<Page>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<Table>
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 Under Rule 14a-12
</Table>
<Table>
CASH ACCUMULATION TRUST
PRUDENTIAL TAX-FREE MONEY FUND, INC.
PRUDENTIAL CORE INVESTMENT FUND
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC.
SPECIAL MONEY MARKET FUND, INC.
- ----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- ----------------------------------------------------------------------------
(Name of Person(s)Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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:
------------------------------------------------------------
</Table>
<Page>
CASH ACCUMULATION TRUST
LIQUID ASSETS FUND
NATIONAL MONEY MARKET FUND
PRUDENTIAL TAX-FREE MONEY FUND, INC.
PRUDENTIAL CORE INVESTMENT FUND
TAXABLE MONEY MARKET SERIES
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC.
SPECIAL MONEY MARKET FUND, INC.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
------------------------
IMPORTANT PROXY MATERIALS
PLEASE VOTE NOW!
APRIL , 2003
------------------------
Dear Shareholder:
I am inviting you to vote on several proposals relating to the management
and operation of your Fund. A shareholder meeting of each of the Funds
identified above is scheduled for July 2, 2003. This package contains
information about the proposals and includes materials you will need to vote.
The Boards of Directors/Trustees of each Fund have reviewed the proposals
and have recommended that the proposals be presented to you for consideration.
Although the Directors/Trustees have determined that the proposals are in your
best interest, the final decision is yours.
Shareholders of each Fund are being asked to approve many of the same
proposals, so in order to save money for your Fund, one proxy statement has been
prepared for all of the Funds listed above. To help you understand the
proposals, we are including a section that answers commonly asked questions. The
accompanying proxy statement includes a detailed description of 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 web 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 Incorporated 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.
/s/ Judy A. Rice
Judy A. Rice
PRESIDENT
<Page>
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 five primary issues:
- to elect a new Board of Directors or Trustees.
- to permit the Fund's Manager to enter into or make material changes to
your Fund's subadvisory agreements without shareholder approval,
- to approve a new management agreement with your Fund's Manager,
- to approve changes to your Fund's fundamental investment restrictions, and
- to approve amendments to the articles of incorporation or declaration of
trust for your Fund.
In addition, shareholders of Prudential Tax-Free Money Fund, Inc. are being
asked to approve a name change for the Fund.
Q. WHY AM I RECEIVING PROXY INFORMATION FOR A FUND THAT I DO NOT OWN?
A. Shareholders of all of the 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.
Q. WHY AM I RECEIVING MORE THAN ONE PROXY STATEMENT OR MAILING?
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 and in an IRA--you will receive multiple proxy
statements. Each proxy card should be voted and returned.
Q. ARE YOU RECOMMENDING A NEW BOARD FOR THE FUNDS?
A. Yes. The Boards of each of the Funds have nominated for election Independent
and Interested Directors or Trustees. Most of the nominees already serve as
Directors or Trustees on some, but not all of the Funds in the Prudential
mutual fund complex.
Q. WILL THE PROPOSED CHANGES RESULT IN HIGHER MANAGEMENT FEES?
A. No. The rate of the management fees charged to each Fund will not change as
a result of any of the proposed changes.
Q. WILL THE PROPOSED CHANGES RESULT IN HIGHER DIRECTORS' OR TRUSTEES' FEES FOR
A FUND?
A. No. Although the number of Independent Directors or Trustees of most of the
Funds, with the exception of Prudential Global Total Return Fund, Inc. will
increase from 6 to 8, the aggregate amount of fees paid by the Funds will
not increase, because the same Independent Directors or Trustees have been
elected to the American Skandia Funds, which will share in paying the fees.
Q. WHAT ARE "FUNDAMENTAL" INVESTMENT RESTRICTIONS, AND WHY ARE THEY PROPOSED TO
BE CHANGED?
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. The law requires certain investment policies to be
designated as fundamental. Each Fund adopted a number of fundamental
investment restrictions, and some of those fundamental restrictions reflect
regulatory, business or
<Page>
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 Boards believe that certain fundamental investment restrictions that are
not legally required should be eliminated. The Boards also believe that
other fundamental restrictions should be modernized and made more uniform.
The reason for these changes is to provide greater 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. No.
Q. WHAT WILL BE THE EFFECT OF THE PROPOSED CHANGES TO MY FUND'S FUNDAMENTAL
RESTRICTIONS?
A. The Boards do not believe that the proposed changes to fundamental
investment restrictions will result in a major restructuring of any Fund's
investment portfolio. The changes will allow each Fund greater flexibility
to respond to investment opportunities and permit the Boards to make changes
in the future that it considers desirable without the necessity of a
shareholder vote and the related additional expenses. A shareholder vote is
not necessary for changes to non-fundamental investment policies or
restrictions.
Q. HOW MANY VOTES DO YOU NEED TO APPROVE THESE PROPOSALS?
A. The number of votes needed to approve each Proposal differs, due to
different requirements imposed by federal and state laws. The descriptions
of each Proposal in the enclosed proxy statement identify the number of
votes required for each Fund to approve each Proposal.
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 Georgeson
Shareholder Communications Inc., a proxy solicitation firm, may contact you
by mail or telephone 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 joint shareholder meeting at 11 a.m. on July 2, 2003, the
meeting may be adjourned to permit further solicitation of proxy votes.
Q. HAS EACH FUND'S BOARD APPROVED THE PROPOSALS?
Yes. Your Fund's Board has approved the proposals and recommends that you
vote to approve them.
Q. HOW MANY VOTES AM I ENTITLED TO CAST?
A. As a shareholder, you are entitled to one vote for each share you own of
your Fund on the record date. The record date is April 11, 2003.
