ANNUAL REPORT June 30, 1994
Prudential
Special Money
Market Fund
(PICTURE)
Money Market Series
<PAGE>
Letter to Shareholders
August 1, 1994
Dear Shareholder:
Over the past 12 months, inflationary fears and Federal Reserve actions
helped cause short-term rates to rise steadily. While these higher rates
adversely affected many equity and bond markets, most money market funds
benefitted. In this environment, the Prudential Special Money Market
Fund--Money Market Series has produced competitive yields.
<TABLE>
SERIES PERFORMANCE
As of June 30, 1994
<CAPTION>
Weighted
7-Day Avg. Mat. Net Asset Total
Current Yield (WAM) Value (NAV) Net Assets
<S> <C> <C> <C> <C>
Special
Money Market Fund 3.85% 31 days $1.00 $473.1 million
IBC Donoghue's
All Taxable Averages* 3.64% 43 days $1.00 N/A
</TABLE>
*This is the average 7-day yield, WAM and NAV of 675 funds in Donoghue's
all taxable money fund category. An investment in the Series is neither
insured nor guaranteed by the U.S. government and there can be no assurance
that it will be able to maintain a stable net asset value of $1.00 per
share.
The 7-day current yield of the Series has risen to over 3% for the first
time since July 1992.
Fund Overview
The Prudential Special Money Market Fund -- Money Market Series seeks
high current income consistent with preservation of principal and
liquidity. The Series is a diversified portfolio of high-quality
U.S.-dollar denominated money market securities issued by the U.S.
government and its agencies, foreign governments, major corporations
and commercial banks of the U.S. and foreign countries. Maturities
can range from one day to a maximum of 13 months. We generally
purchase only securities rated in the highest categories by the
major rating agencies, or, if unrated, deemed to be of equivalent
quality by our own credit research staff.
-1-
<PAGE>
In 1994, Rates Rose Rapidly...
In the last half of 1993, interest rates stabilized as the economy
began to grow. Still, short-term interest rates were at their lowest
levels in nearly three decades. This changed rapidly in February,
however, when the Fed moved to counter growing fears of incipient
inflation. The Fed raised its benchmark federal funds rate (the
rate banks charge each other to lend money) to 4.25% from 3% (125
basis points) over a four-month span and brought to a close its
longest period of accommodative monetary policy in recent history.
Although inflation has not increased, commodity prices have risen,
a signal that economic growth has been burgeoning. Thus, in an
attempt to foster moderate growth without inflation, the Fed acted
to raise the cost of borrowing money.
...Money Market Yields Rise Less Rapidly
While the three-month Treasury bill's yield has generally risen in
step with the fed funds rate, the Series' yield has only increased
by about 90 basis points. The Series lagged because we generally
hold securities to maturity. As older, lower-coupon instruments mature,
however, the portfolio's yield should continue to rise as we purchase
securities with higher coupons. The variable rate securities we
purchased over the last six months helped to limit this lag, because
their yields tend to increase with the market.
One way we can increase yield is by investing in high-quality commercial
paper at competitive interest rates. These short-term corporate
obligations generally offer higher yields than government securities
with similar maturities. At 61% of assets, commercial paper is the
largest component of the portfolio as of June 30, 1994.
However, this is subject to change.
Managing Maturity
As short-term interest rates rose, we maintained a shorter weighted
average maturity than most other money market funds to take advantage
of higher interest rates. In this way we could purchase newer, higher
yielding securities sooner as the older securities matured. We departed
from this strategy when we believed the credit market had overreacted to
the prospect of higher short-term rates. As of June 30, the Series once
again maintained a short maturity, anticipating that the Fed would continue
to nudge rates upward.
-2-
<PAGE>
Outlook
After its most recent rate increases, the Fed has paused to assess the
impact of its actions. With the ever-vigilant central bank ready to move
swiftly should price growth move higher, we expect short-term rates will
climb moderately higher through the rest of the year.
As always, it is a pleasure having you as a shareholder of the Prudential
Special Money Market Fund -- Money Market Series and to take this
opportunity to report our activities to you.
