-----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, RkmgsF6mupTdslYcxecsy70b5XS5chknj/j5QYRkYmN51pxpsq0RUk6QnNap+Ukj ARlcR2F76OchrQvTOsrjPQ== 0000311561-98-000002.txt : 19980309 0000311561-98-000002.hdr.sgml : 19980309 ACCESSION NUMBER: 0000311561-98-000002 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980306 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: SEC FILE NUMBER: 811-02927 FILM NUMBER: 98558937 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. ANNUAL REPORT Dec. 31, 1997 (LOGO) Prudential Tax-Free Money Fund, Inc. Performance At A Glance. Concern about potential inflationary pressures in the United States, an economic crisis in Asia and seasonal imbalances in the supply and demand of municipal money market securities caused short- term, tax-exempt interest rates to fluctuate over the past 12 months. Nevertheless, the Prudential Tax-Free Money Fund provided a steady stream of tax- exempt income while maintaining its high credit quality and stable $1 net asset value. On December 31, 1997, the FundOs seven-day current yield was 3.21%, which was equivalent to a 5.31% taxable yield for persons in the 39.6% federal income tax bracket. Fund Facts As of 12/31/97
Fund Facts As of 12/31/96 7-Day Net Asset Taxable Equivalent Yield* Weighted Avg. Total Net Current Yld. Value @31% @36% @39.6% Maturity Assets (mil.) Tax-Free Money Fund 3.21% $1.00 4.65% 5.02% 5.31% 64 Days $329.8 IBC Financial DataTax-Free Money Fund Avg.** 3.34 1.00 4.84 5.21 5.52 50 Days N/A
Note: Yields will fluctuate from time to time and past performance is not indicative of future results. *Some investors may be subject to the federal alternative minimum tax (AMT). Income may be subject to state and local taxes. **IBC Financial Data reports a seven-day current yield, WAM and NAV on Tuesdays. This is the average seven day current yield, NAV and WAM of all funds in the International Business Communications Financial Data's tax-free money fund category as of December 30, 1997 which was the closest date to our reporting period end. An investment in the Fund is neither insured nor guaranteed by the U.S. government and there can be no assurance the Fund will be able to maintain a stable net asset value of $1 per share. Tax-Free Yields Dipped And Then Recovered. (CHART) How Investments Compared. (As of 12/31/97) (CHART) 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. U.S. Tax-Exempt Money Funds attempt to preserve a constant share value and provide tax-free income; they don't fluctuate much in price but, historically, their returns have been generally among the lowest of the major investment categories. *19 years for Tax-Exempt Money Funds. Colleen Meehan, Fund Manager (PHOTO) Portfolio Manager's Report The Prudential Tax-Free Money Fund seeks the highest level of current income that is exempt from federal income taxes, consistent with liquidity and the preservation of capital. The Fund invests in a diversified portfolio of high quality, short-term municipal bonds issued by state and local governments, territories and possessions of the U.S. 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. Ahead Of The Game. Long before an Asian economic crisis rocked world financial markets in October, our analysts warned that the Japanese banking sector was overburdened with bad loans. So we sold all tax-exempt money market securities backed by letters of credit from Japanese banks, which eliminated your Fund's only exposure to the troubled Asian region. Strategy Session. - ----------------------------------------------- - -------------------------------- Economy On A Roll. The U.S. economy expanded in 1997 at its fastest pace in nine years, fueled by increased consumer spending and greater demand for U.S. exports. With the economy growing rapidly, investors worried that rising wages could push inflation higher, eroding the value of a bond's fixed interest and principal payments. They expected the Federal Reserve to increase the federal funds rate (what banks charge each other for overnight loans) to slow economic growth and pre-emptively defuse inflationary pressures. We shortened your Fund's weighted average maturity (WAM) in early March by purchasing adjustable-rate municipal securities that allowed quick access to cash to buy any higher yielding securities issued after the change in monetary policy. U.S. central bankers raised the federal funds rate by a quarter percentage point to 5.50% on March 25. In the spring, inflation remained surprisingly mild, indicating there was little need for the Federal Reserve to move again. So we took advantage of the usual rise in yields during the April tax season. This occurs when money managers