Q. HOW DO I VOTE MY SHARES?
A. You can vote your shares by completing and signing the enclosed proxy card,
and mailing it in the enclosed postage paid envelope. If you need any
assistance, or have any questions regarding a proposal or how to vote your
shares, please call Prudential at (800) 225-1852.
You may also vote via the Internet. To do so, have your proxy card available
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 Incorporated 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.
<Page>
Q. HOW DO I SIGN THE PROXY CARD?
A. INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names appear
on the account registration shown on the card.
JOINT ACCOUNTS: Both owners must sign and the signatures should conform
exactly to the names shown 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" underneath the name of the company.
The attached proxy statement contains more detailed information about each of
the proposals relating to your Fund. Please read it carefully.
<Page>
CASH ACCUMULATION TRUST
LIQUID ASSETS FUND
NATIONAL MONEY MARKET FUND
PRUDENTIAL TAX-FREE MONEY FUND, INC.
PRUDENTIAL CORE INVESTMENT FUND
TAXABLE MONEY MARKET SERIES
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC.
SPECIAL MONEY MARKET FUND, INC.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102
------------------------
NOTICE OF
JOINT SPECIAL AND ANNUAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON
JULY 2, 2003
------------------------
TO OUR SHAREHOLDERS:
Joint meetings of the shareholders of each of the above-listed Funds (each,
a Meeting) will be held at the offices of Prudential Investments LLC (PI), 100
Mulberry Street, Gateway Center Three, 14th Floor, Newark, New Jersey on
July 2, 2003 at 11 a.m. The purpose of the Meetings is to consider and act upon
the following proposals:
1. To elect 10 Directors or Trustees.
2. To permit PI to enter into or make material changes to subadvisory
agreements without shareholder approval.
3. To approve new management agreements between each of the Funds and PI.
4. To approve changes to each Funds' 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) making loans; and
(g) other investment restrictions, including investing in securities of
other investment companies.
5. To approve amendments to the articles of incorporation or declaration of
trust for each of the Funds.
6. To approve a name change for Prudential Tax-Free Money Fund, Inc.
For Special Money Market Fund, Inc., Prudential Tax-Free Money Fund, Inc.,
Prudential Institutional Liquidity Portfolio, Inc., and Prudential Global Total
Return Fund, Inc., the Meeting will be the Fund's
<Page>
annual meeting. For Cash Accumulation Trust, and Prudential Core Investment
Fund, the Meeting will be a Special Meeting.
You are entitled to vote at the Meeting, and at any adjournments thereof, of
each Fund in which you owned shares at the close of business on April 11, 2003.
If you attend a Meeting, you may vote your shares in person. IF YOU DO NOT
EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN EACH
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE OR VOTE BY INTERNET OR
TELEPHONE.
By order of the Boards,
<Table>
/s/ Jonathan D. Shain /s/ Maria Master
Jonathan D. Shain Maria Master
SECRETARY SECRETARY
</Table>
Dated: April , 2003.
PROXY CARDS FOR YOUR FUND ARE ENCLOSED ALONG WITH THE PROXY STATEMENT. PLEASE
VOTE YOUR SHARES TODAY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARDS 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 CARDS AND FOLLOWING THE SIMPLE INSTRUCTIONS. THE BOARD OF YOUR
FUND RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEES AND "FOR" EACH PROPOSAL.
<Page>
CASH ACCUMULATION TRUST
LIQUID ASSETS FUND
NATIONAL MONEY MARKET FUND
PRUDENTIAL TAX-FREE MONEY FUND, INC.
PRUDENTIAL CORE INVESTMENT FUND
TAXABLE MONEY MARKET SERIES
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC.
SPECIAL MONEY MARKET FUND, INC.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102
------------------------
PROXY STATEMENT
JOINT SPECIAL AND ANNUAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON JULY 2, 2003
------------------------
This proxy statement is being furnished to holders of shares of each of the
above-listed investment companies and their series (Funds) in connection with
the solicitation by their respective Boards of proxies to be used at joint
meetings (Meetings) of shareholders to be held at Gateway Center Three,
100 Mulberry Street, 14th Floor, Newark, New Jersey 07102 on July 2, 2003, at
11 a.m., Eastern Standard Time, or at any adjournment or adjournments thereof.
For each of Special Money Market Fund, Inc., Prudential Tax-Free Money
Fund, Inc., Prudential Institutional Liquidity Portfolio, Inc., and Prudential
Global Total Return Fund, Inc., the Meeting will be an annual meeting. For Cash
Accumulation Trust, and Prudential Core Investment Fund, the Meeting will be a
special meeting. This proxy statement is being first mailed to shareholders on
or about April , 2003.
Each Fund is an open-end, management investment company registered under the
Investment Company Act of 1940, as amended (the 1940 Act). Each of Special Money
Market Fund, Inc., Prudential Tax-Free Money Fund, Inc., Prudential
Institutional Liquidity Portfolio, Inc., and Prudential Global Total Return
Fund, Inc., is organized as a Maryland corporation. Cash Accumulation Trust is
organized as a Massachusetts business trust. Prudential Core Investment Fund is
organized as a Delaware statutory trust. The shares of common stock of each of
Special Money Market Fund, Inc., Prudential Tax-Free Money Fund, Inc.,
Prudential Institutional Liquidity Portfolio, Inc., and Prudential Global Total
Return Fund, Inc. and the shares of beneficial interest of Cash Accumulation
Trust, and Prudential Core Investment Fund are referred to as "Shares," 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 (collectively referred
to as Directors). A listing of the formal name for each Fund and the abbreviated
name for each Fund that is used in this proxy statement is set forth below.
