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<SEC-DOCUMENT>0000898733-01-000089.txt : 20010228
<SEC-HEADER>0000898733-01-000089.hdr.sgml : 20010228
ACCESSION NUMBER: 0000898733-01-000089
CONFORMED SUBMISSION TYPE: N-30D
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010226

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: 1554566

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
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>PRUDENTIAL TAX-FREE MONEY FUND, INC.
<TEXT>

<PAGE>

ANNUAL REPORT DECEMBER 31, 2000

Prudential
Tax-Free Money Fund, Inc.

Fund Type Money market

Objective The highest level of current income that is exempt
from federal income taxes, consistent with liquidity and
the preservation of capital

(GRAPHIC)

This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a
current prospectus.

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.

(LOGO)

<PAGE>
Build on the Rock

Investment Goals and Style
The Prudential Tax-Free Money Fund, Inc. 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 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 rating categories by
at least two major rating agencies or,
if not rated, deemed to be of equivalent quality by the
adviser's credit research staff. There can be no assurance
that the Fund will achieve its investment objective.

Tax-Free Money Fund Yield Comparison
(GRAPH)

<PAGE>
www.prudential.com (800) 225-1852

Performance at a Glance

Fund Facts As of 12/31/00
7-Day Net Asset Weighted Avg. Net Assets
Current Yld. Value (NAV) Mat. (WAM) (Millions)
Prudential Tax-Free
Money Fund, Inc. 3.83% $1.00 61 Days $167
iMoneyNet, Inc.
Tax-Free (SB & GP)
Avg.* 3.88% $1.00 42 Days N/A

Taxable Equivalent Yield** As of 12/31/00
@31% @36% @39.6%
Prudential Tax-Free
Money Fund, Inc. 5.58% 5.98% 6.34%
iMoneyNet, Inc.
Tax-Free (SB & GP)
Avg.* 5.62% 6.06% 6.42%

Note: Yields will fluctuate from time to time, and past
performance is not indicative of future results. An
investment in the Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the
value of your investment at $1.00 per share, it is possible
to lose money by investing in the Fund.

*iMoneyNet, Inc. reports a seven-day current yield, NAV, and
WAM on Mondays. This is the data of all funds in the
iMoneyNet, Inc. Tax-Free Stock Broker & General Purpose (SB
& GP) Average category as of December 22, 2000, the closest
date to the end of our reporting period.

**Some investors may be subject to the federal alternative
minimum tax (AMT).

Weighted Average Maturity Compared to the Tax-Free Money Fund Average
(GRAPH)

1
<PAGE>

(LOGO) February 15, 2001

Dear Shareholder,
The 12-month review period ended December 31, 2000, was a
favorable time for investors in short-term municipal
securities. Short-term interest rates rose in the first half
of the year and remained high during the second half,
providing attractive yields in the municipal money markets.

The Federal Reserve Board (the Fed) hiked rates a total of
three times in the first six months of 2000 in an effort to
keep inflation in check and prevent the U.S. economy from
overheating. As the economy began to cool, the Fed held
interest rates steady for the entire second half of the
year. The final quarter of 2000 brought rapid deterioration
to the growth prospects for corporate earnings and the
economy. Although the Fed shifted to an easing bias in
December, there was no change in rates. However, a rate cut
was widely expected.

The Prudential Tax-Free Money Fund's seven-day current yield
on December 31, 2000, was 3.83%, the equivalent of a 6.34%
taxable yield for investors in the top 39.6% tax bracket.
The Fund maintained a $1 net asset value per share.

In the following report, the Fund's management team
describes in more detail the significant developments that
occurred during 2000, and explains how they responded to
those events.

Thank you for your continued confidence in Prudential mutual funds.

Sincerely,

David R. Odenath, Jr., President
Prudential Tax-Free Money Fund, Inc.

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Annual Report December 31, 2000

Investment Adviser's Report

Interest rates Rise, then stabilize
At the beginning of 2000, the Fund's weighted average
maturity (WAM) was longer than that of its competitive
average. (WAM is a measurement tool that determines a
portfolio's sensitivity to changes in the level of interest
rates. Among other factors, it takes into account the
maturity of each security held by a portfolio.) We had
lengthened the WAM in December 1999 to avoid having to lock
in longer-term positions during the seasonal drop in yields
that usually occurs in January (known as the "January
effect") when investors seek to reinvest the cash received
from coupon payments and maturing bonds.