sell short-term municipal securities to provide investors with cash to pay their income taxes. Our tax-season purchases left the WAM markedly longer than that of its competition and it remained longer throughout the summer. Autumn brought fresh concerns about higher inflation. We thought the Federal Reserve was poised to change monetary policy in November so we shortened the WAM. As it turned out, the federal funds rate remained unchanged after an Asian economic crisis shook global financial markets in late October. With the year rapidly drawing to a close, we again lengthened the WAM by purchasing attractively priced three- and six- month, tax-exempt securities. Yields usually rise during this time as portfolio managers sell securities to provide investors with money to pay for holiday expenditures. Locking in higher yields enabled your Fund to bridge over the dramatic dip in yields that usually happens as the new year begins. What Went Well. - ----------------------------------------------- - -- Fortified Against The "July Effect." Every summer, an imbalance in the supply and demand of tax-exempt money market securities called the "July Effect" drives prices sharply higher (and yields lower). This occurs as a flood of municipal money market securities mature between late June and mid July, temporarily pulling billions of dollars out of the market. At the same time, many long-term municipal bonds pay interest at the beginning of July. Bondholders often invest this cash briefly in the tax-exempt money market, further exacerbating the dearth of short-term securities. While the "July Effect" can undermine a portfolio's performance, your Fund suffered no setback. Locking in higher yields available during the April tax season left the WAM significantly longer than its competition as the summer began. Then as an extra measure of protection against the coming drop in yields, we purchased attractively priced nine- month and one-year municipal securities in late June, which extended the WAM to more than 70 days. So your Fund was well-fortified against the scourge of sharply lower yields. As the summer progressed, states and municipalities issued new tax-exempt money market securities to replace the ones that had matured, causing yields to edge higher. Weighted Average Maturity Is Now Longer Than The Average Fund. (CHART) And Not So Well. - ----------------------------------------------- - -- Long Was Better. When inflation jitters resurfaced in early October, we reduced the Fund's WAM to be ready to buy any higher yielding securities that would be issued if interest rates rose in November. However, we quickly extended the WAM again since the federal funds rate remained unchanged (short-term rates declined as a result of the Asian conflict.) Your Fund's performance would have improved even more if we had not reduced its WAM in October. Looking Ahead. - ----------------------------------------------- - -- Because we invested heavily in higher yielding, tax-exempt money market securities in December, we can ride out the steep drop in yields that takes place every January. We can also afford to wait for clear signals on where monetary policy is headed. Many investors expect Asian problems will slow U.S. economic growth enough to require a federal funds rate cut to get the economy moving again. But more than 350,000 jobs were created in January. These mixed signals continue to keep the Federal Reserve from changing monetary policy. We will monitor the economy for any signs that indicate the central bank needs to intervene again. 1 President's Letter February 2, 1998 - ----------------------------------------------- - -------------------------------- (PHOTO) Investing Smart. Dear Shareholder: This is the season when many investors receive income tax refunds or have a CD or two maturing. What will you do with these assets? Investing smart can be a challenge especially given today's new investment choices. The Federal Taxpayer Relief Act of 1997 is changing the way Americans invest and accumulate wealth, save for college or build a nest egg for retirement. While the law offers opportunity, it is also complex. You may need help to put things in perspective. Now may be an excellent time for you and your Prudential Financial Professional to update your investment strategy and retirement plan. A wise investor does so periodically. You could find the tax law opening doors that may benefit you now or over the long term, such as -- - - Revised Capital Gains Tax Rates & Exclusions. Long-term rates are down. Is your portfolio positioned to benefit? Also, new rules allow you to keep more of the profit from the sale of your home (perhaps up to $500,000 more). - - New Roth IRAs. The Roth IRA features tax-free distributions and does not require mandatory withdrawals, which should be of particular interest to retirees seeking to shelter assets in a tax- free account. - - New Education IRAs. Similar to a traditional IRA, but specifically designed for higher education. The new law also creates credits and deductions to help defray college costs. - - Expanded IRAs. Rules governing traditional IRAs have been extensively revised. Deductibility and contribution limits have been broadened as has the list for penalty-free early withdrawals, including first-time home buyers. As you can see, what you don't know may cost you! That's why I recommend you call your Prudential Financial Professional and get a free investment plan checkup. Let us give you the information and tools to invest smart. Sincerely, Brian M. Storms President, Prudential Mutual Funds & Annuities 2 Portfolio of Investments as of PRUDENTIAL TAX-FREE MONEY December 31, 1997 FUND, INC. - ----------------------------------------------- - ---------------------------------
Moody's Principal Rating Interest Maturity Amount Value Description(a) (Unaudited) Rate Date (000) (Note 1) - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- California--1.4% California Higher Ed. Ln. Auth., Student Ln. Rev., A.N.N.M.T., Ser. 87A VMIG1 4.00% 7/01/98 $ 4,600 $ 4,600,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Colorado--5.1% Colorado Hlth. Facs. Auth. Rev., Frasier Meadows Manor, F.R.W.D., Ser. 94 NR 4.25 1/02/98 6,950 6,950,000 Colorado Hsg. Fin. Auth., Eagle Trust, F.R.W.D.S., Ser. 94C(e) A-1 4.27 1/02/98 10,000 10,000,000 - ------------ 16,950,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Connecticut--0.9% Connecticut Spl. Assmt., Unemploy. Comp. Rev., A.N.N.M.T., Ser 93C VMIG1 3.90 7/01/98 3,000 3,000,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- District Of Columbia--3.9% Dist. of Columbia, T.R.A.N., Ser. 98B MIG1 4.50 9/30/98 6,100 6,127,532 T.R.A.N., Ser. 98C MIG1 5.00 9/30/98 3,500 3,529,006 Dist. of Columbia G.O. Var. Rate, F.R.D.D., Ser. 92A-3 VMIG1 5.15 1/02/98 500 500,000 F.R.D.D., Ser. 92A-4 VMIG1 5.15 1/02/98 600 600,000 F.R.D.D., Ser. 92A-5 VMIG1 5.15 1/02/98 2,000 2,000,000 - ------------ 12,756,538 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Florida--1.4% Florida Hsg. Fin. Agy., Multifamily Hsg. Rev., Oaks at Mill Creek, A.N.N.O.T A-1* 3.85 11/01/98 1,750 1,750,000 Pinellas Cnty. Hsg. Fin. Auth., Single Family Mtg. Rev., Ser. 97B VMIG1 3.80 2/01/98 2,840 2,840,000 - ------------ 4,590,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Georgia--8.7% Cobb Cnty. Dev. Auth., Inst. of Nuclear Pwr., F.R.W.D., Ser. 92 NR 4.20 1/07/98 12,805 12,805,000 Fulton Cnty. Dev. Auth., Atlanta Jewish Federation, Ser. 96 VMIG1 4.20 1/02/98 5,345 5,345,000 Siemen's Energy Inc., F.R.W.D., Ser. 94 VMIG1 4.25 1/02/98 7,750 7,750,000 Monroe Cnty. Dev. Auth. Poll., Oglethorpe Pwr. Corp., S.E.M.O.T., Ser. 96 NR 3.90 5/01/98 2,670 2,670,000 - ------------ 28,570,000
- ----------------------------------------------- - --------------------------------- See Notes to Financial Statements. 3 Portfolio of Investments as of PRUDENTIAL TAX-FREE MONEY December 31, 1997 FUND, INC. - ----------------------------------------------- - --------------------------------- Illinois--11.6% Chicago G.O., A.N.N.M.T., Ser. 97 VMIG1 3.65% 2/05/98 $11,000 $ 11,000,000 Illinois Dev. Fin. Auth. Rev., Adventist Hlth Sys., F.R.W.D., Ser. 97A VMIG1 4.00 1/02/98 9,200 9,200,000 Illinois Hlth. Fac. Auth., Evanston Hsp., S.E.M.M.T., Ser. 95 VMIG1 4.00 5/15/98 7,000 7,000,000 Evanston Hsp., S.E.M.M.T., Ser. 92 VMIG1 3.85 11/30/98 9,000 9,000,000 Southwestern Ill. Dev. Auth., Shell Oil Co. Wood River Proj., F.R.D.D., Ser. 95 VMIG1 5.10 1/02/98 1,900 1,900,000 - ------------ 38,100,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Indiana--1.5% Indiana St. Dev. Fin. Auth. Rev., Edl. Facs., Covenant High Sch., Ser. 96 NR 4.20 1/02/98 5,000 5,000,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Louisiana--3.4% West Baton Rouge Parish Ind. Dev. Rev., Dow Chemical Co., F.R.D.D., Ser. 94B P1 5.05 1/02/98 8,200 8,200,000 Dow Chemical Co., T.E.C.P., Ser. 91A P1 3.80 1/08/98 3,000 3,000,000 - ------------ 11,200,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Maryland--1.4% Maryland Econ. Dev. Corp., F.R.W.D., Ser. 95 A-1 4.20 1/02/98 4,600 4,600,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Massachusetts--1.5% Massachusetts Bay Trans. Auth., Ser. 97A MIG2 4.25 2/27/98 5,000 5,001,674 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Michigan--3.8% Detroit City Sch. Dist., G.O., Ser. 97 SP1+* 4.50 5/01/98 5,000 5,009,553 Grand Rapids Econ. Dev. Corp., Ind. Dev. Rev., F.R.W.D., Ser. 92 Aa2 4.20 1/02/98 7,500 7,500,000 - ------------ 12,509,553 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Minnesota--3.1% Bloomington Coml. Dev. Rev., 94th Street Assoc. Proj., F.R.W.D., Ser. 85 A1+* 4.20 1/02/98 5,245 5,245,000 Bloomington Port Auth. Tax Rev., F.R.W.D., Ser. 95A VMIG1 4.20 1/02/98 5,000 5,000,000 - ------------ 10,245,000 [/TABLE] - ----------------------------------------------- - --------------------------------- See Notes to Financial Statements. 