<Table>
<Caption>
ABBREVIATED
FUND NAME NAME
- --------- -------------------------
Cash Accumulation Trust..................................... CAT
Liquid Assets Fund......................................
National Money Market Fund..............................
Special Money Market Fund, Inc.............................. Special Money
Prudential Tax-Free Money Fund, Inc......................... Tax-Free Money
Prudential Institutional Liquidity Portfolio, Inc........... PILP
Prudential Core Investment Fund............................. Core
Prudential Global Total Return Fund, Inc.................... Global Total Return
</Table>
<Page>
Prudential Investments LLC (PI or the Manager), Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102, serves as the Funds' Manager under a
management agreement with each Fund (each, a Management Agreement). Investment
advisory services have been provided to the Funds by PI through its affiliate,
Prudential Investment Management, Inc. (PIM or Subadviser), Gateway Center Two,
100 Mulberry Street, Newark, New Jersey 07102. PIM serves as subadviser to each
of the Funds.
PIM is a wholly-owned indirect subsidiary of Prudential Financial, Inc.
Prudential Investment Management Services LLC (PIMS or the Distributor), Gateway
Center Three, 100 Mulberry Street, Newark, New Jersey 07102, serves as the
distributor of the Funds' shares. The Funds' transfer agent is Prudential Mutual
Fund Services LLC (PMFS), 194 Wood Avenue South, Iselin, New Jersey 08830. As of
December 31, 2002, PI served as the investment manager to all of the Prudential
U.S. and offshore open-end investment companies, and as the administrator to
closed-end investment companies, with aggregate assets of approximately
$86.1 billion. 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.
VOTING INFORMATION
In the case of all of the Funds except PILP and Core, the presence, in
person or by proxy, of a majority of the Shares of a Fund outstanding and
entitled to vote will constitute a quorum for the transaction of business at the
Meeting of that Fund. In the case of PILP, a quorum is one-third of the shares
outstanding and entitled to vote, and for Core, a quorum is forty percent (40%)
of the shares outstanding and entitled to vote.
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 present and entitled to vote at
the Meeting in person or by proxy. When voting on a proposed adjournment, the
persons named as proxies will vote those proxies which they are entitled to vote
FOR any Proposal in favor of the adjournment of that proposal and will vote
those proxies required to be voted AGAINST any Proposal against the adjournment
of that Proposal. A shareholder 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 Shares on a particular matter with respect to which the
broker or nominee does not have discretionary power), the Shares 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
Shares 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 Proposal No. 1, for which the required vote is a plurality of the votes cast,
but effectively will be a vote against the other Proposals, which require
approval of a majority of the outstanding voting securities under the 1940 Act
or applicable state law.
The individuals named as proxies on the enclosed proxy cards will vote in
accordance with your direction as indicated thereon if your 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 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
2
<Page>
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.
The close of business on April 11, 2003 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
the record date is set forth below:
<Table>
<Caption>
FUND CLASS A CLASS B CLASS C CLASS Z TOTAL
- ---- ----------- ----------- ----------- ----------- -----------
CAT............................
Liquid Assets................
National Money Market........
Special Money..................
Tax-Free Money.................
PILP...........................
Core...........................
Global Total Return............
</Table>
None of the Proposals require separate voting by class, although for all
proposals except Proposal No. 1 shares of the Liquid Assets Fund Series of CAT
and shares of the National Money Market Fund Series of CAT will be voted
separately. Each Share of each class is entitled to one vote. 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 the Fund as of April 11,
2003. A listing of persons who owned beneficially 5% or more of any class of the
Shares of a Fund as of April 11, 2003 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.
SHAREHOLDERS OF A FUND MAY OBTAIN WITHOUT CHARGE ADDITIONAL COPIES OF THE FUND'S
ANNUAL AND SEMI-ANNUAL REPORTS BY WRITING THE FUND AT GATEWAY CENTER THREE,
100 MULBERRY STREET, 4TH FLOOR, NEWARK, NEW 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 Shareholders of
that Fund. Information about the vote necessary with respect to each Proposal is
discussed below in connection with each Proposal.
Shareholders voting via the Internet should understand that there may be
costs associated with electronic access, such as usage charges from Internet
access providers and telephone companies that must be borne by the Shareholder.
We have been advised that Internet voting procedures that have been made
available to you are consistent with the requirements of law.
TO ELECT DIRECTORS OR TRUSTEES
PROPOSAL NO. 1
DISCUSSION
The Board of each Fund has nominated the 10 individuals identified below for
election to each Fund's Board. Pertinent information about each nominee is set
forth in the listing below. Each of the nominees has indicated a willingness to
serve if elected. All but one of the nominees currently serve as Directors or
Trustees on some, but not all of the funds in the Prudential retail mutual fund
complex. The remaining nominee, David E. A. Carson, currently does not serve as
a Director or Trustee for any of the funds in the Prudential retail mutual fund
complex, but serves as a Trustee of the American Skandia Trust and a Director of
the American Skandia Advisor Funds, Inc.
3
<Page>
Because many of the other funds within the Prudential retail mutual fund
complex are also asking shareholders to elect the same individuals, if the
Shareholders of each of these Funds elect each nominee, most of the Funds within
the Prudential retail mutual fund complex will be overseen by a common Board. If
elected, each nominee will commence their new positions effective as of
, 2003. As part of the creation of a common Board, certain
individuals currently serving as Directors or Trustees of each Fund have not
been nominated for election. Each of the current Directors or Trustees of each
Fund who have not been nominated have announced their intention to resign their
positions if Shareholders elect the nominees.