Rapid growth in the economy and the accompanying fear of
resurgent inflation prompted the Fed to raise interest rates
three times during the first six months of 2000--in February,
March, and May. As the February and March increases appeared
more likely, our strategy was to shorten the Fund's WAM
until we could lock in higher yields once the Fed had acted.
Another consideration was to provide liquidity for the
outflows that normally occur in late April and early May
when shareholders withdraw money to pay their taxes.

Soon after the March increase, municipal money market yields
climbed sharply as the markets began to anticipate May's
half-point rate increase. Accordingly, we lengthened the
Fund's WAM by purchasing securities that could be redeemed
on a semiannual basis. Since municipal money market yields
tend to lag those in the taxable money markets, we thought
we would have more opportunities to extend our WAM if the
Fed increased rates again. However, tax-exempt money market
yields declined substantially after the May rate increase
amid belief that the Fed was through raising rates. In
retrospect, we should have extended the WAM even more in
advance of the Fed's final rate hike of 2000.

3
<PAGE>

Prudential Tax-Free Money Fund, Inc.
Annual Report December 31, 2000

At the beginning of July, we experienced a seasonal drop in
yields known as the "July effect." Similar to the "January
effect," this phenomenon is due to a supply/demand
imbalance, as investors reinvest cash
from maturing principal and coupon payments, driving yields
lower on municipal money market securities. To prepare for
this drop in yields, we kept the Fund's WAM longer than the
average going into July.

Toward the end of July, the supply/demand imbalance righted
itself, and yields increased. Accordingly, we lengthened the
Fund's WAM by purchasing one-year notes and commercial paper
with maturities in the 30- to 60-day range. As a result, our
WAM was extended slightly beyond that of our peer group.

A BUYING OPPORTUNITY
We continued our buying campaign throughout September and
October as new issuance supply increased due to large issues
like Texas Tax and Revenue Anticipation Notes (TRANs) coming
to market. In addition, the corporate tax date of September
15 coincided with the end of the quarter for many dealers,
putting further selling pressure on the short-term exempt
market. These conditions drove yields up and prices down,
creating an attractive buying opportunity. We responded by
lengthening the Fund's WAM, purchasing 60-day commercial
paper and one-year notes such as Boise City Housing
Authority Idaho Bond Anticipation Notes (BANs) and Seekonk,
Massachusetts BANs.

The Fed Shifts to an easing bias
December is normally a time when many money market funds
experience a high level of outflows, and we try to build
liquidity to meet those anticipated outflows. We also hope
to use the seasonal upward spike in yields to further extend
our WAM. This year, however, a weak stock market resulted
in lower-than-normal money fund outflows, and market action
continued to reflect the expectation of a near-term rate cut
by the Fed. Consequently, the upward pressure on yields
failed to materialize, and we maintained a moderately longer
WAM in December.

<PAGE>

www.prudential.com (800) 225-1852

Looking ahead
The Fund ended the quarter with a WAM longer than the
average. This will benefit the Fund in the first quarter of
2001, as rates typically drop in January due to the demand
for tax-exempt money market instruments far exceeding the
supply.

Furthermore, in January 2001, the Fed lowered short-term interest rates
by 50 basis points on two occasions. (A basis point is one-hundredth of
a percent.) We believe the Fed will continue to ease
monetary policy to prevent the U.S. economy from slipping
into a recession.

