SCHEDULE 14A
(RULE 14a-101)
INFORMATION Proxy Statement Pursuant to SectionREQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) of
the Securities Exchange Act ofOF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No.(AMENDMENT NO. )
Filed by the Registrant /x//X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x//X/ Preliminary Proxy Statement / / Confidential, forFor Use of the
/ / Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PRUDENTIAL EQUITY FUND, INC.Under Rule 14a-12
Prudential Natural Resources Fund, Inc.
Prudential Sector Funds, Inc.
Prudential Small Company Fund, Inc.
Prudential Tax-Managed Small-Cap Fund, Inc.
Prudential U.S. Emerging Growth Fund, Inc.
The Prudential Investment Portfolios, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified Inin Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other thanOther Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)./X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1)
and 0-11.
1)(1) Title of each class of securities to which transaction applies:
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2)- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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3)- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set(set forth the amount on which the
filing fee is calculated and state how it was determined):
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4)- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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5)- --------------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.materials:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Formform or Scheduleschedule and the date of its filing.
1)(1) Amount Previously Paid:
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2)previously paid:
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(2) Form, Schedule or Registration Statement No.:
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3)- --------------------------------------------------------------------------------
(3) Filing Party:
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4)- --------------------------------------------------------------------------------
(4) Date Filed:
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PRUDENTIAL GLOBAL LIMITED MATURITY FUND, INC
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PRUDENTIAL JENNISON FUND, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PRUDENTIAL MULTI-SECTOR FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PRUDENTIAL SMALL COMPANIES FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PRUDENTIAL UTILITY FUND INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE GLOBAL GOVERNMENT PLUS FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE GLOBAL TOTAL RETURN FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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PRUDENTIAL MUTUAL FUNDS
ONE SEAPORT PLAZAGATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW YORK, NEW YORK 10292
------------------------
August , 1996JERSEY 07102-4077
IMPORTANT PROXY MATERIALS
PLEASE VOTE NOW!
November ______, 2000
Dear Shareholder:
Enclosed is a proxy statement askingI am inviting you to vote in favor ofon several proposals relating to the management and
operation of your Fund. MeetingsA shareholder meeting of your Fund and ofcertain other
Funds within the Prudential Mutual Fund Complexcomplex is scheduled for January 17,
2001. This package contains information about the proposals and includes
materials you will need to vote.
The Boards of Directors of the Funds have reviewed the proposals and have
recommended that the proposals be presented to you for consideration. Although
the Directors have determined that the proposals are in your best interest, the
final decision is yours.
Shareholders of several Funds are being held on October 30, 1996asked to consider theseapprove many of the same
proposals, andso in order to transact any other business that may properly come before the meetings. In the
past, when we have solicited proxiessave money for your Fund, we usually have enclosed aone proxy statement directed solelyhas been
prepared for these Funds. To help you understand the proposals, we are including
a section that answers commonly asked questions. The accompanying proxy
statement includes a detailed description about each of the proposals relating
to your Fund.
Please read the enclosed materials carefully and cast your vote. Remember, your
vote is extremely important, no matter how large or small your holdings. By
voting now, you can help avoid additional costs that are incurred with follow-up
letters and calls.
TO VOTE, YOU MAY USE ANY OF THE FOLLOWING METHODS:
- - BY MAIL. Please complete, date and sign your proxy card before mailing it
in the enclosed postage-paid envelope.
- - BY INTERNET. Have your proxy card available. Go to the shareholdersweb site:
www.proxyvote.com. Enter your 12-digit control number from your proxy card.
Follow the simple instructions found on the web site.
- - BY TELEPHONE. If your fund shares are held in your own name, call
1-800-690-6903 toll free. If your fund shares are held on your behalf in a
brokerage account with Prudential Securities, Inc. or another broker, call
1-800-454-8683 toll free. Enter your 12-digit control number from your
proxy card. Follow the simple instructions.
If you have any questions before you vote, please call us at 1-800-225-1852.
We're glad to help you understand the proposals and assist you in voting. Thank
you for your participation.
Sincerely,
- ---------------------------------------
John R. Strangfeld
President
IMPORTANT INFORMATION TO HELP YOU UNDERSTAND AND VOTE ON THE
PROPOSALS
Please read the enclosed proxy statement for a complete description of
the proposals. However, as a quick reference, the following questions and
answers provide a brief overview of the proposals.
Q. WHAT PROPOSALS AM I BEING ASKED TO VOTE ON?
A. The purpose of the proxy is to ask you to vote on six primary issues
- - to elect 13 Board members,
- - for most Funds, to approve a new subadvisory agreement,
- - to permit the Fund's manager to enter into or make material changes to your
Fund's subadvisory agreement without shareholder approval,
- - to amend the management agreement to permit the Fund's manager to allocate
assets among subadvisers,
- - to approve changes to your Fund's fundamental investment restrictions; and
- - to ratify the selection of your Fund. This time,
however, shareholdersFund's independent accountants for the
current year.
Q. WHY AM I RECEIVING PROXY INFORMATION ON FUNDS THAT I DO NOT OWN?
A.: Shareholders of several Funds are being asked to approve many of the same
proposals, so most of the information that must be included in a proxy statement
for your Fund needs to be included in a proxy statement for the other Funds as
well. Therefore, in order to save money for your Fund, one proxy statement has
been prepared for these Funds. This proxy statement contains
detailed information about each of the proposals relating to your Fund, and we
recommend that you read it carefully. However, we have also attached some
Questions and Answers that we hope will assist you in evaluating the proposals.
We have retained an outside proxy solicitation firm to assist us with any
necessary follow-up. If we have not received your vote as the meeting date
approaches, you may receive a telephone call from Shareholder Communications
Corporation to ask for your vote. We hope that their telephone call does not
inconvenience you.
You will receive a separate proxy statement and proxy card for each Fund
that you own. If you hold shares in more than one of the Funds or you have more
than one account holding Fund shares (E.G., an individual account AND an IRA),
you will receive multiple copies of this Proxy Statement and proxy cards for
each of your Fund accounts. Please vote each proxy card you receive.
Thank you for your attention to this matter and for your continuing
investment in the Prudential Mutual Funds.
Very truly yours,
RICHARD A. REDEKER
PRESIDENT
Prudential Mutual Fund Management
PROXY CARDS FOR EACH OF YOUR FUNDS ARE ENCLOSED ALONG WITH THE PROXY
STATEMENT. PLEASE VOTE YOUR SHARES TODAY BY SIGNING AND RETURNING EACH
ENCLOSED PROXY CARD IN THE POSTAGE PREPAID ENVELOPE PROVIDED. THE BOARD OF
YOUR FUND RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEES FOR BOARD MEMBER AND
"FOR" EACH PROPOSAL.
QUESTIONS AND ANSWERS
Q: WHAT IS THE PURPOSE OF THIS PROXY SOLICITATION?
A:The purpose of this proxy is to ask you to vote on three primary issues:
- to elect twelve Board members;
- for most Funds, to approve changes to your Fund's fundamental investment
restrictions; and
- to ratify the selection of your Fund's independent accountants for the
current year.
Q: WHY AM I RECEIVING PROXY INFORMATION ON FUNDS THAT I DO NOT OWN?
A:In the past, when we have solicited proxies for your Fund, we have generally
enclosed a proxy statement directed solely to the shareholders of one Fund.
This time, however, shareholders of several Funds are being asked to approve
many of the same proposals, so most of the information that must be included
in a proxy statement for your Fund needs to be included in a proxy statement
for the other Funds as well. Therefore, in order to save money for your Fund,
one proxy statement has been prepared for these Funds.
Q:prepared.
Q. WHY AM I RECEIVING MORE THAN ONE PROXY STATEMENT OR MORE THAN ONE MAILING?
A:A. You will receive a separate proxy statement for each Fund that you own.
Also, if you hold shares in more than one account, for example, in an
individual account ANDand in an IRA, you will receive multiple proxy
statements. Each proxy card should be voted and returned.
Q: WHYQ. ARE YOU RECOMMENDING A NEW BOARD FOR THE FUNDS?
A:An advisory group comprised of independent directors ofA. No, except for Prudential Natural Resources Fund, Inc. The other Fund
Boards nominated the Prudential Mutual
Funds, including a number ofthirteen individuals who currently serve on the
existing Board members of the Funds (the
Advisory Group), assisted by representatives of Prudential Mutual Fund
Management, formed a corporate governance task force and considered issues
relating to the management and governance of the Funds. The Advisory Group
recommended to the Fund Boards, as part of an overall plan to coordinate and
enhance the efficiency of the operation of the Funds, that the Prudential
Mutual Funds should be restructured with fewer boards in the Complex. The Fund
Boards adopted the recommendations of the Advisory Group and nominated twelve
individuals drawn primarily from existing Boards. NineTen of the individual Board nominees are independent of
Prudential.
Said differently, if the Shareholders
approve the proposal and the nominees are elected, more of the Prudential
Mutual Funds would have identical Board compositions than presently is the
case.
Q:Q. WILL THE PROPOSED CHANGES RESULT IN HIGHER MANAGEMENT FEES?
A:A. No. The management fees charged to each Fund will remain the same.
Q:Q. WILL THE PROPOSED CHANGES RESULT IN HIGHER DIRECTORS' AND TRUSTEES' FEES?
A:It is anticipated that, onA. On a Fund by Fund basis, Directors' and Trustees' fees
inwe do not expect the aggregate will notDirectors' fees to
be higher than they are currently. Individual Board
members may receive higher or lower fees than they currently receive.now.
Q:Q. WHAT ARE "FUNDAMENTAL" INVESTMENT RESTRICTIONS, AND WHY ARE THEY BEING
CHANGED?
A:A Fund's "fundamental"A. "Fundamental" investment restrictions are limitations placed on a Fund's
investment policies that can be changed only by a shareholder vote--EVEN IF THE CHANGES ARE MINOR.vote - even
if the changes are minor. The law requires certain investment policies to
be designated as fundamental. Each Fund adopted a number of fundamental
investment restrictions, either when the Fund was created or at a
later date, and some of those fundamental restrictions reflect
regulatory, business or industry conditions, practices or requirements that
are no longer in effect. Others reflect regulatory requirements that, while
still in effect, do not need to be classified as fundamental restrictions.
The Fund Boards believe that certain fundamental investment restrictions that
are not legally required should be eliminated andeliminated. The Boards also believe that
other fundamental restrictions should be modernized and made more uniform. The
Boards believe
that the proposedreason for these changes is to the Funds' fundamental investment restrictions
will provide greater flexibility.
Q:investment flexibility for the
Funds.
Q. DO THE PROPOSED CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS MEAN THAT MY
FUND'S INVESTMENT OBJECTIVE IS BEING CHANGED?
A:NoneA. No. The only Fund with a proposed change of the proposals would change the investment objective is
Prudential Jennison Equity Opportunity Fund, a series of any Fund,
except that shareholdersThe Prudential
Investment Portfolios, Inc. That Fund's Board recommends removing the
income component of Prudential Utility Fund are being asked to approve
a change in thatthe Fund's investment objective.
Q:Q. WHAT WILL BE THE EFFECT OF THE PROPOSED CHANGES TO MY FUND'S FUNDAMENTAL
RESTRICTIONS?
A:A. The Boards doBoard does not believe that the proposed changes to fundamental
investment restrictions will result at this time in a major restructuring of anythe Fund's
investment portfolio. The changes will allow each applicable Fund greater
flexibility to respond to investment opportunities byopportunities. By making certain
investment policies and restrictions non-fundamental, the Board may make
changes in non-fundamental
investment policiesthe future that atit considers desirable without the necessity of a
future time, its Board considers desirable.shareholder vote and the related additional expenses. A shareholder vote is
not necessary for changes to non-fundamental investment policies or
restrictions.
Q: WHAT ARE MY BOARD'S RECOMMENDATIONS?
A:The BoardQ. HOW MANY VOTES DO YOU NEED TO APPROVE THESE PROPOSALS?
A. We need a plurality or a majority of the votes cast, to approve proposals 1
and 7. For Proposals 2, 3, 4, 5 and 6, we need the affirmative vote of a
majority of each FundFund's outstanding voting securities, as defined by the
1940 Act.
Q. WHAT IF YOU DO NOT HAVE ENOUGH VOTES TO MAKE THIS DECISION BY THE SCHEDULED
SHAREHOLDER MEETING DATE?
A. If we do not receive sufficient votes to hold the meeting, we or Shareholder
Communications Corporation, a proxy solicitation firm, may contact you by
mail or telephone to encourage you to vote. (We may also contact you to
encourage you to vote.) Shareholders should review the proxy materials and
cast their vote to avoid additional mailings or telephone calls. If we do
not have enough votes to approve the proposals by the time of the
shareholder meeting at 10 a.m. on January 17, 2001, the meeting may be
adjourned to permit further solicitation of proxy votes.
Q. HAS EACH FUND'S BOARD APPROVED THE PROPOSALS?
A. Yes. Your Fund's Board has recommendedapproved the proposals and recommends that you
vote "FOR" the nominees for
Board member and "FOR" each Proposal that applies to your Fund.
THE ATTACHED PROXY STATEMENT CONTAINS MORE DETAILED INFORMATION ABOUT EACH
OF THE PROPOSALS RELATING TO YOUR FUND. PLEASE READ IT CAREFULLY.
YOUR VOTE IS IMPORTANT
NO MATTERapprove them.
Q. HOW MANY SHARES YOU OWN
Enclosed you will find one or more proxy cards relating to each of the Funds
for whichVOTES AM I ENTITLED TO CAST?
A. As a shareholder, you are entitled to vote. Please indicateone vote for each share you own of
your voting instructionsFund on EACH ofthe record date. The record date is November 3, 2000.
Q. HOW DO I VOTE MY SHARES?
A. You can vote your shares by completing and signing the enclosed proxy cards, datecard,
and sign them, and return themmailing it in the envelope provided. IF YOU SIGN, DATE AND RETURN A PROXY CARD BUT GIVE NO
VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED "FOR" THE NOMINEES FOR
DIRECTOR OR TRUSTEE NAMED IN THE ATTACHED PROXY STATEMENT AND "FOR" ALL
OTHER PROPOSALS INDICATED ON THE CARDS. In orderenclosed postage paid envelope. If you need any
assistance, or have any questions regarding the proposal or how to avoidvote
your shares, please call Prudential at (800) 225-1852.
You may also vote via the additional
expense to the Funds of further solicitation, we ask your cooperation in
mailing in your proxy cards promptly. Unless proxy cards are signed by the
appropriate persons as indicated in the instructions below, they will not be
voted.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Fund involved in validating your vote
if you fail to signinternet. To do so, have your proxy card properly.
1. Individual Accounts: Signavailable
and go to the web site: www.proxyvote.com. Enter your 12-digit control
number from your proxy card and follow the instructions found on the web
site.
Finally, you can vote by telephone. If your fund shares are held in your
own name, call 1-800-690- 6903 toll free. If your fund shares are held on
your behalf in a brokerage account with Prudential Securities, Inc. or
another broker, call 1-800-454-8683 toll free. Enter your 12-digit control
number from your proxy card and follow the simple instructions given.
Q. HOW DO I SIGN THE PROXY CARD?
A. INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as it appears in the
registrationtheir names appear
on the proxyaccount registration shown on the card.
2. Joint Accounts: Either party mayJOINT ACCOUNTS: Both owners must sign butand the name of the party
signingsignatures should conform
exactly to the namenames shown in the registration on the account registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her capacity.
For example, a trustee for a trust should include his or her title when he
or she signs, such as "Jane Doe, Trustee"; or an authorized officer of a
company should indicate his or her position with the company, such as
"John Smith, President."
- --------------------------------------------------------------------------------
The attached proxy card.
3. All Other Accounts: The capacitystatement contains more detailed information about
each of the individual signing the proxy
card should be indicated unlessproposals relating to your Fund. Please read it is reflected in the form of registration. For
example:
REGISTRATION VALID SIGNATURE
- -------------------------------------------------------------------------- ----------------------------
Corporate Accounts
(1) XYZ Corp.......................................................... XYZ Corp.
Jane L. Doe, Treasurer
(2) XYZ Corp.......................................................... Jane L. Doe, Treasurer
(3) XYZ Corp. c/o Jane L. Doe, Treasurer.............................. Jane L Doe
(4) XYZ Corp. Profit Sharing Plan..................................... Jane L. Doe, Trustee
Partnership Accounts
(1) The ABC Partnership............................................... Robert Fogg, Partner
(2) Fogg and Hale, Limited Partnership................................ Robert Fogg, General Partner
Trust Accounts
(1) ABC Trust Account................................................. William X. Smith, Trustee
(2) Ron F. Anderson, Trustee u/t/d 12/28/78........................... Ron F. Anderson
Custodial or Estate Accounts
(1) Katherine T. John, Cust. F/b/o Albert T. John, Jr UGMA/UTMA...... Katherine T. John
(2) Estate of Katherine T. John....................................... Albert T. John, Executor
carefully.
- --------------------------------------------------------------------------------
Preliminary Copies
PRUDENTIAL ALLOCATION20/20 FOCUS FUND
PRUDENTIAL EQUITYINDEX SERIES FUND-PRUDENTIAL STOCK INDEX FUND
PRUDENTIAL NATURAL RESOURCES FUND, INC.
PRUDENTIAL EQUITY INCOMESECTOR FUNDS, INC. - PRUDENTIAL FINANCIAL SERVICES FUND
PRUDENTIAL GLOBAL LIMITED MATURITYSECTOR FUNDS, INC.-PRUDENTIAL HEALTH SCIENCES FUND
PRUDENTIAL SECTOR FUNDS, INC.-PRUDENTIAL TECHNOLOGY FUND
PRUDENTIAL SECTOR FUNDS, INC.-PRUDENTIAL UTILITY FUND
PRUDENTIAL SMALL COMPANY FUND, INC.
PRUDENTIAL INTERMEDIATE GLOBAL INCOMETAX-MANAGED FUNDS-PRUDENTIAL TAX-MANAGED EQUITY FUND
PRUDENTIAL TAX-MANAGED SMALL-CAP FUND, INC.
PRUDENTIAL JENNISON FUND, INC.
PRUDENTIAL MULTI-SECTOR FUND, INC.
PRUDENTIAL SMALL COMPANIES FUND, INC.
PRUDENTIAL UTILITYU.S. EMERGING GROWTH FUND, INC.
THE GLOBAL GOVERNMENT PLUSPRUDENTIAL INVESTMENT PORTFOLIOS, INC.-PRUDENTIAL ACTIVE BALANCED FUND
INC
THE GLOBAL TOTAL RETURNPRUDENTIAL INVESTMENT PORTFOLIOS, INC.-PRUDENTIAL JENNISON
EQUITY OPPORTUNITY FUND
INC.
---------------------
ONE SEAPORT PLAZATHE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.-PRUDENTIAL JENNISON GROWTH FUND
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW YORK, NEW YORK 10292
------------------------JERSEY 07102
----------------------------
NOTICE OF
JOINT SPECIAL AND ANNUAL MEETINGSMEETING OF SHAREHOLDERS
TO BE HELD ON
OCTOBER 30, 1996
------------------------JANUARY 17, 2001
----------------------------
TO THEOUR SHAREHOLDERS:
Joint meetings of the shareholders of each of the above-listed investment
companies (Funds)Funds
(each, a Meeting) will be held at One Seaport Plaza, 199 Waterthe offices of Prudential Investments Fund
Management LLC (PIFM), 100 Mulberry Street, 35thGateway Center Three, 14th Floor,
Newark, New York, New York,Jersey on October 30, 1996January 17, 2001 at 9:0010 a.m., Eastern time, for
thetime. The purpose of
consideringthe Meetings is to consider and act upon the following proposals with respect to the Funds:
(1)proposals:
1. For each Fund, to elect twelve members to its Board ofthirteen Directors or Trustees.
(2)2. For Prudential Equity20/20 Focus Fund, Prudential Natural Resources Fund,
Inc., Prudential Equity IncomeSector Funds, Inc. - Prudential Financial Services
Fund, - Prudential Technology Fund, and - Prudential Utility Fund,
Prudential Intermediate Global Income Fund, Inc., Prudential
Jennison Fund, Inc., Prudential Multi-Sector Fund, Inc., Prudential
Small CompaniesCompany Fund, Inc. and Prudential UtilityU.S. Emerging Growth
Fund, Inc., to approve a new subadvisory agreement between PIFM and
Jennison Associates LLC.
3. For each Fund, to permit PIFM to enter into or make material changes to
subadvisory agreements without shareholder approval.
4. For each Fund, to approve an amendment to the Management Agreement to
permit PIFM to allocate assets among affiliated and unaffiliated
subadvisers.
5. For each Fund, to approve certain changes to eachthe Fund's fundamental
investment restrictions or policies, relating to, the following:
(a) fund diversification
(b) issuing senior securities, borrowing money or restrictions.
(3)pledging assets
(c) buying and selling real estate
(d) buying and selling commodities and commodity contracts
(e) fund concentration
(f) engaging in underwriting
(g) making loans
(h) other investment restrictions
6. For Prudential Jennison Equity Opportunity Fund, to amend its investment
objective.
7. For each Fund, to ratify the selection of PricewaterhouseCoopers LLP as
independent accountants for eachthe Fund's current fiscal year.
(4) For each Fund, to transact such other business as may properly
come before the meeting and any adjournments thereof.
For Prudential EquityNatural Resources Fund, Inc., Prudential Global Limited MaturitySector Funds, Inc.,
Prudential Small Company Fund, Inc., Prudential Intermediate Global IncomeTax-Managed Small-Cap Fund,
Inc., Prudential JennisonU.S. Emerging Growth Fund, Inc., Prudential Multi-Sector Fund, Inc., Prudential Small Companies Fund,
Inc., Prudential Utility Fund, Inc., The Global Government Plus Fund, Inc. and The Global Total Return Fund,Prudential Investment
Portfolios, Inc., the meetingsMeetings will be the Funds'Fund's annual meetings. For
the otherPrudential 20/20 Focus Fund, Prudential Index Series Fund, and Prudential
Tax-Managed Funds, the meetings areMeeting will be a special meetings.meeting.
You are entitled to vote at the meetings,Meeting, and at any adjournments thereof, of
each Fund in which you owned shares at the close of business on August 9,
1996.November 3,
2000. If you attend the meetings,a Meeting, you may vote your shares in person. IF YOU DO NOT
EXPECT TO ATTEND THE MEETINGS,MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN EACH
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
By order of the Boards.
S. JANE ROSEBoards,
Marguerite E. H. Morrison
SECRETARY
August , 1996Dated: November __, 2000
- --------------------------------------------------------------------------------
PROXY CARDS FOR YOUR FUND ARE ENCLOSED ALONG WITH THE PROXY STATEMENT. PLEASE
VOTE YOUR SHARES TODAY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD IN THE
POSTAGE PREPAID ENVELOPE PROVIDED. YOU CAN ALSO VOTE YOUR SHARES THROUGH THE
INTERNET OR BY TELEPHONE USING THE 12-DIGIT "CONTROL" NUMBER THAT APPEARS ON THE
ENCLOSED PROXY CARD AND FOLLOWING THE SIMPLE INSTRUCTIONS. THE BOARD OF YOUR
FUND RECOMMENDS THAT YOU VOTE "FOR" EACH PROPOSAL.
- --------------------------------------------------------------------------------
PRUDENTIAL ALLOCATION20/20 FOCUS FUND
PRUDENTIAL EQUITYINDEX SERIES FUND-PRUDENTIAL STOCK INDEX FUND
PRUDENTIAL NATURAL RESOURCES FUND, INC.
PRUDENTIAL EQUITY INCOMESECTOR FUNDS, INC. - PRUDENTIAL FINANCIAL SERVICES FUND
PRUDENTIAL GLOBAL LIMITED MATURITYSECTOR FUNDS, INC.-PRUDENTIAL HEALTH SCIENCES FUND
PRUDENTIAL SECTOR FUNDS, INC.-PRUDENTIAL TECHNOLOGY FUND
PRUDENTIAL SECTOR FUNDS, INC.-PRUDENTIAL UTILITY FUND
PRUDENTIAL SMALL COMPANY FUND, INC.
PRUDENTIAL INTERMEDIATE GLOBAL INCOMETAX-MANAGED FUNDS-PRUDENTIAL TAX-MANAGED EQUITY FUND
PRUDENTIAL TAX-MANAGED SMALL- CAP FUND, INC.
PRUDENTIAL JENNISON FUND, INC.
PRUDENTIAL MULTI-SECTOR FUND, INC.
PRUDENTIAL SMALL COMPANIES FUND, INC.
PRUDENTIAL UTILITYU.S. EMERGING GROWTH FUND, INC.
THE GLOBAL GOVERNMENT PLUSPRUDENTIAL INVESTMENT PORTFOLIOS, INC.-PRUDENTIAL ACTIVE BALANCED FUND
INC.
THE GLOBAL TOTAL RETURNPRUDENTIAL INVESTMENT PORTFOLIOS, INC.-PRUDENTIAL JENNISON
EQUITY OPPORTUNITY FUND
INC.
---------------------
ONE SEAPORT PLAZATHE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.-PRUDENTIAL JENNISON GROWTH FUND
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW YORK, NEW YORK 10292
------------------------JERSEY 07102
PROXY STATEMENT
JOINT SPECIAL AND ANNUAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON OCTOBER 30, 1996
------------------------JANUARY 17, 2001
----------------------------
This proxy statement is being furnished to holders of Shares of each of
the above-listed investment companies (Funds) in connection with the
solicitation by their respective Boards of proxies to be used at joint meetings
(Meetings) of Shareholdersshareholders to be held at Gateway Center Three, 100 Mulberry
Street, 14th Floor, Newark, New Jersey 07102 on October 30, 1996,January 17, 2001, at 9:10:00 a.m.,
Eastern time, or any adjournment or adjournments thereof. For Prudential EquityNatural
Resources Fund, Inc., Prudential Global Limited MaturitySector Funds, Inc., Prudential Small Company
Fund, Inc., Prudential Intermediate Global
IncomeTax-Managed Small-Cap Fund, Inc., Prudential JennisonU.S.
Emerging Growth Fund, Inc., Prudential Multi-Sector Fund,
Inc., Prudential Small Companies Fund, Inc., Prudential Utility Fund, Inc., The
Global Government Plus Fund, Inc. and The Global Total Return Fund,Prudential Investment Portfolios, Inc., the
Meetings arewill be annual meetings. For Prudential 20/20 Focus Fund,
Prudential Index Series Fund, and Prudential Tax-Managed Funds, the Funds' annual meetings of Shareholders. For each other Fund,
the meetings are Special Meetings.Meeting will
be a special meeting. This proxy statement is being first mailed to Shareholdersshareholders
on or about August , 1996.November _______, 2000.
Each Fund is a registered, management investment company under the
Investment Company Act of 1940, as amended (the Investment Company1940 Act), and is organized as a
Maryland corporation, except for Prudential Allocation20/20 Focus Fund, Prudential Index
Series Fund and Prudential Equity Income Fund,Tax-Managed Funds, which are organized as MassachusettsDelaware
business trusts. Each Fund's shares of common stock, in the case of Maryland
corporations, or shares of beneficial interest, in the case of MassachusettsDelaware business
trusts, are referred to as "Shares," and the holders of the Shares are
"Shareholders";, each Fund's board of directors or trustees is referred to as a
"Board," and the directors or trustees are "Board Members" or "Directors" or
"Trustees," as the case may be; and each Fund's articles of incorporation or
declaration of trust is referred to as its "Charter."be. A listing of the formal name for each Fund, and the
abbreviated name for each Fund that is used in this proxy statement isand the
proposals applicable to each Fund are set forth below.
PROPOSALS
ABBREVIATED NAME USED IN APPLICABLE
FUND NAME THIS PROXY STATEMENT TO FUND
- ----------------------------------------------------------------------- --------------------------- ---------------------------------------------------------------------------------------------------------------
Proposals
Abbreviated Applicable
Fund Name Name to Fund
- --------- ---- -------
- ----------------------------------------------------------------------------------------------------
Prudential Allocation Fund............................................. Allocation 1 and 320/20 Focus Fund 20/20 Focus 1,2,3,4,5,7
- ----------------------------------------------------------------------------------------------------
Prudential EquityIndex Series Fund-
Prudential Stock Index Fund Inc............................................ Equity 1, 2 and 3Stock Index 1,3,4,5,7
- ----------------------------------------------------------------------------------------------------
Prudential Equity Income Fund.......................................... Equity Income 1, 2 and 3Natural Resources Fund, Inc. Natural Resources 1,2,3,4,5,7
- ----------------------------------------------------------------------------------------------------
Prudential Global Limited MaturitySector Funds, Inc. -
Prudential Financial Services Fund Inc........................... Global Limited Maturity 1 and 3Financial Services 1,2,3,4,5,7
- ----------------------------------------------------------------------------------------------------
Prudential Intermediate Global IncomeSector Funds, Inc.-
Prudential Health Sciences Fund Inc........................ Intermediate Global 1, 2 and 3Health Sciences 1,3,4,5,7
- ----------------------------------------------------------------------------------------------------
Prudential JennisonSector Funds, Inc.-
Prudential Technology Fund Inc.......................................... Jennison 1, 2 and 3Technology 1,2,3,4,5,7
- ----------------------------------------------------------------------------------------------------
Prudential Multi-Sector Fund, Inc...................................... Multi-Sector 1, 2 and 3
Prudential Small Companies Fund, Inc................................... Small Companies 1, 2 and 3
(formerly Prudential Growth Opportunity Fund, Inc.)Sector Funds, Inc.-
Prudential Utility Fund Inc........................................... Utility 1, 2 and 31,2,3,4,5,7
- ----------------------------------------------------------------------------------------------------
Prudential Small Company Fund, Inc. Small Company 1,2,3,4,5,7
- ----------------------------------------------------------------------------------------------------
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund Tax Equity 1,3,4,5,7
- ----------------------------------------------------------------------------------------------------
Prudential Tax-Managed Small-Cap Fund, Inc. Tax Small-Cap 1,3,4,5,7
- ----------------------------------------------------------------------------------------------------
Prudential U.S. Emerging Growth Fund, Inc. Emerging Growth 1,2,3,4,5,7
- ----------------------------------------------------------------------------------------------------
The Global Government PlusPrudential Investment Portfolios, Inc.
Prudential Active Balanced Fund Inc................................... Global Government 1 and 3Active Balanced 1,3,4,5,7
- ----------------------------------------------------------------------------------------------------
The Global Total ReturnPrudential Investment Portfolios, Inc.
Prudential Jennison Equity Opportunity Fund Inc...................................... Global Total Return 1 and 3Equity Opportunity 1,3,4,5,6,7
- ----------------------------------------------------------------------------------------------------
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund Growth 1,3,4,5,7
- ----------------------------------------------------------------------------------------------------
2
Prudential MutualInvestments Fund Management Inc. (PMFLLC (PIFM or the Manager),
One Seaport
Plaza,Gateway Center Three, 100 Mulberry Street, Newark, New York, New York 10292,Jersey 07102, serves as
the Funds' Manager under a management agreement with each Fund (the Management
Agreement). Investment advisory services arehave been provided to each Fund
(except Jennison Fund)the Equity Opportunity and Growth Funds) by PMFPIFM through its affiliate,
The Prudential Investment Corporation (PIC), Prudential Plaza, 751 Broad Street,
Newark, New Jersey 07102, under a Subadvisory Agreement. Investment advisory
services arehave been provided to Jennison Fundthe 20/20 Focus and Health Sciences Funds (as
to approximately half of the assets), Equity Opportunity and Growth Funds by
PMFPIFM through its affiliate, Jennison Associates Capital Corp.LLC (Jennison), 466 Lexington
Avenue, New York, New York 10017, under a Subadvisory Agreement. PIC and
Jennison are referred to herein as
the Subadviser, as appropriate. PMF, PIC and Jennison are subsidiaries of The Prudential Insurance Company of America
(Prudential) and are part of Prudential's MoneyPrudential Asset Management Group.Holding Company.
Prudential Securities Incorporated,
(Prudential Securities) One Seaport Plaza,Investment Management Services LLC (PIMS or the Distributor),
Gateway Center Three, 100 Mulberry Street, Newark, New York, New York 10292Jersey 07102 serves as
the distributor of the Funds' shares. The Funds' transfer agent is Prudential
Mutual Fund Services, Inc. (PMFS), Raritan Plaza One, Edison,194 Wood Avenue South, Iselin, New Jersey
08837.08830. As of JuneSeptember 30, 1996, PMF2000, PIFM served as the manager to 39__ open-end
investment companies and as manager or administrator to 22 closed-end
investment companies with aggregate assets of more than $52$ __ billion. As part of a corporate
restructuring, PMF intends to reorganize as a limited liability company on or
before December 31, 1996. This reorganization will have no impact on the
provision of services to the Funds. This reorganization will not result in a
change in management or control within the meaning of the Investment Company Act
and does not require Shareholder approval. Each Fund
has a Board of Directors or Trustees which, in addition to overseeing the
actions of the Fund's Manager and Subadviser, decides upon matters of general
policy.
2
VOTING INFORMATION
For each Fund, the presence, in person or by proxy, of a majority of
the Shares of the Fund outstanding and entitled to vote will constitute a quorum
for the transaction of business at the Meetings, except that one-third (1/3) of the
shares of the Fund outstanding and entitled to vote shall constitute a quorum
for Global Limited Maturity, Intermediate Global, Jennison, Multi-Sector and The
Global Government Plus Fund, Inc..Meetings.
If a quorum is not present at a Meeting, or if a quorum is present at
that Meeting but sufficient votes to approve any of the proposals are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any adjournment will
require the affirmative vote of a majority of those Shares represented at the
Meeting in person or by proxy. The persons named as proxies will vote those
proxies which they are entitled to vote FOR any proposal in favor of the
adjournment and will vote those proxies required to be voted AGAINST any
proposal against the adjournment. A Shareholdershareholder vote may be taken on one or more
of the proposals in this proxy statement prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
If a proxy that is properly executed and returned is accompanied by
instructions to withhold authority to vote (an abstention) or represents a
broker "non-vote" (that is, a proxy from a broker or nominee indicating that
such person has not received instructions from the beneficial owner or other
person entitled to vote sharesShares on a particular matter with respect to which the
broker or nominee does not have discretionary power), the sharesShares represented
thereby, with respect to matters to be determined by a majority or plurality of
the votes cast on such matters, will be considered present for purposes of
determining the existence of a quorum for the transaction of business, but, not
being cast, will have no effect on the outcome of such matters. With respect to
matters requiring the affirmative vote of a specified percentage of the total
sharesShares outstanding, an abstention or broker non-vote will be considered present
for purposes of determining a quorum but will have the effect of a vote against
such matters. Accordingly, abstentions and broker non-votes will have no effect
on Proposals Nos.No. 1 and 3,7, for which the required vote is a plurality or
majority number of the votes cast, but effectively will be a vote against adjournment
and against Proposal No. 2, forthe other Proposals, which the required vote isrequire approval of a percentagemajority of the
Shares present or outstanding.outstanding voting securities under the 1940 Act.
The individuals named as proxies on the enclosed proxy cards will vote
in accordance with your direction as indicated thereon, if your proxy card is received
properly executed by you or by your duly appointed agent or attorney-in-fact. If
your card is properly executed and you give no voting instructions, your Shares
will be voted FOR the nominees named herein for the Board of the Fund to which
the proxy
3
card relates and FOR the remaining proposals described in this proxy
statement and referenced on the proxy card. If any nominee for the Fund Boards
should withdraw or otherwise become unavailable for election, your Shares will
be voted in favor of such other nominee or nominees as management may recommend.
You may revoke any proxy card by giving another proxy or by letter or telegram
revoking the initial proxy. To be effective your revocation must be received by
the Fund prior to the related Meeting and must indicate your name and account
number. In addition, if you attend a Meeting in person you may, if you wish,
vote by ballot at that Meeting, thereby canceling any proxy previously given.
3
The close of business on November 3, 2000 has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the Meetings. Information as to the number of outstanding Shares for each
Fund as of August 9, 1996the record date is set forth below:
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CLASSNumber of Number of Number of Number of Total
Class A CLASSClass B CLASSClass C CLASSClass Z TOTAL NUMBER
SHARES SHARES SHARES SHARES OF SHARES
FUND OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDINGNumber
Shares Shares Shares Shares of Shares
Fund Outstanding Outstanding Outstanding Outstanding Outstanding
- ------------------------------------------------ ----------- ----------- ----------- ----------- ------------------------
Prudential Allocation Fund..................20/20 Focus
Active Balanced
Portfolio........................
Strategy Portfolio........................
PrudentialEmerging Growth
Equity Fund, Inc.................
PrudentialOpportunity
Financial Services
Growth
Health Sciences
Natural Resources
Small Company
Stock Index
Tax Equity
Income Fund...............
Prudential Global Limited Maturity Fund,
Inc........................................
Prudential Intermediate Global Income Fund,
Inc........................................
Prudential Jennison Fund, Inc...............
Prudential Multi-Sector Fund, Inc...........
Prudential Small Companies Fund, Inc........
PrudentialTax Small-Cap
Technology
Utility Fund, Inc................
The Global Government Plus Fund, Inc........
The Global Total Return Fund, Inc...........
None of the items on the agenda require separate voting by class. Each
share of each class is entitled to one vote. Management does not know of any person
who owned beneficially 5% more of the Shares of any Fund as of August 9, 1996. To the knowledge of management, the
executive officers and Board Members of each Fund, as a group, owned less than
1% of the outstanding Shares of each Fund as of August 9, 1996.November 3, 2000. A listing of
persons who owned beneficially 5% or more of the Shares of any Fund as of
November 3, 2000 is contained in Exhibit A.
COPIES OF EACH FUND'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS,
INCLUDING FINANCIAL STATEMENTS, HAVE PREVIOUSLY BEEN DELIVERED TO SHAREHOLDERS OR ARE
ENCLOSED WITH THIS PROXY STATEMENT.SHAREHOLDERS.
SHAREHOLDERS OF ANY FUND MAY OBTAIN WITHOUT CHARGE ADDITIONAL COPIES OF A FUND'S
ANNUAL AND SEMI-ANNUAL REPORTS BY WRITING THE FUND AT ONE SEAPORT PLAZA,GATEWAY CENTER THREE, 100
MULBERRY STREET, 4TH FLOOR, NEWARK, NEW YORK, NEW YORK 10292,JERSEY 07102, OR BY CALLING
1-800-225-1852 (TOLL FREE).
Each full Share of each Fund outstanding is entitled to one vote, and
each fractional Share of each Fund outstanding is entitled to a proportionate
share of one vote, with respect to each matter to be voted upon by the
Shareholdersshareholders of that Fund. Information about the vote necessary with respect to
each proposalProposal is discussed below in connection with the proposal.
------------------------Proposal.
4
ELECTION OF DIRECTORS OR TRUSTEES
(PROPOSALPROPOSAL NO. 1)
RELEVANT1
THIS PROPOSAL APPLIES TO ALL OF THE FUNDS.
All Funds.
DISCUSSION:DISCUSSION. The Board of each Fund has acted to expand its membership and
has nominated the twelve13 individuals
identified below for election to the
relatedeach Fund's Board at its Meeting.Board. Under Proposal No. 1,
Shareholdersshareholders of each Fund are being asked to vote on thosethese nominees.
Pertinent information about
4
each nominee is set forth in the listing below
and in Exhibits AB through DE hereto. Each nomineeof the nominees has indicated a
willingness to serve if elected. Except as to Natural Resources, all of the
nominees are currently directors or trustees (collectively referred to as
Directors); Ms. ______, Messrs. _______, _______, _______ are not currently
Directors of Natural Resources. All of the Directors have previously been
elected by shareholders, except for Messrs. Fenster, McDonald, Odenath and
Strangfeld. If elected, each nominee will hold office until the earlier to
occur of (a) the next meeting of Shareholdersshareholders at which Board membersMembers are
elected and until their successors are elected and qualified or (b) until
their terms expire in accordance with the Fund's retirement policy. TheEach
Fund's retirement policy generally calls for the retirement of Directors or
Trustees on December 31 of the year in which they reach the age of 72, except that there75.
Currently, each Board member who is a phase-in period for Board Members who were
68 and older as of December 31, 1993.
The increase in the size of the Boards and the nomination of a single group
of nominees to serve as the Board Members for each Fund reflects an overall plan
to coordinate and enhance the efficiency of the governance of the Funds and of
certain other investment companies that are part of the Prudential Mutual Fund
Complex. This plan was developed by an advisory group of current Board Members
who are not "interested persons" of the Funds, as defined in the Investment
Company Act (independent Board Members),affiliated with
the assistance of representatives
of Prudential Mutual Fund Management, who formed a corporate governance task
force. The Advisory Group considered various matters related to the management
and governance of the Funds and made recommendations to the Boards, including
proposals concerning the number of mutual fund boards, the size and composition
of such Boards, retirement policies and related matters. These proposals were
adopted by the Boards at meetings in November 1995 and during the first quarter
of 1996, and are summarized below. The Boards acted in 1996 to establish the
size of the Boards at twelve. The nominees for independent Board memberships
were selected by the nominating committees of the Board of each Fund. With the
exception of the nominations for Board membership, which are the subject of
Proposal No. 1, no Shareholder action is required with respect to the Advisory
Group recommendations. If Proposal No. 1 is approved, some Funds will have more
Board members than they currently have. Notwithstanding this increase in the
number of Board members, it is anticipated that, on a Fund by Fund basis,
Directors' and Trustees' fees in the aggregate will not be higher than they
currently are. Annual Board fees are reviewed periodically by each Fund's Board
and may be changed in the future.