Each Fund's current Directors or Trustees believes that creating a common
Board is in the best interests of each Fund. The principal reasons for adding
these individuals are:
- to bring additional experience and diversity of viewpoints to the Board;
- to bring the benefit of experience derived from service on the boards of
the other Prudential mutual funds;
- to promote continuity on the Board; and
- to achieve efficiencies and coordination in operation, supervision and
oversight of the Funds which may be derived from having the same
individuals serve on the Board of each of the Prudential retail mutual
funds.
If elected, all nominees will hold office until the earlier to occur of
(a) the next meeting of shareholders at which Board Members are elected and
until their successors are elected and qualified or (b) until their terms expire
in accordance with each Fund's retirement policy or (c) until they resign or are
removed as permitted by law. Each Fund's retirement policy generally calls for
the retirement of Directors on December 31 of the year in which they reach the
age of 75.
Board Members who are not interested persons of a Fund (as defined in the
1940 Act) are referred to as Independent Board Members or Independent Directors.
Board Members who are interested persons of a Fund are referred to as Interested
Board Members or Interested Directors.
Currently, each Independent Director who serves on the Board of a Fund is
paid annual fees as set forth below for his or her service on the Board of each
Fund. Directors' fees are allocated among all of the Funds in a "cluster" based
on their proportionate net assets. In addition, an Independent Board Member who
serves on the Executive Committee is paid by the Funds in the cluster an annual
aggregate fee of $8,000 and an Independent Board Member who chairs the Audit or
Nominating Committee is paid by those Funds an annual aggregate fee of $2,000
per Committee. Interested Directors 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. Board fees are
reviewed periodically by each Fund's Board.
None of the nominees is related to one another. None of each Fund's
Independent Directors or persons nominated to become Independent Directors owns
shares of Prudential Financial, Inc. or its affiliates. The business experience
and address of each nominee for Independent Director and each
4
<Page>
nominee for Interested Director, as well as information regarding their service
on other mutual funds in the Prudential mutual fund complex is as follows:
PROPOSED INDEPENDENT DIRECTOR NOMINEES
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
TERM OF FUND COMPLEX
POSITION(S) OFFICE AND OVERSEEN BY OTHER DIRECTORSHIPS**
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) NOMINEE FOR HELD BY NOMINEE
NAME, ADDRESS* AND AGE EACH FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR FOR DIRECTOR
- ---------------------- ------------- ------------- ------------------------- ------------- -------------------------
David E. A. Carson (68) None -- Director (January 2000 to None Director of United
People's Bank May 2000), Chairman Illuminating and UIL
1 Financial Plaza (January 1999 to December Holdings, a utility
Second Floor 1999), Chairman and Chief company, since May 1993.
Hartford, CT 06103 Executive Officer
(January 1998 to December
1998) and President,
Chairman and Chief
Executive Officer (1983
to December 1997) of
People's Bank.
Robert E. La Blanc (69) CAT: Trustee Since 1997 President (since 1981) of 77 Director of Storage
Special Since 1996 Robert E. La Blanc Technology Corporation
Money: Associates, Inc. (technology) (since
Director (telecommunications); 1979), Chartered
Tax-Free Since 1996 formerly General Partner Semiconductor
Money: at Salomon Brothers and Manufacturing, Ltd.
Director Vice-Chairman of (Singapore) (since 1998),
PILP: Since 1996 Continental Telecom. Titan Corporation
Director Trustee of Manhattan (electronics, since
Core: Trustee Since 1999 College. 1995), Computer
Global Total Associates International,
Return: None -- Inc. (since 2002)
(software company);
Director (since 1999) of
First Financial
Fund, Inc. and Director
(since April 1999) of The
High Yield Plus
Fund, Inc.
Douglas H. McCorkindale (63) CAT: None -- Chairman (since February 77 Director of Gannett
Special -- 2001), Chief Executive Co., Inc., Director of
Money: None Officer (since June 2000) Continental
Tax-Free -- and President (since Airlines, Inc. (since
Money: None September 1997) of May 1993), Director of
PILP: None -- Gannett Co. Inc. Lockheed Martin Corp.
Core: None -- (publishing and media); (aerospace and defense)
formerly Vice Chairman (since May 2001);
(March 1984-May 2000) of Director of the High
Gannett Co. Inc. Yield Plus Fund, Inc.
(since 1996).
Global Total Since 1996
Return:
Director
</Table>
5
<Page>
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
TERM OF FUND COMPLEX
POSITION(S) OFFICE AND OVERSEEN BY OTHER DIRECTORSHIPS**
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) NOMINEE FOR HELD BY NOMINEE
NAME, ADDRESS* AND AGE EACH FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR FOR DIRECTOR
- ---------------------- ------------- ------------- ------------------------- ------------- -------------------------
Stephen P. Munn (60) CAT: None -- Chairman of the Board 72 Chairman of the Board
Special -- (since 1994) and formerly (since January 1994) and
Money: None Chief Executive Officer Director (since 1988) of
Tax-Free (1998-2001) and President Carlisle Companies
Money: None -- of Carlisle Companies Incorporated
PILP: None Incorporated. (manufacturer of
Core: None -- industrial products);
-- Director of Gannett
Co., Inc. (publishing and
media).
Global Total Since 1996
Return:
Director
Richard A. Redeker (59) CAT: None -- Formerly Management 72
Special -- Consultant of
Money: None Invesmart, Inc. (August
Tax-Free 2001-October 2001);
Money: None -- formerly employee of
PILP: None Prudential Investments
Core: None -- (October 1996-December
-- 1998).
Global Total Since 1993
Return:
Director
Robin B. Smith (63) CAT: Trustee Since 1997 Chairman of the Board 69 Director of BellSouth
(since January 2003) of Corporation (since 1992)
Special Since 1996 Publishers Clearing House and Kmart Corporation
Money: (direct marketing), (retail) (since 1996).