Prudential Tax-Free Money Fund Management Team

5
<PAGE>
Prudential Tax-Free Money Fund, Inc.
Portfolio of Investments as of December 31, 2000
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Alaska 1.2%
Anchorage Alaska, G.O., Ser. 91 NR 8.00% 7/01/01 $ 2,000 $ 2,034,190
- ----------------------------------------------------------------------------------------
Colorado 2.0%
Denver City Cnty. Single Fam.
Home, Metro Mayors Caucus Ser.
C SP1+* 4.45 5/15/01 1,265 1,265,000
East Smoky Hill Metropolitan
Dist., Number 2, Q.T.R.M.T. A1* 4.40 12/01/01 2,000 2,000,000
--------------
3,265,000
- ----------------------------------------------------------------------------------------
District of Columbia 0.3%
Dist. of Columbia, G.O., Series
93A NR 5.50 6/01/01 490(d) 492,047
- ----------------------------------------------------------------------------------------
Florida 7.9%
Florida Cap. Proj. Fin. Auth.
Rev., F.R.W.D., Ser. H VMIG1 4.90 1/03/01 5,000 5,000,000
Orange Cnty. Hlth. Facs. Auth.
Rev., Adventist Hlth. Sys.,
F.R.W.D., Ser. 171 A1+* 5.09 1/04/01 8,125 8,125,000
--------------
13,125,000
- ----------------------------------------------------------------------------------------
Georgia 7.9%
Burke Cnty. Dev. Auth. Poll.
Cntrl. Rev., Oglethorpe Pwr.
Co., Ser. 98, T.E.C.P. VMIG1 4.15 4/20/01 1,300 1,300,000
Cobb Cnty. Hsg. Auth., Post
Bridge Proj., F.R.W.D., Ser.
96 A1+* 5.00 1/03/01 8,100 8,100,000
De Kalb Cnty. Hsg. Auth. Multi
Fam. Hsg. Rev., F.R.W.D. A1* 5.14 1/04/01 1,310 1,310,000
Stephens Cnty. Dev. Auth. Ind.
Dev. Rev., Caterpillar Inc.
Proj., F.R.W.D. P-1 5.14 1/04/01 1,000 1,000,000
</TABLE>
6 See Notes to Financial Statements

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Portfolio of Investments as of December 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stephens Cnty. Dev. Auth. Solid
Waste, Disp. Facs. Rev.,
F.R.W.D. P-1 5.14% 1/04/01 $ 1,520 $ 1,520,000
--------------
13,230,000
- ----------------------------------------------------------------------------------------
Idaho 1.2%
Boise Cnty. Idaho Hsg. Auth.
Rev., Bond Anticipation Notes NR 4.70 10/01/01 2,000 2,000,000
- ----------------------------------------------------------------------------------------
Illinois 8.3%
Illinois Edl. Facs. Auth. Rev. P-1 4.40 4/20/01 5,000 5,000,000
Illinois Hlth. Fac. Auth. Rev.,
Evanston Hosp. Corp. Proj.,
Ser. 95 A.N.N.M.T. VMIG1 4.25 1/31/01 5,000 5,000,000
Illinois Wtr Rev., Mun. Secs.
Trust Rec., F.R.D.D., Ser. 93 A1+ 5.05 1/02/01 1,500 1,500,000
Illinois, Ser. A43, F.R.W.D. VMIG1 4.70 1/03/01 2,295 2,295,000
--------------
13,795,000
- ----------------------------------------------------------------------------------------
Indiana 6.3%
Indiana Edl. Fac. Auth.,
Wesleyan Univ., F.R.W.D., Ser.
93 NR 5.00 1/04/01 4,300 4,300,000
Mount Vernon Poll. Cntrl &
Solid Waste Rev. Ser. A P-1 4.35 1/19/01 5,000 5,000,000
South Bend Econ. Dev. Rev.
Dynamic R.E.H.C. Inc. Proj.,
F.R.W.D. NR 5.20 1/03/01 1,195 1,195,000
--------------
10,495,000
- ----------------------------------------------------------------------------------------
Kentucky 6.0%
Carroll Cnty., Solid Wste.
Disp. Facs. Rev., Ser. 94A,
F.R.D.D., A.M.T. VMIG1 5.40 1/02/01 1,400 1,400,000
Henderson Cnty. Rev., Kentucky
Hosp. Assoc. Hlth. Facs.,
F.R.W.D., Ser. A VMIG1 4.90 1/03/01 3,775 3,775,000
</TABLE>
See Notes to Financial Statements 7

