-----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, OeTRnPvn3BooU81lU+Oii9DS2I1ts8yWlkKDCh72IgFCRLXU8OtsQEQCjGI0sPaj ANE0/Zh8rYAbQzVgmOv5AA== 0000898733-02-000542.txt : 20020826 0000898733-02-000542.hdr.sgml : 20020826 20020826131802 ACCESSION NUMBER: 0000898733-02-000542 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020826 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUDENTIAL TAX FREE MONEY FUND INC CENTRAL INDEX KEY: 0000311561 IRS NUMBER: 132993505 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02927 FILM NUMBER: 02748012 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: 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 FORMER COMPANY: FORMER CONFORMED NAME: PRUDENTIAL BACHE TAX FREE MONEY FUND INC DATE OF NAME CHANGE: 19920603 N-30D 1 mf15639.txt TAX-FREE MONEY FUND -- JUNE 30, 2002 SEMI SEMIANNUAL REPORT JUNE 30, 2002 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 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. Prudential Financial is a service mark of The Prudential Insurance Company of America, Newark, NJ, and its affiliates. (LOGO) Prudential Tax-Free Money Fund, Inc. Performance at a Glance INVESTMENT GOALS AND STYLE The Prudential Tax-Free Money Fund, Inc. (the 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 United States, and the District of Columbia. Maturities can range from 1 day to a maximum of 13 months. There can be no assurance that the Fund will achieve its investment objective. Money Market Fund Yield Comparison (GRAPH) www.prudential.com (800) 225-1852 Semiannual Report June 30, 2002 Fund Facts As of 6/30/02
7-Day Net Asset Weighted Avg. Net Assets Current Yield Value (NAV) Mat. (WAM) (Millions) Prudential Tax-Free Money Fund, Inc. 0.94% $1.00 55 Days $212 iMoneyNet, Inc. Tax-Free National Retail Avg.* 1.01% $1.00 36 Days N/A
Taxable Equivalent Yield** As of 6/30/02 Tax Brackets @30% @35% @38.6% Prudential Tax-Free Money Fund, Inc. 1.34% 1.45% 1.53% iMoneyNet, Inc. Tax-Free National Retail Avg.* 1.44% 1.55% 1.64% 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 for all funds in the iMoneyNet, Inc. Tax- Free National Retail Average category as of June 24, 2002, the closest day to the end of our reporting period. **Some investors may be subject to the federal alternative minimum tax (AMT). Weighted Average Maturity Comparison (GRAPH) 1 (LOGO) August 15, 2002 DEAR SHAREHOLDER, The reporting period for Prudential Tax-Free Money Fund, Inc.--the six months ended June 30, 2002--was a time of significant change in the U.S. economy and the financial markets. The economy recovered from its first recession in a decade, helped by 11 cuts in short-term interest rates that had been completed by the Federal Reserve (the Fed) the previous year. The Fed left short-term rates near record lows as the economic recovery slowed and accounting scandals involving certain high-profile companies in the United States roiled financial markets. These developments drove money market yields lower late in our reporting period. In this environment characterized by investor pessimism and distrust, money market funds that invest in either tax-exempt issues or taxable securities remained a viable alternative for those seeking investments that offered relative safety and liquidity. The Fund's management team employed an interest rate strategy and analysis of supply/demand dynamics of municipal money market securities that helped the Fund provide a competitive yield. The Fund's management team explains conditions in the money markets and the Fund's investments on the following pages. Thank you for your continued confidence in Prudential mutual funds. Sincerely, David R. Odenath, Jr., President Prudential Tax-Free Money Fund, Inc. 2 Prudential Tax-Free Money Fund, Inc. Semiannual Report June 30, 2002 INVESTMENT ADVISER'S REPORT FACING A CHALLENGING INVESTMENT ENVIRONMENT Three developments influenced our investment strategy during our six- month reporting period that began January 1, 2002. First, we needed to lock in yields on attractively priced municipal money market securities before market interest rates moved lower. Second, we had to prepare the Fund to meet additional shareholder liquidity needs that typically occur at certain times of the year. Third, we had to maintain our conservative investment strategy, as an economic recession in the United States the previous year weakened the financial health of many state and local governments that issue money market securities. RIDING OUT THE "JANUARY EFFECT" As our six-month reporting period got under way, the January effect had just taken hold of the tax-exempt money market. This seasonal decline in yields occurred during January, as investors rushed to reinvest cash from coupon payments, bond calls, and maturing debt securities that they received at the beginning of 2002. Even without the January effect, the general level of municipal money market yields was already low. This was due to the Fed's aggressive campaign to reduce short-term interest rates that was waged in 2001 to help the U.S. economy recover from the recession. We had prepared the Fund to ride out the January effect by investing in longer-term municipal money market securities in late 2001. Our purchases enabled the Fund to begin 2002 with a weighted average maturity (WAM) positioned significantly longer than the average comparable portfolio. (WAM measures a portfolio's sensitivity to changes in interest rates. It considers the maturity and quantity of each security held in a portfolio.) When municipal money market yields decline, having a longer than average WAM helps a portfolio's yield remain higher for a longer period of time. 3 Prudential Tax-Free Money