-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L8PSOg+okeJvzWAiwoGRvWGwashYkGGfmmEwpqxnfNFAqcsEDIPCkF+1ZCLS7UoA 5ezUvMrF2PpwH6YmpnVFMw== 0000311561-96-000008.txt : 19960906 0000311561-96-000008.hdr.sgml : 19960906 ACCESSION NUMBER: 0000311561-96-000008 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960905 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUDENTIAL TAX FREE MONEY FUND INC CENTRAL INDEX KEY: 0000311561 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 132993505 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02927 FILM NUMBER: 96626144 BUSINESS ADDRESS: STREET 1: 199 WATER ST CITY: NEW YORK STATE: NY ZIP: 10292 BUSINESS PHONE: 2122142189 MAIL ADDRESS: STREET 1: ONE SEAPORT PLZ STREET 2: ONE SEAPORT PLZ CITY: NEW YORK STATE: NY ZIP: 10292 FORMER COMPANY: FORMER CONFORMED NAME: PRUDENTIAL BACHE TAX FREE MONEY FUND INC DATE OF NAME CHANGE: 19920603 FORMER COMPANY: FORMER CONFORMED NAME: CHANCELLOR TAX FREE MONEY FUND INC DATE OF NAME CHANGE: 19830516 FORMER COMPANY: FORMER CONFORMED NAME: CHANCELLOR TAX EXEMPT DAILY INCOME FUND INC DATE OF NAME CHANGE: 19810811 N-30D 1 PRUDENTIAL TAX FREE MONEY FUND (ICON) Prudential Tax-Free Money Fund, Inc. SEMI ANNUAL REPORT June 30, 1996 (LOGO) Prudential Tax-Free Money Fund, Inc. Performance At A Glance. During the past six months, opinions swung wildly on where interest rates were headed. As 1996 began, the prediction was that dramatically lower short-term interest rates were on the way. By summer, it was equally as certain that higher rates were coming. Throughout this period the Prudential Tax-Free Money Fund offered competitive, tax-free yields, maintained a high credit quality and a stable $1 net asset value. On June 30, 1996, the Prudential Tax-Free Money Fund's 7-day current yield stood at 2.82%, which was equivalent to a 4.67% taxable yield for persons in the 39.6% income tax bracket.
Fund Facts As of 6/30/96 7-Day Net Asset Taxable Equivalent Yield* Weighted Avg. Total Net Current Yld. Value @31% @36% @39.6% Avg. Maturity Assets (mil.) Tax-Free Money Fund 2.82% $1.00 4.09% 4.41% 4.67% 80 Days $387 IBC/Financial Data Tax-Free Money Fund Avg.** 2.88 1.00 4.17 4.50 4.76 46 Days N/A
Note: Yields will fluctuate from time to time and past performance is not indicative of future results. An investment in the Fund is neither insured nor guaranteed by the U.S. government and there can be no assurance that the Fund will be able to maintain a stable net asset value. *Some investors may be subject to the federal alternative minimum tax (AMT). Income may be subject to state and local taxes. **This is the average 7-day current yield, NAV and WAM of 137 funds in the IBC Financial Data tax-free money fund category as of June 30, 1996. Tracking Tax-Free Money Fund Yields. Prudential Tax-Free Money Fund IBC Financial Data Tax-Free Money Fund Avg. (CHART) Weekly 7-day current yields of Prudential Tax-Free Money Fund and the IBC Financial Data tax-free money fund average. How Investments Compared. (As of 6/30/96) (GRAPH) Source: Lipper Analytical Services. 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 return averages 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 included historical 20-year average annual returns. These returns assume the reinvestment of dividends. U.S. Growth Funds will fluctuate a great deal. Investors have received higher historical total returns from stocks than from most other investments. Smaller capitalization stocks offer greater potential for long-term growth but may be more volatile than larger capitalization stocks. General 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 significantly) and their returns have been historically lower than those of stock funds. Unlike bond funds, bonds, if held to maturity, generally offer a fixed rate of return and fixed principal value. General Municipal Debt Funds invest in bonds issued by state governments, state agencies and/or municipalities. This investment provides income that is usually exempt from federal and state income taxes. Tax-Exempt Money Market Funds attempt to preserve a constant share value and provide tax-free income; they don't fluctuate much in price but their returns are generally among the lowest of the major investment categories. * 18 years for Tax-Exempt Money Funds. Richard S. Lynes, Fund Manager (PHOTO) Portfolio Manager's Report The Prudential Tax-Free Money Fund seeks high current income that is exempt from federal income taxes, consistent with the stability of capital and the maintenance of liquidity. The Fund invests in a diversified portfolio of high quality, short-term municipal securities issued by state and local governments, territories and possessions of the United States and by the District of Columbia. Maturities can range from one day to a maximum of 13 months. We purchase only securities rated in one of the two highest ratings categories