(ICON)
Prudential
Special
Money
Market Fund
Money Market Series
ANNUAL
REPORT
June 30, 1995
Prudential Mutual Funds
Building Your Future
On Our StrengthSM (LOGO)
<PAGE>
Prudential Special Money Market Fund
Performance At A Glance.
Money market investors enjoyed many happy returns while interest rates rose
throughout 1994 and into 1995. But nothing lasts forever. Short-term interest
rates that reached 6% in February fell to 5.75% in July as the Federal Reserve
sought to pump new life into a faltering U.S. economy by lowering rates.
Despite the decline in short-term rates, we are pleased to report that as of
June 30, 1995, the 7-day current yield of your Prudential Special Money Market
Fund -- Money Market Series had risen to 5.3% from 3.8% a year earlier. This
performance slightly lagged yields from the average money market fund which
rose to 5.4% from 3.6% for the same 12-month period, according to IBC/Donoghue,
a widely known and independent, mutual fund tracking firm.
<TABLE>
Fund Facts As of 6/30/95
--------------------------------------------------------------------------------
<CAPTION>
7-day Net Asset Weighted Total Net
Current Yield Value Avg. Mat. Assets (mil.)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Special Money Market Fund 5.3% $1 64 days $359
--------------------------------------------------------------------------------
IBC/Donoghue Money
Fund Avg. (All Taxable)* 5.4 $1 58 days N/A
-----------------------------------------------------------------------------
----
</TABLE>
Note: Yields will fluctuate from time to time and past performance is no
guarantee of future results. An investment in the Fund is neither insured nor
guaranteed by the U.S. government and there can be no assurance that the Fund
will be able to maintain a stable net asset value.
*This is the average 7-day current yield, NAV and WAM of 738 funds in
International Business Communications/Donoghue all taxable money market fund
category as of June 30, 1995.
GRAPH
Source: Lipper Analytical Services, Inc. Financial markets change, so a mutual
fund's past performance should never be used to predict future results. The
risks to each of the investments listed above are different -- we provide
12-month total returns for several Lipper mutual fund categories to show you
that reaching for higher yields means tolerating more risk. The greater the
risk, the larger the potential reward or loss. In addition, we've added
historical 20-year average annual returns to show that 1995's returns (so far)
are higher than normal. These returns assume the reinvestment of dividends.
Stock funds will fluctuate a great deal. Smaller capitalization stocks offer
greater potential for long term growth but may be more volatile than larger
capitalization stocks. Investors receive higher historical total returns from
stocks than from most other investments.
Bond funds provide more income than stock funds, which can help smooth out
their total returns year by year. But their prices still fluctuate (sometimes
a
good deal) and their returns are historically lower than those of stock funds.
Sector or specialty stock funds usually entail the greatest risks because they
are not widely diversified. They are designed for sophisticated investors who
can tolerate additional risk in exchange for higher potential rewards or
losses.
Money market funds attempt to preserve a constant share value; they don't
fluctuate much in price but their returns are generally among the lowest of the
major investment categories.
<PAGE>
Robert N. Felice, Fund Manager
Portfolio
Manager's Report PICTURE
The Prudential Special Money Market Fund -- Money Market Series seeks high
current income consistent with the stability of capital and maintenance of
liquidity. The Fund invests in a diversified portfolio of high quality, U.S.
dollar-denominated money market instruments with maturities of 13 months or
less.
1. Strategy Session.
What Goes Up.
Until July, the Federal Reserve had moved aggressively to moderate growth and
forestall inflation by increasing short-term interest rates. Seven times the
central bank bumped up the targeted federal funds rate, the rate banks charge
each other for overnight loans, putting pressure on lenders to increase the
cost of borrowing for businesses and consumers. The seventh and final move
occurred in February when short-term rates rose to 6% from 5.5%.
In anticipation of this move, the Fund shortened the weighted average maturity
(WAM) of its portfolio. Shorter maturities gave us more cash to invest in
securities paying newer, higher rates. And we did.
Must Come Down.
By the end of June, weaknesses had surfaced in many areas of the economy.
Interest-rate sensitive sectors were especially affected. Car and home sales
fell. Employment slowed. And there was serious talk about another recession.