Fund, Inc. Semiannual Report June 30, 2002 THE CHANGING OUTLOOK FOR U.S. MONETARY POLICY As the year progressed, market participants scrutinized government reports to determine if an economic rebound had begun in response to the stimulus provided by the Fed rate cuts. In the first quarter of 2002, we adopted a wait-and-see attitude by investing in shorter-term municipal money market securities such as those with interest rates that adjusted on a daily and weekly basis. Our purchases gradually shortened the Fund's WAM, but still allowed the Fund to be positioned longer than the average of its peer group. Data released during the first quarter of 2002 indicated that the Fed's efforts met with success. The economy had begun to recover in earnest. Improving economic conditions shifted the outlook for monetary policy from whether the Fed would continue to lower rates to whether it would increase rates in the first half of 2002. Tightening monetary policy would help prevent the economy from expanding too fast and igniting higher inflationary pressures. TAX TIME CREATED GOOD OPPORTUNITIES TO INVEST With the Fed expected to increase short-term rates in the first half of 2002, municipal money market yields began to edge higher. Yields were also at attractive levels in April because of the tax season when portfolio managers sell securities to provide shareholders with cash to pay their taxes. We took advantage of good investment opportunities during this time by purchasing bond anticipation notes of Boise City, Idaho Housing Authority, which matured in four months, taking us past the "July effect" that is caused by the same influences as the January effect. We invested in tax and revenue anticipation notes of Allegheny County, Pennsylvania, which mature in late 2002, and which will help us to meet the Fund's anticipated outflows at the end of the year. We also purchased single-family revenue bonds of the Pima County, Arizona Industrial Development Authority that have a stated maturity of one year and an interest rate that resets on a monthly basis. Our purchases again lengthened the Fund's WAM. 4 www.prudential.com (800) 225-1852 Investing in these securities during April and May 2002 proved to be a good choice, particularly as it became clear the Fed would not increase short-term rates during the first half of the year. There was no immediate need for the Fed to act since economic growth slowed in the spring. LOOKING AHEAD Data released shortly after our reporting period ended showed that the economic expansion slowed more than was originally expected in the second quarter of 2002. Not surprisingly, there is concern that the economy may be headed for an extended period of sluggishness, with the remote possibility of a "double dip" recession. This leads us to believe the Fed will likely leave monetary policy unchanged for the remainder of 2002. However, some market participants have suggested that the Fed might cut short-term rates further if economic growth continues to weaken. In light of this outlook for monetary policy, we plan to position the Fund's WAM slightly longer than average. This strategy would help preserve the Fund's income stream if money market yields head lower, and would also allow the Fund sufficient liquidity to invest in any higher yielding securities that might become available in late 2002. Meanwhile, we plan to take advantage of the large supply of new municipal money market securities that will be issued in late August and September this year. Afterward, we will begin building up liquidity again in the Fund to prepare to meet anticipated year-end outflows. Prudential Tax-Free Money Fund Management Team 5 Prudential Tax-Free Money Fund, Inc. Portfolio of Investments as of June 30, 2002 (Unaudited)
Principal Moody's Interest Maturity Amount Value Description (a) Rating Rate Date (000) (Note 1) - ------------------------------------------------------------------------------------------------------------ Alaska 1.0% Alaska Engy. Auth. Util. Rev., Ser. 92 NR 6.75% 7/01/02 $ 2,000(c) $ 2,040,000 - ---------------------------------------------------------------------------------------- Arizona 1.8% Maricopa Cnty. Uni., Sch. Dist. No. 48, Ser. 92 NR 6.00 7/01/02 1,000(c) 1,010,000 Pima Cnty. Ind. Dev. Auth. Sngl. Fam. Mtge. Rev. NR 1.81 4/25/03 2,745 2,745,000 -------------- 3,755,000 - ---------------------------------------------------------------------------------------- California 0.7% Calif. St. Comnty. Dev. Auth. Rev., Kaiser Perm., Ser. 2002B MIG2 2.25 2/01/03 1,500 1,500,000 - ---------------------------------------------------------------------------------------- Colorado 1.3% Denver City & Cnty. Airport Rev., Ser. A(c) NR 7.25 11/15/02 750 779,324 East Smoky Hill Metro. Dist. Number 2, A.N.N.M.T. A1(e) 2.00 12/01/02 2,000 2,000,000 -------------- 2,779,324 - ---------------------------------------------------------------------------------------- Delaware 0.1% Delaware St. Econ. Dev. Auth. Rev. Facs., Delmarva Pwr. & Lt. Proj., Ser. 87A, A.M.T., F.R.D.D. VMIG1 2.15 7/01/02 200 200,000 - ---------------------------------------------------------------------------------------- District Of Columbia 3.0% Dist. Columbia Hsg. Fin. Agcy. Rev. Fam. Mtge. Ser. C, A.M.T. A1+(e) 1.66 12/26/02 4,650 4,650,000 Dist. Columbia Rev., Defenders Of Wildlife, F.R.W.D. VMIG1 1.40 7/03/02 1,750 1,750,000 -------------- 6,400,000 - ---------------------------------------------------------------------------------------- Florida 5.6% Halifax Hosp. Med. Ctr. T.A.N. MIG1 2.50 3/14/03 1,500 1,506,709
6 See Notes to Financial Statements Prudential Tax-Free Money Fund, Inc. Portfolio of Investments as of June 30, 2002 (Unaudited) Cont'd.