by at least two major rating agencies or, if not rated, deemed to be of equivalent quality by our credit research staff. There can be no assurance that the Fund will achieve its investment objective. A Word About Quality. As of June 30, 1996, all of the portfolio's investments were rated at least "Aa" or "Prime 2" by Moody's Investors Service or "AA" or "A-2" by Standard & Poor's with the remainder deemed to be of equivalent quality. Although there is never a guarantee that the share price of Prudential Tax-Free Money Fund will remain at $1, we emphasize a conservative, quality-oriented investment approach. Strategy Session. When we last wrote to you six months ago, short-term interest rates (the Federal Funds rate) stood at 5.25%. We believed the Federal Reserve wanted to follow a "go slow" policy of gently lowering rates to help stimulate a sluggish U.S. economy. Many, however, thought the central bank would lower rates faster and more frequently. We were right, they were wrong. In March, financial opinion swung dramatically in the opposite direction after the federal government released its February jobs report, which revealed that businesses were creating far more new jobs than anyone anticipated. This implied the economy was growing faster than forecast and suggested that higher levels of inflation might be around the corner. Inflation fears intensified later that spring with reports of increased home and auto sales as well as by steadily rising energy and commodity prices. Instead of lower interest rates, money fund managers now faced the prospect that the Federal Reserve would raise interest rates. As a result, taxable short-term yields were bid up in anticipation of the central bank aggressively raising short-term interest rates to slow economic growth and to keep inflation in check. Anticipating moves by the Federal Reserve is one of the keys to preserving competitive yields for a money fund. And we believe that the Federal Reserve will probably raise rates later this year. But being a tax-free money fund, our investment strategy is also driven by many technical and economic factors including seasonal shareholder demands for cash as well as supply and demand conditions. For example, your Fund was invested in relatively longer term securities to help preserve yields while short-term, tax-free interest rates dropped in early July 1996. Short-term municipal markets experienced large cash infusions during this time temporarily depressing rates. This is a seasonal occurrence resulting from maturity and call proceeds as well as coupon payments. Rates usually recover by late July and early August. What Went Well. AMT Paper Lifts Yield. At the beginning of the year, your Fund began purchasing securities whose income, for a few shareholders, may be subject to the federal alternative minimum tax or AMT. Purchasing AMT securities was a good move for two reasons: 1) AMT paper carries higher coupons, sometimes yielding as much as 15 basis points more than that of tax-exempt securities, which equates to an increase of three basis points for the Fund on an annual basis (a basis point is 1/100th of a percentage point); and 2) it brings your Fund's investments in-line with other tax-free money funds, most of which actively purchase AMT securities. And Not So Well. Caught Off-Guard. We were caught off-guard in March when the U.S. government released its February jobs report, which showed that businesses nationwide had created far more new positions than anticipated. While this was good news to many (especially those who found work), signs of economic strength can raise fears of inflation which always makes investors skittish. Looking back, we could have been more prepared for this occurrence by buying shorter than average securities for a couple of more weeks prior to the report's release. We then would have been in a better position to take advantage of the rising yields that accompanied this strong economic news. Looking Ahead. The Federal Reserve wants to promote steady, non-inflationary growth -- but there are many signs pointing to an economy that may be growing too fast right now and higher levels of inflation may follow. Under these circumstances we would not be surprised to see the Federal Reserve raise short-term interest rates (the Federal Funds rate) later this year. If this occurs, your Fund is poised to take advantage of rising interest rates or to preserve a competitive yield if rates remain unchanged. As taxable interest rates rise, so too will tax-free interest rates. Weighted Average Maturity Is Now Longer Than The Average Fund. (CHART) - ------------------------------------------------------------------------------- 1 President's Letter August 1, 1996 (PHOTO) Dear Shareholder: Last year, U.S. stocks and bonds generally posted extraordinary returns. Investors celebrated this performance by putting record amounts