The Boards believe that coordinated governance through this Board
restructuring will benefit each of the Funds. Despite some recent
consolidations, the Prudential Mutual Fund Complex has grown substantially in
size in the years since the current Boards were created. This growth has been
due to the creation of new Funds intended to serve a wide variety of investment
needs. The Advisory Group concluded that the Prudential Mutual Fund Complex
would operate more efficiently and economically with fewer boards. The
Prudential Mutual Fund Complex currently includes over 70 portfolios of open-end
and closed-end funds having a wide variety of investment objectives and policies
with over 12 different boards (clusters). The Advisory Group recommended that
the number of Board clusters be reduced from the present level to four. The
proposed Board cluster covered by this proxy statement would include domestic
equity and global debt funds. The other Board clusters would focus on other
types of investments. The Boards believe that the Funds will benefit from having
Board members focus on the issues relating to these types of Funds and to
investing in these types of securities. Coordinated governance within the
Prudential Mutual Fund Complex also will reduce the possibility that separate
Boards might arrive at conflicting decisions regarding the operation and
management of the Funds.
The Boards also believe that the Funds will benefit from the diversity and
experience of the nominees that would comprise the restructured Boards. These
nominees have had distinguished careers in business, finance, government and
other areas and will bring a wide range of expertise to the Boards. Nine of the
twelve nominees have no affiliation with Prudential Mutual Fund Management,
Prudential SecuritiesManager, its Subadviser or Prudential and would be independent Board Members.Distributor (an Independent Board Members are charged with special responsibilities, among other
things, to approve advisory, distribution and similar agreements between the
Funds and management. Currently, they also constitute the members of the Boards'
audit and nominating committees. In the course of their duties, Board Members
must review and understand large amounts of financial and technical material and
must be willing to devote substantial amounts of time. Due to the demands of
service on the Boards, independent nominees may need to reject other attractive
opportunities. Each of the independent nominees already servesMember or
Independent Directors, as an independent
Board Member for one or more funds within the Prudential Mutual Fund Complex and
understands the operations of the complex.
5
As recommended by the Advisory Group, the compensation paid to independent
Board Members will change. The Advisory Group has recommended that, initially,
under the new structure, each independent Board Member beapplicable) is paid annual fees in the aggregate of
$45,000[$______] for his or her service on the Board of each Fund. In addition, an
Independent Board Member who serves on the Executive Committee is paid an
annual fee of $8,000 and an Independent Board Member who chairs the Audit or
Nominating Committee is paid an annual fee of $2,000 per Fund cluster. There will be no additional
compensation for serving on committees or for attending meetings. For the most
part, on a Fund by Fund basis, Directors' and Trustees' fees in the aggregate
will not be higher than they are currently.committee. Board
Members affiliated with PMF,PIFM, Prudential Securities Incorporated (Prudential
Securities) or Prudentialtheir affiliates will continue to receive no compensation from
any Fund. Board Members will continue to be reimbursed for any expenses
incurred in attending meetings and for other incidental expenses. The annual
Board fees
per Fund and per cluster are subject to the approval of the new
Boards upon their election. Thereafter, annual Board fees may be reviewed periodically and changed by each Fund's Board.
5
The following table sets forth information relating to the compensation
paid to Board Members (i) specifically by each Fund during the pastFund's last
fiscal year and (ii) in the aggregate for all Funds in the Prudential Mutual
Fund Complex for the calendar years:year ended December 31, 1999:
COMPENSATION TABLE
AGGREGATE COMPENSATION FROM FUNDS
GLOBAL- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 1999
COMPENSATION
PAID TO
BOARD
MEMBERS
TAX FROM FUNDS
BOARD MEMBERS AND STOCK INVESTMENT NATURAL SMALL TAX SMALL- EMERGING 20/20 AND FUND
NOMINEES(1) INDEX PORTFOLIOS RESOURCES COMPANY SECTOR EQUITY LIMITED SMALL
ALLOCATION EQUITY INCOME MATURITY INTERMEDIATE MULTI-SECTOR COMPANIES
INDEPENDENT BOARD MEMBER (1) FUND FUND FUND FUND GLOBAL FUND JENNISON FUND FUNDCAP GROWTH FOCUS COMPLEX (2)
- ---------------------------- ----------- --------- --------- ----------- ------------- ----------- ------------- -----------------------------------------------------------------------------------------------------------------------------------------------
Beach, Edward D............. $ 8,500 $ 7,500 $ 7,500 -- -- -- $ 7,500 --
Dorsey, Eugene C*........... $ 7,500 -- -- -- $ 7,500 -- --
Eyre, Stephen C*............ -- -- $ 10,000 -- -- -- --
Fortune, Robert, R.D.*........ -- -- -- -- -- -- -- $1,325 $3,225 $650 $425 $6,500 $1,550 $1,050 $1,850 $2,150 $$142,500 (43/70)
Fenster, Saul K. $375 $1,117 $0 $0 $0 $150 $108 $192 $0 $35,000 (5/21)+
Gold, Delayne D............. $ 7,500 -- $ 10,000 -- -- -- $ 6,200
Hauspurg, Arthur*........... -- -- -- -- -- -- $ 6,000
Hoff, Don G.*............... -- -- $ 10,000 -- -- -- --
Knafel, Sidney R*........... -- -- $ 10,000 -- -- -- --
LaBlanc,D. $6,600 $12,575 $1,800 $1,825 $6,500 $1,550 $1,050 $1,850 $2,150 $144,500 (43/70)+
Gunia, Robert E.*......... -- -- $ 10,000 -- -- -- --
Lennox, Donald D............ $ 8,500 -- $ 7,500 -- -- -- $ 7,500 --F.(1) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
McCorkindale, Douglas....... $ 8,500 -- $ 7,500 -- -- -- $ 7,500 --Douglas H.(3) $6,600 $12,575 $0 $1,825 $6,500 $1,550 $1,050 $1,850 $2,150 $80,000 (24/49)+
McDonald, Jr., W. Scott $375 $1,117 $0 $0 $0 $150 $108 $192 $0 $35,000 (5/21)+
Mooney, Thomas T............ $ 8,500 $ 7,500 $ 7,500 -- -- -- $ 7,500 --T.(3) $6,600 $12,575 $0 $1,825 $6,500 $1,550 $1,050 $1,850 $2,150 $129,500 (35/75)+
Munn, Stephen P............. -- -- -- -- -- -- $ 6,000
O'Brien, Thomas H.*......... $ 7,500 -- -- -- -- -- --
OwensP. $7,050 $13,575 $0 $1,925 $6,700 $1,650 $1,125 $2,025 $2,200 $62,250 (29/53)+
Odenath, Jr., ThomasDavid R. (1) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Redeker, Richard A.*....... -- -- $ 10,000 $ 7,500 -- -- --
Sandberg, Sir Michael*...... -- -- -- -- -- -- -- $6,600 $12,575 $0 $1,825 $6,500 $1,550 $1,050 $1,850 $2,150 $95,000 (29/53)+
Smith, Robin B.............. -- -- -- -- $ 7,500 -- --
Stahl, Gerald A.*........... -- -- -- $ 7,500 -- -- --
Stoneburn, Stephen*......... -- -- -- $ 7,500 -- -- --
Teeters, Nancy H.*.......... $ 7,500 -- -- -- -- -- --B.(3) $6,600 $12,575 $1,825 $1,825 $6,500 $1,550 $1,050 $1,850 $2,150 $96,000 (32/44)+
Strangfeld, John R. (1) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Weil, III, Louis A. ........ $ 8,500 -- $ 7,500 -- -- -- $ 7,500 $ 6,000
Wellington, Robert, H.*..... -- -- -- -- $ 7,500 -- --
Welshans, Merle T*.......... -- -- -- -- -- -- --
Whitehead, Clay T........... -- -- $ 10,000 -- -- -- --
TOTAL
COMPENSATION
PAID TO BOARD
GLOBAL MEMBERS FROM
UTILITY GLOBAL TOTAL FUND AND FUND
INDEPENDENT BOARD MEMBER (1) FUND GOVERNMENT RETURN COMPLEX (2)
- ---------------------------- --------- ------------ --------- --------------
Beach, Edward D............. -- $ 18,750 $ 18,500 $ 159,000(20)+
Dorsey, Eugene C*........... -- -- -- $ 75,500(9)+
Eyre, Stephen C*............ -- -- -- $ 41,000(4)+
Fortune, Robert, R.*........ $ 9,000 -- -- 20,250(3)+
Gold, Delayne D............. $ 9,000 -- -- $ 183,250(24)+
Hauspurg, Arthur*........... -- -- -- $ 37,500(5)+
Hoff, Don G.*............... -- -- -- $ 50,625(5)+
Knafel, Sidney R*........... -- -- -- $ 35,500(4)+
LaBlanc, Robert E.*......... -- -- -- $ 35,500(4)+
Lennox, Donald D............ -- $ 18,750 -- $ 90,000(10)+
McCorkindale, Douglas....... -- $ 18,750 -- $ 90,000(10)+
Mooney, Thomas T............ -- $ 18,750 $ 18,500 $ 129,625(14)+
Munn, Stephen P............. -- -- -- $ 39,375(6)+
O'Brien, Thomas H.*......... -- -- -- $ 44,000(6)+
Owens Jr., Thomas A.*....... $ 9,000 -- -- $ 87,000(12)+
Sandberg, Sir Michael*...... -- -- $ 18,500 $ 22,000(2)+
Smith, Robin B.............. -- -- $ 18,500 $ 100,741(10)+
Stahl, Gerald A.*........... -- -- -- $ 11,875(2)+
Stoneburn, Stephen*......... -- -- -- $ 44,875(7)+
Teeters, Nancy H.*.......... -- -- $ 18,500 $ 107,500(13)+
Weil, III, Louis A. ........ -- $ 18,750 -- $ 93,750(11)+
Wellington, Robert, H.*..... -- -- -- $ 19,000(3)+
Welshans, Merle T*.......... $ 9,000 -- -- $ 20,250(3)$6,600 $12,575 $0 $1,825 $6,500 $1,550 $1,050 $1,850 $2,150 $96,000 (29/53)+
Whitehead, Clay T........... -- -- -- $ 35,500(4)T. $7,600 $14,500 $1,800 $2,100 $6,900 $1,800 $1,200 $2,100 $2,250 $77,000 (38/66)+
- --------------------------------
* Indicates Board Member who is not standing for reelection.has since retired.
+ Indicates number of Fundsfunds/portfolios in Fund Complex (including the Fund)Funds) to
which aggregate compensation relates.
(1) Richard A. RedekerRobert F. Gunia, David R. Odenath, Jr. and Harry A. Jacobs, Jr.,John R. Strangfeld, who are
"interested" Board Members, do not receive compensation from the Funds. Mr. Jacobs is not
standing for reelection.Funds or Fund
Complex. All other Board Members listed above are deemed to be independent
Board Members.
(2) No Fundfund within the Fund Complex has a bonus, pension, profit sharing or
retirement plan.
In connection with the Advisory Group recommendations for a restructuring(3) Total Compensation from all of the Prudential Mutual Fund Boards, PMF offered to pay from its own resources a
one-time retirement package to the independent Board Members. The purpose of the
one-time retirement package was to reduce the overall number of Board membersFunds in the Prudential Mutual Fund
Complex. The retirement package would be equalComplex for the calendar year ended December 31, 1999, includes amounts deferred
at the election of Directors under the Funds' deferred compensation plans.
Including accrued interest, total compensation amounted to twice the current aggregate annual Board fees but not to exceed $75,000 per
Director/Trustee plus $2,000approximately $97,916
for every year of service in excess of ten years.
Retirement would be effective in late 1996 or early 1997 after the Shareholder
Meetings. On a complex-wide basis, fourteen independent Board members have
accepted this offerDouglas H. McCorkindale, $135,102 for Thomas T. Mooney and are not standing$156,478 for
reelection to any Fund's Board.Robin B. Smith.
6
Board Members may elect to receive their Directors' or Trustees' fees pursuant to a deferred
fee agreement with each Fund. Under the terms of the agreement, the Fund accrues
daily the amount of such
6
the Board member'sMember's fee in installments whichthat accrue interest
at a rate equivalent to the prevailing rate applicable to 90-day U.S. Treasury
Bills at the beginning of each calendar quarter or, pursuant to an exemptive
order of the Securities and Exchange Commission (SEC), at the daily rate of
return of any Fund within the applicableFund Complex regardless of whether the Director
serves on the Board of that Fund. Payment of the accrued interest so accruedalso is also
deferred and accruals become payable at the option of the Board member. TheMember. A Fund's
obligation to make payments of deferred Directors' and Trustees'Directors fees, together with interest
thereon, is a general obligation of the Fund.
The nominees for election as Board members, their ages and a
description of their principal occupations are listed below. The business
address of the Directors/Trustees and Officers is c/o Prudential Investments
Fund Management LLC, Gateway Center Three, 100 Mulberry Street, 14th Floor,
Newark, New Jersey 07102-4077, Attention: Lesley L. Mann. Further information
about the nominees or current Board members standing for reelectionMembers is set forth in Exhibits A - B.B through E. A table
indicating each nominee'sDirector's/Trustee's ownership of Fund sharesShares is attached as
Exhibit B.
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND OTHER
DIRECTORSHIPS.
EDWARD D. BEACH (71), President and Director of BMC Fund, Inc., a
closed-end investment company; prior thereto, Vice Chairman of Broyhill
Furniture Industries, Inc.; Certified Public Accountant; Secretary and Treasurer
of Broyhill Family Foundation, Inc.;C.
Nominee
(Age) Principal Occupation*
----- ---------------------
Saul K. Fenster (67) President, New Jersey Institute of Technology; Commissioner of the
Middle States Association, Commission on Higher Education; Member
of the New Jersey Commission on Science and Technology; formerly,
director or trustee of the New Jersey State Chamber of Commerce,
Society of Manufacturing Engineering Education Foundation, the
Research and Development Council of New Jersey, Prosperity New
Jersey, Inc., the Edison Partnership, National Action Council for
Minorities in Engineering, and IDT Corporation.
Delayne D. Gold (63) Marketing and Management Consultant.
Robert F. Gunia** (53) Executive Vice President and Chief Administrative Officer (since
June 1999) of Prudential Investments; a business unit of Prudential;
Executive Vice President and Treasurer (since December 1996) of
PIFM; President (since April 1999) of PPIMS; former Corporate Vice
President (September 1997-March 1999) of The Prudential Insurance
Company of America (Prudential); Senior Vice President (March
1987-May 1999) and former Chief Administrative Officer (July
1989-September 1996) of Prudential Securities; Director (January
1989-September 1996), Executive Vice President, Treasurer and Chief
Financial Officer (June 1987-December 1996) of Prudential Mutual
Fund Management, Inc.
Douglas H. McCorkindale (61) Chairman (since June 2000), and President (since September 1997) of
Gannett Co. Inc. (publishing and media); President and Chief
Executive Officer (since August 2000) of Central Newspapers, Inc.;
formerly Vice Chairman (March 1984-May 2000) of Gannett Co. Inc.;
Director of Gannett Co. Inc., Global Crossing Ltd. And Continental
Airlines, Inc.
- -------------------------------
* Except as otherwise indicated, each individual has held the Board of Trustees of Mars
Hill College; President and Director of First Financial Fund, Inc. and The High
Yield Plus Fund, Inc.; President and Director of Global Utility Fund, Inc.;
Director of The Global Government Plus Fund, Inc., The Global Total Return Fund,
Inc., Prudential Equity Fund, Inc., Prudential Global Genesis Fund, Inc.,
Prudential Government Income Fund, Inc., Prudential Mortgage Income Fund, Inc.,
Prudential Multi-Sector Fund, Inc., Prudential Natural Resources Fund, Inc. and
Prudential Special Money Market Fund, Inc.; Trustee of The BlackRock Government
Income Trust, Command Government Fund, Command Money Fund, Command Tax-Free
Fund, Prudential Allocation Fund, Prudential California Municipal Fund,
Prudential Equity Income Fund, Prudential Municipal Bond Fund and Prudential
Municipal Series Fund.
DELAYNE DEDRICK GOLD (58), Marketing and Management Consultant; Director of
Prudential Distressed Securities Fund, Inc., Prudential Equity Fund, Inc.,
Prudential Global Limited Maturity Fund, Inc., Prudential Government Income
Fund, Inc., Prudential High Yield Fund, Inc., Prudential MoneyMart Assets, Inc.,
Prudential Mortgage Income Fund, Inc., Prudential National Municipals Fund,
Inc., Prudential Pacific Growth Fund, Inc., Prudential Small Companies Fund,
Inc., Prudential Special Money Market Fund, Inc., Prudential Structured Maturity
Fund, Inc., Prudential Tax-Free Money Fund, Inc., Prudential Utility Fund, Inc.
and Prudential World Fund, Inc.; Trustee of The BlackRock Government Income
Trust, Command Government Fund, Command Money Fund, Command Tax-Free Fund,
Prudential California Municipal Fund, Prudential Government Securities Trust and
Prudential Municipal Series Fund.
*ROBERT F. GUNIA (49), Director, Chief Administrative Officer, Executive
Vice President, Treasurer and Chief Financial Officer of PMF; Comptroller of the
Money Management Group of Prudential (since 1996); Senior Vice President of
Prudential Securities; Vice President and Director of Nicholas-Applegate Fund,
Inc. and The Asia Pacific Fund, Inc.
DONALD D. LENNOX (77), Chairman (since February 1990) and Director (since
April 1989) of International Imaging Materials, Inc.[ADD DESCRIPTION OF
BUSINESS]; Retired Chairman, Chief Executive Officer and Director of Schlegel
Corporation (industrial manufacturing) (March 1987 - February 1989); Director of
Gleason Corporation, Personal Sound Technologies, Inc., Prudential Global
Genesis Fund, Inc., Prudential Institutional Liquidity Portfolio, Inc.,
Prudential Multi-Sector Fund, Inc., Prudential Natural Resources Fund, Inc., The
Global Government Plus Fund, Inc. and The High Yield Income Fund, Inc.; Trustee
of Prudential Allocation Fund, Prudential Equity Income Fund, Prudential
Municipal Bond Fund and The Target Portfolio Trust.
DOUGLAS H. MCCORKINDALE (57), Vice Chairman, Gannett Co. Inc. (publishing
and media) (since March 1984); Director of Gannett Co. Inc., Frontier
Corporation, Continental Airlines, Inc., Prudential
- --------------
* Isoffice shown or
will be an interested Director or Trustee, as definedother offices in the Investment
Company Act, by reason of his affiliation with PMF, Prudential Securities or
Prudential.
7
Distressed Securities Fund, Inc., Prudential Global Genesis Fund, Inc.,
Prudential Multi-Sector Fund, Inc., Prudential Natural Resources Fund, Inc. and
The Global Government Plus Fund, Inc.; Trustee of Prudential Allocation Fund,
Prudential Equity Income Fund and Prudential Municipal Bond Fund.
*MENDEL MELZER (35), Chief Financial Officer (since November 1995) ofsame company for the Money Management Group of Prudential; formerly Senior Vice President and Chief
Financial Officer of Prudential Preferred Financial Services (April 1993 -
November 1995); Managing Director of Prudential Investment Advisors (April 1991
- -April 1993); Senior Vice President of Prudential Capital Corporation (July 1989
- -April 1991); Chairman and Director of Prudential Series Fund, Inc.
THOMAS T. MOONEY (54), President of the Greater Rochester Metro Chamber of
Commerce; former Rochester City Manager; Trustee of Center for Governmental
Research, Inc.; Director of Blue Cross of Rochester, Monroe County Water
Authority, Rochester Jobs, Inc., Executive Service Corps of Rochester, Monroe
County Industrial Development Corporation, Northeast Midwest Institute, The
Business Council of New York State, Global Utility Fund, Inc., Prudential
Distressed Securities Fund, Inc., Prudential Equity Fund, Inc., Prudential
Global Genesis Fund, Inc., Prudential Government Income Fund, Inc., Prudential
Mortgage Income Fund, Inc., Prudential Multi-Sector Fund, Inc., Prudential
Natural Resources Fund, Inc., First Financial Fund, Inc., The Global Government
Plus Fund, Inc., The Global Total Return Fund, Inc. and The High Yield Plus
Fund, Inc.; Trustee of Prudential Allocation Fund, Prudential California
Municipal Fund, Prudential Equity Income Fund, Prudential Municipal Bond Fund
and Prudential Municipal Series Fund.
STEPHEN P. MUNN (54), Chairman (since January 1994), Director and President
(since 1988) and Chief Executive Officer (1988 - December 1993) of Carlisle
Companies Incorporated (manufacturer of industrial products); Director of
Prudential Distressed Securities Fund, Inc., Prudential Government Securities
Trust, Prudential High Yield Fund, Inc., Prudential National Municipals Fund,
Inc., Prudential Small Companies Fund, Inc. and Prudential Tax-Free Money Fund,
Inc.
*RICHARD A. REDEKER (53), President, Chief Executive Officer and Director
(since October 1993), PMF; Executive Vice President, Director and Member of the
Operating Committee (since October 1993), Prudential Securities; Director (since
October 1993) of Prudential Securities Group, Inc; formerly Senior Executive
Vice President and Director of Kemper Financial Services, Inc. (September 1978 -
September 1993); Director of Global Utility Fund, Inc., Prudential Allocation
Fund, Prudential Distressed Securities Fund, Inc., Prudential Diversified Bond
Fund, Inc., Prudential Equity Fund, Inc., Prudential Equity Income Fund,
Prudential Europe Growth Fund, Inc., Prudential Global Genesis Fund, Inc.,
Prudential Global Limited Maturity Fund, Inc., Prudential Government Income
Fund, Inc., Prudential High Yield Fund, Inc., Prudential Institutional Liquidity
Portfolio, Inc., Prudential Intermediate Global Income Fund, Inc., Prudential
Jennison Fund, Inc., Prudential MoneyMart Assets, Inc., Prudential Mortgage
Income Fund, Inc., Prudential Multi-Sector Fund, Inc., Prudential National
Municipals Fund, Inc., Prudential Natural Resources Fund, Inc., Prudential
Pacific Growth Fund, Inc., Prudential Small Companies Fund, Inc., Prudential
Special Money Market Fund, Inc., Prudential Structured Maturity Fund, Inc.,
Prudential Tax-Free Money Fund, Inc., Prudential Utility Fund, Inc., Prudential
World Fund, Inc., The Global Total Return Fund, Inc., The Global Government Plus
Fund, Inc., and The High Yield Income Fund, Inc.; Trustee of Command Government
Fund, Command Money Fund, Command Tax-Free Fund, Prudential Allocation Fund,
Prudential California Municipal Fund, Prudential Equity Income Fund, Prudential
Government Securities Trust, Prudential Municipal Bond Fund, Prudential
Municipal Series Fund and The Target Portfolio Trust.**
- --------------
*last five years.
** Is or will be an "interested" Director or Trustee, as defined in the Investment Company
Act, by reason of his affiliation with PMF,PIFM, Prudential Securities or
Prudential.
** Mr. Redeker has resigned as President and Chief Executive Officer and
Director of PMF effective on or before December 31, 1996. Although he will no
longer oversee the operations of the Manager on a day-to-day basis, it is
anticipated that Mr. Redeker will remain associated with PMF and Prudential
and will continue to serve as President of the Funds.
87
ROBIN B. SMITH (56), President (since September 1981) and Chief Executive
Officer (since January 1988) of Publishers Clearing House; Director of BellSouth
Corporation, The Omnicom
W. Scott McDonald, Jr. (63) Vice President (since 1997), Kaludis Consulting Group, Inc., Texaco Inc., Spring Industries Inc., First
Financial Fund, Inc., The Global Total Return Fund Inc., The High Yield Income
Fund, Inc., The High Yield Plus Fund, Inc., Global Utility Fund, Inc.,
Prudential Distressed Securities Fund, Inc., Prudential Diversified Bond Fund,
Inc., Prudential Europe Growth Fund, Inc., Prudential Jennison Fund, Inc. and
Prudential Institutional Liquidity Portfolio, Inc.; Trustee of The Target
Portfolio Trust.
LOUIS A. WEIL, III (55), President and Chief Executive Officer (since
January 1996) and Director (since September 1991) of Central Newspapers, Inc.;
Chairman of the Board (since January 1996), Publisher and Chief Executive
Officer (August 1991 - December 1995) of Phoenix Newspapers, Inc.; formerly
Publisher of Time Magazine (May 1989 - March 1991); formerly President,
Publisher & CEO of The Detroit News (February 1986 - August 1989); formerly
member of the Advisory Board, Chase Manhattan Bank-Westchester; Trustee of
Prudential Allocation Fund, Prudential Distressed Securities Fund, Inc.,
Prudential Equity Income Fund, Prudential Government Securities Trust and
Prudential Municipal Bond Fund; Director of Prudential Global Genesis Fund,
Inc., Prudential High Yield Fund, Inc., Prudential Multi-Sector Fund, Inc.,
Prudential National Municipals Fund, Inc., Prudential Natural Resources Fund,
Inc., Prudential Small Companies Fund, Inc., Prudential Tax-Free Money Fund,
Inc. and The Global Government Plus Fund, Inc.
CLAY T. WHITEHEAD (57), President, National Exchange Inc. [DESCRIPTION OF
BUSINESS] (since May 1983); Director of Prudential Distressed Securities Fund,
Inc., Prudential Global Limited Maturity Fund, Inc., Prudential Pacific Growth
Fund, Inc. and Prudential World Fund, Inc. (a
Sallie Mae company serving higher education); Formerly principal
(1993-1997), Scott McDonald & Associates, Chief Operating Officer
(1991-1995), Fairleigh Dickinson University, Executive Vice
President and Chief Operating Officer (1975-1991), Drew University,
interim President (1988-1990), Drew University and founding director
of School, College and University Underwriters Ltd.
Thomas T. Mooney (58) President of the Greater Rochester Metro Chamber of Commerce; former
Rochester City Manager; former Deputy Monroe County Executive;
Trustee of Center for Governmental Research, Inc.; Director of Blue
Cross of Rochester, Monroe County Water Authority and Executive
Service Corps of Rochester.
Stephen P. Munn (58) Chairman, Director and President and former Chief Executive Officer,
Carlisle Companies Incorporated (manufacturer of industrial products).
David R. Odenath, Jr. **(43) Officer in Charge, President, Chief Executive Officer and Chief
Operating Officer (since June 1999) of PIFM; Senior Vice President
(since June 1999) of Prudential; formerly Senior Vice President
(August 1993-May 1999) of PaineWebber Group, Inc.
Richard A. Redeker (57) Former employee of Prudential Investments (October 1996-December
1998); prior thereto, President, Chief Executive Officer and
Director (October 1993-September 1996) of Prudential Mutual Fund
Management, Inc.; Executive Vice President, Director and Member of
the Operating Committee (October 1993-September 1996) of Prudential
Securities; Director (October 1993-September 1996) of Prudential
Securities Group, Inc.; Executive Vice President, PIC (January
1994-September 1996); Director (January 1994-September 1996) of
Prudential Mutual Fund Distributors, Inc. and Prudential Mutual Fund
Services, Inc.
Robin B. Smith (61) Chairman and Chief Executive Officer (since August 1996), formerly
President and Chief Executive Officer (January 1988-August 1996) and
President and Chief Operating Officer (January 1988-August 1996) of
Publishers Clearing House; Director of BellSouth Corporation, Texaco
Inc., Spring Industries Inc. and Kmart Corporation.
John R. Strangfeld **(47) Chief Executive Officer of Prudential Securities (since October
2000), Executive Vice President (since February 1998),
Prudential Insurance Company of America; Chief Executive Officer,
Chairman, President and Director (since January 1999) of
The Prudential Investment Corporation, Chairman (since August 1989)
of Pricoa Capital Group; various positions to Chief Executive
Officer (November 1994-December 1998), Private Asset Management
Group of Prudential.
8
Louis A. Weil, III (59) Former Chairman (January 1999-July 2000), President and Chief
Executive Officer (January 1996-July 2000) and Director (since
September 1991) of Central Newspapers, Inc.; former Chairman of the
Board (January 1996-July 2000), Publisher and Chief Executive
Officer (August 1991-December 1995) of Phoenix Newspapers, Inc.
Clay T. Whitehead (62) President of National Exchange Inc. (new business development firm).
Each Fund has a nominating committeeNominating Committee and an audit committee,Audit Committee, the
members of which are the independent Board members. TheMembers. Among other things, the
Audit Committee makes
recommendations tohas the following responsibilities:
- - Advising the Board with respect to the engagementselection, retention or termination,
as appropriate, of independent
accountants and reviews with the independent public accountants for the planFund.
- - Reviewing the independent public accountants' compensation and resultsthe proposed
terms of their engagement.
- - Monitoring the independence of the audit engagement and matters having a material effect upon the Fund'sindependent public accountants.
- - Reviewing annual financial operations.statements.
The Nominating Committee makes recommendations to the Board with
respect to candidates for election as Board Members. The Nominating Committee
does not consider nominees recommended by shareholders to fill vacancies on the
Board.
The activities of the Nominating Committee also include:
- - Reviewing the independence of Independent Directors then serving on the
Board.
- - Recommending to the Board the Independent Directors to be selected for
membership on the various Board Committees.
- - Reviewing and making recommendations to the Board of Directors concerning
Director compensation and expenses, including:
-annual Director fees
-supplemental compensation for Committee service
-supplemental compensation for serving as a Committee Chair
-Board or Committee meeting attendance fees
-expense reimbursement
Information about the number of Board and Committee meetings held
during the most recent fiscal year ended for each Fund is included in Exhibit C.D.
Information concerning Fund officers is set forth in Exhibit D.
NOTE: MESSRS. GUNIA AND MELZER HAVE NOT TO DATE BEEN NOMINATED BY PRUDENTIAL
INTERMEDIATE GLOBAL INCOME FUND, INC., PRUDENTIAL EQUITY FUND, INC. AND
PRUDENTIAL SMALL COMPANIES FUND, INC.E.
9
REQUIRED VOTE.
For the election of each Board, the candidatesThe nominees receiving the affirmative vote of a majority [list
applicable funds] or a plurality [list applicable funds] of the votes cast for the election of Board
Members
will be elected, provided a quorum is present.
EACH BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT
SHAREHOLDERSYOU VOTE "FOR" EACH OF THE NOMINEES UNDER PROPOSAL NO. 1.
10
TO APPROVE NEW SUBADVISORY AGREEMENTS BETWEEN PIFM AND JENNISON
PROPOSAL NO. 2
THIS PROPOSAL APPLIES TO THE FOLLOWING FUNDS:
20/20 FOCUS
EMERGING GROWTH
FINANCIAL SERVICES
NATURAL RESOURCES
SMALL COMPANY
TECHNOLOGY
UTILITY
BACKGROUND
The Boards of each of the Funds listed above including the Independent
Directors, has approved, and recommends that the shareholders of each Fund
approve, the adoption of a subadvisory agreement between PIFM and Jennison.
Subadvisory services for your Funds have historically been performed by PIC,
except that approximately half of 20/20 Focus Fund's portfolio historically
was subadvised by Jennison. PIFM, Jennison and PIC are all indirect
subsidiaries of Prudential.
Due to a broad restructuring of equity investment management within
Prudential, including the transfer of investment advisory duties for equity
management from PIC to Jennison, each Fund's shareholders are being asked to
approve a new subadvisory agreement between PIFM and Jennison. This
transition is occurring incrementally and we anticipate that the majority of
the equity funds currently subadvised by PIC will be subadvised by Jennison
on or before December 31, 2000. Most of the portfolio managers that have
served the Funds while being subadvised by PIC are moving to Jennison and
will continue to serve as the Funds' portfolio managers.
The combining of substantially all subadvisory duties for equity management
into Jennison is intended to provide your Funds with the investment
capabilities available from Jennison. More information about Jennison's
history and its management team appears on pages __ and ____ of this proxy
statement.
Completion of the transition of subadvisory services from PIC to Jennison may
constitute an "assignment" as that term is defined in the 1940 Act, of the
current subadvisory agreements between PIC and PIFM. As required by the 1940
Act, the subadvisory agreements with PIC provide for their automatic
termination in the event of an assignment. Therefore, shareholders will need
to approve the proposed new subadvisory agreements between PIFM and Jennison
in order for Jennison to continue to provide subadvisory services to the
Funds. A copy of the new form of subadvisory agreement for each Fund is
attached as Exhibit F. THE NEW SUBADVISORY AGREEMENT FOR EACH FUND OTHER THAN
20/20 FOCUS IS THE SAME IN EVERY MATERIAL RESPECT AS THE FUND'S SUBADVISORY
AGREEMENT WITH PIC, except as to the date of the agreement and the identity
of the Subadviser (Jennison rather than PIC) and, as to 20/20 Focus, Jennison
will provide subadvisory services for the entire portfolio.
Pending shareholder approval of these new subadvisory agreements, each Fund's
Board approved an interim subadvisory agreement between PIFM and Jennison.
During the period from the date that portfolio management moved from PIC to
Jennison, until shareholders approve a new investment advisory agreement with
Jennison, PIFM is placing into an escrow account fees for subadvisory
services that Jennison is performing for each Fund. The rate of the
subadvisory fees being placed in escrow is the same as the fees PIC received
for acting as subadvisor to the Funds. Each Fund's subadvisory fees will be
retained in escrow and will not be paid to Jennison, unless and until that
Fund's shareholders approve the new investment advisory agreement.
Because the move from PIC to Jennison is being made pursuant to a corporate
restructuring within Prudential and most of the portfolio managers will remain
the same, the transition to Jennison should not result in any changes in
11
the day-to-day operations of your Fund or the investment process used in
managing your Fund. In addition, the transition will not cause any change to
your Fund's investment objective or investment restrictions and policies
(except as shareholders may approve, as discussed in Proposals 5(a) through
5(h) of this proxy statement).
CURRENT SUBADVISORY AGREEMENTS WITH PIC
PIFM has entered into a subadvisory agreement with PIC for each of the Funds.
Each subadvisory agreement provides that PIC will furnish investment advisory
services in connection with the management of the Fund. In connection with those
services, PIC is obligated to keep certain books and records of the Fund.
Pursuant to PIFM's Management Agreement with each Fund, PIFM continues to have
responsibility for all investment advisory services.
Each Fund's subadvisory agreement provides that PIC will not be liable for any
error of judgment or for any loss suffered by the Fund in connection with
matters to which the subadvisory agreement relates, except a loss resulting from
willful misfeasance, bad faith, gross negligence or reckless disregard of
duties. Each subadvisory agreement also provides that it will terminate in the
event of its assignment (as defined in the 1940 Act) or upon the termination of
the Management Agreement between the Fund and PIFM. Each subadvisory agreement
may be terminated by the Fund, PIFM or PIC on not more than 60 days', nor less
than 30 days' written notice.
The chart below lists the compensation paid to PIC by PIFM under its subadvisory
agreements for the subadvisory services performed for each Fund, as well as the
date of each subadvisory agreement with PIC, and the date on which each
agreement was last submitted to shareholders for approval.
- ---------------------------------------------------------------------------------------------------------------------
FUND SUBADVISORY DATE SUBADVISORY FEE PAID TO PIC
AGREEMENT AGREEMENT (% OF AVERAGE DAILY NET
DATE(1) SUBMITTED TO ASSETS)(2)
SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------------------
20/20 Focus (Value Sleeve) 04-27-98 04-27-98 0.375%
- ---------------------------------------------------------------------------------------------------------------------
Emerging Growth 10-12-96 0.300%
- ---------------------------------------------------------------------------------------------------------------------
Financial Services (Strategically-Managed Sleeve) 05-17-99 05-18-99 0.375%
- ---------------------------------------------------------------------------------------------------------------------
Natural Resources 09-18-87 02-19-88 0.375%
- ---------------------------------------------------------------------------------------------------------------------
Small Company 01-31-89 0.455%
- ---------------------------------------------------------------------------------------------------------------------
Technology (Strategically-Managed Sleeve) 05-17-99 05-18-99 0.375%
- ---------------------------------------------------------------------------------------------------------------------
Utility Fund 05-02-88 04-25-88 0.375% to $250 mil.
0.238% to next $500 mil.
0.203% next $750 mil.
0.170% to next $500 mil.
0.140% next $2 bil.
0.122% next $2 bil.
0.105% over $6 bil.
- ---------------------------------------------------------------------------------------------------------------------
- -------------------------------
(1) Each subadvisory agreement between PIFM and the Funds was amended effective
January 1, 2000 to provide for the payment of compensation by PIFM to PIC based
on, in the case of 20/20 Focus Fund, a percentage of the average daily net
assets of the portion of the Fund managed by PIC, and for every other Fund, a
percentage of the average daily net assets of the Fund. The percentage rate
applicable to each Fund is set forth in the last column of this table.
(2) Prior to January 1, 2000, PIFM reimbursed PIC for its reasonable costs and
expenses incurred in performing advisory services on behalf of the Funds.
12
The chart below sets forth the total fees received by PIC from PIFM for
subadvisory services performed by PIC for each Fund during the last fiscal year
for each Fund:
- -------------------------------------------------------------------------------------------------------------
FUND FISCAL FEE PAID TO FEE RECEIVED
YEAR PIFM BY PIC FROM
ENDED PIFM(3)
- -------------------------------------------------------------------------------------------------------------
20/20 Focus (Value Sleeve) 01-31-00 $7,071,654 $153,706
- -------------------------------------------------------------------------------------------------------------
Emerging Growth 10-31-00 $1,202,452
- -------------------------------------------------------------------------------------------------------------
Financial Services (Strategically-Managed Sleeve) 11-30-99 $302,913
- -------------------------------------------------------------------------------------------------------------
Natural Resources 05-31-00 $575,291 $117,520
- -------------------------------------------------------------------------------------------------------------
Small Company 09-30-00 $6,749,959 $1,940,652
- -------------------------------------------------------------------------------------------------------------
Technology (Strategically-Managed Sleeve) 11-30-99 $631,240
- -------------------------------------------------------------------------------------------------------------
Utility 11-30-99 $16,318,008
- -------------------------------------------------------------------------------------------------------------
The chart below lists the equity mutual funds with capital appreciation as
their investment objective that are currently advised by Jennison, the size
of each fund, and the rate of compensation received by Jennison for the
investment advisory services it provides for each fund:
- -------------------------------------------------------------------------------------------------------------
FUND FUND NET FEE PAID TO JENNISON (%
ASSETS AS OF OF AVERAGE DAILY NET
9/30/00 ASSETS)
- -------------------------------------------------------------------------------------------------------------
20/20 Focus (Growth Sleeve) $1,202,773,879 0.300% to $300 mil
0.250% over $300 mil
- -------------------------------------------------------------------------------------------------------------
Equity Opportunity $205,105,648 0.300% to $300 mil
0.250% over $300 mil
- -------------------------------------------------------------------------------------------------------------
Growth $7,216,723 0.300% to $300 mil
0.250% over $300 mil
- -------------------------------------------------------------------------------------------------------------
Health Sciences (Strategically Managed Sleeve) $418,977,303 0.300% to $300 mil
0.250% over $300 mil
- -------------------------------------------------------------------------------------------------------------
Diversified Conservative Growth (Growth Sleeve) $74,814,266 0.300% to $300 mil
0.250% over $300 mil
- -------------------------------------------------------------------------------------------------------------
Diversified Moderate Growth (Growth Sleeve) $191,302,761 0.300% to $300 mil
0.250% over $300 mil
- -------------------------------------------------------------------------------------------------------------
Diversified High Growth (Growth Sleeve) $158,801,149 0.300% to $300 mil
0.250% over $300 mil
- -------------------------------------------------------------------------------------------------------------
Strategic Partners Focused Growth (Jennison Sleeve) $398,283,859 0.300% to $300 mil
0.250% over $300 mil
- -------------------------------------------------------------------------------------------------------------
Jennison International Growth $314,703,024 0.600% to $300 mil
0.500% next $1.2 bil
0.450% over $1.5 bil
- -------------------------------------------------------------------------------------------------------------
- ----------------------------
(3) Prior to January 1, 2000 PIFM reimbursed PIC for its reasonable costs and
expenses incurred in performing advisory services on behalf of the Funds.
Each subadvisory agreement between PIFM and the Funds was amended effective
January 1, 2000 to provide for the payment of compensation by PIFM based on a
percentage of the average daily net assets of each Fund. The percentage rate
applicable to each Fund is set forth in the table on page ____ for Funds with
fiscal years ending after January 1, 2000, the dollar amount shown in the
column titled "Fee Received by PIC from PIFM" is the cumulative fees paid by
PIFM to PIC from January 1, 2000 through the fiscal year end of the indicated
Fund.
13
THE PROPOSED NEW SUBADVISORY AGREEMENT WITH JENNISON
Jennison, located at 466 Lexington Avenue, New York, NY 10017, is a wholly-owned
subsidiary of PIC. PIC is a wholly-owned subsidiary of Prudential Asset
Management Holding Company (PAMHCo), which is a wholly-owned subsidiary of
Prudential. The address for PIC and PAMHCo is Gateway Center Three, 100 Mulberry
Street, Newark, NJ 07102. Jennison has provided investment advisory services to
registered investment companies since 1990.
Under the proposed subadvisory agreements, Jennison would provide investment
advisory services to each Fund pursuant to an agreement with PIFM. The
agreements between PIFM and Jennison will be identical in all material respects
(other than as indicated on page __) to the current agreements between PIFM and
PIC. This means that Jennison will be subject to the same terms and conditions
as are applicable to PIC under its agreements with PIFM.