4 Portfolio of Investments as of PRUDENTIAL TAX-FREE MONEY December 31, 1997 FUND, INC. - ----------------------------------------------- - --------------------------------- New Hampshire--2.6% New Hampshire Bus. Fin. Auth., New England Pwr. Co. Proj., T.E.C.P., Ser. 90B VMIG1 3.85% 3/16/98 $ 3,500 $ 3,500,000 Whellabrator, F.R.W.D., Ser. 97A A1+* 3.70 1/07/98 5,000 5,000,000 - ------------ 8,500,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- New Jersey--0.7% New Jersey Econ. Dev. Auth. Rev., Nwk. Recl. Fac., A.N.N.M.T., Ser. 97 A-1+ 3.95 12/15/98 2,300 2,300,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- New York--5.3% New York City Wtr. Fin. Auth., T.E.C.P., Ser. 97 P-1 3.80 3/11/98 12,000 12,000,000 New York St., General Obligation, T.E.C.P., Ser. 5 P-1 3.80 2/19/98 5,500 5,500,000 - ------------ 17,500,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- North Carolina--2.2% Rockingham Cnty. Ind. Facs., Poll. Ctl. Rev., Phillip Morris Proj., F.R.W.D. P1 4.00 1/07/98 7,200 7,200,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Ohio--5.4% EastLake Indl. Dev. Rev., Astro Model Dev. Corp., F.R.W.D., Ser. 96 NR 4.25 1/02/98 6,500 6,500,000 Medina Cnty. Hsg. Rev., Oaks At Medina Proj., F.R.W.D. NR 4.15 1/02/98 4,100 4,100,000 Ohio Wtr. Dev. Auth., Ohio Edison Co. Proj., A.N.N.O.T., Ser. 88A VMIG 4.10 5/01/98 7,280 7,280,000 - ------------ 17,880,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Oklahoma--2.5% Tulsa Pkg. Auth. Rev., Williams Ctr. Proj., S.E.M.M.T., Ser. 87A VMIG1 3.80 5/15/98 8,210 8,210,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Oregon--3.8% Oregon St Hsg. Comm. Serv. Dept., Single Family Mtg. Rev., Ser. K MIG1 3.875 12/03/98 5,000 5,000,000 Oregon St. Econ. Dev. Rev., KRC Western Inc. Proj., Ser. 178 Aa2 4.30 1/02/98 7,650 7,650,000 - ------------ 12,650,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Pennsylvania--2.7% Dauphin Cnty. Gen. Auth. Rev., Ed + Hlth. Prog., F.R.W.D., Ser. 97 VMIG1 4.20 1/02/98 4,300 4,300,000 Montgomery Cnty. Higher Ed. & Hlth. Auth. Rev., F.R.W.D., Ser. 96A A-1 4.00 1/07/98 4,600 4,600,000 - ------------ 8,900,000 [/TABLE] - ----------------------------------------------- - --------------------------------- See Notes to Financial Statements. 5 Portfolio of Investments as of PRUDENTIAL TAX-FREE MONEY December 31, 1997 FUND, INC. - ----------------------------------------------- - --------------------------------- South Dakota--4.5% Brookings SD, Cert. of Part., Q.T.R.M.T., Ser. 97 NR 4.00% 4/09/98 $ 985 $ 985,000 Cert. of Part., Q.T.R.M.T., Ser. 97 NR 4.00 4/09/98 1,140 1,140,000 Cert. of Part., Q.T.R.M.T., Ser. 97 NR 4.00 4/09/98 1,530 1,530,000 South Dakota Ed. Lns. Inc. Corp., Student Ln. Rev., Q.T.R.M.T., Ser. 97A NR 3.85 2/04/98 3,500 3,500,000 South Dakota Hsg. Dev. Auth., Home Ownership Mtg., Ser. 97D VMIG1 3.85 3/26/98 4,810 4,810,000 Home Ownership Mtg., Ser. H MIG1 3.95 8/13/98 3,000 3,000,000 - ------------ 14,965,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Tennessee--1.5% Metro Govt Nashville & Davidson Cnty., Ind. Dev. Brd. Rev., Multifamily Hsg., F.R.W.D. Ser. 89 A-1+ 4.30 1/02/98 5,000 5,000,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Texas--9.8% Boatmen's St. Louis Grantor Trust, Port Arthur TX IDC, CTF Part., F.R.W.D., Ser. 96A A-1 4.15 1/07/98 3,415 3,415,000 Brazos Rvr. Auth. Tx., Poll. Ctrl. Rev., F.R.D.D, Ser. 96C VMIG1 5.10 1/02/98 2,900 2,900,000 Greater East Texas Higher Ed. Auth., Student Ln. Rev., A.N.N.O.T., Ser. 95A VMIG1 4.10 5/01/98 3,500 3,500,000 Houston General Obligation, T.E.C.P., Ser. B P-1 3.80 2/26/98 5,000 5,000,000 San Antonio Elec. & Gas, T.E.C.P., Ser. A P-1 3.70 1/14/98 7,000 7,000,000 Ser. A P-1 3.80 3/13/98 8,000 8,000,000 Southeast Texas Hsg. Fin. Corp., Banc One Tax Ex. Trust, F.R.W.D.S., Ser. 91D(e) AAA 4.33 1/02/98 2,550 2,550,000 - ------------ 32,365,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Utah--3.2% Intermountain Pwr. Agy., T.E.C.P. A-1 3.80 2/03/98 10,000 10,000,000 Salt Lake Cnty., Poll. Ctrl. Rev., F.R.D.D., Ser. 94 P1 5.00 1/02/98 400 400,000 - ------------ 10,400,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Washington--1.5% Washington Hsg. Fin. Comm., Panorama Cty. Proj., F.R.D.D., Ser. 97 VMIG1 4.75 1/02/98 5,100 5,100,000 [/TABLE] - ----------------------------------------------- - --------------------------------- See Notes to Financial Statements. 