of new money into mutual funds in the first few months of 1996. According to figures released by the Investment Company Institute, a mutual fund industry trade group, new investments in mutual funds reached an all-time monthly high of $33 billion in January of 1996. An additional $66 billion was invested in the following three months, although this rapid inflow subsided somewhat in late spring. While we are pleased that mutual funds are attracting new investors, we're concerned that some of them may be "buying last year's returns." Few expect 1995's virtual non-stop returns from the stock and bond markets. In fact, 1996's markets have been volatile so far (stock and bond prices go down just as they go up). There's no better time than now to be talking with your Financial Advisor or Registered Representative. She or he can help you determine reasonable expectations about both the potential performance and risks associated with your investments. Board of Directors Election. In addition to this report, we are including a notice about a special shareholder meeting to elect new Prudential mutual fund boards of directors. Your Board of Directors has approved a proposal to place a common board of experienced directors across many of Prudential's mutual funds to improve business efficiency. The enclosed material contains more complete information about this proposal. Changes at Prudential. Finally, there have been some important changes recently at Prudential that were made with you in mind. Prudential Mutual Funds has moved under the umbrella of Prudential's newly created "Money Management Group." This group manages and administers nearly $190 billion in client assets and provides mutual funds, annuities, defined benefit and defined contribution plans to our individual and institutional investors. We plan to improve the range and quality of investment products and services that we can provide you by better leveraging Prudential's strengths. There will, however, be no change in the service you receive from your Financial Advisor, Registered Representative or our Customer Service unit. We're excited about our future and hope that you are, too. Thank you for your continued support and confidence in Prudential Mutual Funds. Sincerely, Richard A. Redeker President - ------------------------------------------------------------------------------- 2 Portfolio of Investments PRUDENTIAL TAX-FREE as of June 30, 1996 (Unaudited) MONEY FUND, INC. - --------------------------------------------------------------------------------
Principal Moody's Interest Maturity Amount Value Description(a) Rating Rate Date (000) (Note 1) - ----------------------------------------------------------------------------- - ------------------------------------------------- Alabama--0.2% Decatur Alabama Ind. Dev. Brd., Amoco Corp., F.R.D.D., Ser. 95 P1 3.80% 7/1/96 $ 800 $ 800,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Arizona--3.9% Maricopa Cnty. Ind. Dev. Auth., Grand Canyon Univ., F.R.W.D. NR 3.40 7/4/96 9,700 9,700,000 Pima Cnty. Ind. Dev. Auth., F.R.W.D., Ser. 96A NR 3.65 7/5/96 5,445 5,445,000 ------------ 15,145,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- California--1.3% California Higher Ed. Ln. Auth., Student Ln. Rev., A.N.N.M.T., Ser. 87A VMIG1 3.95 7/1/97 5,000 5,000,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Colorado--6.8% Arapahoe Cnty. Multifamily Rev., Var. Ref. Hsg., Stratford Sta. Proj., F.R.D.D., Ser. 94 A-2* 4.10 7/1/96 1,055 1,055,000 Colorado Hlth. Facs. Auth. Rev., Frasier Meadows Manor, F.R.W.D., Ser. 94 NR 3.40 7/4/96 8,595 8,595,000 Colorado Hsg. Fin. Auth., Eagle Trust, F.R.W.D.S., Ser. 94C NR 3.49 7/5/96 12,000 12,000,000 Denver City & Cnty. of Airport Sys. Rev., F.R.W.D., Ser. 91B VMIG1 3.85 7/3/96 4,600 4,600,000 ------------ 26,250,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Connecticut--0.3% Connecticut Hsg. Fin. Auth., Hsg. Mtg. Fin. Pgm., A.N.N.M.T., Ser. A-4 VMIG1 3.65 4/10/97 1,100 1,099,657 - ----------------------------------------------------------------------------- - ------------------------------------------------- Florida--1.8% Broward Cnty. Airport AAA* 10.00 10/1/96 6,970 7,078,851 - ----------------------------------------------------------------------------- - ------------------------------------------------- Georgia--7.3% Cobb Cnty. Dev. Auth., Inst. of Nuclear Pwr., F.R.W.D., Ser. 92 CSP1 3.35 7/3/96 6,830 6,830,000 Fulco Hosp. Auth., St. Joseph Hosp. of Atlanta, T.E.C.P., Ser. 89 VMIG1 3.60 8/13/96 5,200 5,200,000 Fulton Cnty. Dev. Auth., Siemen's Energy Inc., F.R.W.D., Ser. 94 VMIG1 3.45 7/4/96 7,750 7,750,000 Monroe Cnty. Dev. Auth., Ogletherpe Scherer Proj., Ser. 95 NR 3.85 12/26/96 8,600 8,600,000 ------------ 28,380,000
