%, 1/6/99........... 117,952,424
19,000 5.645%, 3/9/99........... 18,994,646
100,000 4.92%, 12/24/99.......... 99,952,795
---------------
1,798,495,163
---------------
Commercial Paper--55.7%
Abbey National North
America Corp.
100,000 5.49%, 2/4/99............ 99,481,500
109,000 5.229%, 2/9/99........... 108,382,542
</TABLE>
-6-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Commercial Paper--(cont'd.)
Aetna Services, Inc.
$ 4,000 5.60%, 1/12/99........... $ 3,993,156
31,000 5.50%, 1/15/99........... 30,933,694+
American General Corp.
30,000 5.11%, 3/8/99............ 29,718,950
American General Finance
Corp.
48,188 5.20%, 2/9/99............ 47,916,541
31,000 5.22%, 2/17/99........... 30,788,735
American Honda Finance
Corp.
28,990 5.25%, 2/11/99........... 28,816,664
Aon Corp.
15,000 5.30%, 2/23/99........... 14,882,958
20,000 5.38%, 2/26/99........... 19,832,622
Associates Corp. of North
America
22,846 5.03%, 2/2/99............ 22,743,853
58,000 5.22%, 2/16/99........... 57,613,140
100,000 5.11%, 3/8/99............ 99,063,167
Associates First Capital
Corp.
77,000 5.20%, 2/10/99........... 76,555,111
50,000 5.29%, 2/12/99........... 49,691,417
50,000 5.16%, 2/16/99........... 49,670,333
Bank of Montreal
290,000 5.122%, 2/18/99.......... 288,019,493
BBL North America Funding
Corp.
15,211 5.21%, 1/20/99........... 15,169,174
120,000 5.09%, 1/28/99........... 119,541,900
29,910 5.33%, 1/29/99........... 29,786,006
Cargill, Inc.
25,000 5.12%, 3/12/99........... 24,751,111
Centric Capital Corp.
4,694 5.10%, 1/29/99........... 4,675,380
Chase Manhattan Corp.
211,292 5.22%, 2/22/99........... 209,698,858
Chrysler Financial
Company LLC
10,397 5.09%, 1/29/99........... 10,355,839
97,600 5.25%, 2/22/99........... 96,859,867
125,000 5.11%, 3/8/99............ 123,828,958
Coca-Cola Enterprises,
Inc.
$ 14,800 5.28%, 1/25/99........... $ 14,747,904
Commercial Credit Co.
50,000 5.17%, 1/28/99........... 49,806,125
Cregem North America,
Inc.
50,000 5.12%, 3/18/99........... 49,459,556
80,000 5.12%, 3/19/99........... 79,123,911
Daimler Chrysler North
America Holdings, Inc.
10,274 5.22%, 2/23/99........... 10,195,044
80,894 5.25%, 2/23/99........... 80,268,757
Enterprise Funding Corp.
39,482 5.30%, 1/28/99........... 39,325,059
Falcon Asset
Securitization Corp.
9,345 5.43%, 2/17/99........... 9,278,752
First Chicago Financial
Corp.
55,000 5.22%, 2/19/99........... 54,609,225
15,000 5.24%, 2/25/99........... 14,879,917
25,000 4.92%, 5/27/99........... 24,501,167
Ford Motor Credit Co.
35,000 5.3975%, 1/14/99......... 35,000,000
76,000 5.20%, 2/19/99........... 75,462,089
76,945 5.10%, 3/8/99............ 76,225,564
General Electric Capital
Corp.
202,996 5.16%, 1/29/99........... 202,181,309
212,000 5.10%, 2/19/99........... 210,528,367
124,064 5.11%, 3/8/99............ 122,901,727
911 4.88%, 3/10/99........... 902,603
10,000 4.88%, 6/11/99........... 9,781,756
General Motors Acceptance
Corp.
461,000 5.06%, 1/29/99........... 459,185,709
67,000 5.12%, 3/19/99........... 66,266,276
ING America Insurance Holdings, Inc.
10,000 5.49%, 1/27/99........... 9,960,350
23,622 5.13%, 2/4/99............ 23,507,551
Johnson Controls, Inc.
100,000 5.42%, 1/19/99........... 99,729,000
Merrill Lynch & Co., Inc.
10,347 5.50%, 2/25/99........... 10,260,056
200,000 5.14%, 3/19/99........... 197,801,222
</TABLE>
-7-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Commercial Paper--(cont'd.)
Monte Rosa Capital Corp.
$ 38,716 5.40%, 1/28/99........... $ 38,559,200
16,500 5.28%, 2/17/99........... 16,386,260
51,000 5.43%, 2/19/99........... 50,623,067
221,000 5.46%, 2/19/99........... 219,357,602
19,994 5.28%, 2/22/99........... 19,841,512
NationsBank Corp.
56,000 5.50%, 2/12/99........... 55,640,667
Nationwide Building
Society
75,000 5.11%, 3/9/99............ 74,286,729
Nordbanken North America,
Inc.
180,000 5.20%, 1/15/99........... 179,636,000
200,000 5.10%, 2/17/99........... 198,668,333
Norwest Financial, Inc.
7,000 5.23%, 3/4/99............ 6,936,949
Old Line Funding Corp.
125,000 5.40%, 1/14/99........... 124,756,250
94,750 5.40%, 1/15/99........... 94,551,025
6,266 5.37%, 1/29/99........... 6,239,829
PNC Funding Corp.
20,000 5.20%, 2/22/99........... 19,849,778
Preferred Receivables
Funding Corp.
22,000 5.40%, 2/16/99........... 21,848,200
Safeco Corp.
65,881 5.08%, 4/19/99........... 64,876,974
Salomon Smith Barney
Holdings, Inc.
122,200 5.23%, 1/15/99........... 121,951,459
63,300 5.31%, 2/10/99........... 62,926,530
50,000 5.31%, 2/16/99........... 49,660,750
Sears Roebuck Acceptance
Corp.
50,000 5.25%, 2/23/99........... 49,613,542
10,000 5.25%, 2/24/99........... 9,921,250
Thunder Bay Funding, Inc.
26,655 5.65%, 1/15/99........... 26,596,433
Toronto Dominion Holdings
(U.S.A.), Inc.
$ 29,516 4.90%, 6/4/99............ $ 28,897,312
400,000 4.90%, 6/8/99............ 391,397,778
Triple A One Funding
Corp.
5,251 5.65%, 1/12/99........... 5,241,935
UBS Finance (Delaware),
Inc.
182,243 5.219%, 1/15/99.......... 181,873,118
76,026 5.073%, 1/28/99.......... 75,736,740
150,000 4.949%, 3/1/99........... 148,783,371
Unifunding, Inc.
52,000 5.23%, 2/5/99............ 51,735,594
150,000 5.10%, 2/26/99........... 148,810,000
Windmill Funding Corp.
40,000 5.60%, 1/15/99........... 39,912,889
24,488 5.42%, 1/19/99........... 24,421,638
63,500 5.40%, 1/28/99........... 63,242,825
Wood Street Funding Corp.
10,000 5.45%, 2/8/99............ 9,942,472
12,641 5.40%, 2/12/99........... 12,561,362
---------------
6,413,945,338
---------------
Loan Participations--1.0%
Baker Hughes, Inc.
115,000(b) 5.70%, 1/29/99
(cost $115,000,000;
purchased 12/18/98).... 115,000,000
---------------
Other Corporate Obligations--13.8%
Abbey National Treasury
Services PLC
22,000(a) 5.50%, 2/5/99............ 21,998,363
75,000(a) 5.72%, 6/11/99........... 74,974,657
Bishops Gate Residential
Mortgage Trust 1998-2
78,000(a) 5.747%, 1/20/99.......... 78,000,000
General Motors Acceptance
Corp.