The Federal Reserve reacted on July 6, by lowering short-term rates by 25 basis
points to 5.75%. The lower rate would hopefully rejuvenate the economy by
making loans more affordable.
Since February, we had gradually extended our maturities to 64 days, which was
several days longer than the average money fund tracked by IBC/Donoghue, so we
could preserve higher yielding securities for a longer period of time before
having to reinvest in lower yielding securities.
Overview
Investments may include securities issued by the U.S. government and its
agencies, foreign governments, major corporations and commercial banks of the
U.S. and foreign countries. We typically purchase only high quality, short-term
securities which are rated in one of the two highest categories by at least two
major rating agencies or, if not rated, deemed to be of equivalent quality by
our credit research staff.
GRAPH
<PAGE>
2. What Went Well.
Moving to Change Course.
After the Federal Reserve pushed rates up in February, we gradually changed
course and moved to lengthen WAM (64 days by June 30). Why did we eventually
come to believe that the Federal Reserve's seventh increase might be the last
for now?
As the second quarter progressed, we saw the same economic warning signs that
the central bank did. Gross Domestic Product (GDP) which had risen at a torrid
5.1% in the last quarter of 1994, moderated to 2.7% in the first quarter of
1995. By late spring, it became very clear the economy was slowing
dramatically. This made the case against another interest rate increase a
strong one.
3. And Not So Well.
In retrospect, we should have moved more aggressively in March and April to
lengthen maturities rather than waiting until May and June.
Why didn't we move faster? As March ended we thought there was still a
possibility that the Federal Reserve might continue to increase interest rates
-- and we did not want to be caught holding longer term maturities if this
happened. Throughout the first quarter, economic signs were mixed, and it
appeared to us that the economy would not cool off more quickly. But it did.
The higher interest rates engineered by the Federal Reserve appear to have
really taken the wind out of the economy's sails. And just like economic theory
purports, consumers stopped spending and companies began laying off employees.
4. Looking Ahead.
Money market yields have probably peaked for now. Lower interest rates may not
be welcome news for money market shareholders, but keep in mind, that a money
market fund usually is a place for short-term investments or where more
aggressive investors maintain a liquid position for investment flexibility.
Long-term investors whose goal is to grow their capital should not place a
significant portion of their portfolio in money markets funds for a lengthy
time period. Money market yields may not keep pace with inflation -- a key
consideration to long-term asset growth.
A Word About Quality
As of June 30, 1995, 100% of the Fund's investments were rated in one of the
two higher quality ratings by either Moody's Investors Service, Inc.,Standard
& Poor's Corp. or Duff & Phelps Credit Rating Co. or deemed to be of equivalent
quality if they were not rated. Although there is never a guarantee that the
share price of the Prudential Special Money Market Fund will remain at $1, we
at Prudential emphasize a conservative, quality-oriented investment approach.
1
<PAGE>
President's Letter
(PICTURE)
July 31, 1995
Dear Shareholder:
You've probably noticed your shareholder report looks different this month.
We've designed it to provide clear, concise and forthright information about
your investment, its performance, risks and potential rewards. And, from time
to time, I'll share some thoughts with you about the industry, mutual fund
trends and how we're responding to them at Prudential Mutual Funds.
On The Hill
One recent trend we like is part of the "Contract with America." It's called
the American Dream Savings Account and it was approved by the House of
Representatives earlier in the year. The Senate has now taken up the proposal,
which would improve the traditional Individual Retirement Account program by
allowing higher non-working spouse contributions. The proposed law would also
allow tax-free and penalty-free withdrawals from the account before age 59 1/2,
for certain expenses. Prudential Mutual Funds supports the proposal and we urge
you to share your opinion about it with your Senator. You can reach your
Senator's office by calling 202-224-3121.
In Closing
One final note: if you're a Class B shareholder in other Prudential Mutual
Funds, you'll begin noticing a change on your statements once you've held your
shares for seven years. At that time they will automatically begin to convert
to Class A shares on a quarterly basis. Since Class A shares carry lower annual
distribution charges than Class B shares, your total returns will automatically
rise after the conversion. Conversions started earlier this year and will occur
each calendar quarter -- beginning in December, 1995, they'll take place every
March, June, September and December. I hope you'll find this information
useful as you work with your financial advisor or registered representative to
develop your personal investment plan. Thank you for choosing Prudential Mutual
Funds for your mutual fund investment.