Director formerly Chairman and
Tax-Free Since 1996 Chief Executive Officer
Money: (August 1996-January
Director 2003) of Publishers
PILP: Since 1987 Clearing House.
Director
Core: Trustee Since 1999
Global Total Since 1996
Return:
Director
</Table>
6
<Page>
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
TERM OF FUND COMPLEX
POSITION(S) OFFICE AND OVERSEEN BY OTHER DIRECTORSHIPS**
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) NOMINEE FOR HELD BY NOMINEE
NAME, ADDRESS* AND AGE EACH FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR FOR DIRECTOR
- ---------------------- ------------- ------------- ------------------------- ------------- -------------------------
Stephen Stoneburn (59) CAT: Trustee Since 1997 President and Chief 75
Special Since 1989 Executive Officer (since
Money: June 1996) of Quadrant
Director Media Corp. (a publishing
Tax-Free Since 1996 company); formerly
Money: President (June 1995-June
Director 1996) of Argus Integrated
PILP: Since 1996 Media, Inc.; Senior Vice
Director President and Managing
Core: Trustee Since 1999 Director (January
Global Total 1993-1995) of Cowles
Return: None -- Business Media and Senior
Vice President of
Fairchild Publications,
Inc (1975-1989).
Clay T. Whitehead (64) CAT: Trustee Since 1999 President (since 1983) of 94 Director (since 2000) of
Special Since 1999 National Exchange Inc. First Financial Fund,
Money: (new business development Inc. and Director (since
Director firm). 2000) of The High Yield
Plus Fund, Inc.
Tax-Free Since 1999
Money:
Director
PILP: Since 1999
Director
Core: Trustee Since 1999
Global Total Since 1996
Return:
Director
</Table>
7
<Page>
PROPOSED INTERESTED DIRECTOR NOMINEES
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
TERM OF FUND COMPLEX
POSITION(S) OFFICE AND OVERSEEN BY OTHER DIRECTORSHIPS**
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) NOMINEE FOR HELD BY NOMINEE
NAME, ADDRESS* AND AGE EACH FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR FOR DIRECTOR
- ---------------------- ------------- ------------- ------------------------- ------------- -------------------------
Judy A. Rice (55) President and Director or President, Chief 98
Director or Trustee for Executive Officer, Chief
Trustee all Funds Operating Officer and
since 2000. Officer-In-Charge (since
President of 2003) of PI; formerly
all Funds various positions to
since 2003. Senior Vice President
(1992-1999) of Prudential
Securities Incorporated
(PSI); and various
positions to Managing
Director (1975-1992) of
Salomon Smith Barney;
Member of Board of
Governors of the Money
Management Institute.
Robert F. Gunia (56) Vice CAT: Since Executive Vice President 116 Vice President and
President and 1997 and Chief Administrative Director (since May 1989)
Director or Special Officer (since June 1999) and Treasurer (since
Trustee Money: Since of PI; Executive Vice 1999) of The Asia Pacific
1996 President and Treasurer Fund, Inc.
Tax-Free (since January 1996) of
Money: Since PI; President (since
1996 April 1999) of Prudential
PILP: Since Investment Management
1996 Services LLC (PIMS);
Core: Since Corporate Vice President
1999 (since September 1997) of
Global Total The Prudential Insurance
Return: Since Company of America;
1996 formerly Senior Vice
President (March 1987-May
1999) of PSI; formerly
Chief Administrative
Officer (July
1989-September 1996),
Director (January
1989-September 1996) and
Executive Vice President,
Treasurer and Chief
Financial Officer (June
1987-December 1996) of
Prudential Mutual Fund
Management, Inc. (PMF).
</Table>
- ------------------------
* Unless otherwise indicated, the address of each nominee is c/o Prudential
Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, NJ
07102.
** This column includes only directorships of companies required to register,
or file reports with the Securities and Exchange Commission (the "SEC")
under the Securities Exchange Act of 1934 (that is, "public companies") or
other investment companies registered under the 1940 Act.
8
<Page>
The following tables set forth the dollar range of Fund securities held by
each nominee as of December 31, 2002. The tables also include the aggregate
dollar range of securities held by each nominee in all funds in the Fund Complex
overseen by that nominee as of December 31, 2002.
NOMINEE SHARE OWNERSHIP TABLE -- INDEPENDENT DIRECTORS
<Table>
<Caption>
AGGREGATE DOLLAR RANGE
OF SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES OVERSEEN BY
DOLLAR RANGE OF NOMINEE IN FAMILY
NAME OF NOMINEE SECURITIES IN EACH FUND OF INVESTMENT COMPANIES
- --------------- ----------------------------------- -----------------------
David E. A. Carson................ None None
Robert E. La Blanc................ Tax-Free Money: $1-$10,000 Over $100,000
All other Funds: None
Douglas H. McCorkindale........... Global Total Return: Over $100,000
$10,001-$50,000
All other Funds: None
Stephen P. Munn................... Global Total Return: Over $100,000
$10,001-$50,000
All other Funds: None
Richard A. Redeker................ None Over $100,000
Robin B. Smith.................... CAT -- Liquid Assets Fund: Over Over $100,000
$100,000
Global Total Return: Over $100,000
PILP: $50,001-$100,000
Special Money: $10,001-$50,000
Tax-Free Money: $1-$10,000
All Other Funds: None
Stephen Stoneburn................. All other Funds: None Over $100,000
Clay T. Whitehead................. All other Funds: None Over $100,000
</Table>
NOMINEE SHARE OWNERSHIP TABLE -- INTERESTED DIRECTORS
<Table>
<Caption>
AGGREGATE DOLLAR RANGE
OF SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES OVERSEEN BY
DOLLAR RANGE OF NOMINEE IN FAMILY
NAME OF NOMINEE SECURITIES IN EACH FUND OF INVESTMENT COMPANIES
- --------------- ----------------------------------- -----------------------
Judy A. Rice CAT -- Liquid Assets Fund: Over $100,000
$10,001-$50,000
All other Funds: None
Robert F. Gunia................... All other Funds: None Over $100,000
</Table>
None of the nominees for Independent Director, or any member of his/her
immediate family, owned beneficially or of record any securities in an
investment adviser or principal underwriter of a Fund or a person (other than a
registered investment company) directly or indirectly controlling, controlled
by, or under common control with an investment adviser or principal underwriter
of a Fund as of December 31, 2002.