31,000(a) 5.199%, 2/2/99........... 30,999,211
Goldman, Sachs Group,
L.P.
268,000(a)(b) 5.875%, 1/19/99
(cost $268,000,000;
purchased 6/26/98)..... 268,000,000
</TABLE>
-8-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND MONEY FUND
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Other Corporate Obligations--(cont'd.)
John Deere Capital Corp.
$ 54,000(a) 5.247%, 2/9/99........... $ 53,996,538
Liquid Asset Backed
Securities Trust 1998-1
52,635(a) 5.624%, 1/26/99.......... 52,635,138
Restructured Asset
Securities
245,000(a) 5.611%, 1/4/99........... 245,000,000
23,000(a)(b) 5.629%, 1/29/99
(cost $23,000,000;
purchased 4/3/98)...... 23,000,000
221,000(a) 5.675%, 2/10/99.......... 221,000,000
Short Term Repackaged
Asset Trust 1998-E
148,000(a)(b) 5.551%, 1/19/99
(cost $148,000,000;
purchased 9/23/98)..... 148,000,000
Strategic Money Market
Trust 1998-A
286,000(a) 5.320%, 3/16/99.......... 286,000,000
Strategic Money Market
Trust 1998-B
88,000(a) 5.592%, 1/5/99........... 88,000,000
---------------
1,591,603,907
---------------
Total Investments--98.6%
(amortized cost
$11,360,857,303(c)).... 11,360,857,303
Other assets in excess of
liabilities--1.4%...... 156,079,287
---------------
Net Assets--100%......... $11,516,936,590
---------------
---------------
</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 $554,000,000. The aggregate value of
$554,000,000 is
approximately 4.8% of net assets.
(c) The cost for federal income tax purposes is
substantially the same as for
financial reporting purposes.
The industry classification of portfolio holdings and other
assets in excess of
liabilities shown as a percentage of net assets as of
December 31, 1998 was as
follows:
Commercial Banks........................... 55.7%
Motor Vehicle Parts........................ 9.2
Asset Backed Securities.................... 9.1
Security Brokers & Dealers................. 6.2
Short-Term Business Credit................. 4.7
Personal Credit Institutions............... 4.3
Bank Holding Companies - Domestic.......... 4.2
Oil Construction Equipment................. 1.0
Regulating Controls........................ 0.9
Accidental & Health Insurance.............. 0.9
Fire & Marine Casualty Insurance........... 0.8
Department Stores.......................... 0.5
Farm Machinery & Equipment................. 0.5
Life Insurance............................. 0.3
Grain Mills Products....................... 0.2
Beverages.................................. 0.1
-----
98.6
Other assets in excess of liabilities...... 1.4
-----
100.0%
-----
-----
-9-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND MONEY FUND
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
Assets
December 31, 1998
- -----------------
<S>
<C>
Investments, at amortized cost which approximates market
value........................ $11,360,857,303
Receivable for Fund shares
sold.......................................................
364,034,201
Interest
receivable..................................................
................. 72,729,606
Prepaid
expenses....................................................
.................. 168,360
- -----------------
Total
assets......................................................
.................. 11,797,789,470
- -----------------
Liabilities
Payable for Fund shares
repurchased.................................................
.. 275,554,195
Management fee
payable.....................................................
........... 3,720,522
Accrued expenses and other
liabilities................................................
883,027
Distribution fee
payable.....................................................
......... 695,136
- -----------------
Total
liabilities.................................................
.................. 280,852,880
- -----------------
Net
Assets......................................................
...................... $11,516,936,590
- -----------------
- -----------------
Net assets were comprised of:
Shares of beneficial interest, at
par............................................... $
115,169,366
Paid-in capital in excess of
par....................................................
11,401,767,224
- -----------------
Net assets, December 31,
1998........................................................
. $11,516,936,590
- -----------------
- -----------------
Net asset value, offering price and redemption price per
share ($11,516,936,590 /
11,516,936,590 shares of beneficial interest ($.01 par
value) issued and
outstanding)................................................
........................ $1.00
- -----------------
- -----------------
</TABLE>
See Notes to Financial Statements appearing on page 29.
-10-
<PAGE>
COMMAND MONEY FUND
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
Net Investment Income 1998
<S> <C>
Income
Interest............................. $ 312,762,854
------------------
Expenses
Management fee....................... 20,492,481
Distribution fee..................... 7,093,694
Transfer agent's fees and expenses... 1,693,000
Registration fees.................... 303,000
Reports to shareholders.............. 161,000
Custodian's fees and expenses........ 134,000
Insurance expense.................... 74,000
Trustees' fees....................... 25,000
Audit fee............................ 15,000
Legal fees and expenses.............. 10,000
Miscellaneous........................ 41,567
------------------
Total expenses..................... 30,042,742
------------------
Net investment income.................. 282,720,112
------------------
Net Increase in Net Assets
Resulting from Operations.............. $ 282,720,112
------------------
------------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
COMMAND MONEY FUND
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) December 31, June 30,
in Net Assets 1998 1998
<S> <C> <C>
Operations
Net investment
income........... $ 282,720,112 $ 411,627,966
Net realized gain
on investment
transactions..... -- 76,865
---------------- ----------------
Net increase in net
assets resulting
from
operations....... 282,720,112 411,704,831
---------------- ----------------
Dividends and
distributions to
shareholders (Note
1)................... (282,720,112) (411,704,831)
---------------- ----------------
Fund share
transactions (at $1
per share)
Net proceeds from
shares
subscribed....... 26,423,451,941 40,246,065,983
Net asset value of
shares issued in
reinvestment of
dividends and
distributions.... 282,720,112 411,704,831
Cost of shares
reacquired....... (24,279,524,334) (38,197,384,515)
---------------- ----------------
Net increase in net
assets from Fund
share
transactions..... 2,426,647,719 2,460,386,299
---------------- ----------------
Total increase....... 2,426,647,719 2,460,386,299
Net Assets
Beginning of
period............... 9,090,288,871 6,629,902,572
---------------- ----------------
End of period........ $ 11,516,936,590 $ 9,090,288,871
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
-11-
<PAGE>
COMMAND MONEY FUND
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended June 30,
December 31,
- ------------------------------------------------------------
- ----------
1998
1998 1997 1996 1995
1994
------------
- ---------- ---------- ---------- ----------
- ----------
<S> <C>
<C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period... $ 1.000
$ 1.000 $ 1.000 $ 1.000 $ 1.000
$ 1.000
Net investment income and net realized
gains................................ 0.025
0.052 0.049 0.052 0.050
0.029
Dividends and distributions to
shareholders......................... (0.025)
(0.052) (0.049) (0.052) (0.050)
(0.029)
------------
- ---------- ---------- ---------- ----------
- ----------
Net asset value, end of period......... $ 1.000
$ 1.000 $ 1.000 $ 1.000 $ 1.000
$ 1.000
------------
- ---------- ---------- ---------- ----------
- ----------
------------
- ---------- ---------- ---------- ----------
- ----------
TOTAL RETURN(b):....................... 2.54%
5.31% 5.06% 5.30% 5.13%
2.98%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........ $ 11,516,937
$9,090,289 $6,629,903 $5,309,842 $4,055,700
$2,448,201
Average net assets (000)............... $ 11,257,384
$7,936,219 $6,078,525 $4,896,794 $3,072,284
$2,570,195
Ratios to average net assets:
Expenses, including distribution
fees................................. .53%(a)
.54% .57% .58% .59%
.59%
Expenses, excluding distribution
fees................................. .40%(a)
.42% .44% .46% .47%
.47%
Net investment income................ 4.98%(a)
5.19% 4.97% 5.15% 5.09%
2.92%
</TABLE>
- ---------------
(a) Annualized.