Sincerely,
Lawrence C. McQuade
President
Robert N. Felice
Portfolio Manager
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND Portfolio of Investments
MONEY MARKET SERIES June 30, 1994
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
BANK NOTES--7.4%
Bank of New York
$7,000 4.35%, 8/4/94............. $ 6,999,836
First National Bank
7,000 4.61%, 7/18/94............ 7,000,000
NationsBank Corp.
10,000 4.27%, 7/11/94............ 10,000,000
PNC Bank, Ohio
1,000 3.50%, 1/31/95............ 999,254
Republic National Bank
9,000 4.30%, 3/8/95............. 8,981,223
Society National Bank of
Cleveland
1,000 3.55%, 1/20/95............ 999,105
------------
34,979,418
------------
CERTIFICATE OF DEPOSIT--
EURODOLLAR--0.4%
Republic National Bank
2,000 4.29%, 7/6/94............. 2,000,011
------------
2,000,011
------------
CERTIFICATES OF DEPOSIT--
YANKEE--5.1%
Dai-Ichi Kangyo Bank, Ltd.
1,000 4.29%, 7/8/94............. 999,998
Industrial Bank (Japan)
15,000 4.54%, 7/28/94............ 15,000,000
4,000 4.54%, 7/29/94............ 4,000,000
Sumitomo Bank, Ltd.
4,000 4.23%, 8/5/94............. 3,999,334
------------
23,999,332
------------
COMMERCIAL PAPER--
DOMESTIC--53.3%
American Brands, Inc.
10,000 4.35%, 7/8/94............. 9,991,542
American Express Credit
Corp.
8,000 4.31%, 7/5/94............. 7,996,169
American Honda Finance
Corp.
$1,500 4.32%, 7/5/94............. $ 1,499,280
American Telephone &
Telegraph Co.,
2,500 4.15%, 7/29/94............ 2,491,931
Aristar, Inc.
1,735 4.45%, 7/21/94............ 1,730,711
Associates Corp. of North
America
5,000 4.36%, 8/5/94............. 4,978,806
Auto Alliance Int'l., Inc.
1,000 4.40%, 7/7/94............. 999,267
Beneficial Corp.
8,000 4.35%, 7/5/94............. 7,996,133
Ciesco, Inc.
1,000 4.55%, 7/12/94............ 998,610
CIT Group Holdings, Inc.
5,000 4.45%, 8/22/94............ 4,967,861
Commercial Credit Co.
2,000 4.55%, 7/12/94............ 1,997,219
Consolidated Rail Corp.
1,000 4.33%, 7/7/94............. 999,278
Corporate Asset Funding
Co., Inc.
3,000 4.25%, 7/15/94............ 2,995,042
3,115 4.44%, 8/22/94............ 3,095,022
Corporate Receivables
Corp.
5,300 4.12%, 7/18/94............ 5,289,689
Countrywide Funding Corp.
1,000 4.42%, 7/19/94............ 997,790
Dean Witter, Discover &
Co.
5,000 4.10%, 7/11/94............ 4,994,306
Falcon Asset
Securitization Corp.
1,000 4.55%, 7/12/94............ 998,610
2,000 4.52%, 7/13/94............ 1,996,987
2,000 4.30%, 7/18/94............ 1,995,939
First Union Corp.
5,000 4.27%, 7/20/94............ 4,988,732
</TABLE>
-4- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
COMMERCIAL PAPER--
DOMESTIC--(cont'd)
Ford Motor Credit Corp.
$15,000 4.30%, 7/26/94............ $ 14,955,208
General Electric Capital
Corp.
4,000 4.30%, 7/26/94............ 3,988,056
10,000 4.40%, 8/4/94............. 9,958,444
6,000 3.43%, 9/29/94............ 5,948,550
General Motors Acceptance
Corp.
9,000 4.25%, 7/5/94............. 8,995,750
6,400 4.67%, 7/11/94............ 6,391,698
Golden Peanut Co.
1,000 4.60%, 8/11/94............ 994,761
GTE Corp.
2,995 4.40%, 7/11/94............ 2,991,339
1,000 4.385%, 7/15/94........... 998,295
Heller Financial Services,
Inc.
3,000 4.45%, 7/28/94............ 2,989,988
Hertz Corp.
3,000 4.40%, 7/12/94............ 2,995,967
Household Finance Corp.