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Portfolio of Investments as of December 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Leitchfield Ind. Bldg. Rev.,
Styline Inds. Inc. Proj.,
F.R.W.D., A.M.T., Ser. 99 A1+* 5.05% 1/04/01 $ 4,785 $ 4,785,000
--------------
9,960,000
- ----------------------------------------------------------------------------------------
Louisiana 2.6%
Calcasieu Parish Pub. Trust
Notes Ser. A NR 4.50 4/01/01 570 570,000
Jefferson Parish Sch. Brd.
Sales and Use Tax Rev.,
F.R.W.D., Ser. A38 VMIG1 4.70 1/03/01 3,790 3,790,000
--------------
4,360,000
- ----------------------------------------------------------------------------------------
Maine 2.5%
Lewiston Ind. Dev. Rev. Diamond
Tpke. Assoc., F.R.W.D. A1+* 5.10 1/04/01 4,200 4,200,000
- ----------------------------------------------------------------------------------------
Massachusetts 2.6%
Mass. St. Hlth. and Ed. Facs.
Auth. Rev., SGA 97, F.R.D.D. A1+* 5.05 1/02/01 300 300,000
Seekonk Bond Appreciation Notes NR 4.45 10/19/01 4,025 4,026,834
--------------
4,326,834
- ----------------------------------------------------------------------------------------
Michigan 3.0%
Detroit Sewage Disp. Rev.,
Merlots, F.R.W.D., Ser. I VMIG1 4.70 1/03/01 5,000 5,000,000
- ----------------------------------------------------------------------------------------
Minnesota 2.9%
Bloomington Comm. Dev. Rev.,
94th Str. Assoc. Proj.,
F.R.W.D., Ser. 85 A1+* 5.00 1/05/01 4,775 4,775,000
- ----------------------------------------------------------------------------------------
Mississipi 4.3%
Mississippi Dev. Bank Spec.
Oblig. Cert., F.R.W.D.
Ser. 337 VMIG1 4.99 1/04/01 2,995 2,995,000
Mississippi Hsg. Fin. Corp.
Sngl. Fam. Mtge., F.R.W.D.,
Ser. 88 A1+* 5.10 1/04/01 4,220 4,220,000
--------------
7,215,000
</TABLE>
8 See Notes to Financial Statements

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Portfolio of Investments as of December 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
New Jersey 3.0%
Jersey City, G.O. SP-1+* 4.60% 9/14/01 $ 5,000 $ 5,006,717
- ----------------------------------------------------------------------------------------
New York 0.9%
Longwood Central Sch. Dist.
Suffolk County, Gen. Oblig.,
Ser. 01 NR 5.00 6/29/01 1,500 1,502,462
- ----------------------------------------------------------------------------------------
Ohio 2.2%
East Lake Ind. Dev. Rev., Astro
Model Dev. Corp., F.R.W.D.,
Ser. 96 NR 5.20 1/04/01 2,600 2,600,000
Nordonia Hills City School
Dist. Bond Anticipation Notes,
Ser. A SP1+* 4.75 3/20/01 1,000 1,000,955
--------------
3,600,955
- ----------------------------------------------------------------------------------------
Oklahoma 2.4%
Rural Enterprises Inc. Rev.
Gov. Fin. Proj., F.R.W.D.,
Ser. A VMIG1 4.90 1/03/01 2,000 2,000,000
Tulsa Pkg. Auth. Rev., Williams
Ctr. Proj., S.E.M.M.T.,
Ser. 87 A VMIG1 4.45 5/15/01 2,000 2,000,000
--------------
4,000,000
- ----------------------------------------------------------------------------------------
Pennsylvania 3.0%
Butler Cnty. Hosp. Auth. Rev.,
North Hills Passavant Hosp.,
Ser. 91A, F.S.A. NR 7.00 6/01/01 4,800(d) 4,948,725
- ----------------------------------------------------------------------------------------
Rhode Island 0.4%
Rhode Island Desp. Econ.
Protection Corp. Spc. Oblig.,
Ser. 91A NR 7.10 8/01/01 700(d) 724,054
- ----------------------------------------------------------------------------------------
South Carolina 7.2%
Beaufort Cnty. Sch. Dist.,
Ser. 1997B NR 6.50 3/01/01 1,050 1,053,611
Oconee Cnty. Sch. Dist. T.A.N. NR 4.75 3/15/01 2,000 2,001,176
</TABLE>
See Notes to Financial Statements 9