(b) Total return is calculated assuming a purchase of shares
on the first day
and a sale on the last day of each period reported and
includes reinvestment
of dividends and distributions. Total returns for less
than a full year are
not annualized.
See Notes to Financial Statements appearing on page 29.
-12-
<PAGE>
COMMAND GOVERNMENT FUND Portfolio of
Investments
December 31,
1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
U.S. Government Agencies--85.0%
Federal Farm Credit Bank--0.2%
$ 1,000 5.32%, 1/4/99............. $ 999,983
---------------
Federal Home Loan Bank--37.4%
92,000(a) 5.38%, 1/8/99............. 91,968,195
13,000 4.78%, 1/28/99............ 12,953,395
27,000 4.90%, 1/29/99............ 26,897,100
33,500(a) 4.80%, 2/9/99............. 33,480,356
28,000(a) 5.088%, 2/19/99........... 27,989,638
1,000 5.595%, 3/10/99........... 1,000,870
10,000 5.58%, 3/11/99............ 10,000,323
5,000 5.56%, 3/25/99............ 4,998,936
8,000 5.50%, 3/26/99............ 7,997,351
12,000 5.54%, 4/7/99............. 11,993,128
15,000 5.54%, 7/13/99............ 14,995,381
3,000 5.25%, 10/14/99........... 3,000,000
20,000 5.00%, 10/27/99........... 20,000,000
---------------
267,274,673
---------------
Federal Home Loan Mortgage
Corporation--19.5%
27,000(a) 5.351%, 1/19/99........... 26,988,322
21,385 5.08%, 1/20/99............ 21,327,664
27,500 5.11%, 1/22/99............ 27,418,027
22,500(a) 5.424%, 1/26/99........... 22,498,932
14,000 4.92%, 2/16/99............ 13,911,987
12,500 5.00%, 3/5/99............. 12,390,625
15,000 5.505%, 3/12/99........... 14,997,872
---------------
139,533,429
---------------
Federal National Mortgage
Association--16.3%
3,000(a) 5.334%, 1/19/99........... 2,999,640
24,000(a) 5.048%, 1/28/99........... 23,983,353
$ 10,000 5.00%, 2/5/99............. $ 9,951,389
18,000 5.41%, 2/23/99............ 17,996,474
7,000 5.37%, 2/26/99............ 6,997,231
20,000(a) 5.038%, 3/16/99........... 19,997,973
35,000(a) 5.039%, 3/17/99........... 34,984,966
---------------
116,911,026
---------------
Student Loan Marketing Association--11.6%
22,500(a) 4.81%, 2/4/99............. 22,488,788
15,000(a) 5.013%, 2/5/99............ 14,994,973
11,500(a) 5.388%, 2/9/99............ 11,494,200
11,034 5.58%, 3/11/99............ 11,033,483
15,000 5.53%, 7/16/99............ 14,994,590
8,000 4.50%, 8/2/99............. 7,974,965
---------------
82,980,999
---------------
Total U.S. Government
Agencies
(amortized cost
$607,700,110)........... 607,700,110
Repurchase Agreements(b)--13.2%
213 Merrill Lynch, Pierce,
Fenner & Smith, Inc.,
5.02%, dated 12/31/98,
due 1/5/99 in the amount
of $213,149 (cost
$213,000), value of
collateral including
accrued
interest--$217,993...... 213,000
3,500 Morgan (J.P.) Securities
Inc., 5.10%, dated
12/4/98, due 1/6/99 in
the amount of $3,516,363
(cost $3,500,000), value
of collateral including
accrued
interest--$3,596,271.... 3,500,000
42,000 Morgan (J.P.) Securities
Inc., 5.15%, dated
11/05/98, due 1/20/99 in
the amount of
$42,456,633 (cost
$42,000,000), value of
collateral including
accrued
interest--$43,230,079... 42,000,000
</TABLE>
-13-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND GOVERNMENT FUND
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Repurchase Agreements(b)--(cont'd.)
$ 17,025 Morgan Stanley Dean
Witter, 5.27%, dated
12/21/98, due 1/5/99 in
the amount of
$17,062,384 (cost
$17,025,000), value of
collateral including
accrued
interest--$17,506,945... $ 17,025,000
20,640 Morgan Stanley Dean
Witter, 5.80%, dated
12/29/98, due 1/5/99 in
the amount of
$20,663,277 (cost
$20,640,000), value of
collateral including
accrued
interest--$21,224,279... 20,640,000
11,305 Morgan Stanley Dean
Witter, 5.15%, dated
12/30/98, due 1/29/99 in
the amount of
$11,353,517 (cost
$11,305,000), value of
collateral including
accrued
interest--$11,533,783... 11,305,000
---------------
Total Repurchase
Agreements
(amortized cost
$94,683,000)............ 94,683,000
---------------
Total Investments--98.2%
(amortized cost
$702,383,110(c))........ 702,383,110
Other assets in excess of
liabilities--1.8%....... 13,156,106
---------------
Net Assets--100%.......... $ 715,539,216
---------------
---------------
</TABLE>
- ---------------
(a) Variable rate instrument. The maturity date presented
for these instruments
is the later of the next date on which the security can
be redeemed at par
or the next date on which the rate of interest is
adjusted.
(b) Repurchase agreements are collateralized by U.S.
Treasury or Federal agency
obligations.
(c) The cost for federal income tax purposes is
substantially the same as for
financial reporting purposes.
-14-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND GOVERNMENT FUND
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
Assets
December 31, 1998
- -----------------
<S>
<C>
Investments, at amortized cost which approximates market
value........................ $ 702,383,110
Receivable for Fund shares
sold.......................................................
32,052,636
Interest
receivable..................................................
................. 4,497,436
Prepaid
expenses....................................................
.................. 9,789
- -----------------
Total
assets......................................................
.................. 738,942,971
- -----------------
Liabilities
Payable for Fund shares
repurchased.................................................
.. 22,860,774
Management fee
payable.....................................................
........... 262,053
Accrued expenses and other
liabilities................................................
237,130
Distribution fee
payable.....................................................
......... 43,798
- -----------------
Total
liabilities.................................................
.................. 23,403,755
- -----------------
Net
Assets......................................................
...................... $ 715,539,216
- -----------------
- -----------------
Net assets were comprised of:
Shares of beneficial interest, at
par............................................... $
7,155,392
Paid-in capital in excess of
par....................................................
708,383,824
- -----------------
Net assets, December 31,
1998........................................................
. $ 715,539,216
- -----------------
- -----------------
Net asset value, offering price and redemption price per
share ($715,539,216 /
715,539,216 shares of beneficial interest ($.01 par value)
issued and
outstanding)................................................
........................ $1.00
- -----------------
- -----------------
</TABLE>
See Notes to Financial Statements appearing on page 29.