Principal Moody's Interest Maturity Amount Value Description (a) Rating Rate Date (000) (Note 1) - ------------------------------------------------------------------------------------------------------------ Hillsborough Cnty. Ind. Dev., F.R.D.D., Auth. Poll. Ctrl. Rev., Ser. 92 VMIG1 2.15% 7/01/02 $ 600 $ 600,000 Mun. Secs. Trust Cert. Ser. 2001-160, Class A, F.G.I.C., F.R.D.D. NR 1.90 7/01/02 500 500,000 Orange Cnty. Hlth. Facs. Auth. Rev. Adventist Hlth. Sys., F.S.A., F.R.W.D., Ser. 171 A1+(e) 1.43 7/04/02 8,925 8,925,000 Tampa Sports Auth. Rev., Mun. Sec. Trust Rcpts., Ser. 61, M.B.I.A., F.R.D.D. A1+(e) 1.90 7/01/02 300 300,000 -------------- 11,831,709 - ---------------------------------------------------------------------------------------- Georgia 2.3% De Kalb Cnty. Hsg. Auth. Multi. Fam. Hsg. Rev., F.R.W.D. A1(e) 1.53 7/04/02 1,310 1,310,000 Rome Georgia T.A.N. NR 2.50 12/31/02 1,000 1,003,467 Stephens Cnty. Dev. Auth. Ind. Dev. Rev., Caterpillar Inc. Proj., F.R.W.D., A.M.T. P1 1.53 7/04/02 2,520 2,520,000 -------------- 4,833,467 - ---------------------------------------------------------------------------------------- Idaho 1.4% Boise Cnty. Hsg. Auth. Rev., A.M.T., Ser. 2002 NR 1.75 8/01/02 3,000 3,000,000 - ---------------------------------------------------------------------------------------- Illinois 10.0% Chicago Metro. Wtr. Reclamation Dist., Ser. A VMIG1 1.20 7/03/02 2,500 2,500,000 Chicago Pub. Bldg. Comm. Bldg. Rev., Ser. 99C, F.G.I.C., F.R.W.D. A1+(e) 1.48 7/05/02 3,000 3,000,000 Illinois Hlth. Fac. Auth. Rev., Servant Cor. Falcon II, A.M.T., F.R.W.D., Ser. 96A P-1(e) 1.40 7/03/02 3,100 3,100,000 Illinois Hlth. Facs. Auth., Evanston Hosp. Corp. Proj. VMIG1 1.50 7/25/02 5,000 5,000,000
See Notes to Financial Statements 7 Prudential Tax-Free Money Fund, Inc. Portfolio of Investments as of June 30, 2002 (Unaudited) Cont'd.
Principal Moody's Interest Maturity Amount Value Description (a) Rating Rate Date (000) (Note 1) - ------------------------------------------------------------------------------------------------------------ Chicago Illinois, Ser. A43, M.E.R.L.O.T., F.R.W.D. VMIG1 1.37% 7/03/02 $ 1,695 $ 1,695,000 Reg. Trans. Auth., M.E.R.L.O.T., Ser. A24, G.O., M.B.I.A., F.R.W.D. VMIG1 1.36 7/03/02 5,000 5,000,000 Whiteside & Lee Cnty., Uni., Sch. Dist. No. 5, Ser. 02A, F.S.A NR 4.00 2/01/03 935 943,048 -------------- 21,238,048 - ---------------------------------------------------------------------------------------- Indiana 4.3% Greensburg Multi-Fam. Rev., Hsg. Comm. Partners Vlge. II, F.R.W.D., A.M.T., Ser. 2002 A1+(e) 1.45 7/04/02 2,000 2,540,000 Indiana Bond Bank, Comn. Sch. Fund Advancement Purchase Funding, Ser. 01, A.M.B.A.C. NR 4.75 2/01/03 500 508,567 Indiana Ed. Facs. Auth., Wesleyan Univ., F.R.W.D., Ser. 93 NR 1.40 7/04/02 3,400 3,400,000 South Bend Econ. Dev. Rev. Dynamic R.E.H.C., Inc. Proj., F.R.W.D., Ser. 99, A.M.T. NR 1.55 7/03/02 1,125 1,125,000 Vincennes Univ. Rev., Student Fee, Ser. 02F A1(e) 1.40 7/03/02 1,500 1,500,000 -------------- 9,073,567 - ---------------------------------------------------------------------------------------- Iowa 1.3% Iowa Higher Ed. Ln. Auth. Rev. Morningside Coll., Ser. K NR 3.00 5/23/03 1,500 1,511,803 R.A.N., Dubuque, Ser. D NR 3.25 5/23/03 1,250 1,259,266 -------------- 2,771,069 - ---------------------------------------------------------------------------------------- Kentucky 1.8% Kentucky Prop. & Bldgs. Comm. Rev. Proj. No. 55, M.B.I.A. NR 4.50 9/01/02 1,000 1,004,185
8 See Notes to Financial Statements Prudential Tax-Free Money Fund, Inc. Portfolio of Investments as of June 30, 2002 (Unaudited) Cont'd.
Principal Moody's Interest Maturity Amount Value Description (a) Rating Rate Date (000) (Note 1) - ------------------------------------------------------------------------------------------------------------ Leitchfield Ind. Bldg. Rev., Styline Inds. Inc. Proj., F.R.W.D., A.M.T., Ser. 99 A1+(e) 1.53% 7/04/02 $ 2,840 $ 2,840,000 -------------- 3,844,185 - ---------------------------------------------------------------------------------------- Louisiana 1.4% Louisiana Hsg. Fin. Agcy. Mtge. Rev. Fltr. Ser. 664, A.M.T., F.R.W.D. VMIG1 1.43 7/04/02 1,520 1,520,000 Louisiana Pub. Facs. Auth. Rev. Loyola Univ. Proj., Ser. L5 NR 5.50 10/01/02 1,000 1,007,144 Ouachita Parish Sch. Dist., No. 001 Parish Wide, Cert. Indbt., Ser. 02, M.B.I.A. NR 3.50 3/01/03 560 565,512 -------------- 3,092,656 - ---------------------------------------------------------------------------------------- Maine 2.3% Lewiston Ind. Dev. Rev., Diamond Tpke. Assoc., F.R.W.D., A.M.T., Ser. 1915 A1+(e) 1.50 7/04/02 3,900 3,900,000 York Maine Rev., Stonewall Realty Proj., F.R.W.D., Ser. 99, A.M.T. VMIG1 1.70 7/05/02 945 945,000 -------------- 4,845,000 - ---------------------------------------------------------------------------------------- Massachusetts 3.5% Mass. Mun. Wholesale Elec. Co. Pwr. Supp. Sys. Rev., Ser. 2B, M.B.I.A. NR 6.50 7/01/02 2,000 2,000,000 Mass. St. Cons. Loan, Ser. 9 VMIG1 1.40 7/04/02 2,170 2,170,000 Mass. St. Hlth. & Edu. Facs. Auth. Rev., Partners Hlthcare, Ser. B NR 3.85 7/01/02 1,000 1,000,000 Mass. St. Ind. Fin. Agcy. Rev. Peterson Amer. Corp. Proj., F.R.W.D., A.M.T. Ser. 96 NR 1.55 7/03/02 400 400,000 Mass. St. Wtr. Poll. Abatement Trust Rev., F.R.D.D., SG87 A1+(e) 1.90 7/01/02 500 500,000
See Notes to Financial Statements 9 Prudential Tax-Free Money Fund, Inc. Portfolio of Investments as of June 30, 2002 (Unaudited) Cont'd.