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Portfolio of Investments as of December 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
South Carolina St Pub. Svc.
Auth. Rev. Merlots, F.R.W.D.,
Ser. L VMIG1 4.70% 1/03/01 $ 5,090 $ 5,090,000
South Carolina Trans. Insf.
Bank Rev., F.R.D.D. A1+* 5.05 1/02/01 1,300 1,300,000
Spartanburg Cnty. Sch. Dist. 7
B.A.N. MIG1 4.75 2/15/01 2,500 2,501,618
--------------
11,946,405
- ----------------------------------------------------------------------------------------
South Dakota 2.0%
Grant Cnty. Poll. Cntrl. Rev.
Ref. Otter Tail Pwr. Co.
Proj., F.R.W.D. VMIG1 5.15 1/05/01 2,400 2,400,000
South Dakota Stud. Ln. Fin.
Corp. Ln. Rev. Ser. 94A NR 6.45 8/01/01 1,000(d) 1,030,194
--------------
3,430,194
- ----------------------------------------------------------------------------------------
Tennessee 3.0%
Sevier Cnty. Pub. Bldg. Auth.
Local Gov. Pub. Imprv. Proj.,
F.R.D.D. VMIG1 5.05 1/02/01 5,000 5,000,000
- ----------------------------------------------------------------------------------------
Texas 0.2%
Pasadena Tax Notes NR 6.00 2/15/01 345 345,653
- ----------------------------------------------------------------------------------------
Vermont 1.4%
Vermont Ind. Dev. Auth. Rev.
Var. Burlington Pptys. Proj.,
F.R.W.D., Ser. 88 A1+* 5.10 1/04/01 2,300 2,300,000
- ----------------------------------------------------------------------------------------
Virginia 0.7%
Louisa Ind. Dev. Auth. Elect.
Pwr., Ser. 84 VMIG1 4.45 2/28/01 1,200 1,200,000
- ----------------------------------------------------------------------------------------
Washington 1.1%
Port Pasco Econ. Dev. Var.
Douglas Fruit Company Inc.
Proj., F.R.W.D., Ser. 96 A1* 5.10 1/04/01 1,815 1,815,000
</TABLE>
10 See Notes to Financial Statements

See Notes to Financial Statements 11

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Portfolio of Investments as of December 31, 2000 Cont'd.

(a) The following abbreviations are used in portfolio descriptions:
A.M.T.--Alternate Minimum Tax
A.N.N.M.T.--Annual Mandatory Tender
B.A.N.--Bond Anticipation Notes
F.R.D.D.--Floating Rate (Daily) Demand Note(b)
F.R.W.D.--Floating Rate (Weekly) Demand Note(b)
F.S.A.--Financial Security Assurance
G.O.--General Obligation
Q.T.R.M.T.--Quarterly Monthly Tender
S.E.M.M.T.--Semi-Annual Mandatory Tender
T.A.N.--Tax Anticipation Note
T.E.C.P.--Tax-Exempt Commercial Paper
T.R.A.N.--Tax and Revenue Anticipation Note

(b) For purposes of amortized cost valuation, the maturity date of 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 basis for federal income tax purposes is substantially the same as
that used for financial statement purposes.

(d) Prerefunded issues are secured by escrowed cash and direct U.S. government
guaranteed obligations.

* 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.

12 See Notes to Financial Statements

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
December 31, 2000
<S> <C> <C>
- ---------------------------------------------------------------------------------------
ASSETS
Investments, at amortized cost which approximates market
value $ 162,539,796
Cash 56,716
Receivable for Fund shares sold 3,843,375
Interest receivable 1,554,413
Prepaid expenses 5,890
-----------------
Total assets 168,000,190
-----------------
LIABILITIES
Payable for Fund shares reacquired 1,183,303
Accrued expenses 91,152
Dividends payable 107,123
Management fee payable 73,883
Distribution fee payable 18,471
-----------------
Total liabilities 1,473,932
-----------------
NET ASSETS $ 166,526,258
-----------------
-----------------
Net assets were comprised of:
Common Stock, $.01 par value $ 1,666,205
Paid-in capital in excess of par 164,860,053
-----------------
Net assets, December 31, 2000 $ 166,526,258
-----------------
-----------------
Net asset value, offering price and redemption price
per share ($166,526,258 / 166,620,537 shares) $1.00
-----------------
-----------------
</TABLE>

See Notes to Financial Statements 13

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Statement of Operations
<TABLE>
<CAPTION>
Year
Ended
December 31, 2000
<S> <C> <C>
- ---------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest $ 7,385,984
-----------------
Expenses
Management fee 883,795
Distribution fee 220,949
Transfer agent's fees and expenses 122,000
Custodian's fees and expenses 66,000
Reports to shareholders 37,000
Registration fees 35,000
Audit fee 26,000
Legal fees and expenses 15,000
Directors' fees and expenses 11,000
Miscellaneous 1,638
-----------------
Total expenses 1,418,382
Less: custodian fee credit (1,650)
-----------------
Net expenses 1,416,732
-----------------
Net investment income 5,969,252
-----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,969,252
-----------------
-----------------
</TABLE>