- -------------------------------------------------------------------------------- See Notes to Financial Statements. 3 ----- Portfolio of Investments PRUDENTIAL TAX-FREE as of June 30, 1996 (Unaudited) MONEY FUND, INC. - --------------------------------------------------------------------------------
Principal Moody's Interest Maturity Amount Value Description(a) Rating Rate Date (000) (Note 1) - ----------------------------------------------------------------------------- - ------------------------------------------------- Illinois--15.5% Chicago Illinois, Gen. Oblig., S.E.M.M.T., Ser. 95A VMIG1 3.65% 10/31/96 $ 8,100 $ 8,100,000 Illinois Dev. Fin. Auth., Orleans Multifamily Hsg. Proj., F.R.W.D., Ser. 92 A-1* 4.00 7/5/96 10,120 10,120,000 Illinois Hlth. Fac. Auth., Evanston Hsp., A.N.N.M.T., Ser. 95 VMIG1 3.75 5/15/97 7,000 7,000,000 Evanston Hsp., S.E.M.M.T., Ser. 92 VMIG1 3.35 12/2/96 8,000 8,000,000 Illinois Hsg. Dev. Agy., Homeowner Mtg., S.E.M.M.T., Ser. 95C1 VMIG1 3.35 9/3/96 7,000 7,000,000 Vlg. of Schaumburg, Multifamily Hsg. Rev., Windsong Apts. Proj., F.R.W.D., Ser. 95 A-2* 3.84 7/5/96 5,000 5,000,000 Wheeling Multifamily Hsg. Rev., Woodland Creek II, F.R.W.D., Ser. 90 SP-1* 3.45 7/5/96 9,655 9,655,000 Winnebago & Boone Cntys., Rockford School Dist. #205, T.A.N., Ser. 96 MIG1 4.35 10/30/96 5,000 5,019,494 ------------ 59,894,494 - ----------------------------------------------------------------------------- - ------------------------------------------------- Indiana--1.8% Gary Indiana, Miller Partnership LP, F.R.W.D., Ser. 96A VMIG1 3.65 7/4/96 7,000 7,000,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Kansas--1.0% Butler Cnty., Texaco Refining & Mktg., F.R.D.D., Ser. 95B A-1* 3.85 7/1/96 3,900 3,900,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Kentucky--2.3% Louisville & Jefferson Cnty., Swr. & Drainage Proj., F.R.W.D., Ser. 96A A-1* 3.65 7/5/96 9,000 9,000,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Maryland--3.3% Maryland Dept. of Ecom. & Com., Sngl. Fam. Prog., S.E.M.O.T., Ser. 87-6 Aa 3.60 10/1/96 5,180 5,180,000 Maryland Econ. Dev. Corp., F.R.W.D., Ser. 95 A-1* 3.35 7/4/96 7,500 7,500,000 ------------ 12,680,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Massachusetts--1.2% Massachusetts Bay Transit. Auth., Ser. A MIG2 3.75 2/28/97 4,700 4,698,459 - ----------------------------------------------------------------------------- - ------------------------------------------------- Michigan--1.9% Grand Rapids Econ. Dev. Corp., Ind. Dev. Rev. Rfdg., F.R.W.D., Ser. 92 CPS1 3.40 7/4/96 7,500 7,500,000
- -------------------------------------------------------------------------------- - -----4 See Notes to Financial Statements. Portfolio of Investments PRUDENTIAL TAX-FREE as of June 30, 1996 (Unaudited) MONEY FUND, INC. - --------------------------------------------------------------------------------
Principal Moody's Interest Maturity Amount Value Description(a) Rating Rate Date (000) (Note 1) - ----------------------------------------------------------------------------- - ------------------------------------------------- Missouri--1.4% Missouri St. Hlth. & Ed. Facs. Auth., Sisters of Saint Marys, Hlth. Care, T.E.C.P., Ser. 88C VMIG1 3.60% 8/7/96 $ 5,200 $ 5,200,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Nebraska--1.3% Nebraska Pub. Pwr. Dist. Rev., T.E.C.P., Ser. B P-1 3.70 8/29/96 5,000 5,000,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- New Jersey--1.5% Jersey City, School Promissory Notes SP-1* 3.75 % 3/7/97 5,600 5,616,626 - ----------------------------------------------------------------------------- - ------------------------------------------------- New York--1.6% New York City, Gen. Oblig., T.E.C.P., Ser. 94H-2 VMIG1 3.40 8/14/96 6,300 6,300,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- North Carolina--3.7% North Carolina Eastern Mun. Pwr. Agy., Pwr. Sys. Rev., T.E.C.P. P1 3.70 7/15/96 7,000 7,000,000 Rockingham Cnty. Ind. Facs., Philip Morris Rev. P1 3.35 7/3/96 7,200 7,200,000 ------------ 14,200,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Ohio--6.1% Ohio Hsg. Fin. Agcy., Res. Mtg. Rev., A.N.N.M.T., Ser. 96A-3 A1-+* 3.40 3/3/97 8,000 8,000,000 Ohio Wtr. Dev. Auth., Ohio Edison Co., A.N.N.O.T., Ser. 88A VMIG1 3.80 5/1/97 7,280 7,280,000 Toledo-Lucas Cnty., Convntn. & Visitors Bureau, M.T.H.O.T., Ser. 88 VMIG1 3.55 8/1/96 8,140 8,140,000 ------------ 23,420,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Oklahoma--2.2% Tulsa Pkg. Auth. Rev., Williams Ctr. Proj., S.E.M.M.T., Ser. 87A VMIG1 3.75 11/15/96 8,625 8,625,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- South Carolina--3.7% York Cnty. Natl. Rural Coop. Fin. Corp., S.E.M.O.T., North Carolina Electric, Ser. 84N-3 MIG1 3.25 9/15/96 3,465 3,465,000 North Carolina Electric, Ser. 84N-4 A-1+* 3.25 9/15/96 3,620 3,620,000 North Carolina Electric, Ser. 84N-5 VMIG1 3.25 9/15/96 7,110 7,110,000 ------------ 14,195,000