Sincerely,
Richard A. Redeker
President
2
<PAGE>
Portfolio of Investments as PRUDENTIAL SPECIAL MONEY MARKET FUND
of June 30, 1995 MONEY MARKET SERIES
------------------------------------------------------------
------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
------------------------------------------------------------
Bank Holding Paper--0.6%
$2,000 PNC Funding Corp., 5.96%, 8/18/95 $ 1,984,107
------------------------------------------------------------
Bank Notes--9.5%
1,000 Bank One Indianapolis N.A.,
7.18%, 2/5/96 1,002,348
16,000 Bank One Milwaukee, N.A.,
5.98%, 7/31/95 15,999,961
2,000 Huntington National Bank,
6.20%, 11/3/95 2,000,564
1,000 Mellon Bank, N.A., 6.20%, 11/1/95 999,934
NationsBank Texas,
8,000 6.82%, 10/31/95 8,000,506
3,000 7.30%, 1/26/96 3,007,133
2,000 Northern Trust Co., 6.60%, 11/17/95 2,002,369
1,000 State Street Bank & Trust Co.,
6.01%, 9/20/95 999,980
------------
34,012,795
------------------------------------------------------------
Certificates of Deposit - Domestic--1.4%
1,000 National Westminster Bank Delaware,
5.85%, 12/26/95 1,000,000
4,000 Societe Generale, 7.65%, 1/8/96 4,020,046
------------
5,020,046
------------------------------------------------------------
Certificates of Deposit - Eurodollar--0.8%
Bank of New York,
1,000 6.15%, 7/3/95 1,000,002
2,000 6.27%, 10/31/95 2,000,453
------------
3,000,455
------------------------------------------------------------
Certificates of Deposit - Yankee--7.8%
3,000 Caisse Nationale de Credit,
6.22%, 11/2/95 3,000,190
2,000 Commerzbank, 7.10%, 2/2/96 2,005,108
3,000 Industrial Bank of Japan, Ltd.,
6.02%, 7/5/95 3,000,000
5,000 Norinchukin Bank, 6.06%, 7/20/95 5,000,026
Sumitomo Bank, Ltd.,
$9,000 6.00%, 7/10/95 $ 9,000,000
6,000 6.06%, 7/14/95 6,000,022
------------
28,005,346
------------------------------------------------------------
Commercial Paper - Domestic--40.7%
3,000 A. H. Robbins Co., Inc., 5.97%,
7/21/95 2,990,050
2,973,735
American Express Credit Corp.,
3,000 6.18%, 8/21/95
2,000 5.90%, 10/16/95 1,964,928
995,739
American Home Products Corp.,
1,000 5.90%, 7/27/95
1,000 5.95%, 7/27/95 995,703
3,000 5.98%, 7/27/95 2,987,043
5,000 5.97%, 8/10/95 4,966,833
1,000 5.95%, 8/31/95 989,918
2,000 Aristar, Inc., 6.02%, 7/5/95 1,998,662
1,998,667
Associates Corp. of North America,
2,000 6.00%, 7/5/95
5,000 5.96%, 8/2/95 4,973,511
3,000 5.91%, 8/29/95 2,970,943
2,000 5.91%, 8/30/95 1,980,300
AT&T Capital Corp.,
1,000 5.83%, 9/8/95 988,826
2,000 5.83%, 9/12/95 1,976,356
CIT Group Holdings, Inc.,
3,500 6.00%, 7/5/95 3,497,667
2,000 5.90%, 9/11/95 1,976,400
1,000 Coca-Cola Enterprises, Inc.,
6.00%, 11/3/95 979,167
2,991,030
Countrywide Funding Corp.,
3,000 5.98%, 7/19/95
1,000 6.02%, 7/25/95 995,987
1,000 6.02%, 7/27/95 995,652
3,000 6.00%, 7/28/95 2,986,500
2,000 Dean Witter, Discover & Co.,
5.97%, 7/5/95 1,998,673
1,000 Duracell, Inc., 5.98%, 8/11/95 993,189
Finova Capital Corp.,
2,000 6.20%, 7/6/95 1,998,278
1,000 6.12%, 7/11/95 998,300
1,000 6.03%, 8/1/95 994,808
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements. 3 -----
<PAGE>
<PAGE>
Portfolio of Investments as PRUDENTIAL SPECIAL MONEY MARKET FUND
of June 30, 1995 MONEY MARKET SERIES
------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
------------------------------------------------------------
Commercial Paper - Domestic (cont'd.)