14 See Notes to Financial Statements

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Year
Ended Ended
December 31, 2000 December 31, 1999
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 5,969,252 $ 5,097,107
Net realized gain on investment
transactions -- 3
----------------- -----------------
Net increase in net assets resulting
from operations 5,969,252 5,097,110
----------------- -----------------
Dividends and distributions to
shareholders (5,969,252) (5,097,110)
----------------- -----------------
Fund share transactions (at $1 per share)
Proceeds from shares sold 602,574,421 604,058,962
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 5,660,329 4,896,169
Cost of shares reacquired (621,595,449) (628,233,381)
----------------- -----------------
Net decrease in net assets from Fund
share transactions (13,360,699) (19,278,250)
----------------- -----------------
Total decrease (13,360,699) (19,278,250)
NET ASSETS
Beginning of year 179,886,957 199,165,207
----------------- -----------------
End of year $ 166,526,258 $ 179,886,957
----------------- -----------------
----------------- -----------------
</TABLE>

See Notes to Financial Statements 15

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Notes to Financial Statements

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 The Prudential
Investment

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Notes to Financial Statements Cont'd.

Corporation ('PIC'), a wholly owned subsidiary of Prudential. The Subadvisory
Agreement provides that the subadviser will furnish investment advisory services
in connection with the management of the Fund. In connection therewith, the
Subadviser is obligated to keep certain books and records of the Fund. PIFM
continues to have responsibility for all investment advisory services pursuant
to the Management Agreement and supervises the Subadviser's performance of such
services. PIFM pays for the services of PIC, the cost of 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 to 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 Investment
Management Services LLC ('PIMS'). The Fund compensated PIMS 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.

PIFM, PIC and PIMS are indirect, wholly owned subsidiaries of The
Prudential Insurance Company of America.

Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), an affiliate of PIFM and an
indirect wholly owned subsidiary of Prudential, serves as the Fund's transfer
agent and during the year ended December 31, 2000, the Fund incurred fees of
approximately $120,500 for the services of PMFS. As of December 31, 2000,
approximately $9,400 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.
17
<PAGE>
Prudential Tax-Free Money Fund, Inc.
Financial Highlights
<TABLE>
<CAPTION>
Year
Ended
December 31, 2000
<S> <C> <C>
- ---------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 1.00
Net investment income and realized gains .034
Dividends and distributions to shareholders (.034)
-----------------
Net asset value, end of year $ 1.00
-----------------
-----------------
TOTAL RETURN(a): 3.42%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 166,526
Average net assets (000) $ 176,759
Ratios to average net assets:
Expenses, including distribution and service (12b-1)
fees .80%
Expenses, excluding distribution and service (12b-1)
fees .68%
Net investment income 3.38%
</TABLE>

- ------------------------------
(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.

18 See Notes to Financial Statements

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Year Ended December 31,
- -------------------------------------------------------------------------------------
1999 1998 1997 1996
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00
.025 .028 .030 .028
(.025) (.028) (.030) (.028)
- ---------------- ---------------- ---------------- ----------------
$ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------- ---------------- ---------------- ----------------
- ---------------- ---------------- ---------------- ----------------
2.56% 2.83% 3.00% 2.84%
$179,887 $199,165 $329,812 $333,808
$202,718 $277,839 $339,825 $403,230
.81% .80% .78% .80%
.69% .68% .66% .67%
2.51% 2.80% 2.97% 2.83%
</TABLE>

See Notes to Financial Statements 19

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Report of Independent Accountants

To the Shareholders and Board of Directors 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, 2000, 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 accounting principles generally accepted
in the United States of America. 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 auditing standards
generally accepted in the United States of America, 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, 2000 by correspondence with the custodian provide a reasonable
basis for our opinion.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
February 14, 2001
20

<PAGE>
Prudential Tax-Free Money Fund, Inc.
Federal Income Tax Information (Unaudited)

We are required by the Internal Revenue Code to advise you within 60 days
of the Fund's fiscal year end (December 31, 2000) 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, 2000, dividends paid
from net investment income of $.034 were all 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.

<PAGE>
Prudential Tax-Free Money Fund, Inc.

Prudential Mutual Funds

Prudential offers a broad range of mutual funds designed to meet your
individual needs. For information about these funds, contact
your financial professional or call us at (800) 225-1852.
Read the prospectus carefully before you invest or send money.