Principal Moody's Interest Maturity Amount Value Description (a) Rating Rate Date (000) (Note 1) - ------------------------------------------------------------------------------------------------------------ Winthrop Mass. G.O., B.A.N., Ser. 02 MIG1 2.25% 3/20/03 $ 1,425 $ 1,429,521 -------------- 7,499,521 - ---------------------------------------------------------------------------------------- Michigan 7.3% Cedar Springs Pub. Sch. Dist. NR 3.125 8/22/02 1,500 1,501,234 Detroit Swr. Disp. Rev., M.E.R.L.O.T., F.G.I.C., F.R.W.D., Ser. I VMIG1 1.37 7/03/02 5,000 5,000,000 Michigan St. Bldg. Auth. Rev., A.N.N.O.T., Ser. 516(d) VMIG1 2.90 7/11/02 995 995,000 Michigan St. Job Dev. Auth. Rev., Frankenmuth Bavarian Inn, Ser. A, F.R.M.D. NR 1.50 7/01/02 1,100 1,100,000 Michigan St. Strategic Fund Ltd. Oblig. Rev., American Litho. Proj., Ser. 02, A.M.T., F.R.W.D. NR 1.49 7/04/02 500 500,000 Dow Chemical Co. Proj., Ser. 99, A.M.T., F.R.D.D. P-2 2.20 7/01/02 800 800,000 Walled Lake Consld. Dist. Mun. Trust Cert., F.R.W.D. VMIG1 1.38 7/04/02 5,575 5,575,000 -------------- 15,471,234 - ---------------------------------------------------------------------------------------- Minnesota 3.2% Bloomington Cmnty. Dev. Rev., 94th Str. Assoc. Proj., F.R.W.D., Ser. 85 A1+(e) 1.35 7/05/02 4,585 4,585,000 Minneapolis Rev., The Woman's Club of Minnesota Proj., F.R.W.D. A1+(e) 1.35 7/04/02 2,215 2,215,000 -------------- 6,800,000 - ---------------------------------------------------------------------------------------- Mississippi 1.1% Mississippi Hsg. Fin. Corp. Sngl. Fam. Mtge., F.R.W.D., Ser. 88 A1+(e) 1.43 7/04/02 1,885 1,885,000
10 See Notes to Financial Statements Prudential Tax-Free Money Fund, Inc. Portfolio of Investments as of June 30, 2002 (Unaudited) Cont'd.
Principal Moody's Interest Maturity Amount Value Description (a) Rating Rate Date (000) (Note 1) - ------------------------------------------------------------------------------------------------------------ Roaring Fork Muni. Products, LLC, Home Corp., Ser. 2001, A.M.T., F.R.W.D.(d) VMIG 1.48% 7/04/02 $ 480 $ 480,000 -------------- 2,365,000 - ---------------------------------------------------------------------------------------- Missouri 0.8% City of O'Fallon Certs., A.M.B.A.C., Ser. 99 NR 5.75 12/01/02 605 613,725 St. Louis Mun. Fin. Corp. Leasehold Rev., A.M.B.A.C., Ser. 1993A NR 5.30 7/15/02 1,000 1,000,919 -------------- 1,614,644 - ---------------------------------------------------------------------------------------- Nebraska 0.3% Nebraska Pub. Pwr. Dist. Rev., Ser. 95A(c) NR 6.00 1/01/03 650 662,709 - ---------------------------------------------------------------------------------------- Nevada 1.9% Clark Cnty. Mun. Trust Cert., Class A, F.R.W.D. VMIG1 1.47 7/04/02 3,425 3,425,000 Truckee Meadows Wtr. Auth. Wtr. Rev. Mun. Sec. Trust Rcpts., Ser. 137, F.S.A., F.R.D.D. A1+(e) 1.90 7/01/02 600 600,000 -------------- 4,025,000 - ---------------------------------------------------------------------------------------- New Hampshire 0.8% New Hampshire Hlth & Ed. Facs. Auth. Rev., R.A.N., Riverwoods Co., Ser. 02D SP1+(e) 3.25 5/02/03 1,790 1,798,003 - ---------------------------------------------------------------------------------------- New Jersey 2.7% Jersey City, G.O., B.A.N. SP1+(e) 3.00 9/13/02 4,000 4,003,318 Newark, B.A.N. NR 3.40 10/01/02 1,650 1,654,266 -------------- 5,657,584 - ---------------------------------------------------------------------------------------- New Mexico 0.3% Santa Fe, Rev., St. Vincent Hosp., Ser. 85 NR 7.50 7/01/02 690 690,000
See Notes to Financial Statements 11 Prudential Tax-Free Money Fund, Inc. Portfolio of Investments as of June 30, 2002 (Unaudited) Cont'd.