-15-
<PAGE>
COMMAND GOVERNMENT FUND
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
Net Investment Income 1998
<S> <C>
Income
Interest............................. $ 19,595,318
------------------
Expenses
Management fee....................... 1,455,748
Distribution fee..................... 454,921
Transfer agent's fees and expenses... 53,000
Custodian's fees and expenses........ 38,000
Audit fee............................ 14,000
Reports to shareholders.............. 13,000
Trustees' fees....................... 11,000
Legal fees and expenses.............. 4,000
Insurance expense.................... 4,000
Miscellaneous........................ 59
------------------
Total expenses..................... 2,047,728
------------------
Net investment income.................. 17,547,590
------------------
Realized Gain on Investments
Net realized gain on investment
transactions......................... 9,839
------------------
Net Increase in Net Assets
Resulting from Operations.............. $ 17,557,429
------------------
------------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
COMMAND GOVERNMENT FUND
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) December 31, June 30,
in Net Assets 1998 1998
<S> <C> <C>
Operations
Net investment
income............... $ 17,547,590 $ 28,533,721
Net realized gain on
investment
transactions....... 9,839 50,018
--------------- ---------------
Net increase in net
assets resulting
from operations.... 17,557,429 28,583,739
--------------- ---------------
Dividends and
distributions to
shareholders (Note
1)..................... (17,557,429) (28,583,739)
--------------- ---------------
Fund share transactions
(at $1 per share)
Net proceeds from
shares
subscribed......... 1,664,980,974 2,601,216,630
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions...... 17,557,429 28,583,739
Cost of shares
reacquired........... (1,575,726,590) (2,549,542,451)
--------------- ---------------
Net increase in net
assets from Fund
share
transactions....... 106,811,813 80,257,918
--------------- ---------------
Total increase......... 106,811,813 80,257,918
Net Assets
Beginning of period.... 608,727,403 528,469,485
--------------- ---------------
End of period.......... $ 715,539,216 $ 608,727,403
--------------- ---------------
--------------- ---------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
-16-
<PAGE>
COMMAND GOVERNMENT FUND
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended June 30,
December 31,
- ------------------------------------------------------------
1998
1998 1997 1996 1995 1994
------------
- -------- -------- -------- -------- --------
<S> <C>
<C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period... $ 1.000
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net realized
gains................................ .024
0.051 0.049 0.050 0.048 0.028
Dividends and distributions to
shareholders......................... (.024)
(0.051) (0.049) (0.050) (0.048) (0.028)
------------
- -------- -------- -------- -------- --------
Net asset value, end of period......... $ 1.000
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------
- -------- -------- -------- -------- --------
------------
- -------- -------- -------- -------- --------
TOTAL RETURN(b)........................ 2.46%
5.20% 4.97% 5.12% 4.89% 2.86%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........ $715,539
$608,727 $528,469 $487,485 $404,295 $325,257
Average net assets (000)............... $721,940
$562,693 $534,580 $477,168 $350,458 $376,159
Ratios to average net assets:
Expenses, including distribution
fees................................. .56%(a)
.56% .63% .68% .65% .63%
Expenses, excluding distribution
fees................................. .44%(a)
.44% .51% .56% .53% .51%
Net investment income................ 4.82%(a)
5.08% 4.84% 4.97% 4.81% 2.79%
</TABLE>
- ---------------
(a) Annualized.
(b) Total return is calculated assuming a purchase of shares
on the first day
and a sale on the last day of each period reported and
includes reinvestment
of dividends and distributions. Total return for less
than a full year are
not annualized.
See Notes to Financial Statements appearing on page 29.
-17-
<PAGE>
COMMAND TAX-FREE FUND Portfolio of
Investments
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note
1)
<C> <C> <S> <C>
ALABAMA--1.9%
Alabama St. Pub. School
& College Auth.,
F.R.W.D.S.,
4.25%, 1/7/99, Ser.
VMIG1 $ 21,195 101................... $
21,195,000
Decatur Alabama Ind.
Dev. Rev. F.R.D.D.,
A.M.T.,
5.20%, 1/4/99, Ser.
P-1 4,500 95....................
4,500,000
---------
- -----
25,695,000
---------
- -----
ALASKA--1.0%
Valdez Marine Air
Terminal Rev., Arco
Trans. Proj.,
T.E.C.P.,
3.20%, 1/14/99, Ser.
VMIG1 7,000 94C...................
7,000,000
3.05%, 2/4/99, Ser.
A-1* 7,500 94A...................
7,500,000
---------
- -----
14,500,000
---------
- -----
CALIFORNIA--0.6%
California Student Ln.
Mktg. Corp., Student
Ln. Rev., F.R.W.D.,
4.15%, 1/7/99, Ser.
VMIG1 9,000 93A...................
9,000,000
---------
- -----
COLORADO--2.5%
Colorado Hsg. Fin.
Auth., Eagle Trust,
F.R.W.D.S.,
4.15%, 1/7/99, Ser.
A-1(c)* 34,920 94C...................
34,920,000
---------
- -----
CONNECTICUT--0.6%
Connecticut St., Gen.
Oblig., Puttable Tax
Exempt Rcpts.,
Q.T.R.O.T.S.,
3.25%, 2/24/99, Ser. 27
(cost $8,000,000;
VMIG1 8,000D purchased 11/13/98)...
8,000,000
---------
- -----
DISTRICT OF COLUMBIA--1.1%
Metro. Wash. Airport
Rev., T.E.C.P.,
A-1* $ 15,500 3.15%, 4/28/99.......... $
15,500,000
---------
- -----
GEORGIA--7.9%
Atlanta Urban Res., Fin.
Auth. Greystone,
F.R.W.D.S., A.M.T.,
4.25%, 1/7/99, Ser.
A-1+(c)* 23,526 98B...................
23,526,000
Cobb Cnty. Dev. Auth.,
Institute of Nuclear
Pwr., F.R.W.D.,
4.00%, 1/6/99, Ser.
NR 10,000 98....................
10,000,000
Cobb Cnty. Hsg. Auth.,
Terrell Mill II
Assoc., F.R.W.D.,
4.05%, 1/7/99, Ser.
A-1+* 10,600 93....................
10,600,000
Cobb Cnty. Multifam.
Hsg. Rev., Post Bridge
Proj., F.R.W.D.,
4.00%, 1/6/99, Ser.
A-1+* 10,000 96....................
10,000,000
De Kalb Cnty. Hsg.
Auth., Single Family
Mtge. Rev.,
F.R.W.D.S., A.M.T.,
A-1+(c)* 10,000 4.25%, 1/7/99, Ser. A...
10,000,000
Fulton Cnty. Dev. Auth.
Ind. Rev., Siemen's
Energy Inc., F.R.W.D.,
4.15%, 1/7/99, Ser.
VMIG1 7,750 94....................
7,750,000
Monroe Cnty. Dev. Auth.,
Poll. Ctrl. Rev.,
Oglethorpe Pwr. Corp.,
S.E.M.O.T.,
3.45%, 5/1/99, Ser.
NR 11,000 96....................
11,000,000
</TABLE>
-18-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note
1)
<C> <C> <S> <C>
GEORGIA--(cont'd.)
Roswell Hsg. Auth., Post
Canyon Proj.,
F.R.W.D.,
4.00%, 1/6/99, Ser.
A-1+* $ 9,345 96.................... $
9,345,000
Willacoochee Dev. Auth.,
Poll. Ctrl. Rev., Lang
Board Inc. Proj.,
F.R.W.D., A.M.T.,
4.20%, 1/7/99, Ser.
Aa2 17,000 97....................
17,000,000
---------
- -----
109,221,000
---------
- -----
HAWAII--0.9%
Hawaii St., Gen Oblg.,
F.R.W.D.S.,
4.24%, 1/7/99, Ser.
VMIG1 11,810 98B...................
11,810,000
---------
- -----
ILLINOIS--15.9%
Chicago, Stockyards
Indl. Proj., F.R.W.D.,
4.00%, 1/6/99, Ser.
A-1+* 13,300 96A...................
13,300,000
Gurnee Ind. Dev. Rev.,
Sterigenics Intl.