6 Portfolio of Investments as of PRUDENTIAL TAX-FREE MONEY December 31, 1997 FUND, INC. - ----------------------------------------------- - --------------------------------- Wisconsin--2.9% Whitewater Ind. Dev. Rev., Trek Bicycle Proj., F.R.W.D., Ser. 95 NR 4.35% 1/02/98 $ 4,235 $ 4,235,000 Wisconsin Hsg. & Econ. Dev. Auth., Eagle Tax Ex. Trust, Q.T.R.O.T, Ser. 4901(d)(e) A-1+ 3.80 3/01/98 5,300 5,300,000 - ------------ 9,535,000 - ----------------------------------------------- - ----------------------------------------------- - -------------------------------- Wyoming--1.3% Green River Poll. Ctrl. Rev., Rhone Poulene, Inc. Proj., F.R.D.D., Ser. 92 VMIG1 5.20 1/02/98 4,200 4,200,000 - ------------ Total Investments--97.6% (cost $321,827,765(c)) 321,827,765 Other assets in excess of liabilities--2.4% 7,984,355 - ------------ Net Assets--100% $329,812,120 - ------------ - ------------ [/TABLE] - --------------- (a) The following abbreviations are used in portfolio descriptions: A.N.N.M.T.--Annual Mandatory Tender(b) A.N.N.O.T.--Annual Optional Tender(b) 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) G.O.--General Obligation Q.T.R.M.T.--Quarterly Tax & Reserve Mandatory 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.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 later of the next date on which the security can be redeemed at par, or the next date on which the rate of interest is adjusted. (c) The cost of securities for federal income tax purposes is substantially the same as for financial reporting purposes. (d) Indicates illiquid security. (e) Indicates a security restricted as to resale. * 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 PRUDENTIAL TAX-FREE MONEY FUND, INC. - ----------------------------------------------- - ---------------------------------
Assets December 31, 1997 - ----------------- Investments, at amortized cost which approximates market value.......................................... $ 321,827,765 Cash........................................... ............................................... .......... 2,438,714 Receivable for Fund shares sold........................................... .............................. 7,083,847 Interest receivable..................................... ............................................... . 2,450,064 Other assets......................................... ............................................... .... 8,872 - ----------------- Total assets......................................... ............................................... . 333,809,262 - ----------------- Liabilities Payable for Fund shares reacquired..................................... ................................. 3,463,899 Dividends payable........................................ ............................................... 234,041 Management fee payable........................................ .......................................... 147,360 Accrued expenses....................................... ............................................... .. 131,880 Distribution fee payable........................................ ........................................ 19,962 - ----------------- Total liabilities.................................... ............................................... . 3,997,142 - ----------------- Net Assets......................................... ............................................... ...... $ 329,812,120 - ----------------- - ----------------- Net assets were comprised of: Common Stock, $.01 par value.......................................... ............................... $ 3,298,933 Paid-in capital in excess of par............................................ ......................... 326,513,187 - ----------------- Net assets, December 31, 1997........................................... ................................ $ 329,812,120 - ----------------- - ----------------- Net asset value, offering price and redemption price per share ($329,812,120 / 329,906,399 shares)........................................ ................ $1.00 - ----------------- - -----------------
- ----------------------------------------------- - --------------------------------- See Notes to Financial Statements. 8 PRUDENTIAL TAX-FREE MONEY FUND, INC. Statement of Operations - ----------------------------------------------- - -------------