Principal Moody's Interest Maturity Amount Value Description (a) Rating Rate Date (000) (Note 1) - ------------------------------------------------------------------------------------------------------------ New York 3.7% Mun. Secs. Trust Cert., Ser. 2000-109, Class A Cert., F.R.D.D. VMIG1 1.90% 7/01/02 $ 1,400 $ 1,400,000 New York City Trust Cult. Res. Rev., Mun. Secs. Trust Rcpts., Ser. 91, A.M.B.A.C., F.R.D.D. A1+(e) 1.90 7/01/02 3,585 3,585,000 New York St. Loc. Govt. Assist. Corp., Mun. Secs. Trust Rcpts., Ser. 59, F.R.D.D. A1+(e) 1.90 7/01/02 2,900 2,900,000 -------------- 7,885,000 - ---------------------------------------------------------------------------------------- North Carolina 0.7% Roaring Fork Muni. Products, LLC, Durham Co. Alston Vlge. Apts., Ser. 2001, F.R.W.D., A.M.T. A1+(e) 1.53 7/04/02 1,430 1,430,000 - ---------------------------------------------------------------------------------------- Ohio 3.1% Cleveland, B.A.N. NR 2.00 12/12/02 2,000 2,001,328 East Lake Ind. Dev. Rev., Astro Model Dev. Corp., F.R.W.D., A.M.T., Ser. 96(d) NR 1.55 7/04/02 2,355 2,355,000 Lakewood, B.A.N. NR 2.50 5/16/03 1,300 1,304,999 South Western City Sch. Dist., C.A.B.S., A.M.B.A.C. NR Zero 12/01/02 1,000 992,953 -------------- 6,654,280 - ---------------------------------------------------------------------------------------- Oklahoma 5.0% Oklahoma Hsg. Dev. Auth. Multi-Fam. Rev., Affordable Hsg., Ser. 02A, F.R.W.D. VMIG1 1.45 7/01/02 9,000 9,000,000 Tulsa Pkg. Auth. Rev., Williams Ctr. Proj., S.E.M.M.T., Ser. 87A VMIG1 1.80 11/15/02 1,575 1,575,000 -------------- 10,575,000
12 See Notes to Financial Statements Prudential Tax-Free Money Fund, Inc. Portfolio of Investments as of June 30, 2002 (Unaudited) Cont'd.
Principal Moody's Interest Maturity Amount Value Description (a) Rating Rate Date (000) (Note 1) - ------------------------------------------------------------------------------------------------------------ Oregon 2.5% Oregon St. Econ. Dev. Rev., McFarland Cascade, A.M.T., Ser. 175, F.R.W.D. A1(e) 1.50% 7/04/02 $ 1,400 $ 1,400,000 Oregon St. Hsg. & Cmnty. Svcs. Dept. Mtge. Rev., Ser. 02C MIG1 1.67 2/06/03 4,000 4,000,000 -------------- 5,400,000 - ---------------------------------------------------------------------------------------- Pennsylvania 2.4% Allegheny Cnty. T.R.A.N., Ser. 02B MIG1 3.25 12/20/02 5,000 5,025,469 - ---------------------------------------------------------------------------------------- South Carolina 2.4% South Carolina St. Pub. Svc. Auth. Rev., M.E.R.L.O.T., F.R.W.D., Ser. L VMIG1 1.37 7/03/02 5,090 5,090,000 - ---------------------------------------------------------------------------------------- South Dakota 1.1% Grant Cnty. Poll. Ctrl. Rev., Otter Tail Pwr. Co. Proj., M.B.I.A., F.R.W.D. VMIG1 1.50 7/05/02 2,400 2,400,000 - ---------------------------------------------------------------------------------------- Tennessee 1.9% Morgan Keegan Mun. Prods., Hsg. Dev. Agcy., Inc., Var. Rate Trust Rcpts., Ser. CN 1, F.R.W.D., A.M.T. A1+(e) 1.48 7/05/02 1,000 1,000,000 Shelby Cnty. A1+(e) 1.30 7/11/02 2,900 2,900,000 -------------- 3,900,000 - ---------------------------------------------------------------------------------------- Texas 5.5% Brazos River Harbor Nav. Dist. Rev., Ser. 91 P-1 1.85 7/08/02 1,000 1,000,000 Carroll Indpt. Sch. Dist. G.O., Sch. Bldg. VMIG1 2.25 4/01/03 2,500 2,500,920 Fort Worth G.O. Indpt. Sch. Dist., Ser. 01 Aaa 4.375 2/15/03 235 238,601
See Notes to Financial Statements 13 Prudential Tax-Free Money Fund, Inc. Portfolio of Investments as of June 30, 2002 (Unaudited) Cont'd.
Principal Moody's Interest Maturity Amount Value Description (a) Rating Rate Date (000) (Note 1) - ------------------------------------------------------------------------------------------------------------ Harris Cnty. Toll Rd. Sr. Lein Rev., Ser. 92A NR 6.50% 8/15/02 $ 1,780 $ 1,823,990 Harris Cnty., Ser. C P-1 1.35 7/23/02 1,760 1,760,000 Keller Indpt. Sch. Dist. Mun., F.R.D.D., Secs. Trust Rcpts. A1+(e) 1.90 7/01/02 500 500,000 Plano Indpt. Sch. Dist. Mun. Trust Cert., Class A, F.R.W.D. VMIG1 1.27 2/15/18 3,830 3,830,000 -------------- 11,653,511 - ---------------------------------------------------------------------------------------- Virginia 2.7% Louisa VA Ind. Dev. Auth. A1+(e) 1.45 8/09/02 5,000 5,000,000 Richmond Metro. Auth. Expwy. Rev. Brd., F.G.I.C., Ser. 92A NR 5.85 7/15/02 850 850,990 -------------- 5,850,990 - ---------------------------------------------------------------------------------------- Washington 5.3% Clark Cnty. Pub. Util. Dist., No. 001 Generating Sys. Rev., Mun. Secs. Trust Rcpts., Ser. 118, F.S.A., F.R.D.D. A1+(e) 1.90 7/01/02 400 400,000 King County Dir. Assoc. P1 Zero 7/05/02 8,000 7,999,294 Port Pasco Econ. Dev. Var. Douglas Fruit Co. Inc. Proj. F.R.W.D., A.M.T., Ser. 96 A1(e) 1.50 7/04/02 1,650 1,650,000 Port Pasco Ltd. Tax G.O., F.S.A., A.M.T., Ser. A NR 3.25 8/01/02 125 125,026 Washington St. M.E.R.L.O.T., Ser. A14, F.R.W.D. A1(e) 1.37 7/05/02 1,000 1,000,000 -------------- 11,174,320 - ---------------------------------------------------------------------------------------- Wisconsin 5.6% Cedarburg Sch. Dist. T.R.A.N. NR 2.75 9/06/02 1,000 1,000,627 Elmbrook Sch. Dist. G.O., T.R.A.N. NR 3.13 8/21/02 800 801,107
14 See Notes to Financial Statements Prudential Tax-Free Money Fund, Inc. Portfolio of Investments as of June 30, 2002 (Unaudited) Cont'd.