Proj., F.R.W.D.,
A.M.T.,
4.20%, 1/6/99, Ser.
A-1* 7,750 96....................
7,750,000
Illinois Dev. Fin. Auth.
Rev., Adventist Hlth.
Sys., F.R.W.D.,
4.15%, 1/7/99, Ser.
VMIG1 29,365 97A...................
29,365,000
American College of
Surgeons , F.R.W.D.,
3.85%, 1/4/99, Ser.
A-1+* 15,200 96....................
15,200,000
Illinois Educ. Fac.
Auth.,
Eagle Tax Exempt
Trust, F.R.W.D.S.,
4.20%, 1/7/99, Ser.
A-1+(c)* 9,900 96C130................
9,900,000
Illinois Hlth. Fac.
Auth., Children's Mem.
Hosp., T.E.C.P.,
3.00%, 6/25/99, Ser.
VMIG1 $ 14,500 90A................... $
14,500,000
Evanston Hosp. Corp.
Prog., A.N.N.M.T.,
3.80%, 4/30/99, Ser.
VMIG1 18,000 95....................
18,000,000
3.10%, 11/1/99, Ser.
VMIG1 25,000 92....................
25,000,000
Illinois Hlth. Fac. Dev.
Auth., Riverside Hlth.
Sys., F.R.W.D.,
4.05%, 1/7/99, Ser.
VMIG1 12,900 94....................
12,900,000
SSM Health Care,
T.E.C.P.,
3.25%, 1/12/99, Ser.
A-1+* 20,000 98B...................
20,000,000
Illinois Hsg. Dev. Auth.
Rev., Homeowner's
Mtge. Rev.,
A.N.N.M.T., A.M.T.,
3.45%, 10/7/99, Ser.
VMIG1 6,000 98F2..................
6,000,000
Illinois Student Asst.
Comm., Student Ln.
Rev., F.R.W.D.,
A.M.T.,
4.05%, 1/6/99, Ser.
VMIG1 9,000.... 98A...................
9,000,000
Wheeling Multifam. Hsg.
Rev., Woodland Creek
II, F.R.W.D.,
3.85%, 1/4/99, Ser.
SP-1+* 17,655 90....................
17,655,000
Woodridge & Dupage
Cntys., Multifam. Hsg.
Rev., Hinsdale Lake
Terr. Apts., F.R.W.D.,
3.95%, 1/4/99, Ser.
A-1+* 20,760 90....................
20,760,000
---------
- -----
219,330,000
---------
- -----
INDIANA--3.1%
Indiana Ed. Fac. Auth.,
Wesleyan Univ.,
F.R.W.D.,
4.15%, 1/7/99, Ser.
NR 8,300 93....................
8,300,000
</TABLE>
-19-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note
1)
<C> <C> <S> <C>
INDIANA--(cont'd.)
Indiana St. Office
Building Comm.,
T.E.C.P.,
P-1 $ 8,800 3.10%, 2/5/99, Ser. A... $
8,800,000
P-1 6,800 3.05%, 3/5/99, Ser. A...
6,800,000
Indianapolis, Citizen
Gas & Coke, T.E.C.P.,
3.10%, 2/17/99, Ser.
P-1 10,700 87....................
10,700,000
Mount Vernon Poll. Ctrl.
Rev., General Elec.
Co., T.E.C.P.,
3.10%, 1/14/99, Ser.
P-1 8,400 89A...................
8,400,000
---------
- -----
43,000,000
---------
- -----
IOWA--0.6%
Sergeant Bluff Ind.
Auth., Sioux City
Brick & Tile Proj.,
F.R.W.D., A.M.T.,
4.20%, 1/7/99, Ser.
NR 8,795 96....................
8,795,000
---------
- -----
KANSAS--0.5%
Butler Cnty. Solid Waste
Disposal &
Cogeneration Texaco
Rev., F.R.D.D.,
A.M.T.,
5.25%, 1/4/99, Ser.
VMIG1 6,300 96B...................
6,300,000
---------
- -----
KENTUCKY--6.2%
Kentucky Asset/Liability
Commerce, T.E.C.P.,
3.10%, 1/8/99, Ser.
VMIG1 9,000 98....................
9,000,000
3.05%, 2/8/99, Ser.
VMIG1 8,000 98....................
8,000,000
3.00%, 2/19/99, Ser.
VMIG1 8,000 98....................
8,000,000
Ohio Cnty. Poll. Ctrl.
Rev., Big Rivers Elec.
Corp. Proj., F.R.W.D.,
4.20%, 1/6/99, Ser.
VMIG1 10,300 83....................
10,300,000
4.20%, 1/6/99, Ser.
VMIG1 40,700 85....................
40,700,000
Pendleton Cnty., Lease
Rev. Prog., T.E.C.P.,
3.25%, 2/12/99, Ser.
A-1* $ 10,000 89.................... $
10,000,000
---------
- -----
86,000,000
---------
- -----
LOUISIANA--3.1%
Ascension Parish Dev.
Rev., M.T.H.M.T.,
A.M.T.,
3.60%, 1/5/99, Ser.
P-1 14,000 98....................
14,000,000
Calcasieu Parish Dev.
Rev., Citgo Corp.,
F.R.D.D., A.M.T.,
5.25%, 1/4/99, Ser.
VMIG1 2,600 95....................
2,600,000
Louisiana St., Gen.
Oblig., F.R.W.D.S.,
4.10%, 1/7/99, Ser.
A-1+(c)* 9,080 93A...................
9,080,000
4.10%, 1/7/99, Ser.
A-1+(c)* 10,980 95A...................
10,980,000
West Baton Rouge Parish
Ind. Dist. Pound3
Rev., Dow Chemical Co.
Proj., F.R.D.D.,
A.M.T.,
5.30%, 1/4/99, Ser.
P-1 5,700 93....................
5,700,000
---------
- -----
42,360,000
---------
- -----
MARYLAND--0.8%
Montgomery Cnty. First
Chicago Tender Opt.
Cert., F.R.W.D.S.,
4.30%, 1/6/99, Ser.
VMIG1 10,935 98C...................
10,935,000
---------
- -----
MASSACHUSETTS--1.2%
Massachusetts St.
First Chicago Tender
Opt. Cert.,
F.R.W.D.S.,
4.23%, 1/6/99, Ser.
VMIG1 7,025 98B...................
7,025,000
</TABLE>
-20-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note
1)
<C> <C> <S> <C>
MASSACHUSETTS--(cont'd.)
Massachusetts St. Dev.
Fin. Agcy., Lasell
Village Proj.,
F.R.W.D.,
4.20%, 1/6/99, Ser.
VMIG1 $ 10,000 98C................... $
10,000,000
---------
- -----
17,025,000
---------
- -----
MICHIGAN--0.1%
Wayne Charter Cnty.,
Michigan Airport Rev.,
F.R.D.D.S., A.M.T.,
5.30%, 1/4/99, Ser.
VMIG1 1,200 SSP25A................
1,200,000
---------
- -----
MINNESOTA--1.4%
Bloomington Port Auth.,
Tax Rev., F.R.W.D.,
3.55%, 1/4/99, Ser.
VMIG1 19,000 95A...................
19,000,000
---------
- -----
MISSISSIPPI--1.2%
Harrison Cnty. Poll.
Ctrl. Rev.,
Mississippi Pwr. Co.
Proj., F.R.W.D.,
4.00%, 1/6/99, Ser.
A-1* 16,750 92....................
16,750,000
---------
- -----
MISSOURI--1.1%
Missouri Hsg. Dev.
Comm.,
Single Fam. Mtge.