$1,000 6.01%, 8/2/95 $ 994,658
1,000 6.05%, 8/7/95 993,782
4,000 6.00%, 8/21/95 3,966,000
Ford Motor Credit Corp.,
5,000 6.20%, 9/12/95 4,937,139
General Electric Capital Corp.,
9,000 6.05%, 10/18/95 8,835,138
4,000 6.53%, 10/30/95 3,912,208
19,000 General Motors Acceptance Corp.,
6.15%, 7/12/95 18,964,295
1,000 GTE Finance Corp., 5.98%, 8/11/95 993,188
9,000 Hertz Corp., 5.86%, 9/18/95 8,884,265
2,000 Household Finance Corp., 5.82%,
9/26/95 1,971,870
ITT Corp.,
2,000 6.00%, 7/11/95 1,996,667
4,000 5.96%, 7/14/95 3,991,391
2,987,217
McKenna Triangle National Corp.,
3,000 5.90%, 7/27/95
5,679 5.96%, 8/3/95 5,647,974
4,000 Morgan Stanley Group, Inc.,
5.85%, 10/2/95 3,939,550
1,000 Norwest Financial, Inc., 6.00%,
7/5/95 999,333
Pennsylvania Power & Light Energy
Trust,
1,000 5.92%, 7/10/95 998,520
1,000 5.95%, 7/17/95 997,356
4,000 Philip Morris Co., Inc., 6.02%,
7/13/95 3,991,973
986,838
Preferred Receivables Funding Corp.,
1,000 5.85%, 9/20/95
3,000 Sears Roebuck Acceptance Corp.,
5.98%, 7/10/95 2,995,515
1,243 State Street Capital Corp., 6.07%,
7/7/95 1,241,742
983 Transamerica Corp., 6.00%, 7/6/95 982,181
2,000 Whirlpool Financial Corp.,
6.05%, 7/21/95 1,993,278
1,000 Xerox Corp., 5.82%, 9/14/95 987,875
------------
146,346,818
------------------------------------------------------------
Commercial Paper - Yankee--12.1%
2,891,445
Abbey National Treasury Services,
PLC,
2,900 5.90%, 7/19/95
3,000 5.82%, 9/15/95 2,963,140
$3,000 6.40%, 5/17/96 $ 3,000,000
994,958
American Honda Finance Corp.,
1,000 6.05%, 7/31/95
1,000 5.88%, 8/31/95 990,037
2,000 Bayerishe Hypo Und Wechsel Bank,
6.376%, 4/24/96 1,998,828
3,000 BHF Finance, Inc., 5.80%, 9/22/95 2,959,883
987,872
Bradford & Bingley Building Society,
1,000 5.90%, 9/13/95
2,000 5.81%, 9/26/95 1,971,918
3,000 Cheltenham & Gloucester Building
Society,
6.02%, 7/20/95 2,990,467
1,000 Halifax Building Society, 5.81%,
9/11/95 988,380
Hanson Finance, PLC.,
2,000 5.83%, 9/20/95 1,973,765
4,000 5.90%, 9/21/95 3,946,244
2,847,117
Leeds Permanent Buillding Society,
2,850 6.07%, 7/7/95
2,000 National Australia Funding, Inc.,
6.35%, 8/4/95 1,988,006
Paribas Finance, Inc.,
1,000 6.00%, 8/1/95 994,833
4,000 5.84%, 9/28/95 3,942,249
5,000 Province of Quebec, 5.82%, 9/26/95 4,929,675
------------
43,358,817
------------------------------------------------------------
Corporate Bonds--1.1%
1,014,503
American General Finance Corp.,
1,000 8.875%, 3/15/96
1,000 Atlantic Richfield Company,
10.375%, 7/15/95 1,001,408
1,000 BP America Inc.,
10.15%, 3/15/96 1,022,887
1,000 Ford Motor Credit Corp.,
8.875%, 3/15/96 1,013,246
------------
4,052,044
------------------------------------------------------------
Government Coupon Issue--1.5%
2,500 Federal Home Loan Banks,
6.05%, 6/13/96 2,501,396
</TABLE>
--------------------------------------------------------------------------------
----- 4 See Notes to Financial Statements.