The table below lists the name and principal occupation of the principal
executive officers and each director of Jennison. The address of each person is
466 Lexington Avenue, New York, NY 10017.
MICHAEL A. DEL BALSO - Director since 1998, Executive Vice President, Jennison
Associates LLC since 1998; prior to 1998, various positions to Senior Vice
President, Jennison Associates Capital Corp.
MARY-JANE FLAHERTY - Director since 2000. Managing Director, Strategic
Initiatives, The Prudential Investment Corporation since December 1998; prior
to December 1998 various positions to Chief Financial Officer, The Prudential
Investment Corporation and various positions to Vice President, The
Prudential Insurance Company of America.
JOHN H. HOBBS - Chairman since 1998. Chief Executive Officer,
Jennison since 1998; prior to 1998, various positions to Chairman and
Chief Executive Officer, Jennison Associates Capital Corp.
KAREN E. KOHLER - Director since 1998. Executive Vice President, Jennison
since 2000. Treasurer, Jennison since 1999. Chief Compliance Officer and
Director, Jennison since 1998; prior to 1998, various positions to Senior
Vice President, Chief Compliance Officer, Jennison Associates Capital
Corp.
KATHLEEN A. MCCARRAGHER - Director since 1998. Executive Vice President,
Jennison since 1998. 1992-1998, Managing Director, Weis, Peck & Greer LLC.
SPIROS SEGALAS - Director since 1998. President and Chief Investment Officer,
Jennison Associates LLC since 1998. Prior to 1998, various positions to
President and Chief Investment Officer, Jennison Associates Capital Corp.
PHILIP N. RUSSO - Director since 2000. Vice President and Director, the
Prudential Investment Corporation since 1999; Vice President, Prudential
Insurance Company of America since 1997; prior to 1997, Managing Director,
Bankers Trust Company.
VICTOR SIM - Director since 2000. Vice President, Prudential Insurance
Company of America since 1997.
JOHN R. STRANGFELD - Director since 2000. For additional information, see
biography under Proposal No. 1.
KEVEN C. UEBELEIN - Director since 2000. Senior Managing Director, Mergers &
Acquisitions, The Prudential Investment Corporation, since 2000; prior to
2000, various positions to Managing Director, New Products, Private Asset
Management Group, Prudential Insurance Company of America.
BERNARD B. WINOGRAD - Director since 2000. Chief Executive Officer,
Prudential Real Estate Investors, since December 1986; Senior Vice President
and Director, The Prudential Investment Corporation, since December 1996;
prior to December 1996, The Taubman Company LLC.
The chart below lists for each Fund, as of the most recently completed fiscal
year, the aggregate amount of commissions paid to Prudential Securities and the
percentage of each Fund's aggregate brokerage commissions paid to Prudential
Securities.
14
- --------------------------------------------------------------------------------------------------------------------
FUND FISCAL YEAR AGGREGATE AMOUNT OF COMMISSIONS
ENDED PAID (% OF AGGREGATE BROKERAGE
COMMISSIONS)
- --------------------------------------------------------------------------------------------------------------------
20/20 Focus 01-31-00 $23,198 (1.21%)
- --------------------------------------------------------------------------------------------------------------------
Emerging Growth 10-31-99 $35,000 (1.20%)
- --------------------------------------------------------------------------------------------------------------------
Financial Services 11-31-99 $0
- --------------------------------------------------------------------------------------------------------------------
Natural Resources 05-31-00 $1,824 (1.43%)
- --------------------------------------------------------------------------------------------------------------------
Small Company 09-30-00 $12,515 (0.47%)
- --------------------------------------------------------------------------------------------------------------------
Technology 01-31-00 $2,862 (2.0%)
- --------------------------------------------------------------------------------------------------------------------
Utility 11-31-99 $107,745 (3.11%)
- --------------------------------------------------------------------------------------------------------------------
RELATIONSHIP TO PROPOSALS NO. 3 AND 4
As part of the overall restructuring of the management of each Fund,
Proposals No. 3 and 4 request shareholder approval (1) to permit the Manager
to enter into or make material changes to subadvisory agreements, and (2) to
amend the management contracts between PIFM and each Fund. In brief, Proposal
No. 3, if adopted, would permit PIFM, upon Board approval, to retain new
subadvisers or to materially alter its contracts with existing subadvisers
without first obtaining shareholder approval. Proposal No. 4, if adopted,
would permit PIFM, again with Board approval, to allocate the assets of each
Fund among both affiliated and unaffiliated subadvisers under a
"Manager-of-Managers" structure. Please refer to the explanations
accompanying Proposals No. 3 and 4 for more information on each of these
Proposals.
Although shareholder approval is also being requested for Proposals No. 3 and
4, THE ADOPTION OF PROPOSAL NO. 2 IS NOT CONTINGENT ON SHAREHOLDER
APPROVAL OF EITHER PROPOSAL NO. 3 OR PROPOSAL NO. 4. This means that if
shareholders do not approve either Proposal No. 3 or Proposal No. 4, but do
vote "For" Proposal No. 2, PIFM will implement the new subadvisory agreements
with Jennison,. If Proposal No. 2 is not approved, Jennison will receive the
lesser of the subadvisory fees paid into escrow under the interim subadvisory
agreements or the costs incurred by Jennison, plus interest.
MATTERS CONSIDERED BY THE BOARDS
The proposal to present the proposed new subadvisory agreements with Jennison
was approved by the Boards of each Fund, including all of the Independent
Directors, on August 22, 2000. The Board received materials relating to the
proposed agreements in advance of the meeting at which the proposed
subadvisory agreements were considered, and had the opportunity to ask
questions and request further information in connection with such
consideration. The Boards considered that the fees to be paid to Jennison by
PIFM are the same as the existing fee arrangement with PIC, and that the fee
paid by the Funds would not increase. The Boards also considered that it is
appropriate to enter into new subadvisory agreements for these Funds in light
of the transition of the majority of equity management from PIC to Jennison.
REQUIRED VOTE
A Fund's approval of Proposal No. 2 requires approval by a majority of the
outstanding voting securities of the Fund, as defined by the 1940 Act. For
purposes of the 1940 Act, a majority of a Fund's outstanding voting
securities is the lesser of (i) 67% of the Fund's outstanding voting shares
represented at a meeting at which more than 50% of the Fund's outstanding
voting shares are present in person or represented by proxy, or (ii) more
than 50% of the Fund's outstanding voting shares. If Proposal No. 2 is
approved by the shareholders of a particular Fund, Proposal No. 2 will be
effective for that Fund as described above, notwithstanding that another Fund
does not approve Proposal No. 2.
EACH BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU VOTE
"FOR" PROPOSAL NO. 2.
15
TO APPROVE A PROPOSAL TO PERMIT THE MANAGER TO ENTER INTO, OR MAKE MATERIAL
CHANGES TO, SUBADVISORY AGREEMENTS
PROPOSAL NO. 3
THIS PROPOSAL APPLIES TO ALL OF THE FUNDS.
The Board of each Fund has approved, and recommends that
shareholders approve, Proposal No. 3, which would permit PIFM to enter into
subadvisory agreements with new subadvisers to the Fund, or make material
amendments to subadvisory agreements with existing subadvisers to the Fund,
without obtaining shareholder approval. THIS IS CALLED A
"MANAGER-OF-MANAGERS" STRUCTURE AND, IN THE FUTURE, MAY BE USED TO MANAGE
EACH FUND. THIS NEW STRUCTURE WOULD NOT CHANGE THE TOTAL ADVISORY FEES
CHARGED TO A FUND. Information concerning each Fund's current management
arrangements, including a description of the Fund's current subadvisory
agreements, is contained in Proposal No. 2. If shareholders approve Proposal
No. 3 so that shareholder approval of new or amended subadvisory agreements
is no longer required, the Directors of a Fund, including a majority of the
Independent Directors, must continue to approve these agreements in order for
them to take effect. On August 22, 2000, the Board of each Fund, including
the Independent Directors, discussed and approved Proposal No. 3 at an
in-person meeting.
Proposal No. 3 is being submitted to shareholders pursuant to the
requirements of an exemptive order obtained from the SEC in September 1996 (the
Original Order). The Original Order grants relief to The Target Portfolio Trust
for which PIFM acts as manager-of-managers, and other Prudential Mutual Funds
from certain provisions of the 1940 Act and certain rules thereunder.
Specifically, the Original Order permits PIFM to enter into or amend a
subadvisory agreement with a subadviser that is not otherwise an affiliated
person (as defined in the 1940 Act) of PIFM. Among other things, the Original
Order permits PIFM to enter into a new subadvisory agreement that is
necessitated due to an "assignment" (as defined in the 1940 Act), an amendment
to a subadvisory agreement, or a new subadvisory agreement substituting a new
subadviser for an old subadviser. The Funds are seeking confirmation from the
staff of the Division of Investment Management of the SEC (the Staff) that the
Original Order applies to the Funds as well as to The Target Portfolio Trust and
other Prudential Mutual Funds.
In addition, the Funds currently intend to seek an order (the Proposed
Order) from the SEC permitting PIFM, with Board approval, and without further
shareholder approval, to (1) hire one or more new AFFILIATED subadvisers and (2)
amend existing agreements with affiliated subadvisers. In their request for
relief, the Funds may also ask the SEC to amend the Original Order to permit the
replacement of an unaffiliated subadviser with an affiliated subadviser and to
replace an affiliated adviser with a different affiliated adviser, all with
prior Board approval. Proposal No. 3 seeks your approval to extend the
Manager-of-Managers structure to affiliated subadvisers if and when we obtain
such an order from the SEC.
WHY SHAREHOLDER APPROVAL IS BEING SOUGHT
Section 15 of the 1940 Act makes it unlawful for any person to act as
investment adviser to an investment company, except pursuant to a written
contract that has been approved by shareholders. For purposes of Section 15, the
term "investment adviser" includes any subadviser to an investment company.
Section 15 also requires that an investment advisory agreement provide that it
will terminate automatically upon its assignment.
In conformity with Section 15 of the 1940 Act, a Fund currently would
obtain shareholder approval of subadvisory agreements in the following
situations:
- (1) the employment by an existing Fund of a new subadviser to
replace an existing subadviser; (2) the allocation of a portion of
assets of a Fund to an additional subadviser and the reallocation
of portfolio assets among existing subadvisers;
- a material change in the terms of a subadvisory agreement; and
16
- the continued employment of an existing subadviser on the same
terms if there has been or is expected to be an assignment of a
subadvisory agreement as a result of a change of control of the
subadviser.
The 1940 Act does not require shareholder approval for the termination
of a subadvisory agreement if such termination is approved by a Fund's Board,
including its Independent Directors, although shareholders of the Fund may
terminate a subadvisory agreement at any time by a vote of a majority of its
outstanding shares, as defined in the Act.
DISCUSSION
Under the "Manager-of-Managers" structure, each Fund would continue to
employ PIFM, subject to the supervision of the Board, to manage or provide for
the management of each Fund. PIFM would select one or more subadvisers to invest
the assets of each Fund, subject to the review and approval of the Board.
(Currently, the selection of one or more subadvisers is subject to the approval
of the Fund's shareholders.) PIFM would review each subadviser's performance on
an ongoing basis. PIFM would be responsible for communicating performance
expectations and evaluations to subadvisers and for recommending to the Board
whether a subadviser's contract should be renewed, modified or terminated. PIFM
would continue to pay an advisory fee to each subadviser from the management
fee. Each Board believes that requiring a Fund's shareholders to approve changes
in advisers and subadvisory agreements (including continuation of subadvisory
agreements that have terminated by virtue of an assignment) not only results in
unnecessary administrative expenses to the Fund, but also may cause delays in
executing changes that PIFM and the Board have determined are necessary or
desirable. Each Board believes that these expenses, and the possibility of
delays, may result in shareholders receiving less satisfactory service than
would be the case if Proposal No. 3 is implemented.
The kind of changes to subadvisory arrangements that could be effected
without further shareholder approval if Proposal No. 3 is approved include: (1)
reallocating Fund assets among existing subadvisers; (2) allocating a portion of
a Fund's assets to one or more additional subadvisers; (3) continuing a
subadvisory agreement where a change in control of the subadviser automatically
otherwise causes that agreement to terminate; and (4) replacing an existing
subadviser with a new subadviser when PIFM and the Board determine that the new
subadviser's investment philosophy and style, past performance, security
selection experience and preferences, personnel, facilities, financial strength,
quality of service and client communication are more consistent with the best
interests of the Fund and its shareholders. Each Board believes that PIFM can
effect the types of advisory changes described above more efficiently, without
sacrificing the quality of service to shareholders, if the Funds were permitted
to operate in the manner described in Proposal No. 3. Each Board further
believes that these gains in efficiency would ultimately benefit each Fund and
each of its shareholders.
PIFM is currently in the process of evaluating the management
arrangements for the Funds to determine which Funds would benefit from
implementing a Manager-of-Managers structure in place of the more traditional
investment advisory structure currently in effect. Although this process has not
yet been completed, to ensure maximum flexibility while seeking to minimize
costs through the use of joint proxy statements, shareholders of each Fund are
being asked to approve the operation of their Fund in a Manager-of-Managers
structure. Although a Manager-of-Managers structure will be put into place for
each Fund whose shareholders approve Proposal No. 3, the Fund will not employ
new subadvisers pursuant to this structure unless and until PIFM and the Board
determine that a change in subadvisory arrangements is appropriate. In making
these determinations as to a Fund, PIFM intends to evaluate rigorously both
affiliated subadvisers and unaffiliated subadvisers according to objective and
disciplined standards.
Following shareholder approval of Proposal No. 3 and Proposals No. 2
and 4, PIFM will continue to be each Fund's investment manager and Jennison, the
Prudential subsidiary primarily responsible for day-to-day management of
Prudential's equity funds, will continue to serve as subadviser for the Funds.
(Proposals Nos. __ and __ provide more information about PIFM and Jennison,
respectively.) Initially 100% of each equity Fund's assets will be subadvised by
Jennison (or PIC, in the case of Active Balanced, Tax Equity, Tax Small-Cap and
17
Stock Index Funds), except that the day to day management of Health Sciences
Fund's portfolio is divided between PIC and Jennison. PIFM does not currently
intend to recommend that any additional subadvisers be added, in light of
Jennison's strong performance record and other relevant factors. Each Board
and PIFM, under the Board's supervision, will continue to monitor the nature
and quality of Jennison's services and may, in the future, recommend additional
subadvisers or the re-allocation of assets among Jennison and other subadvisers.
If one or more subadvisers are added to a Fund, PIFM will be responsible for
determining the allocation of assets among the subadvisers and will have the
flexibility to increase the allocation to any one subadviser to as much as 100%
and decrease the allocation to any one subadviser to as little as 0%. The
Manager-of-Managers structure that each Board is asking shareholders to
approve will give the Boards and PIFM the flexibility to appoint additional
subadvisers without shareholder approval, but it is possible that no new
subadvisers will be added.
If Proposal No. 3 is approved by a Fund's shareholders those
shareholders no longer would be entitled to approve the selection of a new
subadviser or a material amendment to an existing subadvisory agreement.
Instead, shareholders, within 90 days of the change, would receive an
information statement containing substantially all of the information about the
subadviser and the subadvisory agreement that would otherwise be contained in a
proxy statement. The information statement would include disclosure as to the
level of fees to be paid to PIFM and each subadviser and would disclose
subadviser changes or changes in subadvisory agreements.
Each Board and PIFM have concluded that, through the information
statement and adherence to the conditions outlined below, shareholders of
each Fund will receive adequate disclosure about any new subadvisers or
material amendments to subadvisory agreements. Whether or not Proposal No. 3
is approved, amendments to the Management Agreement between PIFM and each
Fund would remain subject to the shareholder Board approval requirements of
Section 15 of the 1940 Act and related proxy disclosure requirements.
Moreover, although PIFM and the Board already generally may change the fees
payable to a subadviser without shareholder approval, PIFM and the Board
could not increase the rate of the management fees payable by a Fund to PIFM
or cause the Fund to pay subadvisory fees directly to a subadviser without
first obtaining shareholder approval.
For these reasons, each Board believes that approval of Proposal No. 3
to permit PIFM and the Boards to enter into new subadvisory agreements or make
material changes to existing subadvisory agreements without shareholder approval
is in the best interests of the shareholders of the Funds.
CONDITIONS
If the Staff confirms that the Original Order applies to the Funds, the
Original Order would grant relief from Section 15(a) of the 1940 Act and certain
rules thereunder in order for the Funds to operate in the manner described in
Proposal 3, subject to certain conditions, including approval of Proposal No. 3
by shareholders of each Fund seeking to rely on the Original Order. A Fund will
not rely on the Original Order until all of the conditions set forth below have
been met.
As stated above, the Funds and PIFM intend to seek the Proposed Order,
which would expand the relief obtained under the Original Order to certain
situations involving affiliates of PIFM. There can be no assurance that the SEC
will issue the Proposed Order or that the SEC will not impose additional
conditions on the Funds.
The following are the conditions for relief under the Original Order.
1. PIFM will provide general management and administrative services to
a Fund, including overall supervisory responsibility for the general management
and investment of the Fund's securities portfolio, and, subject to review and
approval by the Board, will (a) set the Fund's overall investment strategies;
(b) select subadvisers; (c) monitor and evaluate the performance of subadvisers;
(d) allocate and, when appropriate, reallocate the Fund's assets among its
subadvisers in those cases where the Fund has more than one subadviser; and (e)
implement procedures reasonably designed to ensure that the subadvisers comply
with the Fund's investment objectives, policies, and restrictions.
18
2. Before a Fund may operate in the manner described in Proposal No. 3,
the Proposal must be approved by a majority of its outstanding voting
securities, as defined in the 1940 Act or, in the case of a new series of a Fund
whose public shareholders purchased shares on the basis of a prospectus
containing the disclosure contemplated by condition 4 below, by the sole
shareholder before the offering of shares of such series to the public. Approval
of Proposal No. 3 would satisfy this condition.
3. A Fund will furnish to shareholders all of the information about a
new subadviser or subadvisory agreement that would be included in a proxy
statement. This information will include any change in the disclosure caused by
the addition of a new subadviser or any material changes in a subadvisory
agreement. The Funds will meet this condition by providing shareholders with an
information statement complying with certain provisions of the Securities
Exchange Act of 1934, as amended, and the rules promulgated thereunder. With
respect to a newly retained subadviser, or a change in a subadvisory agreement,
the information statement will be provided to shareholders of a Fund within a
maximum of 90 days after the addition of the new subadviser or, the
implementation of any change in a subadvisory agreement.
4. A Fund will disclose in its prospectus the existence,
substance and effect of the Original Order.
5. No Director or officer of a Fund or director or officer of PIFM
will own directly or indirectly (other than through a pooled investment
vehicle that is not controlled by the Director or officer) any interest in
any subadviser except for (a) ownership of interests in PIFM or any entity
that controls, is controlled by or is under common control with PIFM, or (ii)
ownership of less than 1% of the outstanding securities of any class of
equity or debt of a publicly-traded company that is either a subadviser or
any entity that controls, is controlled by or is under common control with a
subadviser.
6. PIFM will not enter into a subadvisory agreement with any subadviser
that is an "affiliated person" (as defined in the 1940 Act) of a Fund or PIFM
other than by reason of serving as a subadviser to the Fund (an Affiliated
Subadviser) without such agreement, including the compensation payable
thereunder, being approved by the shareholders of the Fund.
7. At all times, a majority of the members of the Board of a Fund will
be persons each of whom is an Independent Director of the Fund and the
nomination of new or additional Independent Directors will be placed within the
discretion of the then existing Independent Directors.
8. When a subadviser change is proposed for a Fund with an Affiliated
Subadviser, the Board, including a majority of the Independent Directors, will
make a separate finding, reflected in the Board's minutes, that such change is
in the best interests of the Fund and its shareholders and does not involve a
conflict of interest from which PIFM or the Affiliated Subadviser derives an
inappropriate advantage.
If the Proposed Order is granted, the condition described in item 6
above would be eliminated.
MATTERS CONSIDERED BY EACH BOARD
At a Board meeting held on August 22, 2000, each Board, including
all of the Independent Directors, approved the submission to shareholders of
Proposal No. 3 regarding the Manager-of-Managers structure. Prior to the
meeting each Director received materials discussing this type of management
structure. At the meeting, each Director attended a comprehensive
presentation on the proposed structure and had the opportunity to ask
questions and request further information in connection with such
consideration. Management representatives presented an update on Proposal No.
3 to the Directors during a telephone meeting held on September 21, 2000.
Each Board considered that the management fee payable to PIFM would not
change as a result of adopting a Manager-of-Managers structure and that the
new structure would provide the potential for PIFM to hire subadvisers and
amend subadvisory agreements more efficiently and with less expense. Each
Board also considered that PIFM had substantial experience in evaluating
investment advisers and that PIFM would bring that experience to the task of
evaluating the current subadviser for a Fund and any potential new
subadviser. Each Board took into account the fact that, currently, the Board
or PIFM could not, without the prior approval of the Board, including a
majority of
19
the Independent Directors: (1) appoint a new subadviser, (2) change the
allocation of portfolio assets among subadvisers, or (3) make material
amendments to existing subadvisory agreements.
REQUIRED VOTE
Approval of this Proposal as to a Fund requires the affirmative vote of
a majority of that Fund's outstanding voting securities, as defined in the 1940
Act.
EACH BOARD, INCLUDING ITS INDEPENDENT MEMBERS, RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL NO. 3.
20
TO PERMIT AN AMENDMENT TO THE MANAGEMENT CONTRACT TO ALLOCATE A FUND'S
ASSETS AMONG AFFILIATED AND UNAFFILIATED SUBADVISERS.
PROPOSAL NO. 4
THIS PROPOSAL APPLIES TO ALL OF THE FUNDS.
The Board of each of the Funds, including all of the Independent
Directors, has approved, and recommends that shareholders of the Funds
approve, a proposal to amend the management agreement between each Fund and
PIFM (the Amended Agreements). Because the material features of each Amended
Agreement are substantially similar to each other, we have attached as
Exhibit G to this proxy statement a form of the Amended Agreements applicable
to all the Funds. If approved at the Meeting, the Amended Agreements will
supersede the existing Management Agreements (the Existing Agreements)
between each Fund and PIFM.
The Amended Agreements are substantially similar to the Existing
Agreements. THE ADVISORY FEES PAYABLE BY EACH FUND WILL NOT CHANGE. The
primary difference is that the Amended Agreements would permit PIFM, with
Board approval, to allocate and reallocate a Fund's portfolio assets among
subadvisers from 0% to 100%.
If a Fund's shareholders approve this Proposal, the relevant Existing
Agreement would be amended to provide that PIFM may reallocate Fund assets upon
Board approval only and without further shareholder approval. This would mean,
for example, that a Fund that has allocated 50% of its assets to subadviser #1
and 50% to subadviser #2 would be able to change the allocation to 75% of assets
to subadviser #1 and 25% to subadviser #2 without seeking shareholder approval.
Reallocations may result in additional costs since sales of securities
may result in higher portfolio turnover. Also, because each subadviser selects
portfolio securities independently, it is possible that a security held by one
portfolio segment of a Fund may also be held by the other portfolio segment of
that Fund or that the two subadvisers may simultaneously favor the same
industry. PIFM will monitor each Fund's overall portfolio to ensure that any
such overlaps do not create an unintended industry concentration or result in a
diversified Fund's reclassification as a non-diversified Fund. In addition, if
one subadviser of a Fund buys a security at the same time that another Fund
subadviser sells it, the net position of the Fund in the security may be
approximately the same as it would have been with an undivided portfolio and no
such sale and purchase had occurred, but the Fund will have incurred additional
costs. PIFM will consider these costs in determining the allocation of assets.
PIFM will consider the timing of reallocation based upon the best interests of a
Fund and its shareholders. To maintain a Fund's federal income tax status as a
regulated investment company, PIFM also may have to sell securities on a
periodic basis and the Fund could realize capital gains that would not have
otherwise occurred.
Below we provide additional information about the Amended Agreements
and the Existing Agreements.
EXISTING AGREEMENTS
The Funds are currently managed under Existing Agreements with PIFM, dated
as shown in the following table.
The material features of each Existing Agreement are similar to those of
the Amended Agreements except with respect to the provisions relating to the
Manager-of-Managers structure. The following table also shows the date that
each Fund's Existing Agreement was most recently renewed by its Board and
the date that each Existing Agreement was last approved by a vote of the
Fund's shareholders.
21
- ----------------------------------------------------------------------------------------------------------
FUND DATE OF CONTRACT DATE MOST RECENTLY SUBMITTED
WITH PIFM FOR SHAREHOLDER APPROVAL
- ----------------------------------------------------------------------------------------------------------
20/20 Focus
- ----------------------------------------------------------------------------------------------------------
Active Balanced
- ----------------------------------------------------------------------------------------------------------
Emerging Growth
- ----------------------------------------------------------------------------------------------------------
Equity Opportunity
- ----------------------------------------------------------------------------------------------------------
Financial Services
- ----------------------------------------------------------------------------------------------------------
Growth
- ----------------------------------------------------------------------------------------------------------
Health Sciences
- ----------------------------------------------------------------------------------------------------------
Natural Resources
- ----------------------------------------------------------------------------------------------------------
Small Company
- ----------------------------------------------------------------------------------------------------------
Stock Index
- ----------------------------------------------------------------------------------------------------------
Tax Equity
- ----------------------------------------------------------------------------------------------------------
Tax Small-Cap
- ----------------------------------------------------------------------------------------------------------
Technology
- ----------------------------------------------------------------------------------------------------------
Utility
- ----------------------------------------------------------------------------------------------------------
PIFM serves as manager to the Funds and to almost all of the other
investment companies that comprise the Prudential Mutual Funds As of September
30, 2000, PIFM managed and/or administered open-end and closed-end management
investment companies with assets of approximately $_____ billion.
PIFM is a wholly-owned subsidiary of PIFM HoldCo, Inc., which is a
wholly-owned subsidiary of Prudential Asset Management Holding Company, which is
a wholly-owned subsidiary of Prudential. The address of PIFM, PIFM HoldCo and
PAMHCO is Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102.
The address of Prudential is 751 Broad Street, Newark, New Jersey 07102.
22
The table below lists the name and principal occupation of the officer
in charge and the senior officers of PIFM. The address of each person is Gateway
Center Three, 100 Mulberry Street, Newark, NJ 07102-4077.
- ---------------------------------------------------------------------------------------------------------------------
NAME POSITION AND PRINCIPAL OCCUPATION
- ---------------------------------------------------------------------------------------------------------------------
David R. Odenath, Jr. Officer in Charge and President, Chief Executive Officer & Chief Operating
Officer
- ---------------------------------------------------------------------------------------------------------------------
Robert F. Gunia Executive Vice President & Chief Administrative Officer
- ---------------------------------------------------------------------------------------------------------------------
William V. Healey Executive Vice President, Chief Legal Officer & Secretary
- ---------------------------------------------------------------------------------------------------------------------
Theodore F. Kilkuskie Executive Vice President
- ---------------------------------------------------------------------------------------------------------------------
Judy A. Rice Executive Vice President
- ---------------------------------------------------------------------------------------------------------------------
Ajay Sawhney Executive Vice President
- ---------------------------------------------------------------------------------------------------------------------
Lynn M. Waldvogel Executive Vice President
- ---------------------------------------------------------------------------------------------------------------------
Shaun M. Byrnes Senior Vice President
- ---------------------------------------------------------------------------------------------------------------------
John L. Carter Senior Vice President
- ---------------------------------------------------------------------------------------------------------------------
Keith L. Kinne Senior Vice President
- ---------------------------------------------------------------------------------------------------------------------
James Novak Senior Vice President
- ---------------------------------------------------------------------------------------------------------------------
Kevin B. Osborn Senior Vice President
- ---------------------------------------------------------------------------------------------------------------------
Under the Existing Agreements, PIFM manages each Fund's investments and
determines the composition of the assets of each Fund's portfolio, including the
purchase, retention, or sale of the securities and cash contained in the
portfolios. PIFM (or PIC or Jennison under PIFM's supervision) is responsible
for the selection of brokers and dealers to effect all transactions, and is
authorized to pay higher commissions in order to receive research services.
Under the Existing Agreements, PIFM performs administrative services for each
Fund and furnishes each Fund with statistical information concerning its
investments. In general, each Fund bears its own expenses pursuant to the
appropriate Existing Agreement, although PIFM pays the salaries of its employees
who provide services to the Fund. For its services, PIFM is paid as compensation
the following amounts during each Fund's most recent fiscal year:
23
- -------------------------------------------------------------------------------------------------------------------
FUND TOTAL MANAGEMENT FEES AS % MANAGEMENT
OF AVERAGE NET ASSETS ADVISORY FEES
- -------------------------------------------------------------------------------------------------------------------
20/20 Focus 0.75% to $1 bil and $7,071,654
0.70% over $1 bil
- -------------------------------------------------------------------------------------------------------------------
Active Balanced 0.65% to $1 bil and $940,298
0.60% over $1 bil
- -------------------------------------------------------------------------------------------------------------------
Emerging Growth 0.60% to $1 bil and 0.55% $1,202,452
over 1 bil.
- -------------------------------------------------------------------------------------------------------------------
Equity Opportunity 0.60% to $300 mil and $849,053
0.575% over $300 mil
- -------------------------------------------------------------------------------------------------------------------
Financial Services 0.75% $302,913
- -------------------------------------------------------------------------------------------------------------------
Growth 0.60% to $300 mil $22,079,891
0.575% next $4.7 bil and
0.55% over $5 bil
- -------------------------------------------------------------------------------------------------------------------
Health Sciences 0.75% $488,906
- -------------------------------------------------------------------------------------------------------------------
Natural Resources 0.75% $575,291
- -------------------------------------------------------------------------------------------------------------------
Small Company 0.70% $6,749,959
- -------------------------------------------------------------------------------------------------------------------
Stock Index 0.30% $4,790,313
- -------------------------------------------------------------------------------------------------------------------
Tax Equity 0.65% to $500 mil and 0.60% $1,356,586
over $500 mil
- -------------------------------------------------------------------------------------------------------------------
Tax Small-Cap 0.60% $847,276
- -------------------------------------------------------------------------------------------------------------------
Technology 0.75% $631,240
- -------------------------------------------------------------------------------------------------------------------
Utility 0.60% to $250 mil $16,318,008
0.50% next $500 mil
0.45% next $750 mil
0.40% next $500 mil
0.35% next $2 billion
.325% next $2 bil.
0.30% over $6 bil.
- -------------------------------------------------------------------------------------------------------------------
AMENDED AGREEMENTS
Pursuant to the Existing Agreements, PIFM, subject to the
supervision of the Funds' Boards, and in conformity with the investment
policies and restrictions of the Funds, manages both the investment
operations of the Funds and the composition of the Funds' portfolios,
including the purchase, retention, disposition and loan of securities or
other assets. Under the Amended Agreements, PIFM may delegate the subadvisory
function to one or more than one subadviser. As discussed in Proposal No. 3
above, PIFM would like the ability to manage in a "manager-of-managers" style
in which PIFM would, among other things, (i) continually evaluate the
performance of the subadvisers to each Fund through qualitative and
quantitative analysis and consultations with each subadviser, (ii)
periodically make recommendations to the Fund's Board as to whether the
contract with one or more subadvisers should be renewed, modified or
terminated and (iii) periodically report to the Fund's Board regarding the
results of its evaluation and monitoring functions. Under the Amended
Agreement, PIFM must keep certain books and records of each Fund. PIFM also
would administer each Fund's business affairs and furnish appropriate office
facilities, together with ordinary clerical and bookkeeping services that are
not furnished by the Funds' custodian
24
and PMFS, the Funds' transfer and dividend disbursing agent. Officers and
employees of PIFM serve as officers and Directors or Trustees of the Funds
without compensation.
A model Amended Agreement under which PIFM would provide management
services to the Funds is attached as Exhibit G to this proxy statement. In
brief, the Amended Agreement provides that:
- - PIFM will administer a Fund's business affairs and supervise the Fund's
investments. PIFM may select and employ one or more subadvisers for a Fund,
who will have primary responsibility for determining what investments the
Fund will purchase, retain, and sell;
- - PIFM may reallocate a Fund's assets among subadvisers;
- - PIFM (or a subadviser, acting under PIFM's supervision) will select
brokers to effect trades for a Fund, and may pay a higher commission to a
broker that provides bona fide research services;
- - PIFM will pay the salaries and expenses of any employee or officer of a
Fund (other than the fees and expenses of the Fund's Independent
Directors). Otherwise, the Fund pays its own expenses; and
- - For each Fund, PIFM will be paid the same advisory fee as is currently
charged to each such Fund under the Existing Agreements.
MATTERS CONSIDERED BY THE BOARD
The proposal to present the Amended Agreements to shareholders was
approved by the Board of each Fund, including all of the Independent Directors,
on August 22, 2000. The Board received materials relating to the Amended
Agreements in advance of the meeting at which the Amended Agreements were
considered, and had the opportunity to ask questions and request further
information in connection with such consideration. The Board considered that
fees will not change and that the terms of the Amended Agreements were
substantially similar to the Existing Agreements, except that, under the Amended
Agreements, PIFM would be able to allocate Fund assets among subadvisers. The
Board also considered that it was beneficial to conform the advisory structure
of the Funds to the advisory structure already in place for other Prudential
Mutual Funds. After consideration of all these factors, each Board concluded
that adopting Proposal No. 4 is reasonable, fair and in the best interest of
each Fund and its shareholders.
REQUIRED VOTE
Approval of this Proposal as to a Fund requires the affirmative vote of
a majority of that Fund's outstanding voting securities, as defined in the 1940
Act.
EACH BOARD, INCLUDING ITS INDEPENDENT MEMBERS, RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL NO. 4.
25
TO APPROVE CHANGES TO FUNDAMENTAL INVESTMENT
RESTRICTIONS AND POLICIES
PROPOSAL NO. 2
RELEVANT FUNDS. Changes5
This Proposal Applies to fundamental investment restrictions and policies
are proposed for all Funds, except Allocation, Global Limited Maturity, Global
Government and Global Total Return. SomeAll of the proposed changes apply only to
certain Funds.
See "Proposed Changes" below for listingsBACKGROUND
The Board of each Fund has approved, and recommends that shareholders
of the Funds to which
each specific change applies.
REASONS FOR THE PROPOSED CHANGES. Pursuant toFund approve, the Investment Company Act,
eachamendment of the Funds has adopted certain fundamental investment
restrictions and policies (fundamental restrictions), which are set forth inof the Fund.
Each Fund has adopted fundamental investment restrictions and policies
regarding the management of the Fund's prospectus or statementinvestments. The designation of additional information,these
restrictions and maypolicies as "fundamental" means that they cannot be changed
only with
9
Shareholderwithout shareholder approval. RestrictionsYou are being asked to approve changes to your
Fund's fundamental investment restrictions and policies that a Fund has not specifically
designated as being fundamental are considered to be "non-fundamental" and may
be changed byin order to: (a) provide
the Fund's Board without Shareholder approval.
CertainManager and Subadviser(s) with additional flexibility to pursue the
Fund's investment objective; (b) allow the Fund to implement certain investment
programs that may help the Fund to achieve economies of the fundamentalscale by participating
in transactions with other Prudential Mutual Funds, such as joint investment in
affiliated investment companies and an inter-fund lending program; and (c)
eliminate investment restrictions that the Funds have adopted in the
past reflect regulatory, business or industry conditions, practices or
requirementswere imposed by state regulators that are
no longer required or that were imposed years ago, but do not support the
Manager's and Subadviser's current strategy to pursue your Fund's investment
objective.
The Funds have similar, although not identical, fundamental investment
restrictions. Some of the differences are due to the Funds' different investment
objectives. Other differences are due to historical evolution. We would like to
realign the Funds' limits by establishing uniform fundamental investment
restrictions, while achieving the goals described above. Consistency among the
Funds' fundamental investment restrictions should also facilitate the management
of the Funds since the Funds' Manager is expected to be better able to monitor
compliance of the Funds if they have uniform investment restrictions.
The 1940 Act requires a mutual fund to disclose, in effect. Otherits registration
statement, its policy with respect to each of the following:
- diversification
- issuing senior securities
- borrowing money, including the purpose for which the proceeds will
be used
- underwriting securities of other issuers
- concentrating investments in a particular industry or group of
industries
- purchasing or selling real estate or commodities
- making loans
In addition to the above items, a mutual fund is free to designate as
"fundamental," investment policies concerning other investment practices. Each
Fund's Statement of Additional Information currently sets out fundamental
restrictions reflect regulatory requirements which remain in effect, but are not requiredwith respect to, among other things, the specific practices listed
above. As discussed below, the Board of each Fund recommends that some of those
restrictions be stated as fundamental, or in some cases even as non-fundamental,
restrictions. Also, as new Funds have been created over a period of years,
substantially similar fundamental restrictions often have been phrased in
slightly different ways, which could result in minor but unintended differences
in effect or potentially give rise to unintended differences in interpretation.
Accordingly, the Boards have approved revisions to their respective Funds'
fundamental restrictions in order to simplify, modernize and make more uniform
those investment restrictions that are required to be fundamental, and to
eliminate certain fundamental restrictions that are not legally required. In
certain instances, existing fundamental restrictions that are eliminated because
they are not required to be fundamental would be re-classified as
non-fundamental restrictions, in which event they could be further modified by
the Board.amended.
26
SPECIFIC RECOMMENDATIONS
The Board of each Fund believes thathas approved the proposed changes to theadoption of a uniform set of
fundamental investment restrictions. Each Fund's current fundamental investment
restrictions will enhance management's ability to manage efficiently
and effectively theappear in your Fund's assets in changing regulatory and investment
environments.Statement of Additional Information. In
addition by reducing to a minimum those policies that can be
changed only by Shareholder vote, each Fundvariations among Funds arising from their historical development,
there are also, and will more often be able to avoid the
cost and delays of a Shareholder meeting when making changes to investment
policies that, at a future time, its Board considers desirable. Although the
proposed changes in fundamental restrictions will allow the Funds greater
investment flexibility to respond to future investment opportunities, the Boards
do not anticipate at this time that the changes, individually or in the
aggregate, will result in a major restructuring of any Fund's investment
portfolio.
A summary description of each proposed change to the Funds' fundamental
restrictions is set forth below. Shareholders should refer to Exhibit E to this
proxy statement for the text of the Funds' fundamental restrictions as proposedcontinue to be, amended.
The text below also describes those non-fundamental restrictions that would
be adopted by the Boards in conjunction with the elimination of certain
fundamental restrictions under Proposal No. 2. Any non-fundamental restriction
may be modified or eliminated by the appropriate Board at any future date
without any further approval of Shareholders.
If the proposed changes are approved by Shareholders of the respective Funds
at the Meeting, the Funds' prospectuses and statements of additional information
will be revised, as appropriate, to reflect those changes. This will occur as
soon as practicable following the Meetings. In those cases in whichdifferences resulting from a Fund's
practice has been to state its fundamental restrictions both in its prospectus
(as affirmative policies) and in its statement of additional information (as
restrictions), adoption of Proposal No. 2 will result in a change to both.
Proposal No. 2 will not result in a change to any Fund's
investment objective, even thoughits operation as a non-diversified Fund or its intention
to concentrate its investments in a specific industry or group of industries.
Exhibit H provides a list of your Fund's current fundamental investment
restrictions, the objectiveproposed revisions to each restriction and an explanation of
the impact of the change.
The proposed uniform fundamental investment restrictions are as follows
(the italicized information disclosed in brackets is explanatory and is not
part of the restrictions):
The following restrictions are fundamental policies.
Fundamental policies are those that cannot be changed without the
approval of the holders of a fundamental policy,majority of the Fund's outstanding voting
securities. The term "majority of the Fund's outstanding voting
securities" means the vote of the lesser of (i) 67% or more of the
voting shares of the Fund represented at a meeting at which more than
50% of the outstanding voting shares of the Fund are present in person
or represented by proxy, or (ii) more than 50% of outstanding voting
shares of the Fund.
The Fund may not:
(1) Purchase the securities of any issuer if, as a result, the Fund
would fail to be a diversified company within the meaning of the 1940
Act, and the rules and regulations promulgated thereunder, as each may
be amended from time to time except to the extent that the Fund may be
permitted to do so by exemptive order, SEC release, no-action letter or
similar relief or interpretations (collectively, the "1940 Act Laws,
Interpretations amd Exemptions") [THIS RESTRICTION IS NOT APPLICABLE TO
THE FOLLOWING FUNDS THAT ARE CLASSIFIED AS NON-DIVERSIFIED:20/20 FOCUS,
FINANCIAL SERVICES, HEALTH SCIENCES AND TECHNOLOGY]
(2) Issue senior securities or borrow money or pledge its assets,
except as permitted by the 1940 Act Laws, Interpretations and
Exemptions. For purposes of this restriction, the purchase or sale of
securities on a when-issued or delayed delivery basis, reverse
repurchase agreements, dollar rolls, short sales, derivative and
hedging transactions, including, without limitation, interest rate swap
transactions, and collateral arrangements with respect thereto, and
transactions similar to Prudential Utility Fund.
PROPOSED CHANGES. The following is the text and a summary descriptionany of the proposed changesforegoing and collateral
arrangements with respect thereto, and obligations of the Fund to
[Directors/Trustees] pursuant to deferred compensation arrangements are
not deemed to be a pledge of assets or the issuance of a senior
security.
(3) Buy or sell real estate, except that investment in securities of
issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported or
secured by interests in real estate are not subject to this limitation,
and except that the Fund may exercise rights relating to such
securities, including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner.