Rev., A.N.N.M.T.,
A.M.T.,
3.90%, 4/1/99, Ser.
SP-1* 1,615 98C...................
1,615,000
St. Charles Cnty. Ind.
Dev. Auth., Cedar
Ridge Apts., F.R.W.D.,
4.05%, 1/6/99, Ser.
A-1+* 13,975 88A...................
13,975,000
---------
- -----
15,590,000
---------
- -----
NEW HAMPSHIRE--3.4%
New Hampshire Bus. Fin.
Auth., New England
Pwr. Co. Proj.,
T.E.C.P.,
3.30%, 1/7/99, Ser.
VMIG1 $ 25,300 90B................... $
25,300,000
T.E.C.P., A.M.T.,
3.35%, 1/7/99, Ser.
P-1 15,000 90A...................
15,000,000
New Hampshire St. Edu. &
Hlth. Fac. Auth.,
Prerefunded,
7.50%, 1/15/99, Ser.
NR 6,885 95....................
7,169,468
---------
- -----
47,469,468
---------
- -----
NEW JERSEY--0.1%
New Jersey Econ. Dev.
Auth. Rev., 865
Centennial Ave. Proj.,
F.R.W.D., A.M.T.,
4.15%, 1/7/99, Ser.
A-1+* 1,850 85....................
1,850,000
---------
- -----
NEW YORK--0.3%
New York City, Gen.
Oblig., T.E.C.P,
3.15%, 2/9/99, Ser.
VMIG1 3,500 94H-3.................
3,500,000
---------
- -----
NORTH CAROLINA--1.4%
North Carolina Ed. Fac.
Fin. Agcy., Warren
Wilson College,
F.R.W.D.,
4.10%, 1/7/99, Ser.
Aa1 12,200 98....................
12,200,000
Rockingham Cnty. Ind.
Fac., Poll. Ctrl.
Rev.,
Phillip Morris Proj.,
F.R.W.D.,
P-1 7,200 4.10%, 1/6/99...........
7,200,000
---------
- -----
19,400,000
---------
- -----
</TABLE>
-21-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note
1)
<C> <C> <S> <C>
OHIO--3.4%
Clinton Cnty. Hosp.
Rev., Ohio Hosp.
Capital Fin.,
F.R.W.D.,
4.00%, 1/6/99, Ser.
A-1+* $ 16,000 98.................... $
16,000,000
Medina Cnty. Hsg. Rev.,
Oaks At Medina Proj.,
F.R.W.D.,
NR 9,650 4.05%, 1/7/99...........
9,650,000
Montgomery Cnty. Rev.,
Miami Valley Hosp.,
T.E.C.P.,
3.20%, 2/9/99, Ser.
VMIG1 15,000 98B...................
15,000,000
Ohio Hsg. Fin. Agcy.,
Multifam. Hsg. Rev.,
F.R.W.D.,
A-1+(c)* 5,945 4.15%, 1/8/99, Ser. B...
5,945,000
---------
- -----
46,595,000
---------
- -----
OKLAHOMA--0.4%
Muskogee Ind. Trust,
Muskogee Mall Proj.,
F.R.W.D.,
4.15%, 1/6/99, Ser.
VMIG1 5,200 85....................
5,200,000
---------
- -----
OREGON--2.9%
Klamath Falls Elec.
Rev., Salt Caves
Hydoelectric,
A.N.N.M.T.,
3.80%, 5/3/99, Ser.
SP-1+* 40,000 86A...................
40,000,000
---------
- -----
PENNSYLVANIA--6.4%
Dauphin Cnty. Gen. Auth.
Rev., F.R.W.D.,
4.00%, 1/6/99, Ser.
A-1+(c)* 20,000 97A...................
20,000,000
Ed. & Hlth. Prog.,
F.R.W.D.,
4.08%, 1/7/99, Ser.
VMIG1 23,800 97....................
23,800,000
Lehigh Cnty. Gen.
Purpose Rev., Wiley
House Proj.,
Prerefunded,
NR $ 8,275 8.75%, 11/1/99.......... $
8,794,082
Montgomery Cnty. Higher
Ed. & Hlth. Auth.
Rev., F.R.W.D.,
4.10%, 1/6/99, Ser.
A-1* 36,285 96A...................
36,285,000
---------
- -----
88,879,082
---------
- -----
RHODE ISLAND--0.7%
Rhode Island Student Ln.
Auth., Student Ln.
Pgrm. Rev. Proj.,
F.R.W.D., A.M.T.,
4.00%, 1/6/99, Ser.
A-1+* 10,000 96-2..................
10,000,000
---------
- -----
SOUTH CAROLINA--4.0%
Berkeley Cnty. Poll.
Ctrl. Rev., Amoco
Chem. Proj., F.R.D.D.,
A.M.T.,
5.20%, 1/4/99, Ser.
VMIG1 2,700 97....................
2,700,000
South Carolina Ed. Fac.
Auth., Presbyterian
College, F.R.W.D.,
4.10%, 1/7/99, Ser.
NR 11,630 98....................
11,630,000
South Carolina Pub. Svc.
Auth., T.E.C.P.,
P-1 36,000 3.25%, 1/15/99..........
36,000,000
P-1 4,400 3.15%, 1/29/99..........
4,400,000
---------
- -----
54,730,000
---------
- -----
SOUTH DAKOTA--3.4%
Brookings Sch. Dist.,
Cert. of Part.,
Q.T.R.M.T.,
3.85%, 3/11/99, Ser.
NR 12,210 97....................
12,210,000
</TABLE>
-22-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note
1)
<C> <C> <S> <C>
SOUTH DAKOTA--(cont'd.)
South Dakota Hlth. & Ed.
Fac. Auth., Sioux
Valley Hosp. & Hlth.
Rev., F.R.W.D.,
3.85%, 1/4/99, Ser.
VMIG1 $ 9,350 97.................... $
9,350,000
South Dakota Hsg. Dev.
Auth.,
Homeownership Mtge.,
A.M.T.,
3.75%, 8/5/99, Ser.
MIG1 9,000 98C...................
9,000,000
A.N.N.M.T., A.M.T.,
3.20%, 12/2/99, Ser.
MIG1 16,250 98C...................
16,250,000
---------
- -----
46,810,000
---------
- -----
TENNESSEE--4.4%
Dickson Cnty.,
Renaissance
Learning Cent. Rev.,
F.R.W.D.,
4.00%, 1/6/99, Ser.
Aa3 7,000 97....................
7,000,000
Memphis Center City Rev.
Fin. Corp., Sports
Fac. Redbirds Found.,
F.R.W.D.,
VMIG1 22,000 4.25%, 1/7/99, Ser. A...
22,000,000
Nashville & Davidson
Cntys.,
Eagle Tax Exempt Trust
A.N.N.O.T.S.,
3.25%, 8/12/99, Ser. 96C
(cost $16,965,000,
A-1+(c)* 16,965D purchased 11/16/98)...
16,965,000
Shelby Cnty., T.E.C.P.,
A-1+* 15,000 3.00%, 3/8/99, Ser. A...
15,000,000
---------
- -----
60,965,000
---------
- -----
TEXAS--11.4%
Bexar Cnty. Hsg. Fin.
Corp. Perrin Park
Apt., F.R.W.D.,
A.M.T.,
4.15%, 1/7/99, Ser.
VMIG1 $ 10,375 96.................... $
10,375,000
Brazos River Harbor Nav.
Dist., Dow Chemical
Co. Proj.,
T.E.C.P.,
3.35%, 1/8/99, Ser.
P-1 11,100 91....................
11,100,000
F.R.D.D., A.M.T.,
5.30%, 1/4/99, Ser.