Year Ended Net Investment Income December 31, 1997 Income Interest.............................. $12,750,064 --- - -------------- Expenses Management fee........................ 1,699,125 Distribution fee...................... 424,781 Transfer agent's fees and expenses.... 279,000 Custodian's fees and expenses......... 73,000 Registration fees..................... 56,000 Reports to shareholders............... 53,000 Audit fee and expenses................ 26,000 Legal fees and expenses............... 26,000 Directors' fees and expenses.......... 16,000 Insurance............................. 3,600 Miscellaneous......................... 2,633 --- - -------------- Total expenses..................... 2,659,139 Less: custodian fee credit............ (6,349) --- - -------------- Net expenses....................... 2,652,790 --- - -------------- Net investment income.................... 10,097,274 --- - -------------- Net Increase in Net Assets Resulting from Operations................ $10,097,274 --- - -------------- --- - --------------
PRUDENTIAL TAX-FREE MONEY FUND, INC. Statement of Changes in Net Assets - ----------------------------------------------- - -------------
Increase (Decrease) Year Ended December 31, in Net Assets 1997 1996 Operations Net investment income..... $ 10,097,274 $ 11,419,707 Net realized gain on investment transactions........... -- 2,446 --------------- - --------------- Net increase in net assets resulting from operations............. 10,097,274 11,422,153 --------------- - --------------- Dividends and distributions to shareholders........... (10,097,274) (11,422,153) --------------- - --------------- Fund share transactions (at $1 per share) Proceeds from shares subscribed............. 1,046,969,468 1,087,199,969 Net asset value of shares issued to shareholders in reinvestment of dividends and distributions.......... 9,663,288 10,887,534 Cost of shares reacquired............. (1,060,629,324) (1,151,929,658) --------------- - --------------- Net decrease in net assets from Fund share transactions........... (3,996,568) (53,842,155) --------------- - --------------- Total decrease............... (3,996,568) (53,842,155) Net Assets Beginning of year............ 333,808,688 387,650,843 --------------- - --------------- End of year.................. $ 329,812,120 $ 333,808,688 --------------- - --------------- --------------- - ---------------
- ----------------------------------------------- - --------------------------------- See Notes to Financial Statements. 9 Notes to Financial Statements 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 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 Net 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. The cost of portfolio securities for federal income tax purposes is substantially the same as for financial reporting purposes. Expenses are recorded on the accrual basis which may require the use of certain estimates by management. 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 investment income to its shareholders. For this reason, no federal income tax provision is required. Dividends: The Fund declares dividends daily from net investment income and net realized gains, if any. 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 Investments Fund Management LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all investment advisory services and supervises the subadviser's performance of such services. PIFM has entered into a subadvisory agreement with Prudential Investment Corporation ('PIC'); PIC furnishes investment advisory services in connection with the management of the Fund. PIFM 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 PIFM 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 has a distribution agreement with Prudential Securities Incorporated ('PSI'). The Fund compensated PSI 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. PSI, PIFM and PIC are indirect, wholly owned subsidiaries of The Prudential Insurance Company of America. - ----------------------------------------------- - ------------- Note 3. Other Transactions With Affiliates Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM, serves as the Fund's transfer agent and during the year ended December 31, 1997, the Fund incurred fees of approximately $248,000 for the services of PMFS. As of December 31, 1997, approximately $19,000 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 nonaffiliates. - ----------------------------------------------- - --------------------------------- 10 Financial Highlights PRUDENTIAL TAX-FREE MONEY FUND, INC. - ----------------------------------------------- - ---------------------------------