9
<Page>
The following table sets forth information describing the aggregate
compensation paid by each Fund for each Fund's most recently completed fiscal
year and by the Fund Complex for the calendar year ended December 31, 2002 to
each of the nominees for his/her services:
<Table>
<Caption>
TOTAL 2002
PENSION OR COMPENSATION
RETIREMENT BENEFITS ESTIMATED FROM FUND AND
AGGREGATE COMPENSATION ACCRUED AS PART OF ANNUAL BENEFITS FUND COMPLEX PAID
NAME OF PERSON, POSITION(1) FROM EACH FUND FUND EXPENSES UPON RETIREMENT TO NOMINEES
- --------------------------- ---------------------------- -------------------- --------------- -------------------
David E. A. Carson None None None None
Robert E. La Blanc -- Director CAT: $3,209 None None $137,250 (20/77)(3)
Special Money: $1,400
Tax-Free Money: $1,325
PILP: $4,175
Core: $7,271
Douglas H. McCorkindale(2) -- Global Total Return: $1,300 None None $115,000 (18/77)(3)
Director
Stephen P. Munn -- Director Global Total Return: $1,300 None None $118,000 (23/72)(3)
Richard A. Redeker -- Global Total Return: $1,300 None None $120,500 (23/72)(3)
Director
Robin B. Smith(2) -- Director CAT: $3,169 None None $120,500 (26/69)(3)
Special Money: $1,421
Tax-Free Money: $1,325
PILP: $4,409
Core: $6,580
Global Total Return: $1,300
Stephen Stoneburn -- Director CAT $3,221 None None $120,250 (18/75)(3)
Special Money: $1,417
Tax-Free Money: $1,325
PILP: $4,292
Core: $7,212
Clay T. Whitehead -- Director CAT: $3,167 None None $196,750 (32/94)(3)
Special Money: $1,400
Tax-Free Money: $1,325
PILP: $4,175
Core: $6,713
Global Total Return: $1,300 None None $196,750 (32/94)(3)
</Table>
- ------------------------
(1) Interested Directors do not receive any compensation from the Funds or the
Fund Complex.
(2) Although the last column shows the total amount paid to Directors from the
Fund Complex during the calendar year ended December 31, 2002, such
compensation was deferred at the election of the Directors, in total or in
part, under the Funds' deferred fee agreements. Including accrued interest
and the selected Prudential Fund's rate of return on amounts deferred
through December 31, 2002, the total amount of compensation for the year
amounted to $138,574, $58,669, $134,555, $164,629 and $67,374 for
Messrs. Dorsey, McCorkindale, McDonald, Mooney, and Ms. Smith, respectively.
(3) Indicates number of funds/portfolios in Fund Complex (including Fund) to
which aggregate compensation relates.
If elected, the directors will hold office generally without limit except
that (a) any director may resign; (b) any director may be removed by the holders
of not less than a majority of the Fund's outstanding capital stock entitled to
be cast in the election of directors; and (c) each Fund's retirement policy
generally calls for the retirement of Directors on December 31 of the year in
which they reach the age of 75. In the event of a vacancy on the Board, the
remaining directors will fill such vacancy by appointing another director, so
long as immediately after such appointment, at least two-thirds of the directors
have been elected by shareholders.
10
<Page>
The Board of each Fund, which is currently composed of three Interested
Directors and six Independent Directors, with the exception of Global Total
Return, which has three Interested Directors and ten Independent Directors, met
four times during the twelve months ended December 31, 2002. Each incumbent
director attended each of these meetings, with the exception of Ms. Smith, who
attended three meetings. It is expected that the directors will meet at least
four times a year at regularly scheduled meetings.
Each Fund has an Audit Committee, which is composed entirely of independent
directors, and normally meets four times a year, or as required, in conjunction
with the meetings of the Board of Directors. Exhibit B sets forth the charter
for each Fund's Audit Committee and lists the members of each Fund's Audit
Committee. Among other things, each Fund's Audit Committee has the following
responsibilities:
- Recommending to the Board of Directors of each Fund the selection,
retention or termination, as appropriate, of the independent public
accountants of the Fund.
- Reviewing the independent public accountants' compensation, the proposed
terms of their engagement, and their independence.
- Reviewing audited annual financial statements including any adjustments to
those statements recommended by the independent public accountants, and
any significant issues that arose in connection with the preparation of
those financial statements.
- Reviewing changes in accounting policies or practices that had or are
expected to have a significant impact on the preparation of financial
statements.
- Generally acting as a liaison between the independent public accountants
and the Board of Directors.
During the twelve months ended December 31, 2002, the Audit Committee of
each Fund met four times.