<PAGE>
<PAGE>
Portfolio of Investments as PRUDENTIAL SPECIAL MONEY MARKET FUND
of June 30, 1995 MONEY MARKET SERIES
------------------------------------------------------------
------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
------------------------------------------------------------
Government Coupon Issue (cont'd.)
$3,000 Federal National Mortgage
Association, 5.71%, 6/10/96 $ 2,991,845
------------
5,493,241
------------------------------------------------------------
Medium-Term Notes--1.7%
3,000 Merrill Lynch & Co., Inc.,
6.0725%, 7/5/95 2,999,851
3,000 Ford Motor Credit Corp.,
6.125%, 12/11/95 2,992,205
------------
5,992,056
------------------------------------------------------------
Medium-Term Notes - Yankee--0.6%
2,000 Westdeusche Landesbank,
6.85%, 3/1/96 2,002,072
------------------------------------------------------------
Time Deposit - Yankee--5.4%
3,547 Dai-Ichi Kangyo Bank, Ltd.,
6.375%, 7/5/95 3,547,000
Mitsubishi Bank, Ltd.,
9,000 6.1875%, 7/7/95 9,000,000
7,000 6.125%, 7/12/95 7,000,000
------------
19,547,000
------------------------------------------------------------
Variable Rate Obligations(b)--19.5%
1,999,981
American Express Centurion Bank,
2,000 6.0625%, 7/5/95
1,000 6.0625%, 7/17/95 999,873
2,000 6.0625%, 7/19/95 1,999,966
1,000 6.0625%, 7/28/95 999,976
1,000 Avco Financial Services, Inc.,
6.1407%, 7/13/95 1,000,000
6,000 Beneficial Corp., 6.0404%, 7/19/95 5,999,797
5,000 General Electric Capital Corp.,
6.0313%, 7/26/95 5,000,000
20,000 Goldman, Sachs & Co.,
6.1875%, 11/27/95 20,000,000
9,000 Lehman Brothers Holdings, Inc.,
6.2625%, 7/24/95 9,000,000
4,000 Merrill Lynch & Co., Inc.,
6.0725%, 7/24/95 3,999,823
8,000 Money Market Auto Loan Trust,
6.235%, 7/17/95 8,000,000
$ 1,000,000
Morgan Stanley Group, Inc.,
$1,000 6.375%, 7/17/95
10,000 6.25%, 8/15/95 10,000,000
------------
69,999,416
------------------------------------------------------------
Total Investments--102.7%
(amortized cost $368,814,213(a)) 368,814,213
Liabilities in excess of
other assets--(2.7%) (9,616,797)
------------
Net Assets--100% $359,197,416
------------
------------
</TABLE>
---------------
(a) The federal income tax basis of portfolio securities is the same as for
financial reporting purposes.
(b) 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, 1995 was as follows:
<TABLE>
<S> <C>
Banks 36.5%
Personal Credit Institutions 15.3
Security Brokers & Dealers 14.7
Business Credit Institutions 11.4
Asset Backed Securities 4.9
Pharmaceuticals 3.9
Tobacco 2.8
Equipment Rental & Leasing 2.5
Bank Holding Companies 2.2
Financial Services 1.9
Federal Credit Agencies 1.5
Canadian Government 1.4
Telecommunication 1.1
Electrical Services 0.6
Household Appliances 0.6
Petroleum Refining 0.6
Beverages 0.3
Photographic Equipment 0.3
Miscellaneous Electrical, Equipment & Supplies 0.2
-----
102.7
Liabilities in excess of other assets (2.7)
-----
100.0%
-----
-----
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements. 5 -----
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
Statement of Assets and Liabilities MONEY MARKET SERIES
--------------------------------------------------------------------------------
<TABLE>
<S>
<C>
Assets
June 30, 1995
--------------
Investments, at amortized cost which approximates
value..................................................... $ 368,814,213
Cash.........................................................................