(4) Buy or sell physical commodities or contracts involving physical
commodities. The Fund may purchase and sell (i) derivative,
hedging and similar instruments, including, without limitation,
financial futures contracts and options thereon, and (ii) securities or
instruments backed by, or the return from which is linked to, physical
commodities or currencies, including, without limitation, forward
currency exchange contracts, and the Fund may exercise rights relating
to such instruments, including the right to enforce security interests
and to hold physical commodities and contracts involving physical
commodities acquired as a result of the Fund's ownership of
instruments supported or secured thereby until they can be liquidated
in an orderly manner.
27
(5) Purchase any security if as a result more than 25% of the Fund's
total assets would be invested in the securities of issuers having
their principal business activities in the same industry, except for
temporary defensive purposes, and except that this limitation does not
apply to securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities. [THIS RESTRICTION IS NOT APPLICABLE TO
THE FOLLOWING FUNDS THAT CONCENTRATE IN A SINGLE INDUSTRY OR GROUP OF
INDUSTRIES: FINANCIAL SERVICES, HEALTH SCIENCES, NATURAL RESOURCES,
TECHNOLOGY AND UTILITY; A FUND THAT DOES CONCENTRATE ITS INVESTMENT IN
A SINGLE INDUSTRY OR GROUP OF INDUSTRIES AFFIRMATIVELY STATES ITS
INTENTION TO CONCENTRATE IN ITS PROSPECTUS.]
(6) Act as underwriter except to the Funds' fundamental restrictions, together with the
text of those non-fundamental restrictionsextent that, would be adopted in connection with
the eliminationdisposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
The Fund may make loans, including loans of assets of the
Funds' current fundamental restrictions.
WithFund, repurchase agreements, trade claims, loan participations or
similar investments, or as permitted by the 1940 Act Laws,
Interpretations and Exemptions. The acquisition of bonds, debentures,
other debt securities or instruments, or participations or other
interests therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or instruments
similar to any of the foregoing will not be considered the making of a
loan, and is permitted if consistent with the Fund's investment
objective.
For purposes of Investment Restriction 1, the Fund will
currently not purchase any security (other than obligations of the
U.S. government, its agencies or instrumentalities) if as a result,
with respect to each Fund and each proposed fundamental restriction, if a
percentage restriction is adhered
10
to75% of the Fund's total assets, (i) more than 5% of
the Fund's total assets (determined at the time of aninvestment) would
be invested in securities of a single issuer and (ii) the Fund would
own more than 10% of the outstanding voting securities of any single
issuer.
For purposes of Investment Restriction 5, the Fund relies on
[The North American Industry Classification System published by the
Bureau of Economic Analysis, U.S. Department of Commerce], in
determining industry classification. The Fund's reliance on this
classification system is not a fundamental policy of the Fund and,
therefore, can be changed without shareholder approval.
Whenever any fundamental investment policy or transaction,investment
restriction states a maximum percentage of the Fund's assets, it is
intended that, if the percentage limitation is met at the time the
investment is made, a later increase or decreasechange in percentage resulting from
a change in thechanging total asset values of the Fund's portfolio
securities or the amount of its total assets will not be considered a violation of such
policy. However, if the fundamental restriction.
ITEM NO. APPLICABLE FUND(S)
- ------------ --------------------------------------------------------------------------------
Item 2(a) Equity Income, Small Companies
Item 2(b) Equity, Equity Income, Intermediate Global, Jennison, Small Companies
Item 2(c) Equity, Multi-Sector
Item 2(d) Small Companies
Item 2(e) Small Companies
Item 2(f) Utility
ITEM 2(A). APPROVAL OF AMENDMENTS OF THE FUNDS' FUNDAMENTAL INVESTMENT
RESTRICTIONS REGARDING INVESTMENT IN SHARES OF OTHER INVESTMENT
COMPANIES.
PROPOSED CHANGES. The relevant Funds affectedFund's asset coverage for borrowings permitted
by this item 2(a) are listed
below. Next toInvestment Restriction 2 falls below 300%, the Fund name iswill take
prompt action to reduce its borrowings, as required by the respective investment restriction number
which is proposed to be eliminated. The language1940 Act
Laws, Interpretations and Exemptions.
PROPOSAL 5(a): FUND DIVERSIFICATION (ALL FUNDS EXCEPT: 20/20 FOCUS, FINANCIAL
SERVICES, HEALTH SCIENCES, AND TECHNOLOGY).
Most of the current investment
restrictionFunds are operated as well as the modified investment restriction is found in Exhibit
E.
RELEVANT FUNDS.
EXISTING INVESTMENT
RESTRICTION NUMBER
FUND NAME (SEE EXHIBIT E)
- -------------------------------------------------------------------------- ---------------------
Prudential Equity Income Fund............................................. #11
Prudential Small Companies Fund, Inc...................................... #8
Upon the approval of Item 2(a), the existing fundamental restriction
regarding the purchase of shares ofdiversified investment companies
will be modified sounder the 1940 Act. In general, this means that, the applicable Funds will be permitted to invest a larger portion of their
assets in securities of investment companies.
DISCUSSION: Withwith respect to each75% of the
value of the Fund's fundamental investment restriction
relating to investingtotal assets, the Fund invests in sharescash, cash items,
obligations of the U.S. government, its agencies or instrumentalities,
securities of other investment companies and other securities. The "other
securities" are subject to the increase in
the limit is designed to make the limitation co-extensive with the limitation of
the Investment Company Act which permits a fund to invest up to 10% of its total
assets in the shares of other investment companies in the aggregate (with the
restrictionsadditional requirement that (i) a fund may invest nonot more than 5% of
its total assets will be invested in any one investment companythe securities of a single issuer and (ii) a fund maythat the
Fund will not ownhold more than 3%10% of the totalthat issuer's outstanding voting stock of any one investment company).securities.
The Boards believe the proposed amendment would provide the Subadviser with additional flexibility to
take advantage of investment opportunities. However, because any shares thatrestrict a Fund holds in anotherthat is operated as a
diversified investment company will be subject tofrom purchasing the management fees
and expenses of such investment company, investment by a Fund in other
investment companies may result, in effect, in payment by shareholders of
duplicate fees and expenses. See Exhibit E.
ITEM 2(B). APPROVAL OF AMENDMENTS OF THE FUNDS' FUNDAMENTAL INVESTMENT
RESTRICTIONS REGARDING THE PURCHASE OF SECURITIES OF ISSUERS IN
BUSINESS FOR LESS THAN THREE YEARS.
PROPOSED CHANGES. The relevant Funds affected by this item 2(b)are listed
below. Next to the Fund name is the respective investment restriction number
which is proposed to be eliminated. The language of the investment restriction
is found in Exhibit E.
RELEVANT FUNDS.
EXISTING INVESTMENT
RESTRICTION NUMBER
FUND NAME (SEE EXHIBIT E)
- -------------------------------------------------------------------------- -----------------------
Prudential Equity Fund, Inc............................................... #6
Prudential Equity Income Fund............................................. #6
Prudential Intermediate Global Income Fund, Inc........................... #2
Prudential Jennison Fund, Inc............................................. #5
Prudential Small Companies Fund, Inc...................................... #4
11
Upon the approval of Item No. 2(b), the existing fundamental restriction
regarding the purchase of securities of issuers in business for less than three
years would be eliminated. The Funds would in turn become subject to the
following non-fundamental restriction:
The Fund may not:
"Purchase any securityissuer if,
as a result, the Fund would then havefail to be a diversified company within the meaning
of the 1940 Act Laws, Interpretations and Exemptions, as they may be amended
from time to time, except to the extent that the Fund may be permitted to do so
by exemptive order or similar relief. The restriction is accompanied by a note
that explains what the 1940 Act currently requires for the Fund to be
"diversified." The
28
Fund would, however, be free to amend that note if applicable laws are amended
or the Fund receives an exemption from the requirements imposed by applicable
law.
RECOMMENDATION: To provide flexibility as laws change or relief is
obtained from the SEC or its Staff, while also requiring the Fund to comply with
the currently applicable definition of a "diversified" investment company, the
Board of each applicable Fund recommends that shareholders adopt the following
as a fundamental investment restriction:
The Fund may not:
Purchase the securities of any issuer if, as a result, the
Fund would fail to be a diversified company within the meaning
of the 1940 Act, and the rules and regulations promulgated
thereunder, as each may be amended from time to time, except
to the extent that the Fund may be permitted to do so by
exemptive order, SEC release, no-action letter or similar
relief or interpretations (collectively, the "1940 Act Laws,
Interpretations and Exemptions"). [THIS RESTRICTION IS NOT
APPLICABLE TO THE FOLLOWING FUNDS THAT ARE CLASSIFIED AS
NON-DIVERSIFIED: 20/20 FOCUS, FINANCIAL SERVICES, HEALTH
SCIENCES AND TECHNOLOGY]
The following note accompanies this investment restriction:
For purposes of Investment Restriction 1, the Fund will
currently not purchase any security (other than obligations of
the U.S. government, its agencies or instrumentalities) if as
a result, with respect to 75% of the Fund's total assets, (i)
more than 5% of itsthe Fund's total assets (determined at the
time of the
investment) would be invested in securities of a
single issuer and (ii) the Fund would own more than 10% of the
outstanding voting securities of any single issuer.
UTILITY FUND AND NATURAL RESOURCES FUND
Both Utility Fund and Natural Resources Fund are currently operated
as diversified funds, meaning that, the Funds cannot, as to 75% of their
assets, invest more than 5% of their assets in the securities of any one
issuer. The respective Boards approved a proposal to change the Funds from
being diversified to non-diversified and recommend that shareholders approve
the changes for each Fund. Jennison would then be able to invest more than 5%
of the Fund's total assets in the securities of any one issuer. For Utility
Fund, since the Fund concentrates in the securities of utilities companies
(including
predecessors)(which include telecommunications companies, among others), the change will
permit the portfolio managers to invest in a more concentrated manner in
these sectors. Similarly, for Natural Resources Fund, the investment adviser
has found that a large portion of the Fund's assets are invested in a small
number of natural resource companies. Within the Fund's diversification
constraints, the investment adviser cannot further invest in favored
companies.
Investing in a non-diversified fund involves greater risk than
investing in a diversified mutual fund because a loss resulting from the decline
in value of one security may represent a greater portion of the total assets of
a non-diversified fund.
Approval of this proposal also requires the affirmative vote of a
majority of the Fund's outstanding securities, as defined in the 1940 Act. If
you approve Proposal No. 5(a) as to Utility and Natural Resources Fund, you
will approve the proposal to make each Fund non-diversified.
PROPOSAL 5(b): ISSUING SENIOR SECURITIES, BORROWING MONEY OR PLEDGING ASSETS
(ALL FUNDS)
All of the Funds are permitted to borrow money and pledge assets to
secure such borrowings. However, the amount that may be borrowed, the purposes
for which borrowings may be made, and the amount of securities that may be
pledged vary among the Funds.
The proposed amendment would allow each Fund to borrow money and pledge
its assets to secure such borrowings to the extent permitted by the 1940 Act
Laws, Rules and Exemptions. The restriction is accompanied by a note stating
that if asset coverage for a borrowing falls below 300%, the Fund will take
prompt action to reduce its borrowings. This note is to reflect the current
requirement that the Fund limit borrowing to one-third of its total assets.
However, a Fund would be free to amend its borrowing limitations if applicable
laws change or the Fund receives an exemption from the requirements imposed by
applicable law. No Fund currently has pending or currently proposes to file a
request for exemptive relief to permit it to borrow with an asset coverage ratio
of less than three years old,300%. Moreover, there can be no assurance that the SEC Staff would
grant exemptive or similar relief if requested.
Keep in mind that borrowing money and pledging assets are not integral
parts of your Fund's investment program. Under the proposed investment
restriction, the Fund could borrow money for temporary, extraordinary or
emergency purposes or for the clearance of transactions and to take advantage of
investment opportunities. In the future, the Fund may seek to obtain an
exemptive order from the SEC to allow the Fund to lend and borrow money from
other Prudential Mutual Funds. If the Fund requests and obtains such relief, the
borrowing Fund may be able to reduce the cost of borrowing money and the lending
Fund may be able to generate interest income. The proposed investment
restriction could, if adopted, provide each Fund with flexibility in adopting an
inter-fund lending program if an exemptive order is obtained from the SEC,
receipt of which cannot be assured.
RISKS: If a Fund borrows money to invest in securities and the
investment performance of the additional securities purchased fails to cover
their cost (including any interest paid on the money borrowed), the net asset
value of the Fund's shares will decrease faster than would otherwise be the
case. This is the speculative factor known as
29
"leverage." In order to reduce the risk presented by leverage, each of the Funds
intends to not purchase portfolio securities when borrowings exceed 5% of the
value of its total assets. This policy may be changed by the Directors.
If the Fund's asset coverage should decline as a result of market
fluctuations or other reasons, the Fund may be required to sell portfolio
securities to reduce the debt and restore the 300% asset coverage, even though
it may be disadvantageous from an investment standpoint to sell securities at
that time.
RECOMMENDATION: To provide flexibility as laws change or relief may be
obtained from the SEC or its Staff, while also requiring the Fund to comply with
currently applicable restrictions on issuing senior securities, borrowing money
and pledging assets, the Board of each Fund recommends that shareholders adopt
the following as a fundamental investment restriction:
The Fund may not:
Issue senior securities or borrow money or pledge its assets,
except as permitted by the 1940 Act Laws, Interpretations and
Exemptions. For purposes of this restriction, the purchase or
sale of securities on a when-issued or delayed delivery basis,
reverse repurchase agreements, short sales, derivative and
hedging transactions, including, without limitation, interest
rate swap transactions, and collateral arrangements with
respect thereto, and transactions similar to any of the
foregoing and collateral arrangements with respect thereto,
and obligations of the Fund to [Directors/Trustees] pursuant
to deferred compensation arrangements are not deemed to be a
pledge of assets or the issuance of a senior security.
The following note accompanies this investment restriction:
[I]f the Fund's asset coverage for borrowings permitted by
Investment Restriction 2, above, falls below 300%, the Fund
will take prompt action to reduce its borrowings, as required
by the 1940 Act Laws, Interpretations and Exemptions.
PROPOSAL 5(c): BUYING AND SELLING REAL ESTATE (ALL FUNDS)
None of the Funds is permitted to buy or sell real estate. However,
most of the Funds are permitted to invest in the securities of companies that
invest in real estate or to invest in mortgage-backed securities, mortgage
participations or other instruments supported by interests in real estate.
The proposed investment restriction confirms that each Fund may not buy
or sell real estate. The restriction also clarifies that each Fund may make
investments in securities that are real estate-related, as described in the
restriction. In addition, the amended investment restriction allows a Fund that
holds real estate due to the enforcement of rights under an agreement or a
security interest (not through a purchase of the real estate) to hold the real
estate until it can be sold in an orderly manner.
RISKS: The performance of real estate-related securities depends upon
the strength of the real estate market and property management. Thus, investment
performance can be affected by national and regional economic conditions, as
well as other factors. These factors can have a more pronounced impact on
performance than investments in other securities.
RECOMMENDATION: To clarify the Fund's investment restriction with
respect to investments in real estate-related securities, the Board of each Fund
recommends that shareholders adopt the following as a fundamental investment
restriction:
The Fund may not:
Buy or sell real estate, except that investment in securities
of issuers that invest in real estate and investments in
mortgage-backed securities, mortgage participations or other
instruments supported or secured by interests in real estate
are not subject to this limitation, and except that the Fund
may exercise rights relating to such securities,
30
including the right to enforce security interests and to hold
real estate acquired by reason of such enforcement until that
real estate can be liquidated in an orderly manner.
PROPOSAL 5(d): BUYING AND SELLING COMMODITIES AND COMMODITY CONTRACTS (ALL
FUNDS)
None of the Funds is permitted to buy or sell commodities or commodity
contracts. Many of the Funds are permitted to invest in financial futures
contracts and options on financial futures contracts, which are not viewed as
commodity contracts for purposes of the fundamental restriction.
The proposed investment restriction confirms that each Fund may not buy
or sell commodities or commodity contracts. The restriction also clarifies that
a Fund's investment in financial futures contracts and options on financial
futures contracts is not subject to the restriction applicable to commodity
contracts. If your Fund intends to utilize financial futures contracts and
options on financial futures contracts, a description of these instruments will
appear in the Fund's Prospectus or Statement of Additional Information.
RISKS: Financial futures contracts and options on financial futures
contracts may be used by a Fund as a hedging device or, in some circumstances,
for speculation. Due to imperfect correlation between the price of futures
contracts and movements in a currency or a group of currencies, the price of a
futures contract may move more or less than the price of the currency or
currencies being hedged. The use of these instruments will hedge only the
currency risks associated with investments in foreign securities, not market
risk. In the case of futures contracts on securities indices or a security, the
correlation between the price of the futures contract and the movement of the
index or security may not be perfect. Therefore, a correct forecast of currency
rates, market trends or international political trends by your Fund's investment
adviser may still not result in a successful hedging transaction.
In addition, a Fund's ability to establish and close out positions in
futures contracts and options on futures contracts will be subject to the
development and maintenance of liquid markets. There is no assurance that a
liquid market on an exchange will exist for any particular futures contract or
option on a particular futures contract. If no liquid market exists for a
particular futures contract or option of a futures contract in which a Fund
invests, it will not be possible to effect a closing transaction in that
contract or to do so at a satisfactory price and the Fund would have to either
make or take delivery under the futures contract or, in the case of a written
option, wait to sell the underlying securities until the option expires or is
exercised or, in the case of a purchased option, exercise the option.
Successful use of futures contracts and options on futures contracts by
a Fund is subject to the ability of an investment adviser to predict correctly
movements in the direction of interest and foreign currency rates and the market
generally. If the investment adviser's expectations are not met, the Fund would
be in a worse position than if the strategy had not been pursued.
RECOMMENDATION: In order to provide uniformity among the Funds'
restriction applicable to investments in commodities and commodity contracts,
the Board of each Fund recommends that shareholders adopt the following as a
fundamental investment restriction:
The Fund may not:
Buy or sell physical commodities or contracts involving
physical commodities. The Fund may purchase and sell (i)
derivative, hedging and similar instruments, including,
without limitation, financial futures contracts and options
thereon, and (ii) securities or instruments backed by, or
the return from which is linked to, physical commodities or
currencies, including, without limitation, forward currency
exchange contracts, and except that the Fund may exercise
rights relating to such instruments, including the right to
enforce security interests and to hold physical commodities
and contracts involving physical commodities acquired as a
result of the Fund's ownership of instruments supported or
secured thereby until they can be liquidated in an orderly
manner.
31
PROPOSAL 5(e): FUND CONCENTRATION (ALL FUNDS EXCEPT: FINANCIAL SERVICES, HEALTH
SCIENCES, NATURAL RESOURCES, TECHNOLOGY AND UTILITY.)
Most of the Funds invest their portfolios to avoid "concentration" in a
particular industry or group of industries. The 1940 Act requires that a mutual
fund recite its policy regarding concentration. If a Fund has a policy not to
concentrate, this means that, except for temporary defensive purposes, no more
than 25% of the Fund's total assets will be invested in the securities of
issuers having their principal business activities in the same industry. This
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
The proposed amendment is not intended to change any U.S. Government agencyFund's policy
regarding concentration, but to provide uniformity in disclosure of the policy
among those Funds having a policy not to concentrate their investments.
RISKS: Although the Funds do not concentrate their investment in a
particular industry or instrumentality,group of industries, they may, for temporary defensive
purposes, do so. If this occurs, a Fund would, on a temporary basis, be subject
to risks that may be unique or pronounced relating to a particular industry or
group of industries. These risks could include greater sensitivity to
inflationary pressures or supply and indemand for a particular product or service.
RECOMMENDATION: The Board of each applicable Fund recommends that
shareholders adopt the following as a fundamental investment restriction:
The Fund may not:
Purchase any security if as a result more than 25% of the
Fund's total assets would be invested in the securities of
issuers having their principal business activities in the same
industry, except for temporary defensive purposes, and except
that this limitation does not apply to securities issued or
guaranteed by suchthe U.S. government, its agencies or
instrumentalities.
PROPOSAL 5(f): ENGAGING IN UNDERWRITING (ALL FUNDS)
None of the Funds may act as an agency
or instrumentality."
DISCUSSION: With respect"underwriter" of securities, except to
the extent that a Fund may be deemed to be an underwriter under federal
securities laws when it disposes of certain securities held in its investment
portfolio.
The proposed amendment is not intended to change any Fund's policy
regarding underwriting activity, but to provide uniformity in disclosure of the
policy among the Funds.
RECOMMENDATION: The Board of each Fund'sFund recommends that shareholders
adopt the following as a fundamental investment restriction
relatingrestriction:
The Fund may not:
Act as underwriter except to investingthe extent that, in "unseasonedconnection
with the disposition of portfolio securities, it may be deemed
to be an underwriter under certain federal securities laws.
PROPOSAL 5(g): MAKING LOANS (ALL FUNDS)
The Funds currently lend money and assets in limited situations. The
Funds may, for example, purchase certain debt securities of governments,
corporate issuers" such restriction was initially
placed or banks, as described in each Fund's current registration
statement dueand the proposed investment restriction.
Each Fund also may engage in repurchase agreement transactions, where
the Fund purchases securities from a broker or bank with an agreement by the
seller to state law ("blue sky")
requirements. The restrictionrepurchase the securities at an agreed upon price at an agreed upon
time. These transactions allow the Fund to invest its cash to generate income,
usually on a short-term basis, while maintaining liquidity to honor its
redemption obligations. Generating portfolio income through
32
investment in repurchase agreements is not required underan integral part of your Fund's
investment program. A Fund would engage in these transactions primarily to keep
its cash fully invested, but available to meet redemption requests.
The Funds have established a securities lending program where they use
a securities lending agent to locate institutions that, on a temporary basis,
seek to hold certain securities that are owned by a Fund. In these transactions,
a Fund transfers its ownership interest in a security with the federal securities laws.
The Subadviser believes thatright to receive
income from the restriction is confiningborrower and has recommendedthe right to have the Boards that it be eliminated. The Boards believe it prudent to delete this
investment restriction as fundamental and permit the Boards the flexibility to
relax the restriction if legislative or regulatory changes so permit.
ITEM 2(C). APPROVAL OF AMENDMENTS TO THE FUNDS' INVESTMENT RESTRICTION RELATING
TO SECURITIES LENDING.
PROPOSED CHANGES. The relevant Funds affected by this item are listed
below. Nextsecurity returned to the Fund
nameon short notice, for example, to enable the Fund to vote the securities.
Securities lending allows a Fund to generate income on portfolio securities to
enhance the Fund's returns.
In recognition of the fact that the Funds do make loans of assets,
the revised investment policy is the respective investment restriction number
which is proposedintended to be modified. The language ofeliminate the current investment
restriction as well as the modified investment restriction is found in Exhibit
E.
RELEVANT FUNDS.
EXISTING INVESTMENT
RESTRICTION NUMBER
FUND NAME (SEE EXHIBIT E)
- -------------------------------------------------------------------------- ---------------------
Prudential Equity Fund, Inc............................................... #12
Prudential Multi-Sector Fund, Inc......................................... #13
DISCUSSION: Currently,restriction. The new disclosure more accurately describes the Funds' lending
activities and plans to make loans of assets in the future. The new policy
would not prevent a Fund's purchase of debt securities, including investments
in government securities, corporate debt securities, and certain bank
obligations. The new investment restrictions limitpolicy would also allow a Fund to engage in
repurchase agreement transactions and securities lending without these
activities being deemed prohibited loans.
RISKS: Where a Fund engages in securities lending, it assumes a risk
that a borrower fails to maintain the permissiblerequired amount of loans of portfolio securitiescollateral.
The Fund or its lending agent would be required to 10% of each Fund's total
assets. The Prudential Investment Corporation, Subadviser to each Fund, has
recommended, andpursue the Boards have approved, that a change be made to increaseborrower for any
excess replacement cost over the percentage of portfolio securities that the Funds may lend to 30%, subject to
shareholder approval.
Securities lending is a strategy commonly used to enhance the returns of
mutual funds. The Subadviser believes that somevalue of the most profitable
opportunities for securities lending currently exist in the global equity
markets, where there is generally less competition and sophistication, thereby
creating opportunities for wider lending spreads. The Manager and Subadviser
therefore believe that an increase in the currently allowable percentage of
securities lending to 30% of total assets may potentially permit the Funds to
generate higher incremental returns to shareholders. Each Fund is currently
subject to the risks of securities lending and, if the proposal is approved, may
subject a larger portion of Fund assets to such risks.collateral. As with any lending
arrangement,extensions
of credit, there are risks of delay in recovery and in some cases loss of rights
in the collateral shouldif the borrower of the securities failfails financially. There are additionalTo
mitigate these risks, with respecteach Fund's investment adviser makes loans of portfolio
securities only to international lending. Although the
Subadviser believesfirms determined to be creditworthy.
In repurchase agreement transactions, a seller of a security agrees to
repurchase that soon after entering into the securities lending
transaction most collateral will be transferred to a Fund's domestic custodian,
should collateral be maintained by a foreign subcustodian, there could be
additional delays in recovering such collateral. Further, shouldsecurity from a Fund have
difficultyat a mutually agreed-upon time and price.
The repurchase price is in recoveringexcess of the purchase price, reflecting an
agreed-upon rate of return effective for the period of time the Fund's money is
invested in the transaction. If a seller fails to repurchase securities that are called,as
required by its agreement with the Fund and the value of the collateral securing
the repurchase agreement declines, the Fund may lose money. To address this
risk, each Fund's investment adviser enters into repurchase agreements only with
firms determined to be creditworthy.
RECOMMENDATION: In order to provide uniformity among the Funds' policy
applicable to making loans, including allowing the Funds to implement their
securities lending program as described above, the Board of each Fund recommends
that shareholders adopt the following as a fundamental investment policy:
The Fund may make loans, including loans of assets of the
Fund, repurchase agreements, trade claims, loan participations
or similar investments, or as permitted by the 1940 Act Laws,
Interpretations and Exemptions. The acquisition of bonds,
debentures, other debt securities or instruments, or
participations or other interests therein and investments in
government obligations, commercial paper, certificates of
deposit, bankers' acceptances or instruments similar to any of
the foregoing is not considered the making of a loan, and is
permitted if consistent with the Fund's investment objective.
PROPOSAL 5(h): OTHER INVESTMENT RESTRICTIONS
Some of the Funds have adopted additional fundamental investment
restrictions. Some of these investment restrictions were required to buybe
designated as fundamental by state securities laws. These state securities laws
have since been repealed or are otherwise no longer applicable to the same securities atFunds.
To provide maximum flexibility in managing the Funds and uniformity in
the restrictions applicable to the Funds, the Board of each Fund proposes that
all investment restrictions and policies of each Fund, other than those listed
in Proposals 5(a) through 5(g) be designated as non-fundamental. This means that
each such investment restriction or policy could be changed without shareholder
approval, although shareholders would be informed of any material change to any
non-fundamental restriction or policy prior to the change.
Among the investment restrictions that would be designated as
non-fundamental if Proposal 5(h) is approved is your Fund's limitation regarding
investment in other mutual funds. The Funds have obtained an exemptive order
from the SEC that allows each Fund to invest up to 25% of its assets in shares
of an affiliated
33
mutual fund. Such investment would be made to facilitate your Fund's
investment of its cash and short-term investments. The ability to invest in
an affiliated mutual fund should allow each Fund to reduce the administrative
burdens and costs associated with investing in money market price to cover its delivery obligations.
ITEM 2(D). APPROVAL OF AN AMENDMENT OF THE FUND'S INVESTMENT POLICIES TO PERMIT
THE FUND TO PURCHASE AND SELL OPTIONS ON STOCK AND STOCK INDICES IN
THE OVER-THE-COUNTER MARKET.
PROPOSED CHANGE. The Small Companiesinstruments and
short-term debt securities. Each Fund would be permitted to purchase
and sell over-the-counter options on stocks and options on stock indices.
12
RELEVANT FUND. Prudential Small Companies Fund, Inc.
DISCUSSION: Currently, the Fund is permitted to purchase and write (I.E.,
sell) put and call options on equity securities that are traded on securities
exchanges or stock indices that are traded on national securities exchanges or
listed on NASDAQ (listed options). At a meeting held on May 8, 1996, the Board
authorized the Fund, subject to shareholder approval, to purchase and sell
over-the-counter stock options and options on indices (OTC options). If
shareholders approve the current proposal, no further approval will be requested
of shareholdersinvest in an
affiliated mutual fund only if market conditions, developments in investment strategies or
available options, listed or over-the-counter, warrant in the Board's view
changes in the Fund's policies or practices in respect of options on securities
or indices.
The Fund intends to use OTC options for the same purposes for which it
currently uses, or considers for use, listed options, namely, to reduce certain
risks of its investments and to attempt to enhance return, but not for
speculation. The Board of Directors believes that the ability to purchase and
sell OTC options expands the investment tools available tois consistent with the Fund's
investment adviserobjective and will benefitstrategy. Currently, each Fund is subject to a
fundamental or non-fundamental investment restriction that limits its
investment to mutual funds that are purchased in the Fund. Accordingly, the Board recommends that
shareholders of the Fund approve the amendment.
GENERAL. Most of the investment characteristics of OTC options are similar
to those of listed options, although there are some significant differences. A
brief summary of the common characteristics of OTCopen market and listed options follows,
after which there is a discussion of the principal differences.
OPTIONS ON STOCK. A call option is a short-term contract pursuant to which
the purchaser, in return for a premium paid, has the right to buy the security
underlying the option at a specified exercise price. The writer of the call
option, who receives the premium, has the obligation, upon exercise of the
option, to deliver the underlying security against payment of the exercise
price. A put option is a similar contract which gives the purchaser, in return
for a premium paid, the right to sell the underlying security at a specified
price. In the case of both put and call options, listed options may be exercised
at any time during the term of the option and OTC options be exercised either at
any time during the term or on the last day (or during any other period or upon
the occurrence of an event agreed by the parties).
Options are "covered" if, so long
as the writer is obligated under the
option, it owns the security underlying the option or has an absolute and
immediate right to acquire that security without additional cash consideration
(or for additional cash consideration held in a segregated account by the Fund's
Custodian) upon conversion or exchange of other securities held in its
portfolio. A call option is also covered if the writer holds on a
share-for-share basis a call on the same security as the call written where the
exercise priceFund does not hold more than 3% of the call held is equal to or less than the exercise priceoutstanding voting securities
of the call written, or greater than the exercise price of the call written if the
difference is maintained by the Fund in cash, Treasury bills or other liquid,
unencumbered assets in a segregated account with its Custodian.
Settlement of listed options on stocks requires the delivery of the
underlying securities; settlement of OTC options may be require such delivery or
may provide for cash settlement of the difference between the value of the
security and the exercise price.
OPTIONS ON STOCK INDICES. Options on stock indices are similar to options
on stocks except that, rather than the right to take or make delivery of stock
at a specified price, an option on a stock index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the closing level of
the stock index upon which the option is based is greater than, in the case of a
call, the exercise price of the option. This amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
option expressed in dollars times a specified multiple (the multiplier). The
writer of the option is obligated, in return for the premium received, to make
delivery of this amount.
Unlike stock options, all settlements are in cash, and gain or loss depends
on price movements in the stock market generally (or in a particular industry or
segment of the market) rather than price movements in individual stocks. Because
exercises of index options are settled in cash, a call writer cannot determine
the amount of its settlement obligations in advance for, or cover, its potential
settlement obligations by acquiring
13
and holding the underlying securities. In addition, unless the Fund has other
liquid assets which are sufficient to satisfy the exercise of a call, the Fund
would be required to liquidate portfolio securities or borrow in order to
satisfy the exercise.
PRINCIPAL DIFFERENCES BETWEEN OTC OPTIONS AND LISTED OPTIONS
CREDIT RISK. To secure the obligation to deliver the underlying security or
to pay the exercise price in the case of a listed option, the writer of the
option is generally required to pledge for the benefit of the broker the
underlying security or other assets in accordance with the rules of the relevant
exchange or clearinghouse, such as The Options Clearing Corporation (OCC), an
institution created to interpose itself between buyers and sellers of
exchange-traded options in the United States. Technically, the clearinghouse
assumes the other side of every purchase and sale transaction on an exchange
and, by doing so, guarantees the transaction. Accordingly, the holder of the
option is not required to consider or look to the creditworthiness of the option
writer.
In contrast, an OTC option is a direct contractual relationship with another
party. Consequently, in entering into OTC options, the Fund will be exposed to
the risk that the counterparty will default on, or be unable to complete, due to
bankruptcy or otherwise, its obligation on the option. In such an event, the
Fund may lose the benefit of the transaction. Consequently, the value of an OTC
option to the Fund is dependent upon the financial viability of the
counterparty. If the Fund decides to enter into transactions in OTC options, PIC
will take into account the credit quality of counterparties in order to limit
the risk of default by the counterparty.
TERMINATING OPTION OBLIGATIONS. If the writer of a listed option wishes to
terminate its obligation to purchase or deliver a security, it may effect a
"closing purchase transaction". This is accomplished by buying a listed option
of the same series as the option previously written. The effect of the purchase
is that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after it has
been notified of the exercise of a listed option. Similarly, an investor which
is the holder of a listed option may liquidate his or her position by effecting
a "closing sale transaction". This is accomplished by writing (selling) a listed
option of the same series as the option previously purchased. There is no
guarantee that either a closing purchase or a closing sale transaction can be
effected. (See "Illiquidity" below.)
Again in contrast, it is not possible to effect a closing transaction in OTC
options in the same manner as listed options because a clearing corporation is
not interposed between the buyer and seller of the option. In order to terminate
the obligation represented by an OTC option, the holder must agree to the
termination of the OTC option and may be unable or unwilling to do so on terms
acceptable to the writer. In any event, a cancellation, if agreed to, may
require the writer to pay a premium to the counterparty. Although it does not
eliminate counterparty risk, the Fund may be able to eliminate the market risk
of an option it has written by writing or purchasing an offsetting position with
the same or another counterparty. However, the Fund would remain exposed to each
counterparty's credit risk on the call or put option until such option is
exercised or expires. There is no guarantee that the Fund will be able to write
put or call options, as the case may be, that will effectively offset an
existing position.
ILLIQUIDITY. Although listed options are not subject to any contractual or
legal limitation on resale, a liquid secondary market may not always be
available for one or more of the following or other reasons: (i) there may be
insufficient trading interest in certain options; (ii) restrictions may be
imposed by an exchange on opening transactions or closing transactions or both;
(iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options or underlying securities;
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
exchange, (v) the facilities of an exchange or a clearing corporation may not at
all times be adequate to handle current trading volume; or (vi) one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on that exchange (or in
the class or series of options) would cease to exist.
14
OTC options are issued in privately negotiated transactions exempt from
registration under the Securities Act of 1933 and, as a result, are generally
subject to substantial legal and contractual limitations on sale. As a result,
there is no secondary market for OTC options and the SEC staff has taken the
position that OTC options held by an investment company, as well as securities
used to cover OTC options written by one, are illiquid securities, unless the
Fund and its counterparty have provided for the Fund at its option to unwind the
option. Such provisions ordinarily involve the payment by the Fund to the
counterparty to compensate it for the economic loss caused by an early
termination. In the absence of a negotiated unwind provision, the Fund may be
unable to terminate its obligation under a written option or to enter into an
offsetting transaction eliminating its market risk.
LIMITATIONS ON PURCHASE AND SALE OF OTC OPTIONS
There are currently legal and regulatory limitations on the Fund's purchase
or sale of OTC options. These limitations are not fundamental policies of the
Fund and the Fund's obligation to comply with them could be changed without
approval of the Fund's shareholders in the event of modification or elimination
of such laws or regulations in the future.
The Board of Directors believes that approval of Item 2(d) is in the best
interests of the Small Companies Fund and its shareholders because it would
provide additional flexibility in the management of the Fund's portfolio. If the
proposed modification is not approved, the Fund will not be able to purchase or
sell options in the over-the-counter market.
ITEM 2(E). APPROVAL OF AN AMENDMENT OF THE FUND'S INVESTMENT POLICIES AND
RESTRICTIONS TO PERMIT THE FUND TO ENGAGE IN FOREIGN CURRENCY
EXCHANGE TRANSACTIONS.
PROPOSED CHANGE. Investment Restrictions Nos. 6 and 9 of the Small
Companies Fund would be modified to permit that Fund to engage in foreign
currency exchange transactions.
RELEVANT FUND. Prudential Small Companies Fund, Inc.
DISCUSSION: At a meeting held on May 8, 1996, the Board of Directors of the
Fund approved amendments to Investment Restriction Nos. 6 and 9 which, if
approved by shareholders, would permit the Fund to hedge the foreign portion of
its portfolio by entering into forward foreign currency exchange contracts,
options on foreign currencies, and futures contracts on foreign currencies and
options thereon. The proposed amendments would complement the Fund's current
ability to invest up to 15%more than 5% of its total
assets in foreign securities.
The text of the proposed changes to Investment Restriction Nos. 6any one investment company and 9 is
set forth in Exhibit E.
Set forth below is a discussion of the Fund's proposed use of forward
foreign currency exchange contracts, options on foreign currencies, and futures
contracts on foreign currencies and options thereon.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
A forward contract on foreign currency is an obligation to purchase or sell
a specific currency at a future date, which may be any fixed number of days
agreed upon by the parties from the date of the contract at a price set on the
date of the contract. These contracts are traded in the interbank market
conducted directly between currency traders (typically large commercial banks)
and their customers. A forward contract generally has no deposit requirements,
and no commissions are charged for such trades.
When the Fund invests in foreign securities, the Fund proposes to enter into
forward contracts in several circumstances to protect the valuewill not invest more than 10% of its
portfolio. There can be no assurance that this will be successful. The Fund
would not be able to use forward contracts to generate income, although the use
of such contracts may incidentally generate income. There is no limitation on
the value of forward contracts into which the Fund would be able to enter.
However, the Fund's dealings in forward contracts would be limited to hedging
involving either specific transactions or portfolio positions. Transaction
hedging is the purchase or sale of a forward contract with respect to specific
receivables or payables of the Fund generally arising in connection with the
purchase or sale of its portfolio securities and accruals of interest or
dividends receivable and Fund expenses. Position hedging is the sale of a
foreign currency with respect to portfolio
15
security positions denominated or quoted in that currency or in a different
currency (cross hedge). The Fund would not speculate in forward contracts. The
Fund would not position hedge (including cross hedges) with respect to a
particular currency for an amount greater than the aggregate market valuetotal assets (determined at the time of makinginvestment) in any salenumber of
investment companies. If shareholders approve the designation of a forward contract) of the
securities being hedged.
When the Fund enters intoFund's
investment in mutual funds as a contract for the purchase or sale of a security
denominated in a foreign currency, or when the Fund anticipates the receipt in a
foreign currency of dividends or interest payments on a security which it holds,
the Fund may desire to "lock in" the U.S. dollar price of the security or the
U.S. dollar equivalent ofnon-fundamental investment restriction, we
anticipate that such dividend or interest payment, as the case may be.
By entering into a forward contract for a fixed amount of dollars for the
purchase or sale of the amount of foreign currency involved in the underlying
transactions, the Fund may be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar and
the subject foreign currency during the period between the date on which the
security is purchased or sold, or on which the dividend or interest payment is
declared, and the date on which such payments are made or received.
Additionally, whenFund's Board will amend the investment adviser believes thatrestriction to
implement the currency of a
particular foreign country may suffer a substantial decline againstcash management strategy permitted by the U.S.
dollar, the Fund would be able to enter into a forward contract, for a fixed
amount of dollars, to sell the amount of foreign currency approximating the
value of some orSEC relief.
The specific investment restrictions and policies affected by this
proposal are identified in Exhibit H. If shareholders approve Proposal 5(h), all
of the portfolio securities of the Fund denominatedFund's investment restrictions and policies, other than those listed in
such
foreign currency. Requirements under the Internal Revenue Code for qualification
as a regulated investment company may limit the Fund's ability to engage in
transactions in forward contracts.
FUTURES CONTRACTS ON FOREIGN CURRENCIES AND OPTIONS ON FUTURES CONTRACTS ON
FOREIGN CURRENCIES
The Fund would be permitted to buy and sell futures contracts on foreign
currencies and groups of foreign currencies (futures contracts) such as the
European Currency Unit, and options thereon solely for hedging purposes. A
European Currency Unit is a basket of specified amounts of the currencies of
certain member states of the European Union. The Fund would engage in
transactions in only those futures contracts and options thereon that are traded
on a commodities exchange or a board of trade. A "sale" of a futures contract
means the assumption of a contractual obligation to deliver the specified amount
of foreign currency at a specified price in a specified future month. A
"purchase" of a futures contract means the assumption of a contractual
obligation to acquire the currency called for by the contract at a specified
price in a specified future month. At the time a futures contract is purchased
or sold, the Fund would have to allocate cash or securities as a deposit payment
(initial margin). Thereafter, the futures contract would be valued daily and the
payment of "variation margin" may be required, resulting in the Fund's paying or
receiving cash that reflects any decline or increase, respectively, in the
contract's value, a process known as "marking to market."
The Fund intends to engage in futures contracts on foreign currencies and
options on these futures contracts as a hedge against changes in the value of
the currencies to which the Fund is subject or to which the Fund expects to be
subject in connection with future purchases, in accordance with the rules and
regulations of the Commodity Futures Trading Commission (the CFTC). The Fund
also intends to engage in such transactions when they are economically
appropriate for the reduction of risks inherent in the ongoing management of the
Fund. There can be no assurance that these hedging strategiesProposals 5(a) through 5(g), will be successful.