5,000 4.40%, 7/6/94............. 4,996,944
3,000 4.30%, 7/25/94............ 2,991,400
International Lease
Finance
1,300 4.15%, 7/20/94............ 1,297,153
2,000 4.675%, 9/7/94............ 1,982,339
ITT Financial Corp.
2,000 4.13%, 7/7/94............. 1,998,623
3,000 4.625%, 7/14/94........... 2,994,990
5,000 4.50%, 7/18/94............ 4,989,375
5,000 4.55%, 7/20/94............ 4,987,993
J.P. Morgan & Co., Inc.
10,000 3.85%, 7/11/94............ 9,989,306
John Deere Capital Corp.
1,000 4.35%, 7/15/94............ 998,308
Merrill Lynch & Co., Inc.
$5,000 4.30%, 7/21/94............ $ 4,988,056
9,000 4.12%, 7/25/94............ 8,975,280
NationsBank Corp.
5,000 4.46%, 8/1/94............. 4,980,797
NYNEX Corp.
2,000 4.37%, 7/15/94............ 1,996,601
2,500 4.52%, 8/23/94............ 2,483,364
Pennsylvania Power &
Lighting Co.
1,000 4.30%, 7/8/94............. 999,164
PHH Corp.
1,000 4.25%, 7/8/94............. 999,174
2,000 4.25%, 7/11/94............ 1,997,639
1,000 4.32%, 7/15/94............ 998,320
Phillip Morris Co., Inc.
2,000 4.30%, 7/5/94............. 1,999,044
19,000 4.35%, 7/8/94............. 18,983,929
Preferred Receivables
Funding Corp.
1,000 4.25%, 7/1/94............. 1,000,000
1,110 4.25%, 7/12/94............ 1,108,559
3,000 4.26%, 7/13/94............ 2,995,740
5,000 4.27%, 7/22/94............ 4,987,546
Public Service Electric &
Gas Co.
3,000 4.60%, 8/25/94............ 2,978,917
Smith Barney Shearson,
Inc.
7,000 4.40%, 7/25/94............ 6,979,466
SRD Finance, Inc.
5,000 4.35%, 7/14/94............ 4,992,145
US West Commerce, Inc.
1,000 4.10%, 7/15/94............ 998,405
USL Capital Corp.
2,000 4.28%, 7/18/94............ 1,995,957
Xerox Credit Corp.
2,000 4.25%, 7/6/94............. 1,998,818
------------
251,870,332
------------
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
COMMERCIAL PAPER--YANKEE--6.3%
American Honda Finance
Corp.
$1,000 4.32%, 7/6/94............. $ 999,400
Bank of Montreal
7,000 4.30%, 7/26/94............ 6,979,097
Canadian Imperial
Holdings, Inc.
10,000 4.25%, 7/11/94............ 9,988,194
Cheltenham & Glouster
Building Society
4,000 4.22%, 7/6/94............. 3,997,656
2,000 4.68%, 8/16/94............ 1,988,040
Grand Metropolitan
Investment Corp.
1,000 4.60%, 8/4/94............. 995,656
Halifax Building Society
1,000 4.68%, 8/16/94............ 994,020
National Australia Funding
1,000 4.30%, 7/21/94............ 997,611
Province of British
Columbia
1,000 4.60%, 7/18/94............ 997,828
1,000 4.70%, 8/8/94............. 995,039
Province of Quebec
1,000 4.40%, 8/26/94............ 993,155
------------
29,925,696
------------
LOAN PARTICIPATIONS--1.7%
Bell Atlantic Financial
Services, Inc.
2,000 4.33%, 7/7/94............. 2,000,000
Hewlett Packard Co.
1,000 4.42%, 7/20/94............ 1,000,000
Morgan Stanley Group, Inc.
5,000 4.60%, 7/1/94............. 5,000,000
------------
8,000,000
------------
MEDIUM--TERM OBLIGATION--1.1%
PNC Bank Kentucky
5,000 3.75%, 9/1/94............. 4,990,437
------------
TIME DEPOSITS--EURODOLLAR--9.6%
Mitsubishi International
Corp.