............................... 37,677
Interest
receivable...................................................................
...................... 1,378,579
Receivable for Series shares
sold...........................................................................
429,499
Deferred expenses and other
assets..........................................................................
9,123
--------------
Total
assets.......................................................................
...................... 370,669,091
--------------
Liabilities
Payable for investments
purchased....................................................................
....... 7,000,000
Payable for Series shares
reacquired...................................................................
..... 3,994,362
Dividends
payable......................................................................
..................... 259,676
Management fee
payable......................................................................
................ 156,188
Accrued expenses and
taxes........................................................................
.......... 61,449
--------------
Total
liabilities..................................................................
...................... 11,471,675
--------------
Net
Assets.......................................................................
........................... $ 359,197,416
--------------
--------------
Net assets were comprised of:
Common stock, $0.001 par value per
share................................................................. $
359,197
Paid-in capital in excess of
par.........................................................................
358,838,219
--------------
Net assets, June 30,
1995.........................................................................
....... $ 359,197,416
--------------
--------------
Net asset value, offering price and redemption price per share
($359,197,416 / 359,197,416 shares of common stock issued and outstanding;
two billion shares
authorized)..................................................................
............................ $1.00
</TABLE>
--------------------------------------------------------------------------------
----- 6 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Statement of Operations
------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income June 30, 1995
-------------
<S> <C>
Income
Interest and discount earned................ $ 23,456,593
-------------
Expenses
Management fee.............................. 2,084,495
Transfer agent's fees and expenses.......... 409,000
Custodian's fees and expenses............... 163,000
Registration fees........................... 102,000
Reports to shareholders..................... 62,000
Audit fee................................... 37,000
Directors' fees............................. 15,000
Legal fees.................................. 13,000
Amortization of organization expense........ 11,488
Miscellaneous............................... 17,381
-------------
Total expenses........................... 2,914,364
-------------
Net investment income.......................... 20,542,229
Realized Gain on Investments
Net realized gain on investment transactions... 27,039
-------------
Net Increase in Net Assets
Resulting from Operations...................... $ 20,569,268
-------------
-------------
</TABLE>
<TABLE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Statement of Changes in Net Assets
<CAPTION>
Increase (Decrease) Year Ended June 30, 1995
-----------------------------------
in Net Assets 1995 1994
-------------- -----------------
<S> <C> <C>
Operations
Net investment income... $ 20,542,229 $ 8,036,713
Net realized gain on
investment
transactions......... 27,039 35,906
-------------- -----------------
Net increase in net
assets
resulting from
operations........... 20,569,268 8,072,619
-------------- -----------------
Dividends and distributions
to shareholders......... (20,569,268) (8,072,619)
-------------- -----------------
Fund share transactions
(at $1 per share)
Proceeds from shares
subscribed........... 1,721,699,172 1,796,491,879
Net asset value of
shares
issued to
shareholders in
reinvestment of
dividends and
distributions........ 16,901,677 6,433,981
Cost of shares
reacquired........... (1,852,460,009) (1,506,126,858)
-------------- -----------------
Net increase (decrease)
in net assets from
Series share
transactions......... (113,859,160) 296,799,002
-------------- -----------------
Total increase
(decrease)................. (113,859,160) 296,799,002
Net Assets
Beginning of year.......... 473,056,576 176,257,574
-------------- -----------------
End of year................ $ 359,197,416 $ 473,056,576
-------------- -----------------
-------------- -----------------
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements. 7 -----
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
Notes to Financial Statements MONEY MARKET SERIES
--------------------------------------------------------------------------------
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 Policies
The following is a summary of significant 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 were deferred and amortized over five
years.
------------------------------------------------------------
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 America.
------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent. During the twelve months ended June
30, 1995, the Series incurred fees of approximately $312,000 for the services
of
PMFS. As of June 30, 1995, approximately $29,000 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.