OPTIONS ON FOREIGN CURRENCIES
The Fund would be able to purchase and write put and call options on foreign
currencies and on futures contracts on foreign currencies traded on securities
exchanges or boards of trade (foreign and domestic) for hedging purposes in a
manner similar to that in which forward foreign currency exchange contracts and
futures contracts on foreign currencies will be employed. Options on foreign
currencies and on futures contracts on foreign currencies are similar to options
on stock, except that the Fund would have the right to take or make delivery of
a specified amount of foreign currency, rather than stock.
The Fund would be able to purchase and write options to hedge the Fund's
portfolio securities denominated in foreign currencies.non-fundamental. If there were a decline
in the dollar value of a foreign currency in which the Fund's portfolio
securities are denominated, the dollar value of such securities would decline
even though the foreign currency value remained the same. See "Risks of
Investing in Forward Foreign Currency
16
Exchange Contracts, Options on Foreign Currencies and Futures Contracts on
Foreign Currencies and Options Thereon" below. To hedge against the decline of
the foreign currency, the Fund would be able to purchase put options on futures
contracts on such foreign currency. If the value of the foreign currency
declined, the gain realized on the put option would offset, in whole or in part,
the adverse effect such decline would have on the value of the portfolio
securities. Alternatively, the Fund would be able to write a call option on a
futures contract on the foreign currency. If the value of the foreign currency
declined, the option would not be exercised and the decline in the value of the
portfolio securities denominated in such foreign currency would be offset in
part by the premium the Fund received for the option.
If, on the other hand, the investment adviser anticipated purchasing a
foreign security and also anticipated a rise in the value of such foreign
currency (thereby increasing the cost of such security)shareholders reject
Proposal 5(h), the Fund would be able
to purchase call options on the foreign currency. The purchase of such options
could offset, at least partially, the effects of the adverse movements of the
exchange rates. Alternatively, the Fund could write a put option on the currency
and, if the exchange rates moved as anticipated, the option would expire
unexercised.
RISKS OF INVESTING IN FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS, OPTIONS ON
FOREIGN CURRENCIES, AND FUTURES CONTRACTS ON FOREIGN CURRENCIES AND OPTIONS
THEREON
The Fund's successful use of forward foreign currency exchange contracts,
options on foreign currencies and futures contracts on foreign currencies and
options thereon would depend upon the investment adviser's ability to predict
the direction of the market and political conditions, which requires different
skills and techniques than predicting changes in the securities markets
generally. There is no assurance it will be able to do so. For instance, if the
value of the securities being hedged moves in a favorable direction, the
advantage to the Fund would be wholly or partially offset by a loss in the
forward contracts or futures contracts. Further, if the value of the securities
being hedged does not change, the Fund's net income would be less than if the
Fund had not hedged since there are transaction costs associated with the use of
these investment practices.
These practices are subject to various additional risks. The correlation
between movements in the price of options and futures contracts and the price of
the currencies being hedged is imperfect. The use of these instruments would
hedge only the currency risks associated with investments in foreign securities,
not market risks. In addition, if the Fund purchased these instruments to hedge
against currency advances before it invested in securities denominated in such
currency and the currency market declined, the Fund might incur a loss on the
futures contract. The Fund's ability to establish and maintain positions would
depend on market liquidity. The ability of the Fund to close out a futures
position or an option would depend upon a liquid secondary market. There is no
assurance that liquid secondary markets will exist for any particular futures
contract or option at any particular time. There can be no assurance that the
Fund will be able successfully to hedge its portfolio or that foreign exchange
rates will be sufficiently predictable to enable the investment adviser
successfully to employ hedging (including cross hedging) techniques.
The Board of Directors believes that adoption of Item 2(e) is in the best
interests of the Small Companies Fund and its shareholders since the ability to
hedge the Fund's foreign portfolio would be important during periods of
volatility in the foreign currency markets. If the proposed changes in
Investment Restriction Nos. 6 and 9 and related investment policies are not
approved, the Fund would not be able to engage in forward foreign currency
exchange contracts, options on foreign currencies, and futures contracts on
foreign currencies and options thereon.
ITEM 2(F). APPROVAL OF A CHANGE IN THE INVESTMENT OBJECTIVE OF PRUDENTIAL
UTILITY FUND, INC.
PROPOSED CHANGE. The current investment objective of the Utility Fund is
"to seek high current income and moderate capital appreciation through
investment in equity and debt securities of utility companies." It is proposed
that this objective be changed to "total return through a combination of current
income and capital appreciation."
RELEVANT FUND. Prudential Utility Fund, Inc.
17
DISCUSSION: At the requestall of the Fund's Subadviser, the Board of Directors
has considered and recommends for Shareholder approval a changecurrent fundamental investment restrictions or
policies, in the Fund's
investment objective. The current investment objective of the Fund is "to seek
high current income and moderate capital appreciationaddition to those described in Proposals 5(a) through investment in
equity and debt securities of utility companies." It is proposed that the
investment objective be changed to "total return through a combination of
current income and capital appreciation." The Fund would seek to achieve its
objective through investment in equity and debt securities of utility companies,
which include electric, gas, gas pipeline, telephone, telecommunications, water,
cable, airport, seaport and toll road companies.
The Subadviser has recommended this change in investment objective because
of a general change occurring in the market for securities of utility companies.
Deregulation and greater competition are changing the structure of utilities
companies, causing (1) greater uncertainty in the market, (2) the creation of
"non-traditional" utilities with minimal or no yields (such as cable television,
wireless communication and independent power companies) and (3) the
restructuring of traditional utilities in order to5(g), will
remain competitive. As a
result, utility yields have declined in recent years, and for many companies
there has been less emphasis on paying high dividends. In recent years, there
has also been greater volatility in the market for utilities companies.
The Subadviser believes that it is in the Shareholders' best interest to
lessen the Fund's emphasis on current income, both because of the lower yields
currently available in the market and the greater impact made by capital gains
on total returns in years such as 1995. Yield on equities in general have
decreased significantly in recent years. In 1986, the average yield of the
stocks comprising the S & P 500 Index was 3.8% versus 2.1% currently. Over the
same time, the average yield of traditional utilities stocks declined from 7.8%
to 6%. Currently, telephone stocks yield approximately 4% on average while gas
pipeline and distribution company yields range from 2.5% to 5.5%. International
utility yields tend to be lower than in the U.S. because of differing attitudes
towards current income. In some cases, yields may be as low as 1% to 2% for a
traditional electric utility. Dividend policy differs significantly from country
to country.
If the Fund were to continue to seek high current income in today's market,
it would have to consider holding a greater percentage of its assets in bonds in
lieu of common stocks and preferred stocks. The Subadviser does not believe that
maintaining a large weighting in bonds for yield enhancement is in the best
interest of Shareholders.
If this proposed change in investment objective is approved, the Subadviser
would continue to invest, under normal circumstances, at least 80% of the Fund's
assets in the securities of utilities companies and would invest primarily in
common stocks of utilities companies that the investment adviser believes have
the potential for total return, which includes both current income and capital
appreciation. The Subadviser believes that changing the Fund's objective to
reduce the emphasis on current income and increase the emphasis on total return
could enhance its ability to manage the Fund in the long term interests of
Shareholders. Of course, there can be no assurance that the Fund will achieve
its objective.
* * * * *fundamental.
REQUIRED VOTE
FOR PROPOSAL 2, ITEMS (a) - (f): Approval of each of the six
items contemplated by Proposal No. 2 with respectthese Proposals as to a Fund requires the affirmative vote
of a "majoritymajority of the Fund's outstanding voting securities" of that
Fund, which for this purpose means the affirmative vote of the lesser of (1)
more than 50% of the outstanding Shares of the Fund or (2) 67% or more of the
Shares of the Fund present at the Meeting if more than 50% of the outstanding
Shares of the Fund are represented at the Meeting in person or by proxy.
Shareholders of any Fund may vote against the changes proposed in any item with
respect to specific fundamental restrictions applicable to their Fundsecurities, as defined in the
manner indicated on the proxy card.
IF ONE OR MORE OF THE NUMBERED ITEMS CONTEMPLATED BY PROPOSAL NO. 2 IS NOT
APPROVED BY SHAREHOLDERS OF A FUND, THE RELATED, EXISTING FUNDAMENTAL
RESTRICTIONS OF THAT FUND WILL CONTINUE IN EFFECT FOR THAT FUND, BUT DISAPPROVAL
OF ALL OR PART OF PROPOSAL NO. 2 BY THE SHAREHOLDERS OF ONE FUND WILL NOT AFFECT
ANY APPROVALS OF PROPOSAL NO. 2 THAT ARE OBTAINED WITH RESPECT TO ANY OTHER
FUND.1940 Act.
EACH BOARD, INCLUDING ITS INDEPENDENT MEMBERS, RECOMMEND
THAT YOU VOTE "FOR" PROPOSALS NO. 5(a) THROUGH 5(h)
34
TO AMEND THE INVESTMENT OBJECTIVE OF EQUITY OPPORTUNITY FUND
PROPOSAL NO. 6
The Board is submitting for approval by shareholders of the Fund the
following proposal to amend the investment objective of the Fund. The Board
approved this proposal at a meeting held on October 25, 2000. For the reasons
described below, the Board believes that the proposed changes are in the best
interests of shareholders and recommends that shareholders approve the proposed
amendment. The Fund's investment objective is a fundamental policy that cannot
be changed without shareholder approval.
The current investment objective for the Fund is long-term growth of
capital and income with current income as a secondary objective. The Board has
approved and recommends that the shareholders of the Fund approve an amendment
to remove the income component of the Fund's investment objective. To reflect
the change, the Fund's Prospectus will state: "The Fund's investment objective
is long-term growth of capital."
The Manager and Jennison, the Fund's Subadviser, have proposed the
change in investment objective to allow the Fund to take greater advantage of
capital appreciation opportunities. The proposed change in investment objective
will allow Jennison more flexibility to invest for capital appreciation rather
than having to focus on income-generating securities. Further, the Fund's
management believes that repositioning the Fund in the multicap value category
should provide shareholders with exposure to securities with stronger
performance potential.
For these reasons, the Board believes that the proposed changes are in
the best interests of shareholders and therefore recommend that the shareholders
approve the proposed amendment.
If the change in investment objective is approved by shareholders,
Jennison has indicated that primary difference in how it may manage the Fund
would be in purchasing fewer income-producing securities. As a result of this
change, the Subadviser may, depending on market conditions, invest a greater
percentage of the Fund's assets in securities of mid-cap or large-cap
companies with good earnings growth prospects and attractive valuation
levels. Therefore, if the change is approved, the Fund may be subject to more
risk to the extent that it would be investing a greater proportion of its
assets in these securities.
REQUIRED VOTE
Approval of this Proposal requires the affirmative vote of a majority
of the Fund's outstanding voting securities, as defined in the 1940 Act.
THE BOARD OF EQUITY OPPORTUNITY FUND, INCLUDING ITS INDEPENDENT MEMBERS,
RECOMMENDS THAT SHAREHOLDERSYOU VOTE "FOR" PROPOSAL NO. 2.
186.
35
RATIFICATION OFTO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS (PROPOSALOF THE FUND
PROPOSAL NO. 3)
RELEVANT FUNDS. All Funds.
DISCUSSION: Under Proposal No. 3, Shareholders7
The Board of each Fund, are asked to
ratify their Board'sincluding a majority of the Independent
Directors, has selected PricewaterhouseCoopers LLP as independent accountants
for each Fund for the current fiscal year. PricewaterhouseCoopers LLP has served
as independent accountants for the Funds for each year since at least 1996. The
ratification of the selection of independent accountants is to be voted on at
the Meeting and it is intended that the persons named in the accompanying proxy
vote for their Fund.PricewaterhouseCoopers LLP. No representative of PricewaterhouseCoopers
LLP is expected to be present at the Meeting.
The accountants for each Fund audit the Fund's financial statements for each fiscal
year.
TheBoard policy of the Board of each of the Funds regarding engaging independent accountants' services
is that management may engage thea Fund's principal independent public accountants to
perform any service(s)service normally provided by independent accounting firms, provided
that such service(s) meet(s) any and all
ofservice meets the independence requirements of the American Institute
of Certified Public Accountants and the SEC. In accordance with this policy, theThe Audit Committee of
each Board reviewswill review and
approves allapprove services provided by the independent public accountants prior to their being
rendered. The Audit Committee responsibilities have been summarized in Proposal
No. 1. Each Board of each Fundalso receives a report from its Audit Committee relating to
all services after they have been performed by thea Fund's independent accountants.
During the last fiscal year, Deloitte & Touche LLP served as accountants for
Allocation, Equity Income, Global Limited Maturity, Jennison, Multi-Sector and
Global Total Return and Price Waterhouse LLP served as accountants for Equity,
Intermediate Global, Small Companies, Utility and Global Government.REQUIRED VOTE
The Boardsaffirmative vote of each of these Funds have selected their respective accountants to continue to
serve in that capacity for the current fiscal year, subject to ratification by
Shareholders of each of those Funds at the Meetings.
Representatives of the accountants are not expected to be present at the
Meetings but will be available to answer any questions or make any statements
should any matters arise requiring their presence. Deloitte & Touche LLP and
Price Waterhouse LLP have informed the Funds for which they will act as
accountants that they have no material direct or indirect financial interest in
these Funds.
The persons named in the accompanying proxy will vote FOR ratification of
the selection of each Fund's Accountant unless contrary instructions are given.
REQUIRED VOTE. For each Fund, approval of Proposal No. 3 requires a vote ofleast a majority of the votes cast with respect to Proposal No. 3shares present, in
person or by proxy, at the Meeting provided a quorum is present.required for ratification as to each Fund.
EACH BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT SHAREHOLDERSYOU VOTE "FOR"
PROPOSAL NO. 3.7.
36
ADDITIONAL INFORMATION
The solicitation of proxies, the cost of which will be borne by the
Funds, will be made primarily by mail but also may include telephone or oral
communications by regular employees of Prudential Securities or Prudential
Mutual Fund Management,PIFM, who will
not receive any compensation thereforthereon from the Funds or by Shareholder
Communications Corporation, professionala proxy solicitorssolicitation firm retained by the Funds, who
will be paid the approximate fees and expenses for soliciting services set forth
below. Proxies may be recorded
19
pursuant to (i) electronically transmitted
instructions or (ii) telephone instructions obtained through procedures
reasonably designed to verify that the instructions have been authorized.
Soliciting fees and expenses payable to Shareholder Communications Corporation
by a particular Fund are a function of the number of Shareholdersshareholders in that Fund.
Twenty-five percent of the cost of the Meetings will be borne by PIFM.
ESTIMATED
SOLICITATION
FUND FEES AND EXPENSESEstimated Solicitation
Fund Fees and Expenses
- -------------------------------------------------------------------------------------------- ------------------------ -----------------
Prudential Allocation Fund..................................................................
Balanced Portfolio......................................................................
Strategy Portfolio......................................................................
Prudential20/20 Focus......................................... $129,817
Active Balanced..................................... [ ]
Growth.............................................. [ ]
Equity Fund, Inc.................................................................
Prudential Equity Income Fund...............................................................
Prudential Global Limited Maturity Fund, Inc................................................
Prudential Intermediate Global Income Fund, Inc.............................................
Prudential Jennison Fund, Inc...............................................................
Prudential Multi-Sector Fund, Inc...........................................................
PrudentialOpportunity.................................. [ ]
Financial Services.................................. $ 29,260
Emerging Growth..................................... $118,793
Health Sciences..................................... $ 47,782
Natural Resources................................... $ 12,627
Small Companies Fund, Inc........................................................
Prudential Utility Fund, Inc................................................................
The Global Government Plus Fund, Inc........................................................
The Global Total Return Fund, Inc...........................................................Company....................................... $106,573
Stock Index......................................... $ 88,170
Tax Equity.......................................... $ 30,025
Tax Small-Cap....................................... $ 18,070
Technology.......................................... $ 94,472
Utility............................................. $327,263
SHAREHOLDER PROPOSALS
Any Shareholdershareholder who wishes to submit a proposal to be considered at
a Fund's next annual meeting of Shareholdersshareholders should send the proposal to that Fund
at One
Seaport Plaza,Gateway Center Three, 100 Mulberry Street, 4th Floor, Newark, New York, New York 10292,Jersey
07102, so as to be received within a reasonable time before the Board makes
the solicitation relating to such meeting, in order to be included in the
proxy statement and form of proxy relating to such meeting.
The By-laws of each Fund provide that the FundFunds will not be required to hold annual meetings of shareholders
if the election of Board membersMembers is not required under the Investment Company1940 Act. It is the
present intention of the Board of each Fund not to hold annual meetings of
shareholders unless such shareholder action is required.
Shareholder proposals that are submitted in a timely manner will not
necessarily be included in the Fund's proxy materials. Inclusion of such
proposals is subject to limitations under the federal securities laws.
37
OTHER BUSINESS
Management knows of no business to be presented at the Meetings other
than the matters set forth in this proxy statement, but should any other matter
requiring a vote of Shareholdersshareholders arise, the proxies will vote according to their
best judgment in the interest of the Funds.
S. JANE ROSEMarguerite E. H. Morrison
SECRETARY
August , 1996
IT IS IMPORTANT THAT YOU EXECUTE AND RETURNNovember ______, 2000
- --------------------------------------------------------------------------------
It is important that you execute and return ALL OF YOUR PROXIES PROMPTLY.
20of your proxies promptly.
- --------------------------------------------------------------------------------
38
INDEX TO EXHIBITS TO PROXY STATEMENT
Exhibit A -- Year in Which Each Current Board Member Standing for Re-election
Became a Member of the Board......................................... A-1
Exhibit B -- Fund Ownership of Nominees and Current Board Members.................. B-1
Exhibit C -- Board and Committee Information....................................... C-1
Exhibit D -- Officer Information................................................... D-1
Exhibit E -- Fundamental Restrictions.............................................. E-1
21Exhibit A Five Percent Shareholder Report
Exhibit B Year in Which Each Current Board Member Standing for Re-election
Became a Member of the Board
Exhibit C Fund Ownership of Nominees and Current Board Members Standing
for Election
Exhibit D Board and Committee Information
Exhibit E Officer Information
Exhibit F Form of Subadvisory Agreement
Exhibit G Form of Management Agreement
Exhibit H Fundamental Restrictions
39
EXHIBIT A
FIVE PERCENT SHAREHOLDER REPORT
As of November 3, 2000, the beneficial owners, directly or indirectly, of
more than 5% of the outstanding shares of the Funds are listed below. With
respect to , there were no beneficial owners, directly or indirectly,
of more than 5% of the outstanding shares of each of the respective Funds as of
November 3, 2000.
FUND NAME REGISTRATION SHARES (PERCENT)
- --------------------- ---------------------- ------- ---------
40
Cluster 1
EXHIBIT B
YEAR IN WHICH CURRENT BOARD MEMBER STANDING
FOR REELECTIONRE-ELECTION BECAME A MEMBER OF THE BOARD*BOARD
- --------------------------------------------------------------------------------
NAME OF FUNDS
------------------------------------------------------------------------------
INTERM.TAX
\ SMALL TAX SMALL- EMERGING 20/20
STOCK INVESTMENT NATURAL COMPANY SECTOR EQUITY GLOBAL LTD. GLOBALCAP GROWTH FOCUS
DIRECTORS/TRUSTEES ALLOCATION EQUITY INCOME MATURITY INCOME JENNISONINDEX PORTFOLIOS RESOURCES
- ---------------------------------------- ------------- ----------- ----------- ----------- ----------- -----------
Edward D. Beach......................... 1987 1986 1986
Delayne D. Gold......................... 1982 1990
Donald D. Lennox........................ 1987 1987
Douglas McCorkindale.................... 1987 1987
Thomas T. Mooney........................ 1987 1986 1986
Stephen P. Munn.........................
Richard A. Redeker...................... 1993 1993 1993 1993 1993 1995
Robin B. Smith.......................... 1995
Louis A. Weil, III...................... 1987 1986
Clay T. Whitehead.......................
GLOBAL
MULTI- SMALL GLOBAL TOTAL
DIRECTORS/TRUSTEES SECTOR COMPANIES UTILITY GOV'T PLUS RETURN
- ---------------------------------------- ----------- ------------- ----------- ----------- -----------
Edward D. Beach......................... 1990 1987 1986
Delayne D. Gold......................... 1982 1981
Donald D. Lennox........................ 1990 1987
Douglas McCorkindale.................... 1990 1987
Thomas T. Mooney........................ 1990 1987 1986
Stephen P. Munn......................... 1991
Richard A. Redeker...................... 1993 1995 1993 1993 1993
Robin B. Smith.......................... 1986
Louis A. Weil, III...................... 1990 1991 1987
Clay T. Whitehead.......................
- ----------------
*Excludes Robert F. Gunia and Mendel Melzer, who are not presently members of
these Boards. All nominees were nominated in 1996.
A-1
EXHIBIT B
FUND OWNERSHIP OF NOMINEES AND CURRENT BOARD MEMBERS*
NO. OF SHARES HELD AS
NOMINEES OR CURRENT BOARD MEMBERS OF
WHO ARE STANDING FOR RE-ELECTION FUND AUGUST 9, 1996
- ----------------------------------- ------------------------------------------------------- ----------------------
Edward D. Beach NA NA
Delayne D. Gold NA NA
Donald D. Lennox Prudential Intermediate Global Income Fund, Inc. [970.186
The Global Government Plus Fund, Inc. 4,168.270
Douglas McCorkindale NA NA
Thomas T. Mooney Prudential Allocation Fund (Strategy Portfolio) 443.319
Purdential Equity Fund, Inc. 2,943.131
Prudential Equity Income Fund 819.170
Purdential Multi-Sector Fund, Inc. 1,320.695
The Global Government Plus Fund, Inc. 2,720.353
The Global Total Return Fund, Inc. 3,567.715
Stephen P. Munn NA NA
Richard A. Redeker Prudential Equity Fund, Inc. 775.287
Prudential Multi-Sector Fund, Inc. 2,832.534
Robin B. Smith Prudential Jennison Fund, Inc. 543.245
Prudential Multi-Sector Fund, Inc. 2,369.607
The Global Total Return Fund, Inc. 6,125.073
Louis A. Weil, III Prudential Multi-Sector Fund, Inc. 650.636
Clay T. Whitehead Prudential Global Limited Maturity Fund, Inc. 639.906]
- ----------------
** Excludes Robert F. Gunia and Mendel Melzer who are not presently members of
these Boards.
B-1
EXHIBIT C
BOARD AND COMMITTEE INFORMATION
GLOBAL INTERM.
EQUITY LTD. GLOBAL MULTI-
ALLOCATION^ EQUITY** INCOME^ MATURITY INCOME* JENNISON SECTOR^^^
------------- ----------- ----------- ----------- ----------- ----------- ------------------------------------------------------------------------------------------------------------------------------
Fenster, Saul K. 2000 2000 2000 2000 2000 2000 2000 2000 2000
Gold, Delayne D. 1996 1996 1996 1982 1981 1998 1997 1996 1998
Gunia, Robert F. 1996 1996 1996 1996 1996 1998 1997 1996 1998
McCorkindale, Douglas H. 1996 1996 2000 1996 1996 1998 1997 1996 1998
McDonald, Jr., W. Scott 2000 2000 2000 2000 2000 2000 2000 2000 2000
Mooney, Thomas T. 1996 1996 2000 1996 1996 1998 1997 1996 1998
Munn, Stephen P. 1996 1996 2000 1991 1996 1998 1997 1996 1998
Odenath, Jr., David R. 1999 1999 1999 1999 1999 1999 1999 1999 1999
Redeker, Richard A. 1996 1995 2000 1995 1993 1998 1997 1996 1998
Smith, Robin B. 1996 1995 1996 1996 1996 1998 1997 1996 1998
Strangfeld, John R. 1999 1999 1999 1999 1999 1999 1999 1999 1999
Weil, III, Louis A. 1996 1996 2000 1991 1996 1998 1997 1996 1998
Whitehead, Clay T. 1996 1996 1999 1996 1996 1998 1997 1996 1998
41
EXHIBIT C
FUND OWNERSHIP OF NOMINEES AND CURRENT
BOARD MEMBERS STANDING FOR ELECTION
NUMBER OF SHARES HELD AS OF NOVEMBER 3, 2000
NAME OF FUNDS (Cluster 1)
------------------------------------------------------------------------------------
Equity Finan- Tax
Directors/ 20/20 Active Emerging Oppor- cial Health Natural Small Stock Tax Small- Tech-
Trustees Focus Balanced Growth tunity Services Growth Sciences Resources Company Index Equity Cap nology Utility
Saul K. Fenster
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
W. Scott McDonald, Jr.
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfled, Jr.
Louis A. Weil, III
Clay T. Whitehead
42
EXHIBIT D
BOARD AND COMMITTEE INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
Prudential Prudential Prudential Prudential Prudential Prudential Prudential Prudential The
20/20 Index Natural Sector Small Tax-Managed Tax-Managed U.S. Prudential
Focus Series Resources Funds, Company Small-Cap Equity Fund Emerging Investment
Fund Fund Fund, Inc. Inc. Fund, Inc. Fund, Inc. Growth Portfolios,
Fund, Inc. Inc.
-------------------------------------------------------------------------------------------------------------
Annual Fee................... $ 8,500 $ 7,500 $ 7,500 $ 10,000 $ 7,500 $ 7,500 $ 7,500Fee* $2,000 $4,000 $2,500 $5,000 $4,000 $2,000 $2,000 $2,000 $4,000
Fee for Attendance
ofat Board Meetings.................... NA NA NA NA NA NA NAMeetings.... N/A N/A N/A N/A N/A N/A N/A N/A N/A
Fee for Attendance ofat
Committee Meetings.......... NA NA NA NA NA NA NAMeetings.... N/A N/A N/A N/A N/A N/A N/A N/A N/A
Number of Board
Meetings during the
Last Fiscal Year........................ 7 4 8 5 5 1 4Year.... 6 6 6 6 6 6 6 6 6
Number of Audit
Committee MeetingsMeeting
during the Last
Fiscal Year................. 2 2 2Year ** 4 2 0 24 4 4 4 4 4 4 4
Number of Nominating
Committee Meetings
during the Last Fiscal
Year........ 1 0 0 0 0 0 1
GLOBAL GLOBAL
SMALL GOV'T TOTAL
COMPANIES^^ UTILITY** PLUS*** RETURN**
----------------- ----------- ----------- -----------
Annual Fee................... $ 6,000 $ 9,000 $ 10,000 $ 8,000
Fee for AttendanceYear ** 3 3 3 3 3 3 3 3 3
Size of Board
Meetings.................... NA NA [$ 1,250] [$ 1,500]
Fee for Attendance of
Committee Meetings.......... NA NA NA NA
Number of Board Meetings
during the Last Fiscal
Year........................ 5 6Current
Board.... 13 13 10 8
Number of Audit Committee
Meetings during the Last
Fiscal Year................. 3 2 2 2
Number of Nominating
Committee Meetings during
the Last Fiscal Year........ 0 0 0 013 13 13 13 13 13
- --------------------------------------
* Richard A. Redeker attended fewer than 75% ofReflects compensation rates in effect prior to changes in proxy statement.
Board Members who were not ndependent did not receive compensation from the
number of Board
meetings held duringfund.
** Only the most recent fiscal year.
** Harry A. Jacobs, Jr. attended fewer than 75% ofIndependent Directors serve on the number of Board
meetings held during the most recent fiscal year.
*** Harry A. Jacobs, Jr. and Louis A. Weil, III attended fewer than 75% of
the aggregate of the total number of meetings of the Directors, theFund's Audit
Committee and Nominating
Committee held duringCommittees.
(1) No fund within the most recent fiscal
year for which each such DirectorFund Complex has been a member.
^Louis A. Weil, III attended fewer than 75% of the aggregate of the total
number of meetings of the Trustees, the Audit Committee and Nominating
Committee held during the most recent fiscal year.
^^Harry A. Jacobs, Jr., Stephen P. Munn and Louis A. Weil, III attended fewer
than 75% of the aggregate of the total number of meetings of the Directors,
the Audit Committee and Nominating Committee held during the most recent
fiscal year for which each such Director has been a member.
^^^Donald D. Lennox and Louis A. Weil, III attended fewer than 75% of the
aggregate of the total number of meetings of the Directors, the Audit
Committee and Nominating Committee held during the most recent fiscal year.
C-1bonus, pension, profit sharing or
retirement plan.
43
EXHIBIT DE
OFFICER INFORMATION
NAME, AGE, PRINCIPAL GLOBALOFFICER SINCE
- --------------------- -------------
BUSINESS OCCUPATION EQUITY LTD.
FOR THE TAX- TAX-
- -------- ------------------ 20/20 STOCK INVESTMENT NATURAL SMALL MANAGED MANAGED EMERGING
PAST FIVE YEARS OFFICE ALLOCATIONFOCUS INDEX PORTFOLIOS RESOURCES SECTOR COMPANY EQUITY INCOME MATURITYSMALL-CAP GROWTH
- ------------------------------------------------------- ------ ----- ----- ---------- --------- ---------- ------ ------ --------
RICHARD A. REDEKER (53), PRESIDENT 1995 1995 1995 1995
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
DIRECTOR (SINCE OCTOBER 1993), PMF;
EXECUTIVE VICE PRESIDENT, DIRECTOR AND
MEMBER OF THE OPERATING COMMITTEE
(SINCE OCTOBER 1993), PRUDENTIAL
SECURITIES; DIRECTOR (SINCE OCTOBER
1993) OF PRUDENTIAL SECURITIES GROUP,
INC.; EXECUTIVE VICE PRESIDENT PIC
(SINCE JULY 1994); DIRECTOR (SINCE
JANUARY 1994) OF PRUDENTIAL MUTUAL FUND
DISTRIBUTORS, INC. (PMFD) AND
PRUDENTIAL MUTUAL FUND SERVICES, INC.
(PMFS); FORMERLY SENIOR EXECUTIVE VICE
PRESIDENT AND DIRECTOR OF KEMPER
FINANCIAL SERVICES, INC. (SEPTEMBER
1978-SEPTEMBER 1993); PRESIDENT AND
DIRECTOR OF THE HIGH YIELD INCOME FUND,
INC.
ROBERT F. GUNIA (49), VICE 1987 1987 1987 1990
DIRECTOR (SINCE JANUARY 1989), CHIEF PRESIDENT
ADMINISTRATIVE OFFICER (SINCE JULY
1990), AND EXECUTIVE VICE PRESIDENT,
TREASURER AND CHIEF FINANCIAL OFFICER
(SINCE JUNE 1987) OF PMF; COMPTROLLER
OF THE MONEY MANAGEMENT GROUP OF
PRUDENTIAL (SINCE 1996); SENIOR VICE
PRESIDENT (SINCE MARCH 1987) OF
PRUDENTIAL SECURITIES; EXECUTIVE VICE
PRESIDENT, TREASURER AND COMPTROLLER
(SINCE MARCH 1991) OF PMFD; DIRECTOR
(SINCE JUNE 1987) OF PMFS; VICE
PRESIDENT AND DIRECTOR OF THE ASIA
PACIFIC FUND, INC. (SINCE MAY 1989)
SUSAN C. COTE (41), TREASURER 1987 1987
MANAGING DIRECTOR, PRUDENTIAL
INVESTMENT ADVISORS, AND VICE
PRESIDENT, THE PRUDENTIAL INVESTMENT
CORPORATION (SINCE FEBRUARY 1995);
SENIOR VICE PRESIDENT (JANUARY
1989-JANUARY 1995) OF PMF; SENIOR VICE
PRESIDENT (JANUARY 1992-JANUARY 1995)
AND VICE PRESIDENT (JANUARY
1986-DECEMBER 1991) OF PRUDENTIAL
SECURITIES
EUGENE S. STARK (38), TREASURER 1995
FIRST VICE PRESIDENT (SINCE JANUARY
1990) OF PMF
NAME, AGE, PRINCIPAL GLOBAL GLOBAL INTERM
BUSINESS OCCUPATION GOV'T TOTAL GLOBAL MULTI- SMALL
FOR THE PAST FIVE YEARS PLUS RETURN INCOME JENNISON SECTOR COMPANIES UTILITY
- ---------------------------------------- ------ ------ ------ -------- ------------- ------- --------- -------------
RICHARD A. REDEKER
John R. Strangfeld (46), President 1999 1999 1999 1999 1999 1999 1999 1999 1999
Chief Executive Officer, Chairman,
President and Director (Since
January 1990) of The Prudential
Investment Corporation, Executive
Vice President (since February
1998) of Global Asset
Management Group of Prudential;
Chairman (since August 1989) of
Pricoa Capital Group; formerly
various positions to Chief
Executive Officer (November
1994-December 1998) of Private
Asset Management Group of
Prudential.
Robert F. Gunia (53), Vice 1997 1992 1995 1995 1995 1995 1995 1995 1995
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
DIRECTOR (SINCE OCTOBER 1993), PMF;
EXECUTIVE VICE PRESIDENT, DIRECTOR AND
MEMBER OF THE OPERATING COMMITTEE
(SINCE OCTOBER 1993), PRUDENTIAL
SECURITIES; DIRECTOR (SINCE OCTOBER
1993) OF PRUDENTIAL SECURITIES GROUP,
INC.; EXECUTIVE VICE PRESIDENT PIC
(SINCE JULY 1994); DIRECTOR (SINCE
JANUARY 1994) OF PRUDENTIAL MUTUAL FUND
DISTRIBUTORS, INC. (PMFD) AND
PRUDENTIAL MUTUAL FUND SERVICES, INC.
(PMFS); FORMERLY SENIOR EXECUTIVE VICE
PRESIDENT AND DIRECTOR OF KEMPER
FINANCIAL SERVICES, INC. (SEPTEMBER
1978-SEPTEMBER 1993); PRESIDENT AND
DIRECTOR OF THE HIGH YIELD INCOME FUND,
INC.
ROBERT F. GUNIA (49), 1987 1988 1995 1990 1987 1987 DIRECTOR (SINCE JANUARY 1989)1987 1998 1998 1996
Executive Vice President and President
Chief Administrative Officer
(since June 1999) of Prudential
Investments; Corporate Vice
President (since September 1997)
of the Prudential Insurance
Company of America (Prudential);
Executive Vice President and
Treasurer (since December 1996)
of Prudential Investments Fund
Management LLC (PIFM); President
(since April 1999) of Prudential
Investment Management Services LLC
(PIMS); formerly Senior Vice
President (March 1987-May 1999)
of Prudential Securities
Incorporated (Prudential
Securities); formerly Chief
Administrative Officer (July
1990-September 1996), CHIEF
ADMINISTRATIVE OFFICER (SINCE JULY
1990)Director
(January 1989-September 1996),
AND EXECUTIVE VICE PRESIDENT,
TREASURER AND CHIEF FINANCIAL OFFICER
(SINCE JUNE 1987) OF PMF; COMPTROLLER
OF THE MONEY MANAGEMENT GROUP OF
PRUDENTIAL (SINCEand Executive Vice President,
Treasurer and Chief Financial
Officer (June 1987-September 1996); SENIOR VICE
PRESIDENT (SINCE MARCH 1987) OF
PRUDENTIAL SECURITIES; EXECUTIVE VICE
PRESIDENT, TREASURER AND COMPTROLLER
(SINCE MARCH 1991) OF PMFD; DIRECTOR
(SINCE JUNE 1987) OF PMFS; VICE
PRESIDENT AND DIRECTOR OF THE ASIA
PACIFIC FUND, INC. (SINCE MAY 1989)
SUSAN
of Prudential Mutual Fund
Management, Inc. (PMF).
Grace C. COTETorres (41), Treasurer 1997 1997 1998 1997 1998 1998 1998 1997 1996
First Vice President (since and
December 1996) of PIFM; First Vice Principal
President (since March 1994) of Financial
Prudential Securities; formerly and
First Vice President Accounting
(March 1994-September 1996), Officer
Prudential Mutual Fund
Management, Inc.
Marguerite E. H. Morrison (44), Secretary 1999 1999 1999 1999 1999 1999 1999 1999
Department Vice President and ----
Chief Legal Officer (since
August 2000) of the Mutual
Funds Law Division of
Prudential; Vice President
and Associate General Counsel
(since December 1996) of
PIFM; formerly Vice President
and Associate General Counsel
(September 1987-September
1996) of Prudential Securities;
Vice President and Associate
General Counsel (June 1991-
September 1996) of Prudential
Mutual Fund Management, Inc.
Robert C. Rosselot (40), Secretary 1999
Assistant General Counsel ---- ---- ---- ---- ---- ---- ---- ----
(since September 1997) of PIFM;
formerly, partner with the law
firm of Howard & Howard,
Bloomfield Hills, Michigan
(December 1995-September 1997)
and Corporate Counsel (September
1990 1990
MANAGING DIRECTOR, PRUDENTIAL
INVESTMENT ADVISORS, AND VICE
PRESIDENT, THE PRUDENTIAL INVESTMENT
CORPORATION (SINCE FEBRUARY- December 1995);
SENIOR VICE PRESIDENT (JANUARY
1989-JANUARY 1995) OF PMF; SENIOR VICE
PRESIDENT (JANUARY 1992-JANUARY 1995)
AND VICE PRESIDENT (JANUARY
1986-DECEMBER 1991) OF PRUDENTIAL
SECURITIES
EUGENE S. STARK (38), 1995
FIRST VICE PRESIDENT (SINCE JANUARY
1990) OF PMF of Federated
Investors.
D-144
NAME, AGE, PRINCIPAL GLOBALOFFICER SINCE
- --------------------- -------------
BUSINESS OCCUPATION EQUITY LTD.
FOR THE TAX- TAX-
- -------- ------------------ 20/20 STOCK INVESTMENT NATURAL SMALL MANAGED MANAGED EMERGING
PAST FIVE YEARS OFFICE ALLOCATIONFOCUS INDEX PORTFOLIOS RESOURCES SECTOR COMPANY EQUITY INCOME MATURITYSMALL-CAP GROWTH
- ---------------------------------------- ------------------------ ------ ----- ----- ---------- ------ ------ --------
GRACE C. TORRES (37), TREASURER 1995
FIRST VICE PRESIDENT (SINCE MARCH 1994)
OF PMF; FIRST VICE PRESIDENT OF
PRUDENTIAL SECURITIES (SINCE MARCH
1994); PRIOR THERETO VICE PRESIDENT OF
BANKERS TRUST CORPORATION
STEPHEN M. UNGERMAN (42), ASSISTANT 1995 1995 1995 1995
FIRST VICE PRESIDENT (SINCE FEBRUARY TREASURER
1993) OF PMF; PRIOR THERETO, SENIOR TAX
MANAGER OF PRICE WATERHOUSE
(1981-JANUARY 1993)
S. JANE ROSE (50), SECRETARY 1987 1984 1986 1990
SENIOR VICE PRESIDENT (SINCE JANUARY
1991) AND SENIOR COUNSEL (SINCE JUNE
1987) OF PMF; SENIOR VICE PRESIDENT AND
SENIOR COUNSEL OF PRUDENTIAL SECURITIES
(SINCE JULY 1992); FORMERLY VICE
PRESIDENT AND ASSOCIATE GENERAL COUNSEL
OF PRUDENTIAL SECURITIES
DEBORAH. A. DOCS (38), ASSISTANT 1989
VICE PRESIDENT AND ASSOCIATE GENERAL SECRETARY
COUNSEL (SINCE JANUARY 1993) OF PMF;
VICE PRESIDENT AND ASSOCIATE GENERAL
COUNSEL OF PRUDENTIAL SECURITIES (SINCE
JANUARY 1993); PREVIOUSLY ASSOCIATE
VICE PRESIDENT (JANUARY 1990-
DECEMBER 1992) AND ASSISTANT GENERAL
COUNSEL (NOVEMBER 1991-DECEMBER 1992)
OF PMF
MARGUERITE MORRISON (40), ASSISTANT 1991 1991
VICE PRESIDENT AND ASSOCIATE GENERAL SECRETARY
COUNSEL (SINCE JUNE 1991) OF PMF; VICE
PRESIDENT AND ASSOCIATE GENERAL COUNSEL
OF PRUDENTIAL SECURITIES
ELLYN A. VOGIN (35), ASSISTANT 1995
VICE PRESIDENT AND ASSOCIATE GENERAL SECRETARY
COUNSEL (SINCE MARCH 1995) OF PMF; VICE
PRESIDENT AND ASSOCIATE GENERAL COUNSEL
OF PRUDENTIAL SECURITIES (SINCE MARCH
1995); PRIOR THERETO, ASSOCIATED WITH
THE LAW FIRM OF FULBRIGHT & JAWORSKI
LLP
NAME, AGE, PRINCIPAL GLOBAL GLOBAL INTERM
BUSINESS OCCUPATION GOV'T TOTAL GLOBAL MULTI- SMALL
FOR THE PAST FIVE YEARS PLUS RETURN INCOME JENNISON SECTOR COMPANIES UTILITY
- ---------------------------------------- ------ ------ ------ -------- ------------- ------- --------- -------------
GRACE C. TORRES (37)
William V. Healey (46), 1995
FIRST VICE PRESIDENT (SINCE MARCH 1994)
OF PMF; FIRST VICE PRESIDENT OF
PRUDENTIAL SECURITIES (SINCE MARCH
1994)Assistant 2000 2000 2000 2000 2000 2000 2000 2000 2000
Assistant Secretary Vice Secretary
President and Associate General
Counsel of Prudential and Chief
Legal Officer of Prudential
Investments (since August 1998);
PRIOR THERETO VICE PRESIDENT OF
BANKERS TRUST CORPORATION
STEPHEN M. UNGERMAN (42)Director, ICI Mutual Insurance
Company (since June 1999);
formerly Associate General
Counsel of The Dreyfus Corporation
(Dreyfus), 1995 1995 1995 1995 1995 1995 1995
FIRST VICE PRESIDENT (SINCE FEBRUARY
1993) OF PMF; PRIOR THERETO, SENIOR TAX
MANAGER OF PRICE WATERHOUSE
(1981-JANUARY 1993)
S. JANE ROSE (50)a subsidiary of
Mellon Bank, N.A. (Mellon Bank),
1987 1986 1988 1995 1990 1984 1985
SENIOR VICE PRESIDENT (SINCE JANUARY
1991) AND SENIOR COUNSEL (SINCE JUNE
1987) OF PMF; SENIOR VICE PRESIDENT AND
SENIOR COUNSEL OF PRUDENTIAL SECURITIES
(SINCE JULY 1992); FORMERLY VICE
PRESIDENT AND ASSOCIATE GENERAL COUNSEL
OF PRUDENTIAL SECURITIES
DEBORAH. A. DOCS (38), 1989
VICE PRESIDENT AND ASSOCIATE GENERAL
COUNSEL (SINCE JANUARY 1993) OF PMF;
VICE PRESIDENT AND ASSOCIATE GENERAL
COUNSEL OF PRUDENTIAL SECURITIES (SINCE
JANUARY 1993); PREVIOUSLY ASSOCIATE
VICE PRESIDENT (JANUARY 1990-
DECEMBER 1992) AND ASSISTANT GENERAL
COUNSEL (NOVEMBER 1991-DECEMBER 1992)
OF PMF
MARGUERITE MORRISON (40), 1991 1991 1991
VICE PRESIDENT AND ASSOCIATE GENERAL
COUNSEL (SINCE JUNE 1991) OF PMF; VICE
PRESIDENT AND ASSOCIATE GENERAL COUNSEL
OF PRUDENTIAL SECURITIES
ELLYN A. VOGIN (35), 1995
VICE PRESIDENT AND ASSOCIATE GENERAL
COUNSEL (SINCE MARCH 1995) OF PMF; VICE
PRESIDENT AND ASSOCIATE GENERAL COUNSEL
OF PRUDENTIAL SECURITIES (SINCE MARCH
1995); PRIOR THERETO, ASSOCIATED WITH
THE LAW FIRM OF FULBRIGHT & JAWORSKI
LLPand an officer and/or director of
various affiliates of Mellon Bank
and Dreyfus.