Year Ended December 31, - ----------------------------------------------- 1997 1996 1995 1994 - -------- -------- -------- -------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year.................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 Net investment income and realized gains.............................. .030 .028 .031 .023 Dividends and distributions to shareholders........................... (.030) (.028) (.031) (.023) - -------- -------- -------- -------- Net asset value, end of year.......................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 - -------- -------- -------- -------- - -------- -------- -------- -------- TOTAL RETURN(a):..................................... ................. 3.00% 2.84% 3.15% 2.31% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000)......................................... $329,812 $333,808 $387,651 $487,290 Average net assets (000).......................................... .... $339,825 $403,230 $470,370 $644,481 Ratios to average net assets: Expenses, including distribution fee............................... .78% .80% .85% .75% Expenses, excluding distribution fee............................... .66% .67% .72% .63% Net investment income......................................... ..... 2.97% 2.83% 3.14% 2.26% 1993 - -------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year.................................... $ 1.00 Net investment income and realized gains.............................. .018 Dividends and distributions to shareholders........................... (.018) - -------- Net asset value, end of year.......................................... $ 1.00 - -------- - -------- TOTAL RETURN(a):..................................... ................. 1.86% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000)......................................... $601,622 Average net assets (000).......................................... .... $726,571 Ratios to average net assets: Expenses, including distribution fee............................... .74% Expenses, excluding distribution fee............................... .62% Net investment income......................................... ..... 1.84%
- --------------- (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. - ----------------------------------------------- - --------------------------------- See Notes to Financial Statements. 11 Report of Independent Accountants PRUDENTIAL TAX-FREE MONEY FUND, INC. - ----------------------------------------------- - --------------------------------- To the Board of Directors and Shareholders of Prudential Tax-Free Money Fund, Inc. In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Prudential Tax-Free Money Fund, Inc. ('the Fund') at December 31, 1997, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as 'financial statements') are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1997 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP 1177 Avenue of the Americas New York, New York February 6, 1998 Tax Information (Unaudited) PRUDENTIAL TAX-FREE MONEY FUND, INC. - ----------------------------------------------- - --------------------------------- We are required by the Internal Revenue Code to advise you within 60 days of the Fund's fiscal year end (December 31, 1997) as to the federal tax status of dividends paid by the Fund during such fiscal year. Accordingly, we are advising you that in the fiscal year ended December 31, 1997, dividends paid from net investment income of $.03 were federally tax- exempt interest dividends. Information with respect to the state taxability of your investment in the Fund was sent to you under separate cover. - ----------------------------------------------- - --------------------------------- 12 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 Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 (800) 225-1852 http://www.prudential.com (LOGO) Directors Edward D. Beach Stephen C. Eyre Delayne Dedrick Gold Robert F. Gunia Don G. Hoff Robert E. LaBlanc Mendel A. Melzer, CFA Richard A. Redeker Robin B. Smith Stephen Stoneburn Nancy H. Teeters Officers Richard A. Redeker, President Robert F. Gunia, Vice President Grace C. Torres, Treasurer Stephen M. Ungerman, Assistant Treasurer S. Jane Rose, Secretary Robert C. Rosselot, Assistant Secretary Manager Prudential Investments Fund Management LLC Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 Investment Adviser The Prudential Investment Corporation Prudential Plaza Newark, NJ 07102-3777 Distributor Prudential 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 LLC 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. This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus. 74436P103 MF103E Cat. #444003E -----END PRIVACY-ENHANCED MESSAGE-----