STOCK FUNDS
Large Capitalization Stock Funds
Prudential 20/20 Focus Fund
Prudential Equity Fund, Inc.
Prudential Stock Index Fund
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Prudential Value Fund
Target Funds
Large Capitalization Growth Fund
Large Capitalization Value Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund

Small- to Mid-Capitalization Stock Funds
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Prudential Small Company Fund, Inc.
Prudential Tax-Managed Small-Cap Fund, Inc.
Prudential U.S. Emerging Growth Fund, Inc.
Target Funds
Small Capitalization Growth Fund
Small Capitalization Value Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Equity Opportunity Fund

Sector Stock Funds
Prudential Natural Resources Fund, Inc.
Prudential Real Estate Securities Fund
Prudential Sector Funds, Inc.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund

Global/International Stock Funds
Global Utility Fund, Inc.
Prudential Europe Growth Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Growth Fund
Prudential International Value Fund
Prudential Jennison International Growth Fund
Target Funds
International Equity Fund

Strategic Partners Series
Strategic Partners Focused Growth Fund
Strategic Partners New Era Growth Fund

BALANCED/ALLOCATION FUNDS
Prudential Diversified Funds
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund

<PAGE>

www.prudential.com (800) 225-1852

BOND FUNDS
Taxable Bond Funds
Prudential Government Income Fund, Inc.
Prudential High Yield Fund, Inc.
Prudential High Yield Total Return Fund, Inc.
Prudential Short-Term Corporate Bond Fund, Inc.
Income Portfolio
Prudential Total Return Bond Fund, Inc.
Target Funds
Total Return Bond Fund

Tax-Free Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
Prudential Municipal Series Fund
Florida Series
New Jersey Series
New York Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.

Global/International Bond Funds
Prudential Global Total Return Fund, Inc.

MONEY MARKET FUNDS
Taxable Money Market Funds
Cash Accumulation Trust
Liquid Assets Fund
National Money Market Fund
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
Prudential MoneyMart Assets, Inc.
Prudential Special Money Market Fund, Inc.
Money Market Series

Tax-Free Money Market Funds
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
New Jersey Money Market Series
New York Money Market Series
Prudential Tax-Free Money Fund, Inc.

Other Money Market Funds
Command Government Fund
Command Money Fund
Command Tax-Free Fund

<PAGE>

Prudential Tax-Free Money Fund, Inc.

Getting the Most from Your Prudential Mutual Fund

Some mutual fund shareholders won't ever read this--they
don't read annual and semiannual reports. It's quite
understandable. These annual and semiannual reports are
prepared to comply with federal regulations, and are often
written in language that is difficult to understand. So when
most people run into those particularly daunting sections of
these reports, they don't read them.

We think that's a mistake
At Prudential Mutual Funds, we've made some changes to our
report to make it easier to understand and more pleasant to
read. We hope you'll find it profitable to spend a few
minutes familiarizing yourself with your investment. Here's
what you'll find in the report:

Performance at a Glance
Since an investment's performance is often a shareholder's
primary concern, we present performance information in two
different formats. You'll find it first on the "Performance
at a Glance" page where we compare the Fund and the
comparable average calculated by Lipper, Inc., a nationally
recognized mutual fund rating agency. We report both the
cumulative total returns and the average annual total
returns. The cumulative total return is the total amount of
income and appreciation the Fund has achieved in various
time periods. The average annual total return is an
annualized representation of the Fund's performance. It
gives you an idea of how much the Fund has earned in an
average year for a given time period. Under the performance
box, you'll see legends that explain the performance
information, whether fees and sales charges have been
included in returns, and the inception dates for the Fund's
share classes.

See the performance comparison charts at the back of the
report for more performance information. Please keep in mind
that past performance is not indicative of future results.

<PAGE>

www.prudential.com (800) 225-1852

INVESTMENT ADVISER'S REPORT
The portfolio manager, who invests your money for you, reports on
successful--and not-so-successful--strategies in this section
of your report. Look for recent purchases and sales here, as
well as information about the sectors the portfolio manager
favors, and any changes that are on the drawing board.

Portfolio of Investments
This is where the report begins to appear technical, but it's really just a
listing of each security held at the end of the reporting
period, along with valuations and other information. Please
note that sometimes we discuss a security in the "Investment
Adviser's Report" section that doesn't appear in this
listing because it was sold before the close of the
reporting period.