D-245
EXHIBIT E
EXISTING FUNDAMENTAL RESTRICTIONS
The fundamental investment restrictions of each Fund will be found on the
following pagesF
[FUND]
SUBADVISORY AGREEMENT
Agreement made as of this Exhibit (underscored language represents proposed
additions. Bracketed language represents proposed deletions):
E-1
PRUDENTIAL EQUITY FUND, INC.
INVESTMENT RESTRICTIONS
Theday of ___________, 2001 between Prudential
Investments Fund may not:
1. Purchase any security (other than obligationsManagement LLC (PIFM or the Manager) and Jennison Associates
LLC (the Subadviser or Jennison).
WHEREAS, the Manager has entered into a Management Agreement, dated
_____, 2001 (the Management Agreement), with [FUND] (the Fund), a [Delaware
business trust/Maryland corporation]and a [DIVERSIFIED/NONDIVERSIFIED], open-end
management investment company registered under the Investment Company Act of
1940 (the 1940 Act), pursuant to which PIFM acts as Manager of the U.S. Government,Fund; and
WHEREAS, PIFM desires to retain the Subadviser to provide investment
advisory services to the Fund and one or more of its agencies or instrumentalities)series as specified in
Section 5 below, if any (individually and collectively, with the Fund, referred
to herein as a result with respectthe Fund) and to 75%manage such portion of the Fund as the Manager
shall from time to time direct, and the Subadviser is willing to render such
investment advisory services; and
WHEREAS, this Agreement is intended to supersede the agreement, dated
_________, 2000, between PIFM and the Subadviser:
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and the Board of
Directors/Trustees of the Fund, the Subadviser shall manage such
portion of the investment operations of the Fund as the Manager shall
direct and shall manage the composition of the Fund's total assets, more than 5%portfolio(s),
including the purchase, retention and disposition thereof, in
accordance with the Fund's investment objectives, policies and
restrictions as stated in the Prospectus(es) and Statement of
Additional Information (such Prospectus and Statement of Additional
Information as currently in effect and as amended or supplemented from
time to time, being herein called the Prospectus), and subject to the
following understandings:
(i) The Subadviser shall provide supervision of such
portion of the Fund's total assets (taken at current
value) would theninvestments as the Manager shall
direct and shall determine from time to time what
investments and securities will be invested in securities of a single issuer.
2. Make short sales of securities except short sales against-the-box (butpurchased, retained, sold
or loaned by the Fund, may obtain such short-term credits as may be necessary for the
clearance of transactions).
3. Concentrate its investments in any one industry (no more than 25%and what portion of the
Fund's total assets will
be invested in any one industry).
4. Issue senior securities, borrow money or pledge its assets, except thatheld uninvested as cash.
(ii) In the Fund may borrow up to 20% of the value of the total assets (calculated when
the loan is made) for temporary, extraordinary or emergency purposes or for the
clearance of transactions. The Fund may pledge up to 20% of the valueperformance of its total assets to secure such borrowings. Forduties and obligations
under this Agreement, the purpose of this restriction,
obligationsSubadviser shall act in conformity
with the [ARTICLES OF INCORPORATION/AGREEMENT AND
DECLARATION OF TRUST], By-Laws and Prospectus of the Fund
and with the instructions and directions of the Manager and
of the Board of Directors/Trustees of the Fund, and will
conform to Directors pursuantand comply with the requirements of the 1940 Act,
the Internal Revenue Code of 1986 and all other applicable
federal and state laws and regulations. In connection
therewith, the Subadviser shall, among other things, prepare
and file such reports as are, or may in the future be,
required by the Securities and Exchange Commission.
(iii) The Subadviser shall determine the securities and
futures contracts to deferred compensation
arrangements,be purchased or sold by such portion of
each Fund's series, as applicable, and will place orders
with or through such persons, brokers, dealers or futures
commission merchants (including but not limited to
Prudential Securities Incorporated or any broker or dealer
affiliated with the Subadviser) to carry out the policy
with respect to brokerage as set forth in the Fund's
Prospectus or as the Board of Directors/Trustees may direct
from time to time. In providing the Fund with investment
supervision, it is recognized that the Subadviser will give
primary consideration to securing the most favorable price
and efficient execution. Within the framework of this
policy, the Subadviser may consider the financial
responsibility, research and investment information and
other services provided by brokers, dealers or futures
commission merchants who may effect or be a party to any
such transaction or other transactions to which the
Subadviser's other clients may be a party. It is understood
that Prudential Securities Incorporated or any broker or
46
dealer affiliated with the Subadviser may be used as
principal broker for securities transactions, but that no
formula has been adopted for allocation of the Fund's
investment transaction business. It is also understood that
it is desirable for the Fund that the Subadviser have access
to supplemental investment and market research and security
and economic analysis provided by brokers or futures
commission merchants who may execute brokerage transactions
at a higher cost to the Fund than may result when allocating
brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the
Subadviser is authorized to place orders for the purchase
and sale of securities and futures contracts for the Fund
with such brokers or futures commission merchants, subject
to review by the Fund's Board of Directors/Trustees from
time to time with respect to the extent and continuation of
this practice. It is understood that the services provided
by such brokers or futures commission merchants may be
useful to the Subadviser in connection with the Subadviser's
services to other clients.
On occasions when the Subadviser deems the purchase or
sale of a security or futures contract to be in the best
interest of the Fund as well as other clients of the
Subadviser, the Subadviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities or futures contracts
to be sold or purchased in order to obtain the most
favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities or
futures contracts so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the
Subadviser in the manner the Subadviser considers to be the
most equitable and consistent with its fiduciary obligations
to the Fund and to such other clients.
(iv) The Subadviser shall maintain all books and
records with respect to the Fund's portfolio transactions
required by subparagraphs (b)(5), (6), (7), (9), (10) and
(11) and paragraph (f) of Rule 31a-1 under the 1940 Act, and
shall render to the Fund's Board of Directors/Trustees such
periodic and special reports as the Directors/Trustees may
reasonably request. The Subadviser shall make reasonably
available its employees and officers for consultation with
any of the Directors/Trustees or officers or employees of
the Fund with respect to any matter discussed herein,
including, without limitation, the valuation of the Fund's
securities.
(v) The Subadviser shall provide the Fund's Custodian
on each business day with information relating to all
transactions concerning the portion of the Fund's assets it
manages, and shall provide the Manager with such information
upon request of the Manager.
(vi) The investment management services provided by the
Subadviser hereunder are not to be deemed exclusive, and the
Subadviser shall be free to render similar services to
others. Conversely, Subadviser and Manager understand and
agree that if the Manager manages the Fund in a
when-issued"manager-of-managers" style, the Manager will, among other
things, (i) continually evaluate the performance of the
Subadviser to each of the Fund's separate series through
quantitative and qualitative analysis and consultations with
such Subadviser (ii) periodically make recommendations to
the Fund's Board as to whether the contract with one or delayed
deliverymore
Subadviser(s) should be renewed, modified, or terminated and
(iii) periodically report to the Fund's Board regarding the
results of its evaluation and monitoring functions.
Subadviser recognizes that its services may be terminated or
modified pursuant to this process.
(b) The Subadviser shall authorize and permit any of its directors,
officers and employees who may be elected as Directors/Trustees or
officers of the Fund to serve in the capacities in which they are
elected. Services to be furnished by the Subadviser under this
Agreement may be furnished through the medium of any of such directors,
officers or employees.
(c) The Subadviser shall keep the Fund's books and records required
to be maintained by the Subadviser pursuant to paragraph 1(a) hereof
and shall timely furnish to the Manager all information relating to
the Subadviser's services hereunder needed by the Manager to keep the
other books and records of the Series required by Rule 31a-1 under
the 1940 Act. The Subadviser agrees that all records
47
which it maintains for the Fund or any series thereof, as
applicable, are the property of the Fund or such series, and the
Subadviser will surrender promptly to the Fund any of such records
upon the Fund's request, provided, however, that the Subadviser may
retain a copy of such records. The Subadviser further agrees to
preserve for the periods prescribed by Rule 31a-2 of the Commission
under the 1940 Act any such records as are required to be maintained
by it pursuant to paragraph 1(a) hereof.
(d) The Subadviser agrees to maintain adequate compliance procedures
to ensure its compliance with the 1940 Act, the Investment Advisers Act
of 1940 and other applicable state and federal regulations.
(e) The Subadviser shall furnish to the Manager copies of all
records prepared in connection with (i) the performance of this
Agreement and (ii) the maintenance of compliance procedures pursuant
to paragraph 1(d) hereof as the Manager may reasonably request.
2. The Manager shall continue to have responsibility for all services
to be provided to the Fund pursuant to the Management Agreement and, as
more particularly discussed above, shall oversee and review the
Subadviser's performance of its duties under this Agreement.
3. For the services provided and the expenses assumed pursuant to this
Agreement, the Manager shall pay the Subadviser as full compensation
therefor, a fee equal to the percentage of the Fund's average daily
net assets of the portion of the Fund managed by the Subadviser as
described in the attached Schedule A.
4. The Subadviser shall not be liable for any error of judgment or for
any loss suffered by the Fund or the Manager in connection with the
matters to which this Agreement relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the
Subadviser's part in the performance of its duties or from its
reckless disregard of its obligations and duties under this
Agreement.
5. This Agreement shall continue in effect for a period of more than
two years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the
requirements of the 1940 Act; provided, however, that this Agreement
may be terminated by the Fund at any time, without the payment of
any penalty, by the Board of Directors/Trustees of the Fund or by
vote of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the Fund, or by the Manager or the Subadviser at
any time, without the payment of any penalty, on not more than 60
days' nor less than 30 days' written notice to the other party. This
Agreement shall terminate automatically in the event of its
assignment (as defined in the 1940 Act) or upon the termination of
the Management Agreement.
6. Nothing in this Agreement shall limit or restrict the right of any
of the Subadviser's directors, officers or employees who may also
be a Director/Trustee, officer or employee of the Fund to engage in
any other business or to devote his or her time and attention in
part to the management or other aspects of any business, whether
of a similar or a dissimilar nature, nor limit or restrict the
Subadviser's right to engage in any other business or to render
services of any kind to any other corporation, firm, individual or
association.
7. During the term of this Agreement, the Manager agrees to furnish
the Subadviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature or other
material prepared for distribution to shareholders of the Fund or
the public, which refer to the Subadviser in any way, prior to use
thereof and not to use material if the Subadviser reasonably objects
in writing five business days (or such other time as may be mutually
agreed) after receipt thereof. Sales literature may be furnished to
the Subadviser hereunder by first-class or overnight mail, facsimile
transmission equipment or hand delivery.
8. This Agreement may be amended by mutual consent, but the consent of
the Fund must be obtained in conformity with the requirements of
the 1940 Act.
9. This Agreement shall be governed by the laws of the State of
New York.
IN WITNESS WHEREOF, the Parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year first
above written.
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
BY:
-------------------------------------------
Robert F. Gunia
Executive Vice President
JENNISON ASSOCIATES LLC
BY:
----------------------------
Karen E. Kohler
Senior Vice President
49
SCHEDULE A
- --------------------------------------------------------------------------------------------------------
Prudential 20/20 Focus 0.375%
- --------------------------------------------------------------------------------------------------------
Prudential Natural Resources 0.375%
- --------------------------------------------------------------------------------------------------------
Prudential Sector Funds, Inc
- --------------------------------------------------------------------------------------------------------
Prudential Financial Services Fund 0.375%
- --------------------------------------------------------------------------------------------------------
Prudential Technology Fund 0.375%
- --------------------------------------------------------------------------------------------------------
Prudential Utility Fund 0.300% to $250 mil.
0.238% next $500 mil.
0.203% next $750 mil.
0.170% next $500 mil.
0.140% next $2 bil.
0.122% next $2 bil.
0.105% over $6 bil.
- --------------------------------------------------------------------------------------------------------
Prudential Small Company Fund, Inc. 0.455%
- --------------------------------------------------------------------------------------------------------
Prudential U.S. Emerging Growth Fund, Inc. 0.300%.
- --------------------------------------------------------------------------------------------------------
50
EXHIBIT G
[FUND]
MANAGEMENT AGREEMENT
Agreement made this day of , 2001, between , a [Delaware
business trust/Maryland corporation] (the Fund), and Prudential Investments Fund
Management LLC, a New York limited liability company (the Manager).
W I T N E S S E T H
WHEREAS, the Fund is a [DIVERSIFIED/NONDIVERSIFIED], open-end
management investment company registered under the Investment Company Act of
1940, as amended (the 1940 Act); and
WHEREAS, the Fund desires to retain the Manager to render or
contract to obtain as hereinafter provided investment advisory services to the
Fund and the Fund also desires to avail itself of the facilities available to
the Manager with respect to the administration of its day-to-day business
affairs, and the Manager is willing to render such investment advisory and
administrative services;
NOW, THEREFORE, the parties agree as follows:
1. The Fund hereby appoints the Manager to act as
manager of the Fund and each series thereof, if any (each a Portfolio), and
as administrator of its business affairs for the period and on the terms set
forth in this Agreement. The Manager accepts such appointment and agrees to
render the services herein described, for the compensation herein provided.
Subject to the approval of the Board of Directors/Trustees of the Fund, the
Manager is authorized to enter into a subadvisory agreement with The
Prudential Investment Corporation, Jennison Associates LLC, or any other
subadviser, whether or not affiliated with the Manager (each, a Subadviser),
pursuant to which such Subadviser shall furnish to the Fund the investment
advisory services in connection with the management of the Fund (each, a
Subadvisory Agreement). Subject to the approval of the Board of
Directors/Trustees of the Fund, the Manager is authorized to retain more than
one Subadviser for the Fund or any Portfolio, and if the Fund or any
Portfolio has more than one Subadviser, the Manager is authorized to allocate
the Fund's or the Portfolio's assets among the Subadvisers. The Manager will
continue to have responsibility for all investment advisory services
furnished pursuant to any Subadvisory Agreement. The Fund and Manager
understand and agree that the Manager may manage the Fund in a
"manager-of-managers" style with either a single or multiple Subadvisers,
which contemplates that the Manager will, among other things and pursuant to
an Order issued by the Securities and Exchange Commission (SEC): (i)
continually evaluate the performance of the Subadviser to the Fund and to
each Portfolio, if applicable, through quantitative and qualitative analysis
and consultations with such Subadviser; (ii) periodically
51
make recommendations to the Fund's Board as to whether the contract with
one or more Subadvisers should be renewed, modified, or terminated; and
(iii) periodically report to the Fund's Board regarding the results of its
evaluation and monitoring functions. The Fund recognizes that subject to the
approval of the Board of Directors/Trustees of the Fund, a Subadviser's
services may be terminated or modified pursuant to the "manager-of-managers"
process and that the Manager may appoint a new Subadviser for a Subadviser
that is so removed.
2. Subject to the supervision of the Board of
Directors/Trustees of the Fund, the Manager shall administer the Fund's business
affairs and, in connection therewith, shall furnish the Fund with office
facilities and with clerical, bookkeeping and recordkeeping services at such
office facilities and, subject to Section 1 hereof and any Subadvisory
Agreement, the Manager shall manage the investment operations of the Fund and
the composition of the Fund's or Portfolio's portfolio including the
purchase, retention and disposition thereof, in accordance with the Fund's and
each Portfolio's investment objectives, policies and restrictions as stated in
the Fund's SEC registration statement, and subject to the following
understandings:
(a) The Manager (or a Subadviser under the Manager's
supervision) shall provide supervision of the Fund's and each
Portfolio's investments, and shall determine from time to time what
investments or securities will be purchased, retained, sold or loaned by
the Fund and each Portfolio, and what portion of the assets will be
invested or held uninvested as cash.
(b) The Manager, in the performance of its duties and
obligations under this Agreement, shall act in conformity with the
[ARTICLES OF INCORPORATION/AGREEMENT AND DECLARATION OF TRUST] and
By-Laws of the Fund and the Fund's SEC registration statement and with
the instructions and directions of the Board of Directors/Trustees of
the Fund, and will conform to and comply with the requirements of the
1940 Act and all other applicable federal and state laws and
regulations. In connection therewith, the Manager shall, among other
things, prepare and file (or cause to be prepared and filed) such
reports as are, or may in the future be, required by the SEC.
(c) The Manager (or the Subadviser under the Manager's
supervision) shall determine the securities and futures contracts to be
purchased or sold by the Fund and each Portfolio and will place orders
pursuant to its determinations with or through such persons, brokers,
dealers or futures commission merchants (including but not limited to
Prudential Securities Incorporated) in conformity with
52
the policy with respect to brokerage as set forth in the Fund's
Registration Statement or as the Board of Directors/Trustees may direct
from time to time. In providing the Fund with investment supervision, it
is recognized that the Manager (or the Subadviser under the Manager's
supervision) will give primary consideration to securing the most
favorable price and efficient execution. Consistent with this policy,
the Manager (or Subadviser under the Manager's supervision) may consider
the financial responsibility, research and investment information and
other services provided by brokers, dealers or futures commission
merchants who may effect or be a party to any such transaction or other
transactions to which other clients of the Manager (or Subadviser) may
be a party. It is understood that Prudential Securities Incorporated (or
a broker-dealer affiliated with a Subadviser) may be used as principal
broker for securities transactions, but that no formula has been adopted
for allocation of the Fund's investment transaction business. It is also
understood that it is desirable for the Fund that the Manager (or
Subadviser) have access to supplemental investment and market research
and security and economic analysis provided by brokers or futures
commission merchants, and that such brokers or futures commission
merchants may execute brokerage transactions at a higher cost to the
Fund than may result when allocating brokerage to other brokers or
futures commission merchants on the basis of seeking the most favorable
price and efficient execution. Therefore, the Manager (or the Subadviser
under the Manager's supervision) is authorized to pay higher brokerage
commissions for the purchase and sale of options,securities and futures
contracts for the Fund to brokers or futures commission merchants who
provide such research and forward
foreign currency exchange contracts and collateral arrangementsanalysis, subject to review by the Fund's
Board of Directors/Trustees from time to time with respect to the extent
and continuation of this practice. It is understood that the services
provided by such broker or futures commission merchant may be useful to
the Manager (or the Subadviser) in connection with its services to other
clients.
On occasions when the Manager (or a Subadviser under
the Manager's supervision) deems the purchase andor sale of options,a security or a
futures contract to be in the best interest of the Fund as well as other
clients of the Manager (or the Subadviser), the Manager (or Subadviser),
to the extent permitted by applicable laws and regulations, may, but
shall be under no obligation to, aggregate the securities or futures
contracts options onto be so sold or purchased in order to obtain the most
favorable price or lower brokerage commissions and efficient execution.
In such event, allocation of the securities or futures contracts and forward foreign currency exchange contracts are not deemedso
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Manager (or the Subadviser) in the manner it
considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
53
(d) The Manager (or the Subadviser under the Manager's
supervision) shall maintain all books and records with respect to the
Fund's portfolio transactions and shall render to the Fund's Board of
Directors/Trustees such periodic and special reports as the Board may
reasonably request.
(e) The Manager (or the Subadviser under the Manager's
supervision) shall be responsible for the financial and accounting
records to be maintained by the Fund (including those being maintained
by the Fund's Custodian).
(f) The Manager (or the Subadviser under the Manager's
supervision) shall provide the Fund's Custodian on each business day
information relating to all transactions concerning the Fund's assets.
(g) The investment management services of the Manager
to the Fund under this Agreement are not to be deemed exclusive, and the
Manager shall be free to render similar services to others.
(h) The Manager shall make reasonably available its
employees and officers for consultation with any of the
Directors/Trustees or officers or employees of the Fund with respect to
any matter discussed herein, including, without limitation, the
valuation of the Fund's securities.
3. The Fund has delivered to the Manager copies of
each of the following documents and will deliver to it all future amendments and
supplements, if any:
(a) [ARTICLES OF INCORPORATION/AGREEMENT AND
DECLARATION OF TRUST];
(b) By-Laws of the Fund (such By-Laws, as in effect on
the date hereof and as amended from time to time, are herein called the
"By-Laws");
(c) Certified resolutions of the Board of
Directors/Trustees of the Fund authorizing the appointment of the
Manager and approving the form of this agreement;
(d) Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-1A (the Registration
Statement), as filed with the SEC relating to the Fund and its shares of
[COMMON STOCK/BENEFICIAL INTEREST] and all amendments thereto; and
(e) Prospectus and Statement of Additional Information
of the Fund and each of its Portfolios.
4. The Manager shall authorize and permit any of its
officers and employees who may be elected as Directors/Trustees or officers of
the Fund to serve in the capacities in which they are elected. All services to
be furnished by the Manager under this Agreement may be furnished through the
medium of any such officers or employees of the Manager.
54
5. The Manager shall keep the Fund's books and
records required to be maintained by it pursuant to Paragraph 2 hereof. The
Manager agrees that all records which it maintains for the Fund are the property
of the Fund, and it will surrender promptly to the Fund any such records upon
the Fund's request, provided however that the Manager may retain a copy of such
records. The Manager further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records as are required to be maintained
by the Manager pursuant to Paragraph 2 hereof.
6. During the term of this Agreement, the Manager
shall pay the following expenses:
(i) the salaries and expenses of all employees of the
Fund and the Manager, except the fees and expenses of Directors/Trustees
who are not affiliated persons of the Manager or any Subadviser,
(ii) all expenses incurred by the Manager in
connection with managing the ordinary course of the Fund's business,
other than those assumed by the Fund herein, and
(iii) the fees, costs and expenses payable to a
Subadviser pursuant to a Subadvisory Agreement. The Fund assumes and
will pay the expenses described below:
(a) the fees and expenses incurred by the Fund in
connection with the management of the investment and reinvestment of the
Fund's assets,
(b) the fees and expenses of Fund Directors/Trustees
who are not "interested persons" of the Fund within the meaning of the
1940 Act,
(c) the fees and expenses of the Custodian that relate
to (i) the custodial function and the recordkeeping connected therewith,
(ii) preparing and maintaining the general accounting records of the
Fund and the provision of any such records to the Manager useful to the
Manager in connection with the Manager's responsibility for the
accounting records of the Fund pursuant to Section 31 of the 1940 Act
and the rules promulgated thereunder, (iii) the pricing or valuation of
the shares of the Fund, including the cost of any pricing or valuation
service or services which may be retained pursuant to the authorization
of the Board of Directors/Trustees of the Fund, and (iv) for both mail
and wire orders, the cashiering function in connection with the issuance
and redemption of the Fund's securities,
(d) the fees and expenses of the Fund's Transfer and
Dividend Disbursing Agent that relate to the maintenance of each
shareholder account,
(e) the charges and expenses of legal counsel and
independent accountants for the Fund,
(f) brokers' commissions and any issue or transfer
taxes chargeable to the Fund in connection with its securities and
futures transactions,
55
(g) all taxes and corporate fees payable by the Fund
to federal, state or other governmental agencies,
(h) the fees of any trade associations of which the
Fund may be a member,
(i) the cost of share certificates representing,
and/or non-negotiable share deposit receipts evidencing, shares of the
Fund,
(j) the cost of fidelity, directors' and officers' and
errors and omissions insurance,
(k) the fees and expenses involved in registering and
maintaining registration of the Fund and of its shares with the
Securities and Exchange Commission, and paying notice filing fees under
state securities laws, including the preparation and printing of the
Fund's registration statement and the Fund's prospectuses and statements
of additional information for filing under federal and state securities
laws for such purposes,
(l) allocable communications expenses with respect to
investor services and all expenses of shareholders' and
Directors'/Trustees' meetings and of preparing, printing and mailing
reports and notices to shareholders in the amount necessary for
distribution to the shareholders,
(m) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business, and
(n) any expenses assumed by the Fund pursuant to a
Distribution and Service Plan adopted in a manner that is consistent
with Rule 12b-1 under the 1940 Act.
7. For the services provided and the expenses assumed
pursuant to this Agreement, the Fund will pay to the Manager as full
compensation therefor a fee at the annual rate(s) as described on the attached
Schedule A with respect to the average daily net assets of each Portfolio of the
Fund. This fee will be computed daily, and will be paid to the Manager monthly.
8. The Manager shall not be liable for any error of
judgment or for any loss suffered by the Fund in connection with the matters to
which this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services (in which case any
award of damages shall be limited to the period and the amount set forth in
Section 36(b)(3) of the 1940 Act) or loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
56
9. This Agreement shall continue in effect for a
period of more than two years from the date hereof only so long as such
continuance is specifically approved at least annually in conformity with the
requirements of the 1940 Act; provided, however, that this Agreement may be
terminated with respect to any Portfolio by the Fund at any time, without the
payment of any penalty, by the Board of Directors/Trustees of the Fund or by
vote of a senior security or a pledge of assets.
5. Purchase any security if as a result the Fund would then hold more than
10%majority of the outstanding voting securities (as defined in the 1940
Act) of the Portfolio, or by the Manager at any time, without the payment of any
one issuer.
[6. Purchasepenalty, on not more than 60 days' nor less than 30 days' written notice to the
other party. This Agreement shall terminate automatically in the event of its
assignment (as defined in the 1940 Act).
10. Nothing in this Agreement shall limit or restrict
the right of any security if asofficer or employee of the Manager who may also be a
resultDirector/Trustee, officer or employee of the Fund would then have more than
5%to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of its total assets (taken at current value) investedany business, whether of a similar or dissimilar nature, nor
limit or restrict the right of the Manager to engage in securitiesany other business or to
render services of companies (including predecessors) less than three years old.]
6. [7.] Buyany kind to any other corporation, firm, individual or
sell commoditiesassociation.
11. Except as otherwise provided herein or commodity contracts or real estate or
interests in real estate except thatauthorized
by the Board of Directors/Trustees of the Fund may purchase and sell stock index
futures contracts, options thereon and forward foreign currency exchange
contracts and securities which are secured by real estate and securities of
companies which invest or deal in real estate.
7. [8.] Act as underwriter exceptfrom time to time, the extent that, in connection with
the disposition of portfolio securities, it mayManager
shall for all purposes herein be deemed to be an underwriter
under certain federal securities laws.
8. [9.] Make investmentsindependent contractor, and
shall have no authority to act for or represent the purposeFund in any way or otherwise
be deemed an agent of exercising control or
management.
9. [10.] Invest in securitiesthe Fund.
12. During the term of other investment companies, except by
purchases inthis Agreement, the open market involving only customary brokerage commissions and
as a result of which not more than 10% ofFund agrees
to furnish the Manager at its total assets (taken at current
value) would be invested in such securities, or except as part of a merger,
consolidationprincipal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other acquisition.
10. [11.] Investmaterial
prepared for distribution to shareholders of the Fund or the public, which refer
in interestsany way to the Manager, prior to use thereof and not to use such material if
the Manager reasonably objects in oil, gaswriting within five business days (or such
other time as may be mutually agreed) after receipt thereof. In the event of
termination of this Agreement, the Fund will continue to furnish to the Manager
copies of any of the above- mentioned materials which refer in any way to the
Manager. Sales literature may be furnished to the Manager hereunder by
first-class or overnight mail, facsimile transmission equipment or hand
delivery. The Fund shall furnish or otherwise make available to the Manager such
other information relating to the business affairs of the Fund as the Manager at
any time, or from time to time, reasonably requests in order to discharge its
obligations hereunder.
13. This Agreement may be amended by mutual consent,
but the consent of the Fund must be obtained in conformity with the requirements
of the 1940 Act.
57
14. Any notice or other mineral explorationcommunication required to be
given pursuant to this Agreement shall be deemed duly given if delivered or
development programs, although it may investmailed by registered mail, postage prepaid, (1) to the Manager at Gateway Center
Three, 100 Mulberry Street, 4th Floor, Newark, NJ 07102-4077, Attention:
Secretary; or (2) to the Fund at Gateway Center Three, 100 Mulberry Street,
Newark, NJ 07102-4077, Attention: President.
15. This Agreement shall be governed by and construed
in accordance with the common stock of companies
which invest in or sponsor such programs.
11. [12.] Make loans, except through (i) repurchase agreements and (ii)
loans of portfolio securities (such loans being limited to 30% [10%]laws of the Fund's total assets). (The purchaseState of a portion of an issue of securities
distributed publicly, whether or not the purchase is made on the original
issuance, is not considered the making of a loan.)
E-2
PRUDENTIAL EQUITY INCOME FUND
INVESTMENT RESTRICTIONSNew York.
16. The Fund may not:
(1) Purchase securities on margin (butuse the name "[INSERT FUND NAME]" or
any name including the word "Prudential" only for so long as this Agreement or
any extension, renewal or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
Manager's business as Manager or any extension, renewal or amendment thereof
remain in effect. At such time as such an agreement shall no longer be in
effect, the Fund may obtainwill (to the extent that it lawfully can) cease to use such short-term
credits as may be necessary fora
name or any other name indicating that it is advised by, managed by or otherwise
connected with the clearance of transactions); provided that
the depositManager, or payment byany organization which shall have so succeeded to
such businesses. In no event shall the Fund use the name "[INSERT FUND NAME]" or
any name including the word "Prudential" if the Manager's function is
transferred or assigned to a company of initial or maintenance margin in
connection with stock index futures or options thereon iswhich The Prudential Insurance Company
of America does not consideredhave control.
IN WITNESS WHEREOF, the purchase of a security on margin.
(2) Make short sales of securities or maintain a short position, except
short sales against-the-box.
(3) Issue senior securities, borrow money or pledge its assets, except that
the Fund may borrow upparties hereto have caused
this instrument to 20%be executed by their officers designated below as of the value of its total assets (calculated when
the loan is made) for temporary, extraordinary or emergency purposes or for the
clearance of transactionsday
and to take advantage ofyear first above written.
[FUND]
By:
------------------------------
John R. Strangfeld
President
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC
By:
------------------------------
Robert F. Gunia
Executive Vice President
58
SCHEDULE A
- -------------------------------------------------------------------------------------------------------
Prudential 20/20 Focus Fund 0.75%
- -------------------------------------------------------------------------------------------------------
Prudential Index Series Fund
Prudential Stock Index Fund 0.30%
- -------------------------------------------------------------------------------------------------------
Prudential Natural Resources Fund, Inc. 0.75%
- -------------------------------------------------------------------------------------------------------
Prudential Sector Funds, Inc.
- -------------------------------------------------------------------------------------------------------
Prudential Financial Services Fund 0.75%
- -------------------------------------------------------------------------------------------------------
Prudential Technology Fund 0.75%
- -------------------------------------------------------------------------------------------------------
Prudential Utility Fund 0.60% to $250 mil.
0.50% next $500 mil.
0.45% next $750 mil.
0.40% next $500 mil.
0.35% next $2 bil.
0.325% next $2 bil.
0.30% over $6 bil.
- -------------------------------------------------------------------------------------------------------
Prudential Small Company Fund, Inc. 0.70%
- -------------------------------------------------------------------------------------------------------
Prudential Tax Managed Funds
Prudential Tax-Managed Equity Fund 0.65%
- -------------------------------------------------------------------------------------------------------
Prudential Tax-Managed Small-Cap Fund 0.60%
- -------------------------------------------------------------------------------------------------------
Prudential U.S. Emerging Growth Fund, Inc. 0.60% to $1 bil. and
0.55% above $1 bil.
- -------------------------------------------------------------------------------------------------------
The Prudential Investment Portfolios, Inc. 0.65% to $1 bil.,
Active Balanced Fund 0.60% above $1 bil
- -------------------------------------------------------------------------------------------------------
Prudential Equity Opportunity Fund 0.60% to $300 mil,
0.575% above $300 mil
- -------------------------------------------------------------------------------------------------------
Prudential Jennison Growth Fund 0.60% to $300 mil,
0.575% next $1.7 bil,
0.55% over $5 bil
- -------------------------------------------------------------------------------------------------------
59
EXHIBIT H
AMENDMENTS TO FUNDAMENTAL
INVESTMENT RESTRICTIONS AND POLICIES
The following chart compares each Fund's fundamental investment
opportunities. The
Fund may pledge up to 20% of the value of its total assets to secure such
borrowings. For purposes of this restriction, the purchase or sale of securities
on a when-issued or delayed delivery basis, forward foreign currency exchange
contractsrestrictions and collateral and collateral arrangements relating thereto,
collateral arranagements with respect to stock index futures and options thereon
and with respectpolicies as they currently exist to the proposed amended
provisions. For more information about these changes, please refer to
Proposals 5(a) through 5(g) in the Proxy Statement.
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS
- ------------ ------------
PRUDENTIAL 20/20 FOCUS FUND
The Fund may not:
1. Purchase securities on margin (but the Fund may The restriction will not change,
obtain such short-term credits as may be necessary but will become non-fundamental.
for the clearance of transactions); provided that
the deposit or payment by the Fund of initial or
maintenance margin in connection with futures or
options is not considered the purchase of a security
on margin.
2. Make short sales of securities or maintain a The restriction will not change,
short position if, when added together, more than but will become non-fundamental.
25% of the value of the Fund's net assets would be
(i) deposited as collateral for the obligation to
replace securities borrowed to effect short sales
and (ii) allocated to segregated accounts in
connection with short sales. Short sales
"against-the-box" are not subject to this limitation.
3. Issue senior securities, borrow money or pledge Issue senior securities or borrow money or pledge
its assets, except that the Fund may borrow from its assets, except as permitted by the 1940 Act
banks up to 20% of the value of its total assets Laws, Interpretations and Exemptions. For purposes
(calculated when the loan is made) for temporary, of this restriction, the purchase or sale of
extraordinary or emergency purposes or for the securities on a when-issued or delayed delivery
clearance of transactions. The Fund may pledge up to basis, reverse repurchase agreements, short sales,
20% of the value of its total assets to secure such derivative and hedging transactions, including,
borrowings. For purposes of this restriction, the without limitation, interest rate swap transactions,
purchase or sale of securities on a when-issued or and collateral arrangements with respect thereto,
delayed delivery basis, foreign and transactions similar to any of the foregoing and
60
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
currency forward contracts and collateral collateral arrangements with respect thereto, and
arrangements relating thereto, and collateral obligations of the Fund to Trustees pursuant to
arrangements with respect to futures contracts and deferred compensation arrangements are not deemed to
options thereon and with respect to the writing of be a pledge of assets or the issuance of a senior security.
options on securities or on stock indices and obligations of the Fund to Trustees
pursuant to deferred compensation arrangements are
not deemed to be a pledge of assets subject to this
restriction.
4. Purchase any security (other than obligations of Purchase any security if as a result more than 25% of the Fund's
the U.S. government, its agencies or total assets would be invested in the securities of issuers having
instrumentalities) if as a result 25% or more of the their principal business activities in the same industry, except for
Fund's total assets (determined at the time of the temporary defensive purposes, and except that this limitation does not
investment) would be invested in a single industry. apply to securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities.
5. Buy or sell real estate or interests in real Buy or sell real estate, except that investment in
estate, except that the Fund may purchase and sell securities of issuers that invest in real estate and
securities which are secured by real estate, investments in mortgage-backed securities, mortgage
securities of companies which invest or deal in real participations or other instruments supported or
estate and publicly traded securities of real estate secured by interests in real estate are not subject
investment trusts. to this limitation, and except that the Fund may
exercise rights relating to such securities,
including the right to enforce security interests
and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated
in an orderly manner.
6. Buy or sell commodities or commodity contracts, Buy or sell physical commodities or contracts
except that the Fund may purchase and sell financial involving physical commodities, except that the Fund
futures contracts and options thereon, and foreign may purchase and sell (i) derivative, hedging and
currency forward contracts. similar instruments, including, without limitation,
financial futures contracts and options thereon, and
(ii) securities or instruments backed by, or the
return from which is linked to, physical commodities
or currencies, including, without limitation,
forward currency exchange contracts, and except that
the Fund may exercise rights relating to such
instruments, including the right to enforce security
interests and to hold physical commodities and
contracts involving physical commodities acquired as
a result of the Fund's ownership of instruments
supported or secured thereby until they can be
liquidated in an orderly manner.
7. Act as underwriter except to the extent that, in No change.
connection with the disposition of portfolio
securities, it may be deemed to be an underwriter
under certain federal securities laws.
8. Make investments for the purpose of exercising This restriction will not change, but will become
control or management. non-fundamental.
9. Invest in securities of other non-affiliated This restriction will become non-fundamental and,
investment companies, except by purchases in the as described in proposal 5(h), is expected to be
open market involving only customary brokerage amended by the Board.
commissions and as a result of which the Fund will
not hold more than 3% of the outstanding voting
securities of any one investment company,
61
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
will not have invested more than 5% of its total
assets in any one investment company and will not
have invested more than 10% of its total assets
(determined at the time of investment) in such
securities of one or more investment companies, or
except as part of a merger, consolidation or other
acquisition.
10. Make loans, except through (a) repurchase The Fund may make loans, including loans of
agreements and (b) loans of portfolio securities assets of the Fund, repurchase agreements, trade
limited to 33 1/3 of the Fund's total assets. 11. claims, loan participations or similar investments,
Purchase more than 10% of all outstanding voting or as permitted by the 1940 Act Laws,
securities of any one issuer. Interpretations and Exemptions. The acquisition of bonds,
debentures, other debt securities or instruments, or
participations or other interests therein and
investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances
or instruments similar to any of the foregoing will
not be considered the making of a loan, and is permitted
if consistent with the Fund's investment objective.
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL STOCK INDEX FUND
The Fund may not:
1. Purchase any security if, as a result, with Purchase the securities of any issuer if, as a
respect to 75% of the Fund's total assets, more than result, the Fund would fail to be a diversified
5% of the value of its total assets (determined at company within the meaning of the 1940 Act, and the
the time of investment) would then be invested in rules and regulations promulgated thereunder, as
the securities of any one issuer. each may be amended from time to time, except to
the extent that the Fund may be permitted to do so
by exemptive order, SEC release, no-action letter or
similar relief or interpretations (collectively, the
"1940 Act Laws, Interpretations and Exemptions").
2. Purchase a security if more than 10% of the The restriction will not change, but will
outstanding voting securities of any one issuer become non-fundamental, to the extent not included
would be held by the Fund. within restriction no. 1.
3. Purchase a security if, as a result, 25% or more Purchase any securities if as a result more than 25%
of the value of its total assets (determined at the of the Fund's total assets would be invested in the
time of investment) would be invested in securities securities of issuers having their principal
of one or more issuers having their principal business activities in the same industry, except for
business activities in the same industry. This temporary defensive purposes, and except that this
restriction does not apply to obligations issued or limitation does not apply to securities issued or
guaranteed by the United States Government, its guaranteed by the U.S. government, its agencies or
agencies or instrumentalities. instrumentalities.
62
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
4. Purchase or sell real estate or interests therein Buy or sell real estate, except that investment in
(including limited partnership interests), although securities of issuers that invest in real estate and
a Fund may purchase securities of issuers which investments in mortgage-backed securities, mortgage
engage in real estate operations and securities participations or other instruments supported or
which are secured by real estate or interests secured by interests in real estate are not subject
therein. to this limitation, and except that the Fund may
exercise rights relating to such securities,
including the right to enforce security interests
and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated
in an orderly manner.