The firm of PricewaterhouseCoopers LLP (Pricewaterhouse), 1177 Avenue of the
Americas, New York, NY 10036, is the independent public accountant for each
Fund. Each Fund's audit committee recommended, and the Board of each Fund
(including a majority of the Independent Directors) approved, the selection of
Pricewaterhouse as the Fund's independent public accountant for the Fund's
current fiscal year. Representatives of Pricewaterhouse are not expected to be
present at the Meetings, but have been given the opportunity to make a statement
if they so desire and will be available by telephone to respond to appropriate
questions.
AUDIT FEES
Pricewaterhouse received the following fees for its services to the Funds in
connection with the audit of each Fund's annual financial statements for each
Fund's most recently completed fiscal year.
<Table>
<Caption>
FUND AUDIT FEES
- ---- ----------
CAT
Liquid Assets Fund........................................ $29,000
CAT
National Money Market Fund................................ $29,000
Tax-Free Money.............................................. $32,000
Core........................................................ $29,000
PILP........................................................ $25,000
Special Money............................................... $27,000
Global Total Return......................................... $42,000
</Table>
11
<Page>
Pricewaterhouse billed no fees to the Funds or to PI or any entity
controlling, controlled by or under common control with the Funds that provided
services to the Funds in connection with financial information systems design
and implementation, for each Fund's recently completed fiscal year.
Pricewaterhouse billed no other fees for professional services rendered to
the Funds or to PI or any entity controlling, controlled by or under common
control with the Funds that provided services to the Funds, for each Fund's most
recently completed fiscal year.
The Audit Committee of each Fund has considered whether the services
described above are compatible with Pricewaterhouse's independence.
Nominating Committee members confer periodically and hold meetings as
required. The responsibilities of each Fund's Nominating Committee include, but
are not limited to, recommending to the Board the individuals to be nominated to
become Independent Directors. During the twelve months ended December 31, 2002,
no Fund's Nominating Committee met. The Funds do not have compensation
committees. The Nominating Committee generally will not consider nominees
recommended by shareholders. Exhibit B lists the members of each Fund's
Nominating Committee.
Information about the number of Board and Committee meetings held during the
most recent fiscal year for each Fund is included in Exhibit B. Information
concerning Fund officers is set forth in Exhibit C.
REQUIRED VOTE
For each Fund, nominees receiving the affirmative vote of a plurality of the
votes cast will be elected, provided a quorum is present.
EACH BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU
VOTE "FOR" EACH OF THE NOMINEES UNDER PROPOSAL NO. 1.
TO APPROVE A PROPOSAL TO PERMIT THE MANAGER TO ENTER INTO, OR MAKE
MATERIAL CHANGES TO, SUBADVISORY AGREEMENTS WITHOUT
OBTAINING SHAREHOLDER APPROVAL
PROPOSAL NO. 2
The Board of each Fund has approved, and recommends that shareholders approve,
Proposal No. 2, which would permit PI to enter into subadvisory agreements with
new subadvisers to the Fund and to 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 RATE OF
ADVISORY FEES CHARGED TO A FUND. Information concerning each Fund's current
management arrangements, including a description of the Fund's current
subadvisory agreement, is contained in Proposal No. 3. If shareholders approve
Proposal No. 2 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 annually
in order for them to take effect. On March 4, 2003, the Board of each Fund,
including the Independent Directors, discussed and approved Proposal No. 2 at an
in-person meeting.
Proposal No. 2 is being submitted to shareholders pursuant to the
requirements of an exemptive order obtained by the Prudential Mutual Funds from
the SEC in September 1996 (the Original Order). The Original Order grants relief
to The Target Portfolio Trust (for which PI acts as a Manager-of-Managers) and
other Prudential Mutual Funds from certain provisions of the 1940 Act and
certain rules thereunder. Specifically, the Original Order permits PI 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 PI. Among other things, the
Original Order permits PI to enter into (1) a new subadvisory agreement that is
necessitated
12
<Page>
due to an "assignment" (as defined in the 1940 Act), (2) an amendment to a
subadvisory agreement, or (3) a new subadvisory agreement substituting a new
subadviser for an old subadviser.
The Funds plan to apply to the SEC for an amended order permitting them not
to disclose the fee rates paid to specific subadvisers where a Fund employs more
than one subadviser because that may permit PI to hire new subadvisers at lower
fees. There can be no assurance that such an amended order would be granted by
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, each Fund currently is
required to obtain shareholder approval of subadvisory agreements in the
following situations:
- (1) the employment of a new subadviser to replace an existing subadviser
or (2) the allocation of a portion of its assets to an additional
subadviser;
- a material change in the terms of a subadvisory agreement; and
- 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 voting securities, as defined in the 1940 Act.
DISCUSSION
Under the "Manager-of-Managers" structure, each Fund would continue to
employ PI, subject to the supervision of the Board, to manage or provide for the
management of each Fund. PI could select one or more subadvisers to invest the
assets of each Fund, subject to the review and approval of the Board of the
respective Fund. (Currently, the selection of one or more subadvisers is subject
to the approval of the Fund's shareholders, which is why Proposal No. 2 is being
submitted to shareholders of the Funds.) PI would review each subadviser's
performance on an ongoing basis. PI would continue to 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. PI would continue to pay an advisory fee to each
subadviser from each Fund's overall management fee. Each Board believes that
requiring a Fund's shareholders to approve changes in subadvisers and
subadvisory agreements (including continuation of subadvisory agreements that
otherwise would 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 PI 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. 2 is implemented.