Principal Moody's Interest Maturity Amount Value Description (a) Rating Rate Date (000) (Note 1) - ------------------------------------------------------------------------------------------------------------ Milton Ind. Dev. Rev., New England Extrusion Proj., F.R.W.D., A.M.T., Ser. 98 A1+(e) 1.60% 7/04/02 $ 1,900 $ 1,900,000 Mukwonago Sch. Dist., G.O., T.R.A.N. NR 2.80 9/19/02 1,250 1,250,344 Whitewater Ind. Dev. Rev., Trek Bicycle, F.R.W.D., A.M.T., Ser. 95 NR 1.55 7/04/02 2,775 2,775,000 Wisconsin St. G.O., F.S.A., F.R.W.D. VMIG1 1.40 7/04/02 4,245 4,245,000 -------------- 11,972,078 Total Investments 102.1% (cost $ 216,798,368(f)) 216,798,368 Liabilities in excess of other assets (2.1)% (4,454,655) -------------- Net Assets 100% $ 212,343,713 -------------- --------------
See Notes to Financial Statements 15 Prudential Tax-Free Money Fund, Inc. Portfolio of Investments as of June 30, 2002 (Unaudited) Cont'd. (a) The following abbreviations are used in portfolio descriptions: A.M.B.A.C.--American Municipal Bond Assurance Corporation A.M.T.--Alternate Minimum Tax A.N.N.M.T.--Annual Mandatory Tender A.N.N.O.T.--Annual Mandatory Option Tender(b) B.A.N.--Bond Anticipation Notes C.A.B.S.--Capital Appreciation Bonds F.G.I.C.--Financial Guaranty Insurance Company F.R.D.D.--Floating Rate (Daily) Demand Note(b) F.R.M.D.--Floating Rate (Monthly) Demand Note(b) F.R.W.D.--Floating Rate (Weekly) Demand Note(b) F.S.A.--Financial Security Assurance G.O.--General Obligation M.B.I.A.--Municipal Bond Insurance Association M.E.R.L.O.T.--Municipal Exempt Receipt--Liquid Option Tender R.A.N.--Revenue Anticipation Note S.E.M.M.T.--Semi-Annual Mandatory Tender T.A.N.--Tax Anticipation Note 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) Prerefunded issues are secured by escrowed cash and direct U.S. guaranteed obligations. (d) Private placement restricted as to resale and does not have a readily available market; the aggregate cost of such securities is $11,140,000. The aggregate value of $11,140,000 is approximately 5.2% of net assets. (e) Standard & Poor's Rating. (f) The cost basis for federal income tax purposes is substantially the same as that used for financial statement purposes. NR--Not Rated by Moody's or Standard & Poor's. The Fund's current Prospectus contains a description of Moody's and Standard and Poor's ratings. 16 See Notes to Financial Statements Prudential Tax-Free Money Fund, Inc. Statement of Assets and Liabilities (Unaudited)
June 30, 2002 - --------------------------------------------------------------------------------------- ASSETS Investments, at amortized cost which approximates market value $ 216,798,368 Cash 86,982 Receivable for Fund shares sold 2,989,607 Interest receivable 1,203,849 Prepaid expenses and other assets 33,694 ----------------- Total assets 221,112,500 ----------------- LIABILITIES Payable for investments purchased 7,281,775 Payable for Fund shares reacquired 1,330,755 Management fee payable 87,024 Dividends payable 41,158 Distribution fee payable 21,756 Accrued expenses 6,319 ----------------- Total liabilities 8,768,787 ----------------- NET ASSETS $ 212,343,713 ----------------- ----------------- Net assets were comprised of: Common Stock, $.01 par value $ 2,124,392 Paid-in capital in excess of par 210,219,321 ----------------- Net assets, June 30, 2002 $ 212,343,713 ----------------- ----------------- Net asset value, offering price and redemption price per share ($212,343,713 / 212,343,713 shares) $1.00 ----------------- -----------------
See Notes to Financial Statements 17 Prudential Tax-Free Money Fund, Inc. Statement of Operations (Unaudited)
Six Months Ended June 30, 2002 - --------------------------------------------------------------------------------------- NET INVESTMENT INCOME Income Interest $ 1,743,709 ----------------- Expenses Management fee 483,056 Distribution fee 120,764 Transfer agent's fees and expenses 62,000 Custodian's fees and expenses 40,000 Reports to shareholders 40,000 Registration fees 29,000 Legal fees and expenses 20,000 Audit fee 13,000 Directors' fees 3,900 Miscellaneous 1,282 ----------------- Total expenses 813,002 ----------------- Net investment income 930,707 NET REALIZED GAIN ON INVESTMENTS Net realized gain on investment transactions 683 ----------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 931,390 ----------------- -----------------
18 See Notes to Financial Statements Prudential Tax-Free Money Fund, Inc. Statement of Changes in Net Assets (Unaudited)
Six Months Year Ended Ended June 30, 2002 December 31, 2001 - ----------------------------------------------------------------------------------- INCREASE IN NET ASSETS Operations Net investment income $ 930,707 $ 3,981,999 Net realized gain on investment transactions 683 96,417 ----------------- ----------------- Net increase in net assets resulting from operations 931,390 4,078,416 ----------------- ----------------- Dividends and distributions to shareholders (931,390) (4,078,416) ----------------- ----------------- Fund share transactions (at $1 per share) Proceeds from shares sold(a) 289,645,675 463,802,391 Net asset value of shares issued to shareholders in reinvestment of dividends and distributions 1,000,099 3,896,427 Cost of shares reacquired (246,231,233) (466,295,904) ----------------- ----------------- Net increase in net assets from Fund share transactions 44,414,541 1,402,914 ----------------- ----------------- Total increase 44,414,541 1,402,914 NET ASSETS Beginning of period 167,929,172 166,526,258 ----------------- ----------------- End of period $ 212,343,713 $ 167,929,172 ----------------- ----------------- ----------------- -----------------