- -------------------------------------------------------------------------------- See Notes to Financial Statements. 5 ----- Portfolio of Investments PRUDENTIAL TAX-FREE as of June 30, 1996 (Unaudited) MONEY FUND, INC. - --------------------------------------------------------------------------------
Principal Moody's Interest Maturity Amount Value Description(a) Rating Rate Date (000) (Note 1) - ----------------------------------------------------------------------------- - ------------------------------------------------- Tennessee--3.2% Memphis Hlth. Edl. & Hsg., Wesley Hsg. Corp., F.R.W.D., Ser. 89 VMIG1 4.00% 7/5/96 $ 9,320 $ 9,320,000 Nashville & Davidson Cnty., Gen. Accident Ins. Co. Proj., S.E.M.O.T., Ser. 86 A1+* 3.80 11/1/96 3,200 3,200,000 ------------ 12,520,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Texas--9.2% Brazos River Harbor Nav., Dow Chemical, F.R.D.D., Ser 92A P1 3.80 7/1/96 1,600 1,600,000 Greater Texas Student Ln. Rev., A.N.N.M.T., Ser. 96A VMIG1 3.35 3/1/97 5,000 5,000,000 Houston, Gen. Oblig., T.E.C.P., Ser. A P1 3.60 10/10/96 8,900 8,900,000 San Antonio Elec. & Gas Rev., T.E.C.P., Ser. A P1 3.75 7/22/96 15,000 15,000,000 Southeast Texas Hsg. Fin. Corp., Banc One Tax Exempt Trust, F.R.W.D.S., Ser. 91D AAA 3.50 7/4/96 5,160 5,160,000 ------------ 35,660,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Utah--4.5% Intermountain Pwr. Agy., Utah Pwr. Supply Rev., A.N.N.O.T., Ser. 85E VMIG1 3.93 6/16/97 4,000 4,000,000 S.E.M.O.T., Ser. 85E VMIG1 3.35 9/16/96 6,000 6,000,000 Salt Lake Cnty., T.R.A.N., Ser. 96 NR 4.50 12/31/96 7,250 7,276,677 ------------ 17,276,677 - ----------------------------------------------------------------------------- - ------------------------------------------------- Virginia--3.1% Chesterfield Cnty. Ind. Dev. Auth., Philip Morris Proj., F.R.W.D. P1 3.35 7/3/96 6,500 6,500,000 Culpeper Ind. Dev. Auth., Resident Baptist Homes, F.R.W.D., Ser. 92 A-1* 3.35 7/4/96 5,640 5,640,000 ------------ 12,140,000 - ----------------------------------------------------------------------------- - ------------------------------------------------- Wisconsin--5.5% Middleton Cross Plains Area Sch., T.R.A.N., Ser. 95 NR 4.25 8/28/96 5,000 5,000,763 Sheboygan Area School District, B.A.N. NR 3.50 12/2/96 6,000 6,000,000
- -------------------------------------------------------------------------------- - -----6 See Notes to Financial Statements. Portfolio of Investments PRUDENTIAL TAX-FREE as of June 30, 1996 (Unaudited) MONEY FUND, INC. - --------------------------------------------------------------------------------
Principal Moody's Interest Maturity Amount Value Description(a) Rating Rate Date (000) (Note 1) - ----------------------------------------------------------------------------- - ------------------------------------------------- Wisconsin (cont'd.) Whitewater Ind. Dev. Rev., Trek Bicycle, F.R.W.D., Ser. 95 NR 3.55% 7/4/96 $ 3,845 $ 3,845,000 Wisconsin Hsg. & Econ. Dev. Auth., Home Ownership Rev., Q.T.R.O.T., Ser. 87B AAA 3.60 9/1/96 6,550 6,550,000 ------------ 21,395,763 Total Investments--95.6% (amortized cost $ 369,975,527(c)) 369,975,527 Other assets in excess of liabilities--4.4% 17,045,564 ------------ Net Assets--100% $387,021,091 ------------ ------------
- --------------- (a) The following abbreviations are used in portfolio descriptions: A.N.N.M.T.--Annual Mandatory Tender A.N.N.O.T.--Annual Optional Tender 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 Note Synthetic(b) M.T.H.O.T.--Monthly Optional Tender(b) Q.T.R.O.T.--Quarterly Tax & Reserve Optional Tender(b) S.E.M.M.T.--Semi-Annual Mandatory Tender(b) S.E.M.O.T.--Semi-Monthly Optional Tender Offer(b) T.A.N.--Tax Anticipation Note T.E.C.P.--Tax-Exempt Commercial Paper T.R.A.N.--Tax & Revenue Anticipation Note (b) For purposes of amortized cost valuation, the maturity date of these instruments is considered to be the latter of the next date on which the security can be redeemed at par, or the next date on which the rate of interest is adjusted. (c) The cost of securities for federal income tax purposes is substantially the same as for financial reporting purposes. * Standard & Poor's Rating. NR--Not Rated by Moody's or Standard & Poor's. The Fund's current Statement of Additional Information contains a description of Moody's and Standard and Poor's ratings. - -------------------------------------------------------------------------------- See Notes to Financial Statements. 7 ----- Statement of Assets and Liabilities (Unaudited) PRUDENTIAL TAX-FREE MONEY FUND, INC. - --------------------------------------------------------------------------------