5. Purchase or sell commodities or commodity futures Buy or sell physical commodities or contracts
contracts, except that the Fund may purchase and sell involving physical commodities, except that the Fund
financial futures contracts and options thereon and may purchase and sell (i) derivative, hedging and
that forward contracts are not deemed to be similar instruments, including, without limitation,
commodities or commodity futures contracts. financial futures contracts and options thereon, and
(ii) securities or instruments backed by, or the
return from which is linked to, physical commodities
or currencies, including, without limitation,
forward currency exchange contracts, and except that
the Fund may exercise rights relating to such
instruments, including the right to enforce security
interests and to hold physical commodities and
contracts involving physical commodities acquired as
a result of the Fund's ownership of instruments
supported or secured thereby until they can be
liquidated in an orderly manner.
6. Purchase oil, gas or other mineral leases, rights The restriction will not change, but will
or royalty contracts or exploration or development become non-fundamental.
programs, except that the Fund may invest in the
securities of companies which operate, invest in or
sponsor such programs.
7. Issue senior securities, borrow money or pledge Issue senior securities or borrow money or pledge
its assets, except that each Fund may borrow from its assets, except as permitted by the 1940 Act
banks or through forward rolls, dollar rolls or Laws, Interpretations and Exemptions. For purposes
reverse repurchase agreements up to 20% of the value of this restriction, the purchase or sale of
of its total assets to take advantage of investment securities on a when-issued or delayed delivery
opportunities, for temporary, extraordinary or basis, reverse repurchase agreements, short sales,
emergency purposes, or for the clearance of derivative and hedging transactions, including,
transactions and may pledge up to 20% of the value without limitation, interest rate swap transactions,
of its total assets to secure such borrowings. For and collateral arrangements with respect thereto,
purposes of this restriction, the purchase or sale and transactions similar to any of the foregoing and
of securities on a "when-issued" or delayed delivery collateral arrangements with respect thereto, and
basis; the purchase and sale of options, financial obligations of the Fund to Trustees pursuant to
futures contracts and options thereon; the entry deferred compensation arrangements are not deemed
into repurchase agreements and collateral and margin to be a pledge of assets or the issuance
arrangements with respect to any of the foregoing, of a senior security.
will not be deemed to be a pledge of assets nor the
issuance of senior securities.
8. Make loans except by the purchase of fixed-income The Fund may make loans, including through loans of
securities in which the Fund may invest consistently assets of the Fund, repurchase agreements, trade
with its investment objective and policies or by use claims, loan participations or similar investments,
of reverse repurchase and repurchase agreements, or as permitted by the 1940 Act Laws,
forward rolls, dollar rolls and securities lending Interpretations and Exemptions. For purposes of this
arrangements. limitation and consistent with the Fund's investment
objective, the acquisition of bonds, debentures,
other debt securities or instruments, or
participations or other interests therein and
investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances
or instruments similar to any of the foregoing will
not be considered the making of a loan.
63
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
9. Make short sales of securities. The restriction will not change, but will
become non-fundamental.
10. Purchase securities on margin, except for such The restriction will not change, but will
short-term loans as are necessary for the clearance become non-fundamental.
of purchases of portfolio securities. (For the
purpose of this restriction, the deposit or payment
by any Fund of initial or maintenance margin in
connection with financial futures contracts is not
considered the purchase of a security on margin.)
11. Act as underwriter except to the extent that, in Act as underwriter except to the extent that, in
connection with the disposition of portfolio connection with the disposition of portfolio
securities, it may be deemed to be an underwriter securities, it may be deemed to be an underwriter
under certain federal securities laws. The Fund has under certain federal securities laws.
no limit with respect to investments in restricted
securities.
PRUDENTIAL NATURAL RESOURCES FUND, INC.
The Fund may not:
1. Purchase securities on margin (but the Fund may The restriction will not change, but will
obtain such short-term credits as may be necessary become non-fundamental.
for the clearance of transactions); provided that
the deposit or payment by the Fund of initial or
maintenance margin in connection with futures or
options is not considered the purchase of a security
on margin.
2. Make short sales of securities or maintain a The restriction will not change, but will
short position, except short sales against-the-box. become non-fundamental.
3. Issue senior securities, borrow money or pledge Issue senior securities or borrow money or pledge
its assets, except that the Fund may borrow up to its assets, except as permitted by the 1940 Act
20% of the value of its total assets (calculated Laws, Interpretations and Exemptions. For purposes
when the loan is made) for temporary, extraordinary of this restriction, the purchase or sale of
or emergency purposes or for the clearance of securities on a when-issued or delayed delivery
transactions. The Fund basis, reverse repurchase agreements, short sales,
derivative and hedging transactions, including,
without limitation, interest rate swap transactions,
and collateral arrangements with respect thereto,
and transactions similar to any of the foregoing and
collateral arrangements with respect thereto, and
obligations of the Fund to Directors pursuant to
deferred compensation arrangements are not deemed to
be a pledge of assets or the issuance of a senior security.
(4)
64
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
may pledge up to 20% of the value of its total
assets to secure such borrowings. For purposes of
this restriction, the purchase or sale of securities
on a when-issued or delayed delivery basis, forward
foreign currency exchange contracts and collateral
arrangements relating thereto, and collateral
arrangements with respect to futures contracts and
options thereon and with respect to the writing of
options and obligations of the Fund to Directors
pursuant to deferred compensation arrangements are
not deemed to be a pledge of assets or the issuance
of a senior security.
4. Purchase any security (other than obligations of The first portion of the restriction is proposed to be eliminated
the U.S. Government, its agencies or (so that the Fund will be non-diversified).
instrumentalities) if as a result: (i) with respect - and -
to 75% of the Fund's total assets, more than 5% of Purchase any securities if as a result more than 25% of the Fund's
the Fund's total assets (determined at the time of total assets would be invested in the securities of issuers having
investment) would then be invested in securities of their principal business activities in the same industry, except for
a single issuer, or (ii) 25% or more of the Fund's temporary defensive purposes, and except that this limitation does not
total assets (determined at the time of investment) apply to securities issued or guaranteed by the U.S. government, its
would be invested in a single industry. agencies or instrumentalities.
5. Purchase any security (other than obligations of the U.S. Government,
its agencies or instrumentalities) if as a result: (i) with respect to 75% of
the Fund's total assets, more than 5% of the Fund's total assets (determined at
the time of investment) would then be invested in securities of a single issuer,
or (ii) more than 25% of the Fund's total assets (determined at the time of
investment) would be invested in a single industry. As to utility companies,
gas, electric and telephone companies will be considered as separate industries.
(5) Purchase any security if as a result the Fund would then hold more than
10% of the outstanding voting securities of an issuer.
[(6) Purchase any security if as a result the Fund would then have more than
5% of its total assets (determined at the time of investment) invested in
securities of companies (including predecessors) less than three years old,
except that the Fund may invest in the securities of any U.S. Government agency
or instrumentality, and in any security guaranteed by such an agency or
instrumentality.]
(6) [(7)] Buy or sell real estate or interests in real estate, except that
the Fund may purchase and sell securities which are secured by real estate,
securities of companies which invest or deal in real estate and publicly traded
securities of real estate investment trusts. The Fund may not purchase interests
in real estate limited partnerships which are not readily marketable.
(7) [(8)] Buy or sell commodities or commodity contracts, except that the
Fund may purchase and sell stock index futures contracts and options thereon.
(For purposes of this restriction, forward foreign currency exchange contracts
are not deemed to be a commodity or commodity contract.)
(8) [(9)] Act as underwriter except to the extent that, in connection with
the disposition of portolio securities, it may be deemed to be an underwriter
under certain federal securities law.
(9) [(10)] Make investments for the purpose of exercising control or
management.
(10) [(11)] Invest in securities or other registered investment companies,
except by purchases in the open market involving only cu stomary brokerage
commissions and as a result of which not more than 10% [5%]of its total assets
(determined at the time of investment) would be invested in such securities, or
except as part of a merger, consolidation or other acquisition.
(11) [(12)] Invest in interests in oil, gas or other mineral exploration or
development programs, except that the Fund may invest in the securities of
companies which invest in or sponsor such programs.
E-3
(12) [(13)] Make loans, except through repurchase agreements and loans of
portfolio securities (limited to 33% of the Fund's total assets).
(13) [(14)] Purchase warrants if as a result the Fund The restriction will not change, but will become
would then hold more than 10% of the outstanding non-fundamental, to the extent not included within restriction no. 4.
voting securities of an issuer.
6. Buy or sell real estate or interests in real Buy or sell real estate, except that investment in
estate, except that the Fund may purchase and sell securities of issuers that invest in real estate and
securities which are secured by real estate, investments in mortgage-backed securities, mortgage
securities of companies which invest or deal in real participations or other instruments supported or
estate and publicly traded securities of real estate secured by interests in real estate are not subject
investment trusts. The Fund may not purchase to this limitation, and except that the Fund may
interests in real estate limited partnerships which exercise rights relating to such securities,
are not readily marketable. including the right to enforce security interests
and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated
in an orderly manner.
7. Buy or sell commodities or commodity contracts. Buy or sell physical commodities or contracts
(For purposes of this restriction, futures contracts involving physical commodities, except that the Fund
on currencies and on stock indices and forward may purchase and sell (i) derivative, hedging and
foreign currency exchange contracts are not deemed similar instruments, including, without limitation,
to be commodities or commodity contracts.) financial futures contracts and options thereon, and
(ii) securities or instruments backed by, or the
return from which is linked to, physical commodities
or currencies, including, without limitation,
forward currency exchange contracts, and except that
the Fund may exercise rights relating to such
instruments, including the right to enforce security
interests and to hold physical commodities and
contracts involving physical commodities acquired as
a result of the Fund's ownership of instruments
supported or secured thereby until they can be
liquidated in an orderly manner.
65
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
8. Act as underwriter except to the extent that, in No change.
connection with the disposition of portfolio
securities, it may be deemed to be an underwriter
under certain federal securities laws.
9. Make investments for the purpose of exercising The restriction will not change, but will
control or management. become non-fundamental.
10. Invest in securities of other registered The restriction will become non-fundamental and, as described
investment companies, except by purchases in the in proposal 5(h), is expected to be amended by the Board.
open market involving only customary brokerage
commissions and as a result of which not more than
5% of its total assets (determined at the time of
investment) would be invested in such securities, or
except as part of a merger, consolidation or other
acquisition.
11. Invest in interests in oil, gas or other mineral The restriction will not change, but will
exploration or development programs, except that the become non-fundamental.
Fund may invest in the securities of companies which
invest in or sponsor such programs.
12. Make loans, except through (i) repurchase The Fund may make loans, including loans of
agreements and (ii) loans of portfolio securities assets of the Fund, repurchase agreements, trade
(limited to 30% of the Fund's total assets). claims, loan participations or similar investments,
or as permitted by the 1940 Act Laws,
Interpretations and Exemptions. The acquisition of bonds,
debentures, other debt securities or instruments, or
participations or other interests therein and
investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances
or instruments similar to any of the foregoing will
not be considered the making of a loan, and is permitted
if consistent with the Fund's investment objective.
13. Purchase any security if as a result the Fund The restriction will not change, but will
would then have more than 5% of its total assets become non-fundamental.
(determined at the time of the investment) invested
in securities of companies (including predecessors)
less than three years old, except that the Fund may
invest in the securities of any U.S. Government
agency or instrumentality, and in any security
guaranteed by such agency or instrumentality and
except that the Fund may invest in securities rated
in the top three grades by a nationally recognized
rating agency.
66
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
PRUDENTIAL SECTOR FUNDS, INC.
- - PRUDENTIAL FINANCIAL SERVICES FUND
- - PRUDENTIAL HEALTH SCIENCES FUND
- - PRUDENTIAL TECHNOLOGY FUND
1. Issue senior securities, borrow money or pledge Issue senior securities or borrow money or pledge
its assets, except that the Fund may borrow from its assets, except as permitted by the 1940 Act
banks up to 33 1/3% of the value of its total assets Laws, Interpretations and Exemptions. For purposes
(calculated when the loan is made) for temporary, of this restriction, the purchase or sale of
extraordinary or emergency purposes or for the securities on a when-issued or delayed delivery
clearance of transactions. Each of these Funds may basis, reverse repurchase agreements, short sales,
pledge up to 33 1/3% of the value of its total derivative and hedging transactions, including,
assets to secure such borrowings. For purposes of without limitation, interest rate swap transactions,
this restriction, the purchase or sale of securities and collateral arrangements with respect thereto,
on a when-issued or delayed delivery basis, forward and transactions similar to any of the foregoing and
foreign currency exchange contracts and collateral collateral arrangements with respect thereto, and
arrangements relating thereto, and collateral obligations of the Fund to Directors pursuant to
arrangements with respect to futures contracts and deferred compensation arrangements are not deemed to be
options thereon and with respect to the writing of a pledge of assets or the issuance of a senior security.
options and obligations of a Fund to Directors
pursuant to deferred compensation arrangements are
not deemed to be a pledge of assets subject to this
restriction.
2. Buy or sell real estate or interests in real Buy or sell real estate, except that investment in
estate, except that a Fund may purchase and sell securities of issuers that invest in real estate and
securities which are secured by real estate, investments in mortgage-backed securities, mortgage
securities of companies which invest or deal in real participations or other instruments supported or
estate and publicly traded securities of real estate secured by interests in real estate are not subject
investment trusts. to this limitation, and except that the Fund may
exercise rights relating to such securities,
including the right to enforce security interests
and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated
in an orderly manner.
3. Buy or sell commodities or commodity contracts, Buy or sell physical commodities or contracts
except that a Fund may purchase and sell financial involving physical commodities, except that the Fund
futures contracts and options thereon, and forward may purchase and sell (i) derivative, hedging and
foreign currency exchange contracts. similar instruments, including, without limitation,
financial futures contracts and options thereon, and
(ii) securities or instruments backed by, or the
return from which is linked to, physical commodities
or currencies, including, without limitation,
forward currency exchange contracts, and except that
the Fund may exercise rights relating to such
instruments, including the right to enforce security
interests and to hold physical commodities and
contracts involving physical commodities acquired as
a result of the Fund's ownership of instruments
supported or secured thereby until they can be
liquidated in an orderly manner.
4. Act as underwriter except to the extent that, in No change.
connection with the disposition of portfolio
securities, it may be deemed to be an underwriter
under certain federal securities laws.
67
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
5. Make loans, except through (a) repurchase The Fund may make loans, including loans of
agreements and (b) loans of portfolio securities assets of the Fund, repurchase agreements, trade
limited to 33 1/3% of the Fund's total assets. claims, loan participations or similar investments,
or as permitted by the 1940 Act Laws,
Interpretations and Exemptions. The acquisition of
bonds, debentures, other debt securities or instruments,
or participations or other interests therein and
investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances
or instruments similar to any of the foregoing will
not be considered the making of a loan, and is permitted
if consistent with the Fund's investment objective.
6. Purchase any security (other than obligations of This restriction will not change and
the U.S. Government, its agencies or will remain fundamental.
instrumentalities) if, as a result, 25% or more of
the Fund's total assets (determined at the time of
the investment) would be invested in any one
industry other than as follows: Prudential Financial
Services Fund will concentrate its investments
(i.e., will invest at least 25% of its total assets
under normal circumstances) in securities of
companies in the financial services group of
industries. Prudential Health Sciences Fund will
concentrate its investments (i.e., will invest at
least 25% of its total assets under normal
circumstances) in securities of companies in the
health sciences group of industries. Prudential
Technology Fund will concentrate its investments
(i.e., will invest at least 25% of its total assets
under normal circumstances) in securities of
companies in the technology group of industries.
68
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
PRUDENTIAL SECTOR FUNDS, INC.
- - PRUDENTIAL UTILITY FUND
The Fund may not:
1. Purchase any security (other than obligations of The first portion of the restriction is proposed
the U.S. Government, its agencies, or to be eliminated (so that the Fund will be
instrumentalities) if as a result with respect to non-diversified). The second portion, which is
75% of the Fund's total assets, more than 5% of the the Fund's concentration policy, is proposed to
Fund's total assets (taken at current value) would be re-cast to read: Prudential Utility Fund
then be invested in securities of a single issuer; will concentrate its investments (i.e., will
the Fund will concentrate its investments in utility invest at least 25% of its total assets under
stocks as described under "Description of the Funds, normal circumstances) in securities of
Their Investments and Risks." companies in the utility group of industries.
2. Purchase securities on margin (but the Fund may The restriction will not change, but will become
obtain such short-term credits as may be necessary non-fundamental.
for the clearance of transactions); the deposit or
payment by the Fund of initial or maintenance margin
in connection with options, futures contracts,
options on futures contracts, forward foreign
currency exchange contracts or options on currencies
is not considered the purchase of a security on
margin.
3. Make short sales of securities or maintain a The restriction will not change, but will become
short position, unless at all times when a short non-fundamental.
position is open it owns an equal amount of such
securities or securities convertible into or
exchangeable, without payment of any further
consideration, for securities of the same issue as,
and equal in amount to, the securities sold short,
and unless not more than 25% of the Fund's net
assets (taken at current value) invested in warrants or
more than 2% of its total assets (taken at current value) invested in warrants
not listed on the New York or American Stock Exchanges.
E-4
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
INVESTMENT RESTRICTIONS
The Fund may not:
1. Invest 25% or more of its total assets in any one industry. For this
purpose "industry" does not include the U.S. Government and agencies and
instrumentalities of the U.S. Government.
[2. Invest more than 5% of its total assets in securities of companies
having a record, together with predecessors, of less than three years of
continuous operation. This restriction shall not apply to obligations of the
U.S. Government and obligations issued by agencies of the U.S. Government or
instrumentalities established or sponsored by the U.S. Government.]
2. [3.] Purchase securities on margin, except such short-term credits as may
be necessary for the clearance of transactions and except that the Fund may make
deposits on margin in connection with futures contracts and options.
3. [4.] Purchase securities of other investment companies, except in
accordance with applicable limits under the Investment Company Act.
4. [5.] Make short sales of securities or maintain a short position, with
the exception of "short sales against the box," provided that not more than 10%
of the Fund's net assets (taken at market value) is held as
collateral for such sales at any one time.
5. [6.]
69
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
4. Issue senior securities, borrow money or pledge Issue senior securities or borrow money or pledge
its assets, except that the Fund may borrow up to its assets, except as permitted by the 1940 Act
20% of the value of its total assets (calculated Laws, Interpretations and Exemptions. For purposes
when the loan is made) for temporary, extraordinary of this restriction, the purchase or sale of the value of its total assets (calculated
when the loan is made) for temporary or extraordinary
or emergency purposes or for the clearance of securities on a when-issued or delayed delivery
transactions. The Fund may pledge up to 20% of the basis, reverse repurchase agreements, short sales,
value of its total assets to secure such borrowings. derivative and hedging transactions, including,
For purposes of this restriction,
the purchase or sale of securities on a when-issued or delayed delivery basis,
collateral arrangements with respect to interest rate swaps, reverse repurchase
agreements or dollar roll transactions, options, futures contracts and options
on futures contracts and collateral arrangements with respect to initial and
variation margins are not deemed to be a pledge of assets or the issuance of a
senior security; and neither such arrangements, the purchase or sale of interest
rate futures contacts or other financial futures contracts or the purchase or
sale of related options nor obligations of the without limitation, interest rate swap transactions,
Fund to the Directors pursuant to deferred compensation and collateral arrangements with respect thereto,
arrangements, the purchase and sale of securities on and transactions similar to any of the foregoing and
a when-issued or delayed delivery basis, the collateral arrangements with respect thereto, and
purchase and sale of options, futures contracts, obligations of the Fund to Directors
options on futures contracts, forward foreign pursuant to deferred compensation arrangements are
currency exchange contracts and options on not deemed to be a pledge of assets or the issuance
currencies and collateral arrangements with respect of a senior security.
to the purchase and sale of options, futures
contracts, options on futures contracts, forward
foreign currency exchange contracts and options on
currencies are not deemed to be the issuance of a
senior security or the pledge of assets.
5. Purchase any security if as a result the Fund The restriction will be eliminated if proposal 5(a)
would then hold more than 10% of the outstanding is approved.
voting securities of an issuer.
6. Purchase any security if as a result the Fund The restriction will not change, but will become
would then have more than 5% of its total assets non-fundamental.
(taken at current value) invested in securities of
companies (including predecessors) less than three
years old.
7. Buy or sell commodities or commodity contracts, Buy or sell physical commodities or contracts
or real estate or interests in real estate, except involving physical commodities, except that the Fund
that the Fund may purchase and sell options, futures may purchase and sell (i) derivative, hedging and
contracts, options on futures contracts, forward similar instruments, including, without limitation,
foreign currency exchange contracts and options on financial futures contracts and options thereon, and
currencies and securities which are secured by real (ii) securities or instruments backed by, or the
estate and securities of companies which invest or return from which is linked to, physical commodities
deal in real estate. or currencies, including, without limitation,
forward currency exchange contracts, and except that
the Fund may exercise rights relating to such
instruments, including the right to enforce security
interests and to hold physical commodities and
contracts involving physical commodities acquired as
a result of the Fund's ownership of instruments
supported or secured thereby until they can be
liquidated in an orderly manner.
70
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
8. Act as underwriter except to the extent that, in No change.
connection with the disposition of portfolio
securities, it may be deemed to be an underwriter
under certain federal securities laws.
9. Make investments for the purpose of exercising The restriction will not change, but will become
control or management. non-fundamental.
10. Invest in securities of other investment The restriction will become non-fundamental
companies, except by purchases in the open market and, as described in proposal 5(h), is expected to
involving only customary brokerage commissions and be amended by the Board.
as a result of which not more than 5% of its total
assets (taken at current value) would be invested in
such securities, or except as part of a merger,
consolidation or other acquisition.
11. Invest in interests in oil, gas or other mineral The restriction will not change, but will become
exploration or development programs, although it may non-fundamental.
invest in the common stocks of companies which
invest in or sponsor such programs.
12. Make loans, except through (i) the purchase of The Fund may make loans, including loans of
bonds, debentures, commercial paper, corporate notes assets of the Fund, repurchase agreements, trade
and similar evidences of indebtedness of a type claims, loan participations or similar investments,
commonly sold privately to financial institutions, or as permitted by the 1940 Act Laws,
(ii) the lending of its portfolio securities, as Interpretations and Exemptions.
described under "Description of the Funds, Their The acquisition of bonds, debentures,
Investments and Risks--Lending of Securities" and other debt securities or instruments, or
(iii) repurchase agreements. (The purchase of a participations or other interests therein and
portion of an issue of securities described under investments in government obligations, commercial
(i) above distributed publicly, whether or not the paper, certificates of deposit, bankers' acceptances
purchase is made on the original issuance, is not or instruments similar to any of the foregoing will
considered the making of a loan.) not be considered the making of a loan, and is
permitted if consistent with the Fund's
investment objective.
71
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
PRUDENTIAL SMALL COMPANY FUND, INC.
The Fund may not:
(1) With respect to 75% of the Fund's total assets, Purchase the securities of any issuer if, as a
invest more than 5% of the value of its total assets result, the Fund would fail to be a diversified
in the securities of any one issuer (other than company within the meaning of the 1940 Act, and the
obligations issued or guaranteed by the United rules and regulations promulgated thereunder, as
States Government, its agencies or each may be amended from time to time, except to
instrumentalities). It is the current policy (but the extent that the Fund may be permitted to do so
not a fundamental policy) of the Fund not to invest by exemptive order, SEC release, no-action letter or
more than 5% of the value of its total assets in similar relief or interpretations (collectively, the
securities of any one issuer. "1940 Act Laws, Interpretations and Exemptions").
(2) Purchase more than 10% of the outstanding voting The restriction will not change, but will become
securities of any one issuer. non-fundamental, to the extent not included
within restriction no. 1.
(3) Invest more than 25% of the value of its total Purchase any securities if as a result more than 25%
assets in securities of issuers in any one industry. of the Fund's total assets would be invested in the
This restriction does not apply to obligations securities of issuers having their principal
issued or guaranteed by the United States Government business activities in the same industry, except for
or its agencies or instrumentalities. temporary defensive purposes, and except that this
limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or
instrumentalities.
(4) Purchase or sell real estate or interests Buy or sell real estate, except that investment in
therein, although the Fund may purchase securities securities of issuers that invest in real estate and
of issuers which engage in real estate operations investments in mortgage-backed securities, mortgage
and securities which are secured by real estate or participations or other instruments supported or
interests therein. secured by interests in real estate are not subject
to this limitation, and except that the Fund may
exercise rights relating to such securities,
including the right to enforce security interests
and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated
in an orderly manner.
(5) Purchase or sell commodities or commodity Buy or sell physical commodities or contracts
futures contracts, except that transactions in involving physical commodities, except that the Fund
foreign currency financial futures contracts and may purchase and sell (i) derivative, hedging and
forward contracts and related options are not similar instruments, including, without limitation,
considered to be transactions in commodities or financial futures contracts and options thereon, and
commodity contracts. (ii) securities or instruments backed by, or the
return from which is linked to, physical commodities
or currencies, including, without limitation,
forward currency exchange contracts, and except that
the Fund may exercise rights relating to such
instruments, including the right to enforce security
interests and to hold physical commodities and
contracts involving physical commodities acquired as
a result of the Fund's ownership of instruments
supported or secured thereby until they can be
liquidated in an orderly manner.
(6) Purchase oil, gas or other mineral leases, The restriction will not change, but will become
rights or royalty contracts or exploration or non-fundamental.
development programs, except that the Fund may
invest in the securities of companies which operate,
invest in or sponsor such programs.
72
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
(7) Purchase securities of other investment The restriction will become non-fundamental
companies, except by purchases in the open market and, as described in proposal 5(h), is
involving only customary brokerage commissions and expected to be amended by the Board.
as a result of which not more than 10% of its total
assets (determined at the time of investment) would
be invested in such securities or except in
connection with a merger, consolidation,
reorganization or acquisition of assets.
(8) Issue senior securities, borrow money or pledge Issue senior securities or borrow money or pledge
its assets, except that the Fund may borrow up to its assets, except as permitted by the 1940 Act
20% of the value of the total assets (calculated Laws, Interpretations and Exemptions. For purposes
when the loan is made) for temporary, extraordinary of this restriction, the purchase or sale of
or emergency purposes or for the clearance of securities on a when-issued or delayed delivery
transactions. The Fund may pledge up to 20% of the basis, reverse repurchase agreements, short sales,
value of its total assets to secure such borrowings. derivative and hedging transactions, including,
Secured borrowings may take the form of reverse without limitation, interest rate swap transactions,
repurchase agreements, pursuant to which the Fund and collateral arrangements with respect thereto,
would sell portfolio securities for cash and and transactions similar to any of the foregoing and
simultaneously agree to repurchase them at a collateral arrangements with respect thereto, and
specified date for the same amount of cash plus an obligations of the Fund to Directors
interest component. For purposes of this pursuant to deferred compensation arrangements are
restriction, obligations of the Fund to Directors not deemed to be a pledge of assets or the issuance
pursuant to deferred compensation arrangements, the of a senior security.
purchase and sale of securities on a when-issued or
delayed delivery basis, the purchase and sale of
forward foreign currency exchange contracts and
financial futures contracts and related options and
collateral arrangements with respect to margins for
financial futures contracts and with respect to
options are not deemed to be the issuance of a
senior security or a pledge of assets.
(9) Make loans of money or securities, except by the The Fund may make loans, including loans of
purchase of debt obligations in which the Fund may assets of the Fund, repurchase agreements, trade
invest consistently with its investment objective claims, loan participations or similar investments,
and policies or by investment in repurchase or as permitted by the 1940 Act Laws,
agreements. Interpretations and Exemptions. The acquisition
of bonds, debentures, other debt securities or
instruments, or participations or other interests
therein and investments in government obligations,
commercial paper, certificates of deposit, bankers'
acceptances or instruments similar to any of
the foregoing will not be considered the making
of a loan, and is permitted if consistent with
the Fund's investment objective.
73
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
(10) Make short sales of securities except short The restriction will not change, but will become
sales against-the-box. non-fundamental.
(11) Purchase securities on margin, except for such The restriction will not change, but will become
short-term loans as are necessary for the clearance non-fundamental.
of purchases of portfolio securities. (For the
purpose of this restriction, the deposit or payment
by the Fund of initial or maintenance margin in
connection with financial futures contracts is not
considered the purchase of a security on margin.)
(12) Engage in the underwriting of securities, Act as underwriter except to the extent that, in
except insofar as the Fund may be deemed an connection with the disposition of portfolio
underwriter under the Securities Act, in disposing securities, it may be deemed to be an underwriter
of a portfolio security. under certain federal securities laws.
(13) Invest for the purpose of exercising control or The restriction will not change, but will become
management of any other issuer. non-fundamental.
PRUDENTIAL TAX-MANAGED FUNDS
- - PRUDENTIAL TAX-MANAGED EQUITY FUND
The Fund may not:
1. Issue senior securities, borrow money or pledge Issue senior securities or borrow money or pledge
its assets, except that the Fund may borrow from its assets, except as permitted by the 1940 Act
banks up to 33 1/3% of the value of its total assets Laws, Interpretations and Exemptions. For purposes
(calculated when the loan is made) for temporary, of this restriction, the purchase or sale of
extraordinary or emergency purposes or for the securities on a when-issued or delayed delivery
clearance of transactions. The Fund may pledge up to basis, reverse repurchase agreements, short sales,
33 1/3% of the value of its total assets to secure derivative and hedging transactions, including,
such borrowings. For purposes of this restriction, without limitation, interest rate swap transactions,
the purchase or sale of securities on a when-issued and collateral arrangements with respect thereto,
or delayed delivery basis, forward foreign currency and transactions similar to any of the foregoing and
exchange contracts and collateral arrangements collateral arrangements with respect thereto, and
relating thereto, and collateral arrangements with obligations of the Fund to [Directors/Trustees]
respect to futures contracts and options thereon and pursuant to deferred compensation arrangements are
with respect to the writing of options and not deemed to be a pledge of assets or the issuance
obligations of a senior security.
6. [7.] Buy or sell commodities, commodity contracts, real estate or
interests in real estate (including mineral leases or rights), except that the
Fund may purchase and sell futures contracts, options on futures contracts and
securities secured by real estate or interests therein or issued by companies
that invest therein. Transactions in foreign currencies and forward contracts
and options in foreign currencies are not considered by the Fund to be
transactions in commodities or commodity contracts.
7. [8.] Make loans (except that purchases of debt securities in accordance
with the Fund's investment objective and policies and loans of portfolio
securities and repurchase agreements are not considered by the Fund to be
"loans").
8. [9.] Make investments for the purpose of exercising control or management
over the issuers of any security.
9. [10.] Act as an underwriter (except to the extent the Fund may be deemed
to be an underwriter in connection with the sale of securities in the Fund's
investment portfolio).
E-5
74
PRUDENTIAL JENNISON
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
of the Fund to Trustees pursuant to deferred
compensation arrangements are not deemed to be a
pledge of assets subject to this restriction.
2. Purchase any security (other than obligations of Purchase the securities of any issuer if, as a
the U.S. Government, its agencies or result, the Fund would fail to be a diversified
instrumentalities) if as a result, with respect to company within the meaning of the 1940 Act, and the
75% of the Fund's total assets, more than 5% of the rules and regulations promulgated thereunder, as
Fund's total assets (determined at the time of each may be amended from time to time, except to
investment) would then be invested in securities of the extent that the Fund may be permitted to do so
a single issuer. by exemptive order, SEC release, no-action letter or
similar relief or interpretations (collectively, the
"1940 Act Laws, Interpretations and Exemptions").
3. Buy or sell real estate or interests in real Buy or sell real estate, except that investment in
estate, except that the Fund may purchase and sell securities of issuers that invest in real estate and
securities which are secured by real estate, investments in mortgage-backed securities, mortgage
securities of companies which invest or deal in real participations or other instruments supported or
estate and publicly traded securities of real estate secured by interests in real estate are not subject
investment trusts. to this limitation, and except that the Fund may
exercise rights relating to such securities,
including the right to enforce security interests
and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated
in an orderly manner.
4. Buy or sell commodities or commodity contracts, Buy or sell physical commodities or contracts
except that the Fund may purchase and sell financial involving physical commodities, except that the Fund
futures contracts and options thereon, and foreign may purchase and sell (i) derivative, hedging and
currency forward contracts. similar instruments, including, without limitation,
financial futures contracts and options thereon, and
(ii) securities or instruments backed by, or the
return from which is linked to, physical commodities
or currencies, including, without limitation,
forward currency exchange contracts, and except that
the Fund may exercise rights relating to such
instruments, including the right to enforce security
interests and to hold physical commodities and
contracts involving physical commodities acquired as
a result of the Fund's ownership of instruments
supported or secured thereby until they can be
liquidated in an orderly manner.
5. Act as underwriter except to the extent that, in No change.
connection with the disposition of portfolio
securities, it may be deemed to be an underwriter
under certain federal securities laws.
6. Make loans, except through (i) repurchase The Fund may make loans, including loans of
agreements and (ii) loans of portfolio securities assets of the Fund, repurchase agreements, trade
limited to 33 1/3 of the Fund's total assets. claims, loan participations or similar investments,
or as permitted by the 1940 Act Laws,
Interpretations and Exemptions. The acquisition of
bonds, debentures, other debt securities or instruments,
or participations or other interests therein and
investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances
or instruments similar to any of the foregoing will
not be considered the making of a loan, and is
permitted if consistent with the Fund's investment objective.
7. Purchase any security (other than obligations of Purchase any securities if as a result more than 25%
the U.S. Government, its agencies or of the Fund's total assets would be invested in the
instrumentalities) if as a result 25% or more of the securities of issuers having their principal
Fund's total assets (determined at the time of business activities in the same industry, except for
investment) would be invested in a single industry. temporary defensive purposes, and except that this
limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or
instrumentalities.
75
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
PRUDENTIAL TAX-MANAGED
SMALL-CAP FUND, INC.
INVESTMENT RESTRICTIONS
The Fund may not:
1. Purchase securities on margin (but the Fund may The restriction will not change, but will become
obtain such short-term credits as may be necessary non-fundamental.
for the clearance of transactions); provided that
the deposit or payment by the Fund of initial or
maintenance margin in connection with futures or
options is not considered the purchase of a security
on margin.
2. Make short sales of securities or maintain a The restriction will not change, but will become
short position if, when added together, more than non-fundamental.
25% of the value of the Fund's net assets would be
(i) deposited as collateral for the obligation to
replace securities borrowed to effect short sales
and (ii) allocated to segregated accounts in
connection with short sales. Short sales
"against-the-box" are not subject to this limitation.
3. Issue senior securities, borrow money or pledge Issue senior securities or borrow money or pledge
its assets, except that the Fund may borrow from its assets, except as permitted by the 1940 Act
banks up to 20% of the value of its total assets Laws, Interpretations and Exemptions. For purposes
(calculated when the loan is made) for temporary, of this restriction, the purchase or sale of
securities on a when-issued or delayed delivery
basis, reverse repurchase agreements, short sales,
derivative and hedging transactions, including,
without limitation, interest rate swap transactions,
and collateral arrangements with respect thereto,
and transactions similar to any of the foregoing and
collateral arrangements with respect thereto, and
obligations of the Fund to Directors
pursuant to deferred compensation arrangements are
not deemed to be a pledge of assets or the issuance
of a senior security.
76
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
extraordinary or emergency purposes or for the
clearance of transactions. The Fund may pledge up to
20% of the value of its total assets to secure such
borrowings. For purposes of this restriction, the
purchase or sale of securities on a when-issued or
delayed delivery basis, foreign currency forward
contracts and collateral arrangements relating
thereto, and collateral arrangements with respect to
futures contracts and options thereon and with
respect to the writing of options and obligations of
the Fund to Directors pursuant to deferred
compensation arrangements are not deemed to be a
pledge of assets subject to this restriction.
4. Purchase any security (other than obligations of Purchase the securities of any issuer if, as a
the U.S. government, its agencies or result, the Fund would fail to be a diversified
instrumentalities) if as a result: (i) with respect company within the meaning of the 1940 Act, and the
to 75% of the Fund's total assets, more than 5% of rules and regulations promulgated thereunder, as
the Fund's total assets (determined at the time of each may be amended from time to time, except to
investment) would then be invested in securities of the extent that the Fund may be permitted to do so
a single issuer, or (ii) 25% or more of the Fund's by exemptive order, SEC release, no-action letter or
total assets (determined at the time of the similar relief or interpretations (collectively,
investment) would be invested in a single industry. the "1940 Act Laws, Interpretations and Exemptions").
5. Buy or sell real estate or interests in real Buy or sell real estate, except that investment in
estate, except that the Fund may purchase and sell securities of issuers that invest in real estate and
securities which are secured by real estate, investments in mortgage-backed securities, mortgage
securities of companies which invest or deal in real participations or other instruments supported or
estate and publicly traded securities of real estate secured by interests in real estate are not subject
investment trusts. The Fund may not purchase to this limitation, and except that the Fund may
interests in real estate limited partnerships which exercise rights relating to such securities,
are not readily marketable. including the right to enforce security interests
and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated
in an orderly manner.
6. Buy or sell commodities or commodity contracts, Buy or sell physical commodities or contracts
except that the Fund may purchase and sell financial involving physical commodities, except that the Fund
futures contracts and options thereon, and foreign may purchase and sell (i) derivative, hedging and
currency forward contracts. similar instruments, including, without limitation,
financial futures contracts and options thereon, and
(ii) securities or instruments backed by, or the
return from which is linked to, physical commodities
or currencies, including, without limitation,
forward currency exchange contracts, and except that
the Fund may exercise rights relating to such
instruments, including the right to enforce security
interests and to hold physical commodities and
contracts involving physical commodities acquired as
a result of the Fund's ownership of instruments
supported or secured thereby until they can be
liquidated in an orderly manner.
7. Act as underwriter except to the extent that, in No change.
connection with the disposition of portfolio
securities, it may be deemed to be an underwriter
under certain federal securities laws.
77
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
8. Make investments for the purpose of exercising The restriction will not change, but will become
control or management. non-fundamental.
9. Invest in securities of other non-affiliated The restriction will become non-fundamental
investment companies, except by purchases in the and, as described in proposal 5(h), is
open market involving only customary brokerage expected to be amended by the Board.
commissions and as a result of which the Fund will
not hold more than 3% of the outstanding voting
securities of any one investment company, will not
have invested more than 5% of its total assets in
any one investment company and will not have
invested more than 10% of its total assets
(determined at the time of investment) in such
securities of one or more investment companies, or
except as part of a merger, consolidation or other
acquisition.
10. Make loans, except through (i) repurchase The Fund may make loans, including loans of
agreements and (ii) loans of portfolio securities assets of the Fund, repurchase agreements, trade
limited to 33 1/3 of the Fund's total assets. claims, loan participations or similar investments,
or as permitted by the 1940 Act Laws,
Interpretations and Exemptions.
The acquisition of bonds, debentures,
other debt securities or instruments, or
participations or other interests therein and
investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances
or instruments similar to any of the foregoing will
not be considered the making of a loan, and is permitted
if consistent with the Fund's investment objective.
11. Purchase more than 10% of all outstanding voting The restriction will not change, but will become
securities of any one issuer. non-fundamental, to the extent not included within
restriction no. 4.
PRUDENTIAL U.S. EMERGING
GROWTH FUND, INC.
The Fund may not:
1. Purchase securities on margin (but the Fund may The restriction will not change, but will become
obtain such short-term credits as may be necessary non-fundamental.
for the clearance of transactions); provided that
the deposit or payment by the Fund of initial or
maintenance margin in connection with futures or
options is not considered the purchase of a security
on margin.
78
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
2. Make short sales of securities or maintain a The restriction will not change, but will become
short position if, when added together, more than non-fundamental.
25% of the value of the Fund's net assets would be
(i) deposited as collateral for the obligation to
replace securities borrowed to effect short sales
and (ii) allocated to segregated accounts in
connection with short sales. Short sales
"against-the-box" are not subject to this limitation.
3. Issue senior securities, borrow money or pledge Issue senior securities or borrow money or pledge
its assets, except that the Fund may borrow from its assets, except as permitted by the 1940 Act
banks up to 20% of the value of its total assets Laws, Interpretations and Exemptions. For purposes
(calculated when the loan is made) for temporary, of this restriction, the purchase or sale of
extraordinary or emergency purposes or for the securities on a when-issued or delayed delivery
clearance of transactions. The Fund may pledge up to basis, reverse repurchase agreements, short sales,
20% of the value of its total assets to secure such derivative and hedging transactions, including,
borrowings. For purposes of this restriction, the without limitation, interest rate swap transactions,
purchase or sale of securities on a when-issued or and collateral arrangements with respect thereto,
delayed delivery basis, forward foreign currency and transactions similar to any of the foregoing and
exchange contracts and collateral arrangements collateral arrangements with respect thereto, and
relating thereto, and collateral arrangements with obligations of the Fund to Directors
respect to futures contracts and options thereon and with respect to the writing of options
and obligations of the Fund to Directors pursuant to deferred compensation arrangements are
with respect to the writing of options and not deemed to be a pledge of assets or the issuance
obligations of the Fund to Directors pursuant to of a senior security.
deferred compensation arrangements are not deemed to
be a pledge of assets subject to this restriction.
4. Purchase any security (other than obligations of Purchase the securities of any issuer if, as a
the U.S. Government, its agencies or result, the Fund would fail to be a diversified
instrumentalities) if as a result: (i) with respect company within the meaning of the 1940 Act, and the
to 75% of the Fund's total assets, more than 5% of rules and regulations promulgated thereunder, as
the Fund's total assets (determined at the time of each may be amended from time to time, except to
investment) would then be invested in securities of the extent that the Fund may be permitted to do so
a single issuer, or (ii) 25% or more of the Fund's by exemptive order, SEC release, no-action letter or
total assets (determined at the time of the similar relief or interpretations (collectively,
investment) would be invested in a single industry. the "1940 Act Laws, Interpretations and Exemptions").