- ------------------------------ (a) For the year ended December 31, 2001, includes shares issued in connection with the acquisition of Connecticut Money Market Series and Massachusetts Money Market Series (Note 4). See Notes to Financial Statements 19 Prudential Tax-Free Money Fund, Inc. Notes to Financial Statements (Unaudited) 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 (other than those issued or guaranteed by the U.S. Government) held by the Fund to meet their obligations may be affected by economic or political developments in a specific state, industry or region. Note 1. Accounting Policies The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Securities Valuation: Portfolio securities are valued at amortized cost, which approximates market value. The amortized cost method of valuation involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of any discount or premium. If the amortized cost method is determined not to represent fair value, the value shall be determined by or under the direction of the Board of Directors. Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) on sales of securities are calculated on the identified cost basis. Interest income is recorded on the accrual basis. Expenses are recorded on the accrual basis, which may require the use of certain estimates by management. Net investment income for dividend purposes includes accrued interest and amortization of premiums and discounts, plus or minus any gains (losses) realized on sales of portfolio securities, less the estimated expenses of the Fund applicable to the dividend period.The Fund amortizes premiums and accretes discounts on purchases of portfolio securities as adjustments to interest income. 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 taxable net income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. The cost of portfolio securities for federal income tax purposes is substantially the same as for financial reporting purposes. Dividends: The Fund declares daily dividends from net investment income and net realized short-term capital gains. Payment of dividends is made monthly. Income distributions and capital gain distributions are determined in accordance with 20 Prudential Tax-Free Money Fund, Inc. Notes to Financial Statements (Unaudited) Cont'd. income tax regulations which may differ from generally accepted accounting principles. 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. Such custody fee credits are presented as a reduction of gross expenses in the accompanying statement of operations. Note 2. Agreements The Fund has a management agreement with Prudential Investments LLC ('PI'). Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisor's performance of such services. PI has entered into a subadvisory agreement with Prudential Investment Management, Inc. ('PIM'). The subadvisory agreement provides that PIM will furnish investment advisory services in connection with the management of the Fund. PI pays for the services of PIM, 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 to PI 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 compensates 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. PI, PIM and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. ('Prudential'). Note 3. Other Transactions With Affiliates Prudential Mutual Fund Services LLC ('PMFS'), an affiliate of PI and an indirect wholly-owned subsidiary of Prudential, serves as the Fund's transfer agent. During the six months ended June 30, 2002, the Fund incurred fees of approximately $56,100 for the services of PMFS. As of June 30, 2002, 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. 21 Prudential Tax-Free Money Fund, Inc. Notes to Financial Statements (Unaudited) Cont'd. Note 4. Acquisition of Prudential Municipal Series Fund Connecticut Money Market Series and Prudential Municipal Series Fund Massachusetts Money Market Series On June 27, 2001, the Fund acquired all the assets of the Prudential Municipal Series Fund Connecticut Money Market Series ('Connecticut Money Market Series') pursuant to a plan of reorganization approved by Connecticut Money Market Series shareholders on June 14, 2001. The acquisition was accomplished by a tax-free exchange of 6,544,440 shares of the Fund (valued at $6,544,440) for shares of Connecticut Money Market Series outstanding on June 27, 2001. Connecticut Money Market Series net assets at that date ($6,544,440) were combined with those of the Fund. The aggregate net assets of the Fund and Connecticut Money Market Series immediately before the acquisition were $177,745,143 and $6,544,440, respectively. On July 19, 2001, the Fund acquired all the assets of the Prudential Municipal Series Fund Massachusetts Money Market Series ('Massachusetts Money Market Series') pursuant to a plan of reorganization approved by Massachusetts Money Market Series shareholders on July 9, 2001. The acquisition was accomplished by a tax-free exchange of 6,141,531 shares of the Fund (valued at $6,141,531) for shares of Massachusetts Money Market Series outstanding on July 19, 2001. Massachusetts Money Market Series net assets at that date ($6,141,531) were combined with those of the Fund. The aggregate net assets of the Fund and Massachusetts Money Market Series immediately before the acquisition were $192,198,105 and $6,141,531, respectively. 22 SEMIANNUAL REPORT JUNE 30, 2002 PRUDENTIAL TAX-FREE MONEY FUND, INC. - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Prudential Tax-Free Money Fund, Inc. Financial Highlights (Unaudited)
Six Months Ended June 30, 2002 - --------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 1.00 Net investment income and net realized gains .005 Dividends and distributions to shareholders (.005) ----------------- Net asset value, end of period $ 1.00 ----------------- ----------------- TOTAL RETURN(a): .54% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $ 212,344 Average net assets (000) $ 194,824 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees .84%(b) Expenses, excluding distribution and service (12b-1) fees .72%(b) Net investment income .96%(b)
- ------------------------------ (a) Total return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns for less than a full year are not annualized. (b) Annualized. 24 See Notes to Financial Statements Prudential Tax-Free Money Fund, Inc. Financial Highlights (Unaudited) Cont'd.