Assets June 30, 1996 ------------- Investments, at amortized cost which approximates market value.............................................. $369,975,527 Cash......................................................................... ............................... 2,032,421 Receivable for investments sold......................................................................... .... 18,800,000 Interest receivable................................................................... ...................... 2,553,725 Receivable for Fund shares sold......................................................................... .... 2,395,047 Prepaid expenses..................................................................... ....................... 14,327 ------------- Total assets....................................................................... ...................... 395,771,047 ------------- Liabilities Payable for investments purchased.................................................................... ....... 5,000,000 Payable for Fund shares reacquired................................................................... ....... 3,074,333 Accrued expenses..................................................................... ....................... 275,086 Dividends payable...................................................................... ..................... 217,783 Due to Manager...................................................................... ........................ 161,293 Due to Distributor.................................................................. ........................ 21,461 ------------- Total liabilities.................................................................. ...................... 8,749,956 ------------- Net Assets....................................................................... ........................... $387,021,091 ------------- ------------- Net assets were comprised of: Common stock, $.01 par value........................................................................ ..... $ 3,871,155 Paid-in capital in excess of par......................................................................... 383,149,936 ------------- Net assets, June 30, 1996......................................................................... .......... $387,021,091 ------------- ------------- Net asset value, offering price and redemption price per share ($387,021,091 / 387,515,369)................................................................... $1.00 ------------- -------------
[/CAPTION] - -------------------------------------------------------------------------------- - -----8 See Notes to Financial Statements. PRUDENTIAL TAX-FREE MONEY FUND, INC. TAX-FREE MONEY FUND, INC. Statement of Operations (Unaudited) - ------------------------------------------------------------
Six Months Ended Net Investment Income June 30, 1996 Income Interest................................... $ 7,567,199 ------------- Expenses Management fee............................. 1,039,706 Distribution fee........................... 259,926 Transfer agent's fees and expenses......... 180,000 Registration fees.......................... 53,000 Reports to shareholders.................... 52,000 Custodian's fees and expenses.............. 44,000 Audit fees and expenses.................... 24,000 Franchise taxes............................ 20,000 Legal fees and expenses.................... 15,000 Director's fees and expenses............... 12,000 Insurance.................................. 5,000 Miscellaneous.............................. 2,724 ------------- Total expenses.......................... 1,707,356 Less: custodian fee credit.............. (10,359) ------------- Net expenses............................ 1,696,997 ------------- Net investment income......................... 5,870,202 ------------- Realized Gain (Loss) on Investments Net realized loss on investment transactions............................... (132) ------------- Net Increase in Net Assets.................... $ 5,870,070 ------------- -------------
PRUDENTIAL TAX-FREE MONEY FUND, INC. TAX-FREE MONEY FUND, INC. Statement of Changes in Net Assets (Unaudited) - ------------------------------------------------------------
Six Months Ended Year Ended Increase (Decrease) June 30, December 31, in Net Assets 1996 1995 Operations Net investment income... $ 5,870,202 $ 14,779,107 ---------------- ---------------- Net realized loss on investment transactions............ (132) -- ---------------- ---------------- Dividends and distributions to shareholders......... (5,870,070) (14,779,107) ---------------- ---------------- Fund share transactions (at $1.00 per share) Net proceeds from shares subscribed........... 599,042,052 1,402,761,535 Net asset value of shares issued to shareholders in reinvestment of dividends and distributions.... 5,618,401 14,035,315 Cost of shares reacquired........... (605,290,205) (1,516,436,457) ---------------- ---------------- Net decrease in net assets from Fund share transactions............ (629,752) (99,639,607) ---------------- ---------------- Total decrease............. (629,752) (99,639,607) Net Assets Beginning of period........ 387,650,843 487,290,450 ---------------- ---------------- End of period.............. $ 387,021,091 $ 387,650,843 ---------------- ---------------- ---------------- ----------------