$21,560 4.50%, 7/1/94............. $ 21,560,000
1,000 4.65%, 8/15/94............ 994,187
Sakura Bank, Ltd.
23,000 4.34%, 7/6/94............. 23,000,000
------------
45,554,187
------------
VARIABLE RATE INSTRUMENTS#--12.5%
Avco Financial Services,
Inc.
2,000 4.436%, 8/26/94........... 2,000,000
Federal Home Loan Mortgage
Corp.
4,000 4.2625%, 9/15/94.......... 3,999,922
Goldman, Sachs & Co.
23,000 5.125%, 4/13/95........... 23,000,000
Lehman Brothers Holdings,
Inc.
6,000 4.75%, 8/26/94............ 6,000,000
Merrill Lynch & Co., Inc.
4,000 4.0125%, 7/20/94.......... 3,999,837
Money Market Auto Loan
Trust 1990-1
2,000 4.525%, 5/31/95........... 2,000,000
Money Market Credit Card
Trust
6,000 4.42%, 6/12/95............ 6,000,000
Morgan Stanley Group, Inc.
1,000 4.125%, 7/15/95........... 1,000,000
1,000 4.5781%, 7/29/94.......... 1,000,019
10,000 4.9375%, 6/15/95.......... 10,000,000
------------
58,999,778
------------
REPURCHASE AGREEMENT--1.0%
5,000 Lehman Brothers Holdings,
Inc., 4.23% dated
6/29/94, due 7/1/94 in
the amount of $5,001,175
(cost $5,000,000; the
value of the collateral
including accrued
interest is
$5,094,516)............. 5,000,000
------------
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
<TABLE>
<CAPTION>
Value
Description (Note 1)
<C> <S> <C>
Total Investments--98.4%
(amortized cost
$465,319,191*).......... $465,319,191
Other assets in excess of
liabilities--1.6%....... 7,737,385
------------
Net Assets--100%.......... $473,056,576
------------
------------
</TABLE>
* The federal income tax basis of portfolio
securities is the same as for financial
reporting purposes.
# For purposes of amortized cost valuation, the
maturity date of these instruments 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.
The industry classification of portfolio holdings shown as a percentage of net
assets as of June 30, 1994 was as follows:
<TABLE>
<S> <C>
Banks..................................... 34.3%
Security Brokers & Dealers................ 17.2
Personal Credit Institutions.............. 14.7
Business Credit Institutions.............. 8.2
Asset Backed Securities................... 7.5
Tobacco................................... 6.6
Telephone Communications.................. 3.0
Auto Rental & Leasing..................... 1.5
Financial Services........................ 1.1
Electrical Services....................... 0.8
Federal Credit Agencies................... 0.8
Equipment Rental & Leasing................ 0.7
Canadian Government....................... 0.6
Computer Rental & Leasing................. 0.4
Food & Kindred Products................... 0.4
Railroads................................. 0.2
Office Machines........................... 0.2
Commodity Trading Firms................... 0.2
-----
98.4
Other assets in excess of liabilities..... 1.6
-----
100.0%
-----
-----
</TABLE>
-7- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets June 30, 1994
-------------
<S> <C>
Investments, at amortized cost which approximates value................................... $ 465,319,191
Cash...................................................................................... 16,930
Receivable for Fund shares sold........................................................... 10,438,056
Interest receivable....................................................................... 728,415
Deferred expenses and other assets........................................................ 30,624
-------------
Total assets.......................................................................... 476,533,216
-------------
Liabilities
Payable for Fund shares reacquired........................................................ 2,988,658
Dividends payable......................................................................... 190,272
Due to Manager............................................................................ 165,179
Accrued expenses and other liabilities.................................................... 132,531
-------------
Total liabilities..................................................................... 3,476,640
-------------
Net Assets................................................................................ $ 473,056,576
-------------
-------------
Net assets were comprised of:
Common stock, $0.001 par value.......................................................... $ 473,057
Paid-in capital in excess of par........................................................ 472,583,519
-------------
Net assets at June 30, 1994............................................................. $ 473,056,576
-------------
-------------
Net asset value, offering price and redemption price per share
($473,056,576 / 473,056,576 shares of common stock issued and outstanding; two billion
shares authorized)...................................................................... $1.00
-------------
-------------
</TABLE>
See Notes to Financial Statements.