5. Buy or sell real estate or interests in real Buy or sell real estate, except that investment in
estate, except that the Fund may purchase and sell securities of issuers that invest in real estate and
securities which are secured by real estate, investments in mortgage-backed securities, mortgage
securities of companies which invest or deal in real participations or other instruments supported or
estate and publicly traded securities of real estate secured by interests in real estate are not subject
investment trusts. The Fund may not purchase to this limitation, and except that the Fund may
interests in real estate limited partnerships which exercise rights relating to such securities,
are not readily marketable. including the right to enforce security interests
and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated
in an orderly manner.
79
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
6. Buy or sell commodities or commodity contracts, Buy or sell physical commodities or contracts
except that the Fund may purchase and sell financial involving physical commodities, except that the Fund
futures contracts and options thereon, and forward may purchase and sell (i) derivative, hedging and
foreign currency exchange contracts. similar instruments, including, without limitation,
financial futures contracts and options thereon, and
(ii) securities or instruments backed by, or the
return from which is linked to, physical commodities
or currencies, including, without limitation,
forward currency exchange contracts, and except that
the Fund may exercise rights relating to such
instruments, including the right to enforce security
interests and to hold physical commodities and
contracts involving physical commodities acquired as
a result of the Fund's ownership of instruments
supported or secured thereby until they can be
liquidated in an orderly manner.
7. Act as underwriter except to the extent that, in No change.
connection with the disposition of portfolio
securities, it may be deemed to be an underwriter
under certain federal securities laws.
8. Make investments for the purpose of exercising The restriction will not change, but will become
control or management. non-fundamental.
9. Invest in securities of other non-affiliated The restriction will become non-fundamental and, as
investment companies, except by purchases in the described in proposal 5(h), is expected to be amended
open market involving only customary brokerage by the Board.
commissions and as a result of which the Fund will
not hold more than 3% of the outstanding voting
securities of any one investment company, will not
have invested more than 5% of its total assets in
any one investment company and will not have
invested more than 10% of its total assets
(determined at the time of investment) in such
securities of one or more investment companies, or
except as part of a merger, consolidation or other
acquisition.
10. Make loans, except through (i) repurchase The Fund may make loans, including loans of
agreements and (ii) loans of portfolio securities assets of the Fund, repurchase agreements, trade
limited to 33 1/3% of the Fund's total assets. claims, loan participations or similar investments,
or as permitted by the 1940 Act Laws,
Interpretations and Exemptions. The acquisition of
bonds, debentures, other debt securities or
instruments, or participations or other interests
therein and investments in government obligations,
commercial paper, certificates of deposit, bankers'
acceptances or instruments similar to any of the
foregoing will not be considered the making of a
loan, and is permitted if consistent with the Fund's
investment objective.
11. Purchase more than 10% of all outstanding voting The restriction will not change, but will become
securities of any one issuer. non-fundamental, to the extent not included within
restriction no. 4.
80
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
THE PRUDENTIAL INVESTMENT
PORTFOLIOS, INC.
- -EQUITY OPPORTUNITY FUND
- -GROWTH FUND
1. Purchase securities on margin (but the Fund may The restriction will not change, but will become
obtain such short-term credits as may be necessary non-fundamental.
for the clearance of transactions); provided that
the deposit or payment by the Fund of initial or
maintenance margin in connection with futures or
options is not considered the purchase of a security
on margin.
2. Make short sales of securities or maintain a The restriction will not change, but will become
short position if, when added together, more than non-fundamental.
25% of the value of the Fund's net assets would be
(i) deposited as collateral for the obligation to
replace securities borrowed to effect short sales
and (ii) allocated to segregated accounts in
connection with short sales. Short sales
"against-the-box" are not subject to this limitation.
3. Issue senior securities, borrow money or pledge Issue senior securities or borrow money or pledge
its assets, except that the Fund may borrow from its assets, except as permitted by the 1940 Act
banks up to 20% of the value of its total assets Laws, Interpretations and Exemptions. For purposes
(calculated when the loan is made) for temporary, of this restriction, the purchase or sale of
extraordinary or emergency purposes or for the securities on a when-issued or delayed delivery
clearance of transactions. The Fund may pledge up to basis, reverse repurchase agreements, short sales,
20% of the value of its total assets to secure such derivative and hedging transactions, including,
borrowings. For purposes of this restriction, the without limitation, interest rate swap transactions,
purchase or sale of securities on a when-issued or and collateral arrangements with respect thereto,
delayed delivery basis, forward foreign currency and transactions similar to any of the foregoing and
exchange contracts and collateral arrangements collateral arrangements with respect thereto, and
relating thereto, and collateral arrangements with obligations of the Fund to Directors
respect to futures contracts and options thereon and pursuant to deferred compensation arrangements are
with respect to the writing not deemed to be a pledge of assets or the issuance
of a senior security.
4. Purchase any security (other than obligations of the U.S. Government, its
agencies or instrumentalities) if as a result: (i) with respect to 75% of the
Fund's total assets, more than 5% of the Fund's total assets (determined at the
time of investment) would then be invested in securities of a single issuer, or
(ii) 25% or more of the Fund's total assets (determined at the time of the
investment) would be invested in a single industry.
[5. Purchase any security if as a result the Fund would then have more than
5% of its total assets (determined at the time of investment) invested in
securities of companies (including predecessors) less than three years old,
except that the Fund may invest in the securities of any U.S. Government agency
or instrumentality, and in any security guaranteed by such an agency or
instrumentality.]
5.[6.] Buy or sell real estate or interests in real estate, except that the
Fund may purchase and sell securities which are secured by real estate,
securities of companies which invest or deal in real estate and publicly traded
securities of real estate investment trusts. The Fund may not purchase interests
in real estate limited partnerships which are not readily marketable.
6.[7.] Buy or sell commodities or commodity contracts, except that the Fund
may purchase and sell financial futures contracts and options thereon. (For
purposes of this restriction, futures contracts on currencies and on securities
indices and forward foreign currency exchange contracts are not deemed to be
commodities or commodity contracts.)
7.[8.] Act as underwriter except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter under
certain federal securities laws. The Fund has not adopted a fundamental
investment policy with respect to investments in restricted securities. See
"Illiquid
81
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
of options and obligations of the Fund to Directors
pursuant to deferred compensation arrangements are
not deemed to be a pledge of assets or the issuance
of a senior security.
4. Purchase any security (other than obligations of Purchase the securities of any issuer if, as a
the U.S. Government, its agencies or result, the Fund would fail to be a diversified
instrumentalities) if as a result: (i) with respect company within the meaning of the 1940 Act, and the
to 75% of the Fund's total assets, more than 5% of rules and regulations promulgated thereunder, as
the Fund's total assets (determined at the time of each may be amended from time to time, except to
investment) would then be invested in securities of the extent that the Fund may be permitted to do so
a single issuer, or (ii) 25% or more of the Fund's by exemptive order, SEC release, no-action letter or
total assets (determined at the time of the similar relief or interpretations (collectively,
investment) would be invested in a single industry. the "1940 Act Laws, Interpretations and Exemptions").
5. Buy or sell real estate or interests in real Buy or sell real estate, except that investment in
estate, except that the Fund may purchase and sell securities of issuers that invest in real estate and
securities which are secured by real estate, investments in mortgage-backed securities, mortgage
securities of companies which invest or deal in real participations or other instruments supported or
estate and publicly traded securities of real estate secured by interests in real estate are not subject
investment trusts. The Fund may not purchase to this limitation, and except that the Fund may
interests in real estate limited partnerships which exercise rights relating to such securities,
are not readily marketable. including the right to enforce security interests
and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated
in an orderly manner.
6. Buy or sell commodities or commodity contracts, Buy or sell physical commodities or contracts
except that the Fund may purchase and sell financial involving physical commodities, except that the Fund
futures contracts and options thereon. (For purposes may purchase and sell (i) derivative, hedging and
of this restriction, futures contracts on currencies similar instruments, including, without limitation,
and on securities indices and, with respect to financial futures contracts and options thereon, and
Equity Opportunity Fund, futures contracts on debt (ii) securities or instruments backed by, or the
securities, and forward foreign currency exchange return from which is linked to, physical commodities
contracts are not deemed to be commodities or or currencies, including, without limitation,
commodity contracts.) forward currency exchange contracts, and except that
the Fund may exercise rights relating to such
instruments, including the right to enforce security
interests and to hold physical commodities and
contracts involving physical commodities acquired as
a result of the Fund's ownership of instruments
supported or secured thereby until they can be
liquidated in an orderly manner.
7. Act as underwriter except to the extent that, in Act as underwriter except to the extent that, in
connection with the disposition of portfolio connection with the disposition of portfolio
securities, it may be deemed to be an underwriter securities, it may be deemed to be an underwriter
under certain federal securities laws. Neither Fund under certain federal securities laws.
has adopted a fundamental investment policy with
respect to investments in restricted securities. See
"Investment Objectives and Policies--Illiquid
Securities."
8.[9.] Make investments for the purpose of exercising control or management.
9.[10.] Invest in securities of other investment companies, except by
purchases in the open market involving only customary brokerage commissions and
as a result of which the Fund will not hold more than 3% of the outstanding
voting securities of any one investment company, will not have invested more
than 5%
E-6
82
of its total assets in any one investment company and will not have invested
more than 10% of its total assets (determined at the time of investment) in such
securities of one or more investment companies, or except as part of a merger,
consolidation or other acquisition.
10.[11.] Invest in interests in oil, gas or other mineral exploration or
development programs, except that the Fund may invest in the securities of
companies which invest in or sponsor such programs.
11.[12.] Make loans, except through (i) repurchase agreements and (ii) loans
of portfolio securities limited to 30% of the Fund's total assets.
12.[13.] Purchase more than 10% of all outstanding voting securities of any
one issuer.
E-7
PRUDENTIAL MULTI-SECTOR FUND, INC.
INVESTMENT RESTRICTIONS
The Fund may not:
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
8. Make investments for the purpose of exercising The restriction will not change, but will become
control or management. non-fundamental.
9. Invest in securities of other investment The restriction will become
companies, except by purchases in the open market non-fundamental and, as described
involving only customary brokerage commissions and in proposal 5(h), is proposed to be
as a result of which the Fund will not hold more amended by the Board.
than 3% of the outstanding voting securities of any
one investment company, will not have invested more
than 5% of its total assets in any one investment
company and will not have invested more than 10% of
its total assets (determined at the time of
investment) in such securities of one or more
investment companies, or except as part of a merger,
consolidation or other acquisition.
10. Invest in interests in oil, gas or other mineral The restriction will not change, but will become
exploration or development programs, except that the non-fundamental.
Fund may invest in the securities of companies which
invest in or sponsor such programs.
11. Make loans, except through (i) repurchase The Fund may make loans, including loans of
agreements and (ii) loans of portfolio securities assets of the Fund, repurchase agreements, trade
limited to 30% of the Fund's total assets. claims, loan participations or similar investments,
or as permitted by the 1940 Act Laws,
Interpretations and Exemptions. The acquisition of
bonds, debentures, other debt securities or
instruments, or participations or other interests
therein and investments in government obligations,
commercial paper, certificates of deposit, bankers'
acceptances or instruments similar to any of the
foregoing will not be considered the making of a loan,
and is permitted if consistent with the Fund's
investment objective.
12. Purchase more than 10% of all outstanding voting The restriction will not change, but will become
securities of any one issuer. non-fundamental, to the extent not included within
restriction no. 4.
ACTIVE BALANCED FUND-
1. Purchase securities on margin (but the Fund may The restriction will not change, but will become
obtain such short-term credits as may be necessary non-fundamental.
for the clearance of transactions); provided that
the deposit or payment by the Fund of initial or
maintenance margin in connection with futures or
options is not considered the purchase of a security
on margin.
83
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
2. Make short sales of securities. Short sales The restriction will not change, but will become
"against-the-box" are not subject to this limitation. non-fundamental.
3. Issue senior securities, borrow money or pledge Issue senior securities or borrow money or pledge
its assets, except that the Fund may borrow from its assets, except as permitted by the 1940 Act
banks or through forward rolls, dollar rolls or Laws, Interpretations and Exemptions. For purposes
reverse repurchase agreements in an amount up to 30% of this restriction, the purchase or sale of
of the value of its total assets (calculated when securities on a when-issued or delayed delivery
the loan is made) to take advantage of investment basis, reverse repurchase agreements, short sales,
opportunities, for temporary, extraordinary or derivative and hedging transactions, including,
emergency purposes or for the clearance of without limitation, interest rate swap transactions,
transactions. The Fund may pledge up to 30% of the and collateral arrangements with respect thereto,
value of its total assets to secure such borrowings. and transactions similar to any of the foregoing and
The purchase or sale of securities on a when-issued collateral arrangements with respect thereto, and
or delayed delivery basis, forward foreign currency obligations of the Fund to Directors
exchange contracts and collateral arrangements pursuant to deferred compensation arrangements are
relating thereto, and collateral arrangements with not deemed to be a pledge of assets or the issuance
respect to futures contracts and options thereon and of a senior security.
with respect to the writing of options and
obligations of the Fund to Directors pursuant to
deferred compensation arrangements are not deemed to
be a pledge of assets subject to this restriction.
4. Purchase any security (other than obligations of Purchase the securities of any issuer if, as a
the U.S. Government, its agencies or result, the Fund would fail to be a diversified
instrumentalities) if as a result; (i) with respect company within the meaning of the 1940 Act, and the
to 75% of the Fund's total assets, more than 5% of rules and regulations promulgated thereunder, as
the Fund's total assets (determined at the time of each may be amended from time to time, except to
investment) would then be invested in securities of the extent that the Fund may be permitted to do so
a single issuer, or (ii) 25% or more of the Fund's by exemptive order, SEC release, no-action letter or
total assets (determined at the time of investment) similar relief or interpretations (collectively,
would be invested in a single industry. the "1940 Act Laws, Interpretations and Exemptions").
5. Buy or sell real estate or interests in real Buy or sell real estate, except that investment in
estate, except that the Fund may purchase and sell securities of issuers that invest in real estate and
securities which are secured by real estate, investments in mortgage-backed securities, mortgage
securities of companies which invest or deal in real participations or other instruments supported or
estate and publicly traded securities of real estate secured by interests in real estate are not subject
investment trusts. The Fund may not purchase to this limitation, and except that the Fund may
interests in real estate limited partnerships which exercise rights relating to such securities,
are not readily marketable. including the right to enforce security interests
and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated
in an orderly manner.
84
CURRENT PROPOSED
RESTRICTIONS RESTRICTIONS/POLICIES
- ------------ ---------------------
6. Buy or sell commodities or commodity contracts, Buy or sell physical commodities or contracts
except that the Fund may purchase and sell financial involving physical commodities, except that the Fund
futures contracts and options thereon, and forward may purchase and sell (i) derivative, hedging and
foreign currency exchange contracts. similar instruments, including, without limitation,
financial futures contracts and options thereon, and
(ii) securities or instruments backed by, or the
return from which is linked to, physical commodities
or currencies, including, without limitation,
forward currency exchange contracts, and except that
the Fund may exercise rights relating to such
instruments, including the right to enforce security
interests and to hold physical commodities and
contracts involving physical commodities acquired as
a result of the Fund's ownership of instruments
supported or secured thereby until they can be
liquidated in an orderly manner.
7. Act as underwriter except to the extent that, in No change.
connection with the disposition of portfolio
securities, if may be deemed to be an underwriter
under certain federal securities laws.
8. Make investments for the purpose of exercising The restriction will not change, but will become
control or management. non-fundamental.
9. Invest in securities of other investment The restriction will become non-fundamental
companies, except: (i) purchases in the open market and, as described in proposal 5(h), is expected
involving only customary brokerage commissions and to be amended by the Board.
as a result of which the Fund will not hold more
than 3% of the outstanding voting securities of any
one investment company, will not have invested more
than 5% of its total assets in any one investment
company and will not have invested more than 10% of
its total assets (determined at the time of
investment) in such securities of one or more
investment companies, (ii) as part of a merger,
consolidation or other acquisition, or (iii)
purchases of affiliated investment company shares
pursuant to and subject to such limits as the
Commission may impose by rule or order.
10. Make loans, except through (i) repurchase The Fund may make loans, including loans of
agreements and (ii) loans of portfolio securities assets of the Fund, repurchase agreements, trade
limited to 30% of the Fund's total assets. claims, loan participations or similar investments,
or as permitted by the 1940 Act Laws,
Interpretations and Exemptions. The acquisition of
bonds, debentures, other debt securities or
instruments, or participations or other interests therein
and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances
or instruments similar to any of the foregoing will
not be considered the making of a loan, and is permitted
if consistent with the Fund's investment objective.
11. Purchase more than 10% of all outstanding voting The restriction will not change, but will become
securities of any one issuer. non-fundamental, to the extent not included within
restriction no. 4.
85
_______________________ Fund
Gateway Center Three
Newark, New Jersey 07102
PRUDENTIAL INVESTMENTS
GATEWAY CENTER THREE
100 MULBERRY STREET, 4TH FLOOR
NEWARK, NJ 07102-4077
PROXY
Joint Special and Annual Meeting of securities (other than short sales against-the-box)
or maintain a short position if, when added together, more than 25% of the value
of the Fund's net assets would be (i) deposited as collateral for the obligation
to replace securities borrowed to effect short sales and (ii) allocated to
segregated accounts in connection with short sales.
3. Issue senior securities, borrow money or pledge its assets, except that
the Fund may borrow up to 20% of the value of its total assets (calculated when
the loan is made) from banks and from entities other than banks if so permitted
pursuant to an order of the SEC for temporary, extraordinary or emergency
purposes or for the clearance of transactions and to take advantage of
investment opportunities. The Fund may pledge up to 20% of the value of its
total assets to secure such borrowings. For purposes of this restriction, the
purchase or sale of securities on a when-issued or delayed delivery basis,
forward foreign currency exchange contracts and collateral and collateral
arrangements relating thereto, and collateral arrangements with respect to
futures contracts and options thereon and with respect to the writing of options
and obligations of the Fund to Directors pursuant to deferred compensation
arrangements are not deemed to be a pledge of assets or the issuance of a senior
security.
4. Purchase any security (other than obligations of the U.S. Government, its
agencies or instrumentalities) if as a result 25% or more of the value of the
Fund's total assets (determined at the time of the investment) would be invested
in the securities of one or more issuers conducting their principal business
activities in the same industry or group of industries.
5. Purchase any security if as a result the Fund would then hold more than
10% of the outstanding voting securities of an issuer.
6. Purchase any security if as a result the Fund would then have more than
5% of its total assets (determined at the time of investment) invested in
securities of companies (including predecessors) less than three years old,
provided that there is no limit on the Fund's ability to invest in the
securities of any U.S. Government agency or instrumentality, and in any security
guaranteed by such an agency or instrumentality.
7. Buy or sell real estate or interests in real estate, except that the Fund
may purchase and sell securities which are secured by real estate, securities of
companies which invest or deal in real estate and publicly traded securities of
real estate investment trusts. The Fund may not purchase interests in real
estate limited partnerships which are not readily marketable.
8. Buy or sell commodities or commodity contracts. (For purposes of this
restriction, futures contracts and forward foreign currency exchange contracts
are not deemed to be commodities or commodity contracts.)
9. Act as an underwriter except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter under
certain federal securities laws.
10. Make investments for the purpose of exercising control or management.
11. Invest in securities of other registered investment companies, except by
purchases in the open market involving only customary brokerage commissions and
as a result of which not more than 10% of its total assets (determined at the
time of investment) would be invested in such securities, or except as part of a
merger, consolidation or other acquisition.
E-8
12. Invest in interests in oil, gas or other mineral exploration or
development programs, except that the Fund may invest in the securities of
companies which invest in or sponsor such programs.
13. Make loans, except through (i) repurchase agreements and (ii) loans of
portfolio securities (limited to 30% [10%] of the Fund's total assets).
E-9
PRUDENTIAL SMALL COMPANIES FUND, INC.
INVESTMENT RESTRICTIONS
The Fund may not:
(1) With respect to 75% of the Fund's total assets, invest more than 5% of
the value of its total assets in the securities of any one issuer (other than
obligations issued or guaranteed by the United States Government, its agencies
or instrumentalities). It is the current policy (but not a fundamental policy)
of the Fund not to invest more than 5% of the value of its total assets in
securities of any one issuer.
(2) Purchase more than 10% of the outstanding voting securities of any one
issuer.
(3) Invest more than 25% of the value of its total assets in securities of
issuers in any one industry. This restriction does not apply to obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities.
[(4) Invest more than 5% of the value of its total assets in securities of
issuers having a record, together with predecessors, of less than three years of
continuous operation. This restriction shall not apply to any obligation issued
or guaranteed by the United States Government, its agencies or
instrumentalities.]
(4) [(5)] Purchase or sell real estate or interests therein, although the
Fund may purchase securities of issuers which engage in real estate operations
and securities which are secured by real estate or interests therein.
(5) [(6)] Purchase or sell commodities or commodity futures contracts,
except that transactions in foreign currency financial futures contracts and
forward contracts and related options are not considered to be transactions in
commodities or commodity contracts [as described under "Investment Objective and
Policies" in the Prospectus and this Statement of Additional Information].
(6) [(7)] Purchase oil, gas or other mineral leases, rights or royalty
contracts or exploration or development programs, except that the Fund may
invest in the securities of companies which operate, invest in or sponsor such
programs.
(7) [(8)] Purchase securities of other investment companies, except by
purchases in the open market involving only customary brokerage commissions and
as a result of which not more than 10% of its total assets (determined at the
time of investment) would be invested in such securities or except in connection
with a merger, consolidation, reorganization or acquisition of assets.
(8) [(9)] Issue senior securities, borrow money or pledge its assets, except
that the Fund may borrow up to 20% of the value of the total assets (calculated
when the loan is made) for temporary, extraordinary or emergency purposes or for
the clearance of transactions. The Fund may pledge up to 20% of the value of its
total assets to secure such borrowings. Secured borrowings may take the form of
reverse repurchase agreements, pursuant to which the Fund would sell portfolio
securities for cash and simultaneously agree to repurchase them at a specified
date for the same amount of cash plus an interest component. For purposes of
this restriction, obligations of the Fund to Directors pursuant to deferred
compensation arrangements, the purchase and sale of securities on a when-issued
or delayed delivery basis, the purchase and sale of forward foreign currency
exchange contracts and financial futures contracts and related options and
collateral arrangements with respect to margins for financial futures contracts
and with respect to options are not deemed to be the issuance of a senior
security or a pledge of assets.
(9) [(10)] Make loans of money or securities, except by the purchase of debt
obligations in which the Fund may invest consistently with its investment
objective and policies or by investment in repurchase agreements.
(10) [(11)] Make short sales of securities except short sales
against-the-box.
E-10
(11) [(12)] Purchase securities on margin, except for such short-term loans
as are necessary for the clearance of purchases of portfolio securities. (For
the purpose of this restriction, the deposit or payment by the Fund of initial
or maintenance margin in connection with financial futures contracts is not
considered the purchase of a security on margin.)
(12) [(13)] Engage in the underwriting of securities, except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933, as amended
(the "Securities Act"), in disposing of a portfolio security.
(13) [(14)] Invest for the purpose of exercising control or management of
any other issuer.
E-11
x PRUDENTIAL EQUITY FUND, INC
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292Shareholders (Meeting)
10:00 a.m.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.DIRECTORS/TRUSTEES.
The undersigned hereby appoints Eugene Stark, S. Jane RoseGrace C. Torres and
Deborah A.
DocsMarguerite E.H. Morrison as Proxies, each with the power of
substitution, and hereby authorizes each of them to represent and
to vote, as designated below, all the shares of Common
Stock/beneficial interest of Prudential Equity Fund, Inc.the fund held of record by the
undersigned on August 9, 1996November 3, 2000 at the Special Meeting of Shareholders to be held on
October 30, 1996January 17, 2001 or any adjournment thereof.
The Board of Directors recommend a vote "FOR" each of the following proposals.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
/ / For All / / Withhold All / / For All Except As Listed Below
List Exceptions:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
VOTING INSTRUCTIONS: Mark your vote
(For, Against, Abstain) IN THE BOX
For Against Abstain
2b. / / / / / /
2c. / / / / / /
3. / / / / / /
4. / / / / / /
1. Election of Directors
Nominees: Edward D. Beach
Delayne D. Gold
Robert F. Gunia
Donald D. Lennox
Douglas McCorkindale
Mendel Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
2(b). To approve or disapprove the elimination of the Fund's investment
restriction regarding unseasoned issuers.
2(c). To approve or disapprove an amendment of the Fund's investment
restriction relating to securities lending.
3. To ratify or reject the selection by the Board of Directors of Price
Waterhouse LLP as independent accountants for the fiscal year ending
December 31, 1996.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.SHARES REPRESENTED BY THIS PROXY, WHEN THIS PROXY IS PROPERLY
EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THISSHAREHOLDER. THE PROXY WILL BE VOTED FOR ALL THE NOMINEES
FOR DIRECTOR/TRUSTEE AND FOR PROPOSALS LISTED ABOVE.
[NAME/ADDRESS]NO. 2, 3, 4, 5, 6 AND 7,
AS APPLICABLE, IF YOU DO NOT SPECIFY OTHERWISE. PLEASE REFER TO THE
PROXY STATEMENT DATED NOVEMBER __, 2000 FOR DISCUSSION OF THE
PROPOSALS.
IF VOTING BY MAIL, PLEASE MARK, SIGN AND DATE THIS PROXY CARD WHERE
INDICATED AND RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the Meeting or any
adjournment thereof.
NOTE: Please sign exactly as name appears at left. When shares are held by joint
tenants bothhereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
TO VOTE BY TELEPHONE
1) Read the Proxy Statement and have
this Proxy card at hand.
2) Call 1-800-690-6903 toll free.
3) Enter the 12-digit control number
set forth on the right side of this
Proxy card and follow the simple
instructions. SHARES
TO VOTE BY INTERNET CONTROL NUMBER
1) Read the Proxy Statement and have
this Proxy card at hand.
2) Go to Web site www.proxyvote.com
3) Enter the 12-digit control number
set forth on the right side of
this Proxy card and follow the
simple instructions.
TO VOTE, MARK BLOCKS BELOW IN
BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS
- ---------------------------------
Legal Proxy --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY for voting your / /
shares at the meeting in person
Admission pass only / /
- ---------------------------------
- ---------------------------------
Date
X
- ---------------------------------
Signature
X
- ---------------------------------
Signature if Held Jointly
[NAME/ADDRESS]
x PRUDENTIAL GLOBAL LIMITED MATURITY FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY CARD IS SOLICITED ON BEHALF OFVALID ONLY WHEN SIGNED AND DATED.
______________________ Fund
For address changes, please check this box /_/
and write them on the back.
THE BOARD OF DIRECTORS.
The undersigned hereby appoints Grace C. Torres, S. Jane Rose and Ellyn Vogin
as Proxies, each with the power of substitution, and hereby authorizes
each of them to represent and to vote, as designated below, all the shares of
beneficial interest of Prudential Global Limited Maturity Fund, Inc. held of
record by the undersigned on August 9, 1996 at the Special Meeting of
Shareholders to be held on October 30, 1996 or any adjournment thereof.
The Board of Directors recommends a vote "FOR" each of the following proposals.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
/ / For All / / Withhold All / / For All Except As Listed Below
List Exceptions:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
VOTING INSTRUCTIONS: Mark your vote
(For, Against, Abstain) IN THE BOX
For Against Abstain
3. / / / / / /
4. / / / / / /
1. Election of Directors
Nominees: Edward D. Beach
Delayne D. Gold
Robert F. Gunia
Donald D. Lennox
Douglas McCorkindale
Mendel Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
3. To ratify or reject the selection by the Board of Directors of Deloitte
& Touche LLP as independent accountants for the fiscal year ending
October 31, 1996.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTEDDIRECTORS/TRUSTEES RECOMMENDS A VOTE FOR ALL THE PROPOSALS LISTED ABOVE.
[NAME/ADDRESS]
Please sign exactly as name appears at left. When shares are held by joint
tenants both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- ---------------------------------
Legal Proxy - ONLY for voting your / /
shares at the meeting in person
Admission pass only / /
- ---------------------------------
- ---------------------------------
Date
X
- ---------------------------------
Signature
X
- ---------------------------------
Signature if Held Jointly
[NAME/ADDRESS]
x PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Grace C. Torres, S. Jane Rose and Deborah A.
Docs as Proxies, each with the power of substitution, and hereby authorizes
each of them to represent and to vote, as designated below, all the shares of
beneficial interest of Prudential Intermediate Global Income Fund, Inc. held of
record by the undersigned on August 9, 1996 at the Special Meeting of
Shareholders to be held on October 30, 1996 or any adjournment thereof.
The Board of Directors recommends a vote "FOR" each of the following proposals.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
/ / For All / / Withhold All / / For All Except As Listed Below
List Exceptions:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
VOTING INSTRUCTIONS: Mark your vote
(For, Against, Abstain) IN THE BOX
For Against Abstain
2b. / / / / / /
3. / / / / / /
4. / / / / / /
1. Election of Directors
Nominees: Edward D. Beach
Delayne D. Gold
Robert F. Gunia
Donald D. Lennox
Douglas McCorkindale
Mendel Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
2.(b). To approve or disapprove the elimination of the Fund's investment
restriction regarding unseasoned issuers.
3. To ratify or reject the selection by the Board of Directors of Price
Waterhouse LLP as independent accountants for the fiscal year ending
December 31, 1996.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
PLEASE MARK, SIGN, DATENOMINEES AND
RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL THE PROPOSALS LISTED ABOVE.
[NAME/ADDRESS]
Please sign exactly as name appears at left. When shares are held by joint
tenants both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- ---------------------------------
Legal Proxy - ONLY for voting your / /
shares at the meeting in person
Admission pass only / /
- ---------------------------------
- ---------------------------------
Date
X
- ---------------------------------
Signature
X
- ---------------------------------
Signature if Held Jointly
[NAME/ADDRESS]
x PRUDENTIAL JENNISON FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALFEACH OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Grace C. Torres, S. Jane Rose and Ellyn Vogin
as Proxies, each with the power of substitution, and hereby authorizes
each of them to represent and to vote, as designated below, all the shares of
beneficial interest of Prudential Jennison Fund, Inc. held of
record by the undersigned on August 9, 1996 at the Special Meeting of
Shareholders to be held on October 30, 1996 or any adjournment thereof.
The Board of Directors recommends a vote "FOR" each of the following proposals.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
/ / For All / / Withhold All / / For All Except As Listed Below
List Exceptions:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
VOTING INSTRUCTIONS: Mark your vote
(For, Against, Abstain) IN THE BOX
For Against Abstain
2b. / / / / / /
3. / / / / / /
4. / / / / / /
1. Election of Directors
Nominees: Edward D. Beach
Delayne D. Gold
Robert F. Gunia
Donald D. Lennox
Douglas McCorkindale
Mendel Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
2.(b) To approve or disapprove the elimination of the Fund's investment
restriction regarding unseasoned issuers.
3. To ratify or reject the selection by the Board of Directors of Deloitte
& Touche as independent accountants for the fiscal year ending
September 30, 1996.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL PROPOSALS LISTED ABOVE.
[NAME/ADDRESS]
Please sign exactly as name appears at left. When shares are held by joint
tenants both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- ---------------------------------
Legal Proxy - ONLY for voting your / /
shares at the meeting in person
Admission pass only / /
- ---------------------------------
- ---------------------------------PROPOSALS.
Vote on Proposals For Against Abstain For Against Abstain
1. To elect thirteen Directors 2. To approve a new subadvisory /_/ /_/ /_/
or Trustees agreement between PIFM and
Nominees: Saul K. Fenster, Delayne Dedrick Gold, Jennison Associates LLC.
Robert F. Gunia, Douglas H. McCorkindale, W. Scott McDonald, Jr.,
Thomas T. Mooney, Stephen P. Munn, David R. Odenath, Jr.,
Richard A. Redeker, Robin B. Smith, John R. Strangfeld,
Louis A. Weil III, Clay T. Whitehead
/_/For All /_/Withhold All /_/For All Except as listed below:
List Exceptions: _____________________________________________
_____________________________________________
3. To permit PIFM to enter into /_/ /_/ /_/ 4. To approve an amendment to /_/ /_/ /_/
or make material changes to the Management Agreement to
subadvisory agreements without permit PIFM to allocate assets
shareholder approval. Among affiliated and
unaffiliated subadvisers.
5. To approve certain changes to 6. To amend the Fund's objective. /_/ /_/ /_/
Fund's fundamental investment
restrictions or policies,
relating to, the following:
(a) fund diversification /_/ /_/ /_/
(b) issuing senior securities,
borrowing money or
pledging assets /_/ /_/ /_/
(c) buying and selling
real estate /_/ /_/ /_/
(d) buying and selling
commodities and
commodity contracts /_/ /_/ /_/
(e) fund concentration /_/ /_/ /_/
(f) engaging in underwriting /_/ /_/ /_/
(g) making loans /_/ /_/ /_/
(h) other investment
restrictions /_/ /_/ /_/
7. To ratify the selection of /_/ /_/ /_/
PricewaterhouseCoopers LLP as
independent accountants for the
Fund's current fiscal year.
Please be sure to sign and date this Proxy.
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
X
- ---------------------------------
Signature
X
- ---------------------------------
Signature if Held Jointly
[NAME/ADDRESS]
x PRUDENTIAL MULTI-SECTOR FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Susan C. Cote, S. Jane Rose and Marguerite
E.H. Morrison as Proxies, each with the power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all
the shares of beneficial interest of Prudential Multi-Sector Fund, Inc. held
of record by the undersigned on August 9, 1996 at the Special Meeting of
Shareholders to be held on October 30, 1996 or any adjournment thereof.
The Board of Directors recommends a vote "FOR" the following proposals.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
/ / For All / / Withhold All / / For All Except As Listed Below
List Exceptions:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
VOTING INSTRUCTIONS: Mark your vote
(For, Against, Abstain) IN THE BOX
For Against Abstain
2b. / / / / / /
2c. / / / / / /
3. / / / / / /
4. / / / / / /
1. Election of Directors
Nominees: Edward D. Beach
Delayne D. Gold
Robert F. Gunia
Donald D. Lennox
Douglas McCorkindale
Mendel Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
2.(c) To approve or disapprove an amendment of the Fund's investment
restriction relating to securities lending.
3. To ratify or reject the selection by the Board of Directors of
Deloitte & Touche LLP as independent accountants for the fiscal year
ending April 30, 1997.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL THE PROPOSALS LISTED ABOVE.
[NAME/ADDRESS]
Please sign exactly as name appears at left. When shares are held by joint
tenants both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- ---------------------------------
Legal Proxy - ONLY for voting your / /
shares at the meeting in person
Admission pass only / /
- ---------------------------------
- ---------------------------------
Date
X
- ---------------------------------
Signature
X
- ---------------------------------
Signature if Held Jointly
[NAME/ADDRESS]
x PRUDENTIAL SMALL COMPANIES FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Susan C. Cote, S. Jane Rose and Marguerite E.H.
Morrison as Proxies, each with the power of substitution, and hereby authorizes
each of them to represent and to vote, as designated below, all the shares of
beneficial interest of Prudential Small Companies Fund, Inc. held of
record by the undersigned on August 9, 1996 at the Special Meeting of
Shareholders to be held on October 30, 1996 or any adjournment thereof.
The Board of Directors recommends a vote "FOR" each of the following proposals.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
/ / For All / / Withhold All / / For All Except As Listed Below
List Exceptions:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
VOTING INSTRUCTIONS: Mark your vote
(For, Against, Abstain) IN THE BOX
For Against Abstain
2c. / / / / / /
3. / / / / / /
4. / / / / / /
1. Election of Directors
Nominees: Edward D. Beach
Delayne D. Gold
Robert F. Gunia
Donald D. Lennox
Douglas McCorkindale
Mendel Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
2.(a). To approve or disapprove an amendment of Fund's investment restrictions
regarding investment in shares of other investment companies.
2.(b). To approve or disapprove the elimination of the Fund's investment
restriction regarding unseasoned issuers.
2(d). To approve or disapprove a change in the Fund's investment policies to
permit the purchase and sale of over-the-counter options on stocks and
options on stock indices.
29(e). To approve or disapprove an amendment to the Fund's investment
restriction to permit foreign currency exchange transactions.
3. To ratify or reject the selection by the Board of Directors of Price
Waterhouse LLP as independent accountants for the fiscal year ending
September 30, 1996.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL PROPOSALS LISTED ABOVE.
[NAME/ADDRESS]
Please sign exactly as name appears at left. When shares are held by joint
tenants both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- ---------------------------------
Legal Proxy - ONLY for voting your / /
shares at the meeting in person
Admission pass only / /
- ---------------------------------
- ---------------------------------
Date
X
- ---------------------------------
Signature
X
- ---------------------------------
Signature if Held Jointly
[NAME/ADDRESS]
x PRUDENTIAL UTILITY FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Eugene Stark, S. Jane Rose and Marguerite
E.H. Morrison as Proxies, each with the power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all
the shares of beneficial interest of Prudential Utility Fund, Inc. held
of record by the undersigned on August 9, 1996 at the Special Meeting of
Shareholders to be held on October 30, 1996 or any adjournment thereof.
The Board of Directors recommends a vote "FOR" the following proposals.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
/ / For All / / Withhold All / / For All Except As Listed Below
List Exceptions:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
VOTING INSTRUCTIONS: Mark your vote
(For, Against, Abstain) IN THE BOX
For Against Abstain
2f. / / / / / /
3. / / / / / /
4. / / / / / /
1. Election of Directors
Nominees: Edward D. Beach
Delayne D. Gold
Robert F. Gunia
Donald D. Lennox
Douglas McCorkindale
Mendel Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
2(f). To approve or disapprove a change in the investment objective of the
Fund.
3. To ratify or reject the selection by the Board of Directors of Price
Waterhouse LLP as independent accountants for the fiscal year ending
December 31, 1996.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL THE PROPOSALS LISTED ABOVE.
[NAME/ADDRESS]
Please sign exactly as name appears at left. When shares are held by joint
tenants both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- ---------------------------------
Legal Proxy - ONLY for voting your / /
shares at the meeting in person
Admission pass only / /
- ---------------------------------
- ---------------------------------
Date
X
- ---------------------------------
Signature
X
- ---------------------------------
Signature if Held Jointly
[NAME/ADDRESS]
x THE GLOBAL GOVERNMENT PLUS FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Susan C. Cote, S. Jane Rose and Marguerite
E.H. Morrison as Proxies, each with the power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all
the shares of beneficial interest of The Global Government Plus Fund, Inc.
held of record by the undersigned on August 9, 1996 at the Special Meeting of
Shareholders to be held on October 30, 1996 or any adjournment thereof.
The Board of Directors recommends a vote "FOR" each of the following proposals.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
/ / For All / / Withhold All / / For All Except As Listed Below
List Exceptions:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
VOTING INSTRUCTIONS: Mark your vote
(For, Against, Abstain) IN THE BOX
For Against Abstain
3. / / / / / /
4. / / / / / /
1. Election of Directors
Nominees: Edward D. Beach
Delayne D. Gold
Robert F. Gunia
Donald D. Lennox
Douglas McCorkindale
Mendel Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
2. N/A
3. To ratify or reject the selection by the Board of Directors of Price
Waterhouse LLP as independent accountants for the fiscal year ending
December 31, 1996.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL PROPOSALS LISTED ABOVE.
[NAME/ADDRESS]
Please sign exactly as name appears at left. When shares are held by joint
tenants both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- ---------------------------------
Legal Proxy - ONLY for voting your / /
shares at the meeting in person
Admission pass only / /
- ---------------------------------
- ---------------------------------
Date
X
- ---------------------------------
Signature
X
- ---------------------------------
Signature if Held Jointly
[NAME/ADDRESS]
x THE GLOBAL TOTAL RETURN FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Susan C. Cote, S. Jane Rose and Marguerite
E.H. Morrison as Proxies, each with the power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all
the shares of beneficial interest of The Global Total Return Fund, Inc.
held of record by the undersigned on August 9, 1996 at the Special Meeting of
Shareholders to be held on October 30, 1996 or any adjournment thereof.
The Board of Directors recommends a vote "FOR" each of the following proposals.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
/ / For All / / Withhold All / / For All Except As Listed Below
List Exceptions:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
VOTING INSTRUCTIONS: Mark your vote
(For, Against, Abstain) IN THE BOX
For Against Abstain
3. / / / / / /
4. / / / / / /
1. Election of Directors
Nominees: Edward D. Beach
Delayne D. Gold
Robert F. Gunia
Donald D. Lennox
Douglas McCorkindale
Mendel Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
2. N/A
3. To ratify or reject the selection by the Board of Directors of Deloitte
& Touche as independent accountants for the fiscal year ending
December 31, 1996.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL PROPOSALS LISTED ABOVE.
[NAME/ADDRESS]
Please sign exactly as name appears at left. When shares are held by joint
tenants both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- ---------------------------------
Legal Proxy - ONLY for voting your / /
shares at the meeting in person
Admission pass only / /
- ---------------------------------
- ---------------------------------
Date
X
- ---------------------------------
Signature
X
- ---------------------------------
Signature if Held Jointly
[NAME/ADDRESS]