- -------------------------------------------------------------------------------- See Notes to Financial Statements. 9 ----- Notes to Financial Statements (Unaudited) PRUDENTIAL TAX-FREE MONEY FUND, INC. - -------------------------------------------------------------------------------- Prudential Tax-Free Money Fund, Inc. (the ``Fund''), is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The investment objective of the Fund is to attain the highest level of current income that is exempt from federal income taxes, consistent with liquidity and preservation of capital. The Fund will invest in short-term tax-exempt debt securities of state and local governments. The ability of the issuers of the securities held by the Fund to meet their obligations may be affected by economic or political developments in a specific state, 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 any discount or premium. Securities Transactions and Investment Income: Securities transactions are recorded on the trade date. Realized gains and losses on sales of investments are calculated on an identified cost basis. Interest income is recorded on an 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: It is the Fund's policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net income to its shareholders. For this reason, no federal income tax provision is required. Dividends: The Fund declares dividends daily from net investment income. Payment of dividends is made monthly. Custody Fee Credits: The Fund has an arrangement with its custodian bank, whereby uninvested monies earn credits which reduce the fees charged by the custodian. Note 2. Agreements The Fund has a management agreement with Prudential Mutual Fund Management, Inc. (``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 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 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 1% of the Fund's average daily net assets up to $750 million, .425 of 1% of the next $750 million of average daily net assets and .375 of 1% of average daily net assets in excess of $1.5 billion. The Fund had a distribution agreement with Prudential Mutual Fund Distributors, Inc. (``PMFD''). Effective January 2, 1996, Prudential Securities Incorporated (``PSI'') became the distributor of the Fund. PSI is serving the Fund under the same terms and conditions as under the distribution agreement with PMFD. The Fund compensated PSI and PMFD for distributing and servicing the Fund's shares pursuant to the plan of distribution at an annual rate of .125% of 1% of the Fund's average daily net assets. The distribution fee is accrued daily and payable monthly. PMFD is a wholly-owned subsidiary of PMF; PSI, 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 and during the six months ended June 30, 1996, the Fund incurred fees of $170,800 for the services of PMFS. As of June 30, 1996, approximately $28,000 of such fees were due to PMFS. Transfer agent fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates. - -------------------------------------------------------------------------------- - -----10 Financial Highlights (Unaudited) PRUDENTIAL TAX-FREE MONEY FUND, INC. - --------------------------------------------------------------------------------
Six Months Ended Year Ended December 31, June 30, - ----------------------------------------------- 1996 1995 1994 1993 1992 ---------- - -------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Net investment income and realized gains.................. .014 .031 .023 .018 .026 Dividends and distributions to shareholders............... (.014) (.031) (.023) (.018) (.026) ---------- - -------- -------- -------- -------- Net asset value, end of period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ---------- - -------- -------- -------- -------- ---------- - -------- -------- -------- -------- TOTAL RETURN(a):.......................................... 1.40% 3.15% 2.31% 1.86% 2.63% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000)........................... $387,021 $387,651 $487,290 $601,622 $614,333 Average net assets (000).................................. $418,167 $470,370 $644,481 $726,571 $669,588 Ratios to average net assets: Expenses, including distribution fee................... .82%(b) .85% .75% .74% .74% Expenses, excluding distribution fee................... .69%(b) .72% .63% .62% .62% Net investment income.................................. 2.82%(b) 3.14% 2.26% 1.84% 2.60% 1991 -------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period...................... $ 1.00 Net investment income and realized gains.................. .041 Dividends and distributions to shareholders............... (.041) -------- Net asset value, end of period............................ $ 1.00 -------- -------- TOTAL RETURN(a):.......................................... 4.22% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000)........................... $616,867 Average net assets (000).................................. $725,844 Ratios to average net assets: Expenses, including distribution fee................... .75% Expenses, excluding distribution fee................... .63% Net investment income.................................. 4.15%