P-1 1,200 92A...................
1,200,000
5.30%, 1/4/99, Ser.
P-1 1,100 97....................
1,100,000
Merey Sweeney Proj.,
F.R.W.D., A.M.T.,
5.25%, 1/4/99, Ser.
VMIG1 6,300 96....................
6,300,000
Collin Cnty. Hsg. Fin.
Corp.,
Multifam. Hsg. Rev.,
Huntington Apts.
Proj., F.R.W.D.,
4.15%, 1/7/99, Ser.
A-1* 6,155 96....................
6,155,000
Greater Student Ln.
Corp. Rev. Rfdg.,
A.N.N.M.T., A.M.T.,
3.60%, 3/1/99, Ser.
VMIG1 30,500 96A...................
30,500,000
Guadalupe Blanco River
Auth., BOC Group Inc.,
F.R.W.D.,
4.10%, 1/7/99, Ser.
NR 13,800 93....................
13,800,000
Gulf Coast Ind. Dev.
Auth., Citgo Petroleum
Proj., F.R.D.D.,
A.M.T.,
5.25%, 1/4/99, Ser.
VMIG1 2,200 95....................
2,200,000
</TABLE>
-23-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note
1)
<C> <C> <S> <C>
TEXAS--(cont'd.)
Houston, Gen Oblig.,
T.E.C.P.,
3.20%, 1/12/99, Ser.
P-1 $ 10,000 A..................... $
10,000,000
3.20%, 1/13/99, Ser.
P-1 9,500 B.....................
9,500,000
3.25%, 1/13/99, Ser.
P-1 3,200 B.....................
3,200,000
Houston Water & Swr.
Sys. Rev., F.R.W.D.S.,
4.15%, 1/6/99, Ser.
A-1+(c)* 8,600 SG73..................
8,600,000
Houston Water & Swr.
Sys., Eagle Trust
Proj., F.R.W.D.S.,
4.15%, 1/7/99, Ser.
A-1+(c)* 14,005 4305..................
14,005,000
San Antonio Elec. & Gas,
T.E.C.P.,
3.50%, 1/21/99, Ser.
P-1 19,400 A.....................
19,400,000
San Antonio Elec. & Gas
Rev., Muni. Secs.
Trust Rcpts.,
F.R.W.D.S.,
4.15%, 1/6/99, Ser.
A-1+* 10,220 SGA48.................
10,220,000
---------
- -----
157,655,000
---------
- -----
UTAH--2.0%
Intermountain Pwr. Agy.,
T.E.C.P.,
3.10%, 2/18/99, Ser.
A-1* 15,000 B.....................
15,000,000
Utah St., Gen. Oblig.,
T.E.C.P.,
P-1 12,600 3.10%, 1/19/99..........
12,600,000
---------
- -----
27,600,000
---------
- -----
VIRGINIA--1.9%
Chesapeake Bay Bridge &
Tunnel, Eagle Tax
Exempt Trust,
S.E.M.O.T.S.,
3.45%, 4/1/99,
Ser.984601
(cost $14,755,000;
A-1+(c)* 14,755D purchased 10/8/98)....
14,755,000
Harrisonburg Redev. &
Hsg. Auth., Multifam.
Hsg. Rev., F.R.W.D.,
4.00%, 1/7/99, Ser.
VMIG1 $ 8,555 91A................... $
8,555,000
Hopewell Ind. Dev. Auth.
Rev., Hudson Pwr.
Proj., F.R.D.D.,
A.M.T.,
5.30%, 1/4/99, Ser.
P-1 100...... 90A...................
100,000
King George Cnty. Ind.
Dev. Auth. Birchwood
Pwr. Proj., F.R.D.D.,
A.M.T.,
A-1+* 2,200 5.20%, 1/4/99...........
2,200,000
---------
- -----
25,610,000
---------
- -----
WASHINGTON--1.2%
Washington Hsg. Fin.
Comm., Anchor Village
Apts. Proj., F.R.W.D.,
A.M.T.,
4.10%, 1/7/99, Ser.
A-1+* 10,750 97....................
10,750,000
Washington St. Hsg. Fin.
Comm., Inglenook Court
Proj., F.R.D.D.,
A.M.T.,
VMIG1 6,075 5.30%, 1/4/99...........
6,075,000
---------
- -----
16,825,000
---------
- -----
WEST VIRGINIA--1.7%
Grant Cnty. Solid Waste
Rev., Vepco, T.E.C.P.,
A.M.T.,
3.25%, 1/8/99, Ser.
VMIG1 15,000 96....................
15,000,000
West Virginia Pub.
Energy Auth. Rev.,
Morgantown Energy
Assn., T.E.C.P.,
A.M.T.,
3.10%, 2/8/99, Ser.
A-1+* 9,000 89A...................
9,000,000
---------
- -----
24,000,000
---------
- -----
</TABLE>
-24-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
<TABLE>
<CAPTION>
Principal
Moody's Amount
Value
Rating (000) Description (a) (Note
1)
<C> <C> <S> <C>
WISCONSIN--0.4%
Middletown Crossplains
Area, T.R.A.N.,
NR $ 5,300 3.73%, 8/25/99.......... $
5,301,619
---------
- -----
WYOMING--0.7%
Sweetwater Cnty. Poll.
Ctrl. Rev., Pacificorp
Proj., T.E.C.P.,
VMIG1 9,140 3.35%, 1/15/99..........
9,140,000
---------
- -----
Total Investments--101.8%
(cost
$1,406,461,169**).....
1,406,461,169
Liabilities in excess of
other
assets--(1.8%)........
(25,193,656)
---------
- -----
Net Assets--100%........
$1,381,267,513
---------
- -----
---------
- -----
</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.
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.
* Standard & Poor's rating.
** The cost for federal income tax purposes is substantially
the same as for
financial reporting purposes.
D Indicates a security restricted as to resale. The
aggregate cost of such
securities is $39,720,000. The aggregate value of
$39,720,000 is approximately
2.9% of net assets.
NR--Not Rated by Moody's or Standard & Poor's.
-25-
See Notes to Financial Statements
appearing on page 29.
<PAGE>
COMMAND TAX-FREE FUND
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
Assets
December 31, 1998
- -----------------
<S>
<C>
Investments, at amortized cost which approximates market
value........................ $ 1,406,461,169
Cash........................................................
.......................... 10,447
Receivable for Fund shares
sold.......................................................
20,584,266
Interest
receivable..................................................
................. 6,540,832
Receivable for investments
sold.......................................................
504,000
Prepaid
expenses....................................................
.................. 28,157
- -----------------
Total
assets......................................................
.................. 1,434,128,871
- -----------------
Liabilities
Payable for investments
purchased...................................................
.. 31,505,798
Payable for Fund shares
repurchased.................................................
.. 20,371,281
Management fee
payable.....................................................
........... 575,196
Accrued
expenses....................................................
.................. 320,338
Distribution fee
payable.....................................................
......... 88,745
- -----------------
Total
liabilities.................................................
.................. 52,861,358
- -----------------
Net
Assets......................................................
...................... $ 1,381,267,513
- -----------------
- -----------------
Net assets were comprised of:
Shares of beneficial interest, at
par............................................... $
13,812,675
Paid-in capital in excess of
par....................................................
1,367,454,838
- -----------------
Net assets, December 31,
1998........................................................
. $ 1,381,267,513
- -----------------
- -----------------
Net asset value, offering price and redemption price per
share ($1,381,267,513 /
1,381,267,513 shares of beneficial interest ($.01 par
value) issued and
outstanding)................................................