-8-
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
June 30,
Net Investment Income 1994
----------
<S> <C>
Income
Interest.............................. $9,991,977
----------
Expenses
Management fee........................ 1,359,346
Transfer agent's fees and expenses.... 261,000
Custodian's fees and expenses......... 101,000
Registration fees..................... 105,000
Audit fee............................. 37,000
Amortization of organization
expenses............................ 27,000
Reports to shareholders............... 25,000
Directors' fees....................... 15,000
Legal fees............................ 10,000
Miscellaneous......................... 14,918
----------
Total expenses...................... 1,955,264
----------
Net investment income................... 8,036,713
----------
Realized Gain on Investments
Net realized gain on investment
transactions.......................... 35,906
----------
Net Increase in Net Assets
Resulting from Operations............... $8,072,619
----------
----------
</TABLE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended
Increase (Decrease) ----------------------------------
in Net Assets 1994 1993
--------------- ---------------
<S> <C> <C>
Operations
Net investment
income........... $ 8,036,713 $ 5,681,217
Net realized gain
from
investment
transactions..... 35,906 149,500
--------------- ---------------
Net increase in net
assets
resulting from
operations....... 8,072,619 5,830,717
--------------- ---------------
Dividends and
distributions to
shareholders....... (8,072,619) (5,830,717)
--------------- ---------------
Fund share
transactions
(at $1 per share)
Proceeds from
shares
subscribed....... 1,796,491,879 1,301,022,263
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions.... 6,433,981 4,625,673
Cost of shares
reacquired....... (1,506,126,858) (1,312,483,396)
--------------- ---------------
Net increase
(decrease) in net
assets from Fund
share
transactions..... 296,799,002 (6,835,460)
--------------- ---------------
Total increase
(decrease)......... 296,799,002 (6,835,460)
Net Assets
Beginning of year.... 176,257,574 183,093,034
--------------- ---------------
End of year.......... $ 473,056,576 $ 176,257,574
--------------- ---------------
--------------- ---------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-9-
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Notes to Financial Statements
Prudential-Bache Special Money Market Fund, Inc., doing business as
Prudential Special Money Market Fund (the ``Fund''), is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company consisting of only the Money Market Series (the ``Series''). The Fund
was incorporated in Maryland on October 20, 1989 and had no operations until
November 30, 1989 when 100,000 shares of the Series' common stock was sold for
$100,000 to Prudential Mutual Fund Management, Inc. (PMF). Investment operations
commenced January 22, 1990.
The investment objective of the Series is high current income consistent with
the preservation of principal and liquidity. The Series invests in a diversified
portfolio of high quality money market securities maturing in 13 months or less.
The ability of issuers of securities held by the Series to meet their
obligations may be affected by economic developments in a specific industry or
region.
Note 1. Accounting The following is a summary of significant
Policies accounting
policies followed by the Fund in the preparation
of its financial statements.
Securities Valuation: Portfolio securities are valued at amortized cost, which
approximates market value. The amortized cost method of valuation involves
valuing a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of the difference between the principal amount
due at maturity and cost.
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.
Federal Income Taxes: It is the intent of the Fund to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable net income to its shareholders.
Therefore, no federal income tax provision is required.
Dividends and Distributions: The Fund declares daily and pays monthly dividends
from net investment income and short-term capital gains. Dividends are recorded
on ex-dividend date. Income distributions and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles.
Deferred Organization Expenses: Organization expenses of approximately $135,000
were incurred in connection with the organization and initial registration of
the Fund. The total organization expenses have been deferred and are being
amortized over the period of benefit not to exceed 60 months from the date of
commencement of investment operations for the Fund. PMF has agreed not to redeem
the 100,000 shares purchased until all organization expenses have been
amortized.
Note 2. Agreements The Fund has a management agreement with PMF.
Pursuant to this agreement, PMF has responsibility for all investment advisory
services and supervises the subadviser's performance of such services. PMF has
entered into a subadvisory agreement with The Prudential Investment Corporation
(``PIC''); PIC furnishes investment advisory services in connection with the
management of the Fund. PMF pays for the cost of the subadviser's services, the
compensation of officers and employees of the Fund, occupancy and certain
clerical and bookkeeping costs of the Fund. The Fund bears all other costs and
expenses.