- --------------- (a) 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 periods less than a full year are not annualized. (b) Annualized. - -------------------------------------------------------------------------------- See Notes to Financial Statements. 11 ----- Getting The Most From Your Prudential Mutual Fund. How many times have you read these letters -- or other financial materials -- and stumbled across a word that you don't understand? Many shareholders have run into the same problem. We'd like to help. So we'll use this space from time to time to explain some of the words you might have read, but not understood. And if you have a favorite word that no one can explain to your satisfaction, please write to us. Basis Point: One 1/100th of 1%. For example, one half of one percentage point is 50 basis points. Call Option: A contract giving the holder a right to buy stocks or bonds at a predetermined price (called the strike price) before a predetermined expiration date. A buyer of a call option generally expects to benefit from a rise in the price of the stock or bond. Capital Gain/Capital Loss: The difference between the cost of a capital asset (for example, a stock, bond or mutual fund share) and its selling price. Under current law the federal income tax rate for individuals on a long-term capital gain is up to 28%. Collateralized Mortgage Obligations (CMOs): Pools of mortgage-backed securities sliced in maturity ranges that bear differing interest rates. These instruments are sensitive to changes in interest rates and homeowner refinancing activity. They are subject to prepayment and maturity extension risk. Derivatives: Securities that derive their value from another security. The rate of return of these financial products rises and falls -- sometimes very suddenly -- in response to changes in some specific interest rate, currency, stock or other variable. Discount Rate: The interest rate charged by the Federal Reserve on loans to banks and other depository institutions. Federal Funds Rate: The interest rate charged by one bank to another on overnight loans. Futures Contract: An agreement to deliver a specific amount of a commodity or financial instrument at a set price at a stipulated time in the future. Leverage: The use of borrowed assets to enhance return on equity. The expectation is that the interest rate charged will be lower than the return on the investment. While leverage can increase profits, it can also magnify losses. Liquidity: The ease with which a financial instrument (or mutual fund) can be bought or sold (converted into cash) in the financial markets. Price/Earnings Ratio: The price of a share of stock divided by the earnings per share for a 12-month period. Option: An agreement to sell something, such as shares of stock, by a certain time for a specified price. An option need not be exercised. Spread: The difference between two values; most often used to describe the difference between prices bid and asked for a security. Yankee Bond: A bond denominated in U.S. dollars but sold by a foreign company or government in the U.S. market. Prudential Mutual Funds One Seaport Plaza New York, NY 10292 (800) 225-1852 http:\\www.prudential.com Directors Delayne Dedrick Gold Arthur Hauspurg Stephen P. Munn Richard A. Redeker Louis A. Weil, III Officers Richard A. Redeker, President David W. Drasnin, Vice President Robert F. Gunia, Vice President Grace C. Torres, Treasurer Stephen M. Ungerman, Assistant Treasurer S. Jane Rose, 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 Securities Incorporated One Seaport Plaza New York, NY 10292 Custodian State Street Bank and Trust Company One Heritage Drive North Quincy, MA 02171 Transfer Agent Prudential Mutual Fund Services, Inc. P.O. Box 15005 New Brunswick, NJ 08906 Independent Accountants Price Waterhouse LLP 1177 Avenue of the Americas New York, NY 10036 Legal Counsel Sullivan & Cromwell 125 Broad Street New York, NY 10004 The views expressed in this report and information about the Fund's portfolio holdings are for the period covered by this report and are subject to change thereafter. The accompanying financial statements as of June 30, 1996 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. (LOGO) Prudential Mutual Funds One Seaport Plaza New York, NY 10292 (800) 225-1852 BULK RATE U.S. POSTAGE PAID Permit 6807 New York, NY MF103E2 74436P103 Cat. # 444004C -----END PRIVACY-ENHANCED MESSAGE-----