Year Ended December 31, - ---------------------------------------------------------------------------------------------------------- 2001 2000 1999 1998 1997 - ---------------------------------------------------------------------------------------------------------- $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 .023 .034 .025 .028 .030 (.023) (.034) (.025) (.028) (.030) - ---------------- ---------------- ---------------- ---------------- ---------------- $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------- ---------------- ---------------- ---------------- ---------------- - ---------------- ---------------- ---------------- ---------------- ---------------- 2.26% 3.42% 2.56% 2.83% 3.00% $167,929 $166,526 $179,887 $199,165 $329,812 $182,953 $176,759 $202,718 $277,839 $339,825 .87% .80% .81% .80% .78% .74% .68% .69% .68% .66% 2.18% 3.38% 2.51% 2.80% 2.97%
See Notes to Financial Statements 25 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. PRUDENTIAL MUTUAL FUNDS - ----------------------------------------------------------- Stock Funds Large Capitalization Stock Funds Prudential 20/20 Focus Fund Prudential Equity Fund, Inc. Prudential Index Series Fund Prudential Stock Index Fund Prudential Tax-Managed Funds Prudential Tax-Managed Equity Fund Prudential 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. 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 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 Balanced/Allocation Fund The Prudential Investment Portfolios, Inc. Prudential Active Balanced Fund Bond Funds Taxable Bond Funds Prudential Government Income Fund, Inc. Prudential High Yield Fund, Inc. Prudential Short-Term Corporate Bond Fund, Inc. Income Portfolio Prudential Total Return Bond Fund, Inc. Municipal Bond Funds Prudential California Municipal Fund California Series California Income Series Prudential Municipal Bond Fund High Income Series Insured Series www.prudential.com (800) 225-1852 Prudential Municipal Series Fund Florida Series New Jersey Series New York Series Pennsylvania Series Prudential National Municipals Fund, Inc. Global/International Bond Fund 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. Municipal 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 Tax-Free Money Market Funds Command Tax-Free Fund Prudential Tax-Free Money Fund, Inc. Other Money Market Funds Command Government Fund Command Money Fund Special Money Market Fund, Inc.* Money Market Series STRATEGIC PARTNERS MUTUAL FUNDS** - ---------------------------------------------------- Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Strategic Partners Moderate Growth Fund Strategic Partners High Growth Fund Strategic Partners Style Specific Funds Strategic Partners Large Capitalization Growth Fund Strategic Partners Large Capitalization Value Fund Strategic Partners Small Capitalization Growth Fund Strategic Partners Small Capitalization Value Fund Strategic Partners International Equity Fund Strategic Partners Total Return Bond Fund Strategic Partners Opportunity Funds Strategic Partners Focused Growth Fund Strategic Partners New Era Growth Fund Strategic Partners Focused Value Fund Strategic Partners Mid-Cap Value Fund Special Money Market Fund, Inc.* Money Market Series * This Fund is not a direct purchase money fund and is only an exchangeable money fund. **Not exchangeable with Prudential mutual funds. Prudential Tax-Free Money Fund, Inc. Getting the Most from Your Prudential Mutual Fund When you invest through Prudential Mutual Funds, you receive financial advice from a Prudential Securities Financial Advisor or Pruco Securities registered representative. Your financial professional can provide you with the following services: THERE'S NO REWARD WITHOUT RISK; BUT IS THIS RISK WORTH IT? Your financial professional can help you match the reward you seek with the risk you can tolerate. Risk can be difficult to gauge-- sometimes even the simplest investments bear surprising risks. The educated investor knows that markets seldom move in just one direction. There are times when a market sector or asset class will lose value or provide little in the way of total return. Managing your own expectations is easier with help from someone who understands the markets, and who knows you! KEEPING UP WITH THE JONESES A financial professional can help you wade through the numerous available mutual funds to find the ones that fit your individual investment profile and risk tolerance. While the newspapers and popular magazines are full of advice about investing, they are aimed at generic groups of people or representative individuals--not at you personally. Your financial professional will review your investment objectives with you. This means you can make financial decisions based on the assets and liabilities in your current portfolio and your risk tolerance--not just based on the current investment fad. BUY LOW, SELL HIGH Buying at the top of a market cycle and selling at the bottom are among the most common investor mistakes. But sometimes it's difficult to hold on to an investment when it's losing value every month. Your financial professional can answer questions when you're confused or worried about your investment, and should remind you that you're investing for the long haul. www.prudential.com (800) 225-1852 FOR MORE INFORMATION Prudential Mutual Funds Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 (800) 225-1852 Directors Delayne Dedrick Gold Robert F. Gunia Robert E. La Blanc 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 Judy A. Rice, Vice President Grace C. Torres, Treasurer Jonathan D. Shain, Secretary Marguerite E.H. Morrison, Assistant Secretary Manager Prudential Investments LLC Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 Investment Adviser Prudential Investment Management, Inc. Gateway Center Two Newark, NJ 07102 Distributor Prudential Investment Management Services LLC Gateway Center Three, 14th Floor 100 Mulberry Street 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 10004-2498 Nasdaq Cusip PBFXX 74436P103 The views expressed in this report and information about the Fund's portfolio holdings are for the period covered by this report and are subject to change thereafter. The accompanying financial statements as of June 30, 2002, were not audited and, accordingly, no auditor's opinion is expressed on them. (LOGO) Nasdaq Cusip PBFXX 74436P103 MF103E2 IFS-A073288 Mutual funds are not bank guaranteed or FDIC insured, and may lose value. -----END PRIVACY-ENHANCED MESSAGE-----