Statement of Assets and Liabilities
The balance sheet shows the assets (the value of the Fund's holdings),
liabilities (how much the Fund owes), and net assets (the Fund's
equity, or holdings after the Fund pays its debts) as of the
end of the reporting period. It also shows how we calculate
the net asset value per share for each class of shares. The
net asset value is reduced by payment of your
dividend, capital gain, or other distribution, but remember
that the money or new shares are being paid or issued to
you. The net asset value fluctuates daily, along with the
value of every security in the portfolio.

Statement of Operations
This is the income statement, which details income (mostly interest and
dividends earned) and expenses (including what you pay us to
manage your money). You'll also see capital gains here--both
realized and unrealized.

<PAGE>

Prudential Tax-Free Money Fund, Inc.
Getting the Most from Your Prudential Mutual Fund

Statement of Changes in Net Assets
This schedule shows how income and expenses translate into changes
in net assets. The Fund is required to pay out the bulk of
its income to shareholders every year, and this statement
shows you how we do it (through
dividends and distributions) and how that affects the net
assets. This statement also shows how money from investors
flowed into and out of the Fund.

Notes to Financial Statements
This is the kind of technical material that can intimidate
readers, but it does contain useful information. The Notes
provide a brief history and explanation of your Fund's
objectives. In addition, they outline how Prudential Mutual
Funds prices securities. The Notes also explain who manages
and distributes the Fund's shares and, more importantly, how
much they are paid for doing so. Finally, the Notes explain
how many shares are outstanding and the number issued and
redeemed over the period.

Financial Highlights
This information contains many elements from prior pages, but on a
per-share basis. It is designed to help you understand how the Fund
performed, and to compare this year's performance and
expenses to those of prior years.

Independent accountant's Report
Once a year, an independent accountant looks over our books
and certifies that the financial statements are fairly
presented in accordance with generally accepted accounting principles.

Tax Information
This is information that we report annually about how much
of your total return is taxable. Should you have any
questions, you may want to consult a tax adviser.

<PAGE>

www.prudential.com (800) 225-1852

Performance Comparison
These charts are included in the annual report and are
required by the Securities Exchange Commission. Performance
is presented here as a hypothetical $10,000 investment in
the Fund since its inception or for 10 years (whichever is
shorter). To help you put that return in context, we
are required to include the performance of an unmanaged,
broad-based securities index as well. The index does not
reflect the cost of buying the securities it contains or the
cost of managing a mutual fund. Of course, the index
holdings do not mirror those of the Fund--the index is a
broad-based reference point commonly used by investors to
measure how well they are doing. A definition of the
selected index is also provided. Investors cannot invest
directly in an index.

<PAGE>

Prudential Tax-Free Money Fund, Inc.
Getting the Most from Your Prudential Mutual Fund

How many times have you read these reports--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: 1/100th of 1%. For example, one-half of one
percent is 50 basis points.

Collateralized Mortgage Obligations (CMOs): Mortgage-backed
bonds that separate mortgage pools into different maturity
classes called tranches. 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 other
securities. The rate of return of these financial
instruments 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 member banks.

Federal Funds Rate: The interest rate charged by one bank to
another on overnight loans.

Futures Contract: An agreement to purchase or sell a specific amount of
a commodity or financial instrument at a set price at a
specified date in the future.

<PAGE>

www.prudential.com (800) 225-1852

Leverage: The use of borrowed assets to enhance return. The
expectation is that the interest rate charged on borrowed
funds 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
product) 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 purchase or 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; often used to describe the
difference between "bid" and "asked" prices of a security,
or between the yields of two similar maturity bonds.

Yankee Bond: A bond sold by a foreign company or government
on the U.S. market and denominated in U.S. dollars.

<PAGE>
For More Information

Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852

Visit Prudential's website at:
http://www.prudential.com

Directors
Delayne Dedrick Gold
Robert F. Gunia
Robert E. LaBlanc
David R. Odenath, Jr.
Judy A. Rice
Robin B. Smith
Stephen Stoneburn
Nancy H. Teeters
Clay T. Whitehead

Officers
David R. Odenath, Jr., President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Marguerite E.H. Morrison, Secretary
William V. Healey, 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 Investment
Management Services LLC
Three Gateway Center, 14th Floor
Newark, NJ 07102-4077

Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171

Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 8098
Philadelphia, PA 19101

Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036

Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004

Cusip Number 74436P103

MF103E

(ICON) Printed on Recycled Paper

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