........................ $1.00
- -----------------
- -----------------
</TABLE>
See Notes to Financial Statements appearing on page 29.
-26-
<PAGE>
COMMAND TAX-FREE FUND
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
Net Investment Income 1998
<S> <C>
Income
Interest............................. $ 26,231,906
------------------
Expenses
Management fee....................... 3,289,373
Distribution fee..................... 949,426
Transfer agent's fees................ 94,000
Custodian's fees and expenses........ 40,000
Reports to shareholders.............. 15,000
Trustees' fees....................... 14,000
Audit fee............................ 14,000
Insurance expense.................... 11,000
Legal fees and expenses.............. 5,000
Miscellaneous........................ 2,375
------------------
Total expenses..................... 4,434,174
Less: custodian fee credit......... (12,562)
------------------
Net expenses....................... 4,421,612
------------------
Net investment income.................. 21,810,294
------------------
Realized Gain on Investments
Net realized gain on investment
transactions......................... 5,923
------------------
Net Increase in Net Assets
Resulting from Operations.............. $ 21,816,217
------------------
------------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
COMMAND TAX-FREE FUND
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) December 31, June 30,
in Net Assets 1998 1998
<S> <C> <C>
Operations
Net investment
income............... $ 21,810,294 $ 39,793,567
Net realized gain on
investment
transactions....... 5,923 6,522
--------------- ---------------
Net increase in net
assets resulting
from operations.... 21,816,217 39,800,089
--------------- ---------------
Dividends and
distributions to
shareholders (Note
1)..................... (21,816,217) (39,800,089)
--------------- ---------------
Fund share transactions
(at $1 per share)
Net proceeds from
shares
subscribed......... 2,670,530,458 5,269,527,972
Net asset value of
shares issued in
reinvestment of
dividends and
distributions...... 21,816,217 39,800,089
Cost of shares
reacquired........... (2,644,064,416) (5,105,855,856)
--------------- ---------------
Net increase in net
assets from Fund
share
transactions....... 48,282,259 203,472,205
--------------- ---------------
Total increase......... 48,282,259 203,472,205
Net Assets
Beginning of period.... 1,332,985,254 1,129,513,049
--------------- ---------------
End of period.......... $ 1,381,267,513 $ 1,332,985,254
--------------- ---------------
--------------- ---------------
</TABLE>
See Notes to Financial Statements
appearing on page 29.
-27-
<PAGE>
COMMAND TAX-FREE FUND
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended June 30,
December 31,
- ------------------------------------------------------------
- --------
1998
1998 1997 1996 1995
1994
------------
- ---------- ---------- ---------- ----------
- --------
<S> <C>
<C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period... $ 1.000
$ 1.000 $ 1.000 $ 1.000 $ 1.000
$ 1.000
Net investment income and net realized
gains................................ 0.015
0.031 0.030 0.031 0.032
0.020
Dividends and distributions to
shareholders......................... (0.015)
(0.031) (0.030) (0.031) (0.032)
(0.020)
------------
- ---------- ---------- ---------- ----------
- --------
Net asset value, end of period......... $ 1.000
$ 1.000 $ 1.000 $ 1.000 $ 1.000
$ 1.000
------------
- ---------- ---------- ---------- ----------
- --------
------------
- ---------- ---------- ---------- ----------
- --------
TOTAL RETURN(b)........................ 1.46%
3.16% 3.05% 3.12% 3.29%
1.98%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........ $ 1,381,268
$1,332,985 $1,129,513 $1,156,935 $1,055,568
$847,602
Average net assets (000)............... $ 1,506,697
$1,279,188 $1,181,084 $1,134,257 $ 926,888
$908,421
Ratios to average net assets:
Expenses, including distribution
fees................................. .58%(a)
.60% .64% .66% .66%
.65%
Expenses, excluding distribution
fees................................. .46%(a)
.47% .51% .54% .54%
.53%
Net investment income................ 2.87%(a)
3.11% 3.00% 3.06% 3.05%
1.96%
</TABLE>
- ---------------
(a) Annualized.
(b) Total return is calculated assuming a purchase of shares
on the first day
and a sale on the last day of each period reported and
includes reinvestment
of dividends and distributions. Total returns for less
than a full year are
not annualized.
See Notes to Financial Statements appearing on page 29.
-28-
<PAGE>
COMMAND FUNDS
Notes to Financial Statements (Unaudited)
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.
The following is a summary
Note 1. Accounting of significant accounting poli-
Policies cies followed by the Funds in
the preparation of
their financial statements.
Securities Valuation: Portfolio securities are valued at
amortized cost, which
approximates market value. The amortized cost method
involves valuing a security
at its cost on the date of purchase and thereafter assuming
a constant
amortization to maturity of any discount or premium. If the
amortized cost
method is determined not to represent fair value, the value
shall be determined
by or under the direction of the Board of Trustees. All
securities are valued as
of 4:30 p.m., New York time.
Repurchase Agreements: In connection with transactions in
repurchase agreements,
it is the Funds' policy that its custodian or designated
subcustodians, as the
case may be under triparty repurchase agreements, take
possession of the
underlying collateral securities, the value of which exceeds
the principal
amount of the repurchase transaction, including accrued
interest. If the seller
defaults and the value of the collateral declines or if
bankruptcy proceedings
are commenced with respect to the seller of the security,
realization of the
collateral by the Funds may be delayed or limited.
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
December 31, 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
-29-
<PAGE>
to this agreement, PIFM has responsibility for all
investment advisory services
and supervises the subadviser's performance of such
services. PIFM has entered
into a subadvisory agreement with the Prudential Investment
Corporation (PIC);
PIC furnishes investment advisory services in connection
with the management of
the Funds. PIFM pays for the cost of the subadvisor's
services, the compensation
of officers of the Funds, occupancy and certain clerical and
bookkeeping costs
of the Funds. The Funds bear all other costs and expenses.
The management fee paid to PIFM is computed daily and
payable monthly on the
following basis:
<TABLE>
<CAPTION>
Average Daily Command Command
Command
Net Assets Money Government
Tax-Free
- ------------------------------- ------- ----------
- -------
<S> <C> <C>
<C>
First $500 million............. .500% .400%
.500%
Second $500 million............ .425% .400%
.425%
Third $500 million............. .375% .375%
.375%
Excess of $1.5 billion......... .350% .375%
.375%
</TABLE>
Each Fund had a distribution agreement with Prudential
Securities
Incorporated ('PSI'), which acted as the distributor of the
shares of each Fund.
Effective June 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. Each
Fund compensates
PIMS for distributing and servicing each Fund's shares,
pursuant to the plan of
distribution at an annual rate of .125 of 1% of the average
daily net assets of
each Fund's shares. The distribution fees are accrued daily
and payable monthly.
PIFM, 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
six months ended December 31, 1998 the Funds incurred fees
for the services of
PMFS of approximately:
Command Money.................................. $1,692,700
Command Government............................. $ 52,800
Command Tax-Free............................... $ 94,000
As of December 31, 1998, the following amounts were due
to PMFS from the
Funds:
Command Money................................... $299,556
Command Government.............................. $ 8,689
Command Tax-Free................................ $ 14,864
-30-
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Toll free (800) 222-4324
(LOGO)
Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Don G. Hoff
Robert E. LaBlanc
Mendel A. Melzer, CFA
Robin B. Smith
Langdon R. Stevenson
Stephen Stoneburn
Brian M. Storms
Nancy H. Teeters
Officers
Brian M. Storms, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Robert C. Rosselot, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
The accompanying financial statements as of December 31,
1998 were not audited and, accordingly, no opinion is
expressed
upon them. This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a
current prospectus.