The management fee paid PMF is computed daily and payable monthly at an
annual rate of .50% of the average daily net assets of the Fund.
The Fund has a distribution agreement with Prudential Mutual Fund
Distributors, Inc. (``PMFD''). PMFD serves the Fund without compensation.
PMFD is a wholly-owned subsidiary of PMF; PMF and PIC are (indirect)
wholly-owned subsidiaries of The Prudential Insurance Company of North America.
Note 3. Other Prudential Mutual Fund Services, Inc. (``PMFS''),
Transactions With a wholly-owned subsidiary of
Affiliates PMF, serves as the Fund's transfer agent. During
the year ended June 30, 1994, the Series incurred fees of approximately $234,000
for the services of PMFS. As of June 30, 1994, approximately $27,000 of such
fees were owed to PMFS. Transfer agent fees and expenses in the Statement of
Operations include certain out of pocket expenses paid to non-affiliates.
-10-
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Financial Highlights
<TABLE>
<CAPTION>
January 22,
1990*
Year Ended June 30, Through
------------------------------------------------ June 30,
1994 1993 1992 1991 1990*
------------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income and net realized gains......... 0.030 0.027 0.044 0.071# 0.036#
Dividends and distributions.......................... (0.030) (0.027) (0.044) (0.071) (0.036)
------------- -------- -------- -------- -------------
Net asset value, end of period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- -------- -------- -------- -------------
------------- -------- -------- -------- -------------
TOTAL RETURN:**...................................... 3.09% 2.77% 4.49% 7.36% 3.65%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)...................... $ 473,057 $176,258 $183,093 $284,849 $ 181,690
Average net assets (000)............................. $ 271,869 $213,948 $249,223 $328,899 $ 177,412
Ratios to average net assets:
Expenses........................................... 0.72% 0.81% 0.83% 0.61%# 0.19%(D)#
Net investment income.............................. 2.96% 2.73% 4.36% 6.98%# 8.12%(D)#
- ---------------
* Commencement of investment operations.
** Total return is calculated assuming a purchase of shares on the first day and a sale on
the last day of each year reported and includes reinvestment of dividends and
distributions. Total returns for periods for less than a full year are not annualized.
(D) Annualized.
# Net of expense subsidy and/or management fee waiver.
</TABLE>
See Notes to Financial Statements.
-11-
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors of
Prudential Special Money Market Fund
Money Market Series
We have audited the accompanying statement of assets and liabilities of
Prudential Special Money Market Fund--Money Market Series, including the
portfolio of investments, as of June 30, 1994, the related statements of
operations for the year then ended and of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
four years in the period then ended, and for the period January 22, 1990
(commencement of investment operations) through June 30, 1990. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at June
30, 1994 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Prudential Special
Money Market Fund--Money Market Series as of June 30, 1994, the results of its
operations, the changes in its net assets and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
Deloitte & Touche
New York, New York
July 28, 1994
IMPORTANT NOTICE FOR SHAREHOLDERS
Mutual fund dividends which have been derived from interest on federal
obligations are not taxable to New York, California, Massachusetts and Oregon
shareholders provided the mutual fund meets certain requirements mandated by the
state taxing authorities. The requirements have not been met in New York or
California; however, for Massachusetts and Oregon, 2% of the dividends paid by
the Fund qualify for such tax deduction.
For more detailed information regarding your state and local taxes, you
should contact your tax adviser or the state/local taxing authorities.
-12-
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Directors
Edward D. Beach
Delayne Dedrick Gold
Harry A. Jacobs, Jr.
Lawrence C. McQuade
Richard A. Redeker
Stanley E. Shirk
Stephen Stoneburn
Nancy H. Teeters
Officers
Lawrence C. McQuade, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Domenick Pugliese, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributor
Prudential Mutual Fund Distributors, Inc.
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Deloitte & Touche
1633 Broadway
New York, NY 10019
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852, Collect (908) 417-7555
The accompanying financial statements as of June 30, 1994 were
not audited and accordingly, no opinion is expressed on them.
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
MF141E274430J103 Cat. #4442337