--------------------------------------------------------------------------------
----- 8
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
Financial Highlights MONEY MARKET SERIES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
June 30,
------------------------------------------------------------
1995 1994
1993 1992 1991
-------- --------
-------- -------- --------
<S> <C> <C> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............ $ 1.00 $ 1.00 $
1.00 $ 1.00 $ 1.00
Net investment income and net realized
gains....................................... 0.049 0.030
0.027 0.044 0.071(b)
Dividends and distributions................... (0.049) (0.030)
(0.027) (0.044) (0.071)
-------- --------
-------- -------- --------
Net asset value, end of year.................. $ 1.00 $ 1.00 $
1.00 $ 1.00 $ 1.00
-------- --------
-------- -------- --------
-------- --------
-------- -------- --------
TOTAL RETURN(a):.............................. 5.05% 3.09%
2.77% 4.49% 7.36%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)................. $359,197 $473,057
$176,258 $183,093 $284,849
Average net assets (000)...................... $416,899 $271,869
$213,948 $249,223 $328,899
Ratios to average net assets:
Expenses.................................... 0.70% 0.72%
0.81% 0.83% 0.61%(b)
Net investment income....................... 4.93% 2.96%
2.73% 4.36% 6.98%(b)
</TABLE>
---------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes
reinvestment of dividends and distributions.
(b) Net of expense subsidy and/or management fee waiver.
--------------------------------------------------------------------------------
See Notes to Financial Statements. 9 -----
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
Independent Auditors' Report MONEY MARKET SERIES
--------------------------------------------------------------------------------
The Shareholders and Board of Directors
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, 1995, 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
five years in the period then ended. 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 as of
June 30, 1995 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. 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, 1995, 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 LLP
New York, New York
August 21 1995
--------------------------------------------------------------------------------
----- 10
<PAGE>
<PAGE>
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<PAGE>
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<PAGE>
The Prudential Mutual Family
Prudential Mutual Fund Management offers a broad range of mutual funds designed
to meet your individual needs. We welcome you to review the investment options
available through our family of funds. For more information on the Prudential
Mutual Funds, including charges and expenses, contact your Prudential
Securities Financial Advisor or Pruco Securities Representative or telephone
the Funds at (800) 225-1852 for a free prospectus. Read the prospectus
carefully before you invest or send money.
Taxable Bond Funds
Prudential Diversified Bond Fund, Inc.
Prudential Government Income Fund, Inc.
(formerly known as Prudential Government Plus Fund)
Prudential Government Securities Trust
Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential Structured Maturity Fund, Inc.
Income Portfolio
Prudential U.S. Government Fund
The BlackRock Government Income Trust
Tax-Exempt Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Yield Series
Insured Series
Modified Term Series
Prudential Municipal Series Fund
Florida Series
Hawaii Income Series
Maryland Series
Massachusetts Series
Michigan Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
Global Funds
Prudential Europe Growth Fund, Inc.
Prudential Global Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Global Natural Resources Fund, Inc.
Prudential Intermediate Global Income Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential Short-Term Global Income Fund, Inc.
Global Assets Portfolio
Short-Term Global Income Portfolio
Global Utility Fund, Inc.
Equity Funds
Prudential Allocation Fund
(formerly know as Prudential FlexiFund)
Conservatively Managed Portfolio
Strategy Portfolio
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
Prudential Growth Opportunity Fund, Inc.
Prudential Multi-Sector Fund, Inc.
Prudential Strategist Fund, Inc.
(formerly known as Prudential Growth Fund)
Prudential Utility Fund, Inc.
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Money Market Funds
- Taxable Money Market Funds
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund
Money Market Series
Prudential MoneyMart Assets
- Tax-Free Money Market Funds
Prudential Tax-Free Money Fund
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
- Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
- Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
<PAGE>
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll Free (800) 225-1852
Prudential Mutual Fund Management (LOGO)
Directors
Edward D. Beach
Delayne Dedrick Gold
Harry A. Jacobs, Jr.
Richard A. Redeker
Stanley E. Shirk
Stephen Stoneburn
Nancy Hays Teeters
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice President
Eugene S. Stark, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Ellyn C. Acker, 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 LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
74430J103 MF141E
CAT# 444366W