The kind of changes to subadvisory arrangements that could be effected
without further shareholder approval if Proposal No. 2 is approved include:
(1) allocating a portion of a Fund's assets to one or more additional
subadvisers; (2) continuing a subadvisory agreement where a change in control of
the subadviser automatically otherwise causes that agreement to terminate; and
(3) replacing an existing subadviser with a new subadviser when PI and the Board
determine that the new subadviser's investment philosophy and
13
<Page>
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 PI can effect the types of subadvisory
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. 2. Each Board further believes that these gains in
efficiency would ultimately benefit each Fund and its shareholders. Shareholders
of many of the funds in the Prudential fund complex approved the same
Manager-of-Managers structure for their funds several years ago.
Although a Manager-of-Managers structure will be put into place for each
Fund whose shareholders approve Proposal No. 2, the Fund will not employ new
subadvisers pursuant to this structure unless and until PI and the Board
determine that a change in subadvisory arrangements is appropriate. In making
these determinations as to a Fund, PI intends to evaluate rigorously both
affiliated subadvisers and unaffiliated subadvisers according to objective and
disciplined standards.
Following shareholder approval of Proposal No. 2, PI will continue to be
each Fund's investment manager. Each Board and PI, under the Board's
supervision, will continue to monitor the nature and quality of the services
provided by PIM and may, in the future, recommend additional subadvisers (apart
from PIM) or the reallocation of assets among PIM and other subadvisers. If one
or more new subadvisers are added to a Fund, PI 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%, subject to
Board approval. The Manager-of-Managers structure that each Board is asking
shareholders to approve will give the Boards and PI the flexibility to appoint
additional subadvisers without shareholder approval, but it is possible that no
new subadvisers will be added.
If Proposal No. 2 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 PI and each subadviser (unless the SEC permits information as to the
rate of fees to be paid to subadvisers not to be disclosed) and would disclose
subadviser changes or changes in subadvisory agreements.
Each Board and PI have concluded that, through the information statement and
adherence to the conditions outlined below, shareholders of each Fund would
receive adequate disclosure about any new subadvisers or material amendments to
subadvisory agreements. Whether or not Proposal No. 2 is approved, amendments to
the Management Agreement between PI and each Fund would remain subject to the
shareholder and Board approval requirements of Section 15 of the 1940 Act and
related proxy disclosure requirements. Moreover, although PI and each Board
already generally may change the rate of fees payable by PI to a subadviser
without shareholder approval, PI and the Board could not increase the rate of
the management fees payable by a Fund to PI 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. 2 to
permit PI 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
A Fund will not rely on the Original Order to implement the
Manager-of-Managers structure until all of the conditions set forth below have
been met.
14
<Page>
The following are conditions for relief under the Original Order:
1. PI 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.
2. Before a Fund may operate in the manner described in Proposal
No. 2, 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. 2 would satisfy this condition with respect to a
Fund.]
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 material 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 PI 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 PI or any entity that
controls, is controlled by or is under common control with PI, 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. PI 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 PI
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 PI or the Affiliated
Subadviser derives an inappropriate advantage.
MATTERS CONSIDERED BY EACH BOARD
At Board meetings held on March 4, 2003, each Board, including the
Independent Directors, approved the submission to shareholders of Proposal No. 2
regarding the Manager-of-Managers structure.
15
<Page>
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. Each
Board gave primary consideration to the fact that the rate of the management fee
payable to PI would not change as a result of adopting a Manager-of-Managers
structure and that the new structure would provide the potential for PI to hire
subadvisers and amend subadvisory agreements more efficiently and with less
expense. Each Board also considered that PI had substantial experience in
evaluating investment advisers and that PI 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 PI could not, without the
prior approval of the Board, including a majority of the Independent Directors:
(1) appoint a new subadviser, (2) materially change the allocation of portfolio
assets among subadvisers, or (3) make material amendments to existing
subadvisory agreements. Each Board also took into account the fact that other
funds managed by PI, including most of the funds marketed, distributed and
operated similarly to the Funds, operate within this structure.
REQUIRED VOTE
For each Fund, approval of this Proposal 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 BOARD MEMBERS, RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL NO. 2.
TO PERMIT AN AMENDMENT TO THE MANAGEMENT CONTRACT
BETWEEN PI AND EACH FUND
PROPOSAL NO. 3
The Board of each Fund, including the Independent Directors, has approved,
and recommends that shareholders of the Funds approve, a proposal to amend the
management agreement between each Fund and PI (the Amended Management
Agreements). Because the material features of each Amended Management Agreement
are substantially similar to each other, we have attached as Exhibit D to this
proxy statement a form of the Amended Management Agreements applicable to each
Fund. If approved at the Meeting, the Amended Management Agreements will
supersede the existing Management Agreements (the Existing Management
Agreements) between each Fund and PI respectively.
The Amended Management Agreements are substantially similar to the Existing
Management Agreements except with respect to the provisions relating to the
Manager-of-Managers structure. THE RATE OF ADVISORY FEES PAYABLE BY EACH FUND TO
PI WILL NOT CHANGE. The primary difference is that the Amended Management
Agreements would permit PI, with Board approval, to allocate and reallocate a
Fund's portfolio assets among subadvisers as PI deems appropriate. In addition,
the Amended Management Agreements contain a provision permitting a Fund to
indemnify the Manager in certain instances.
If the Amended Management Agreement is approved with respect to your Fund,
the Fund's existing subadvisory agreement between PI and PIM (the Existing PIM
Subadvisory Agreement) will be amended to reflect the changes in the Amended
Management Agreement. Therefore, in deciding whether to approve the Amended
Management Agreement, you should consider that by voting for approval of the
Amended Management Agreement with respect to your Fund, you are also voting to
approve amending the existing PIM Subadvisory Agreement in order to permit PI,
with Board approval, to allocate and reallocate your Fund's portfolio assets to
and from PIM from 0% to 100% of your Fund's portfolio assets and to clarify that
PIM's subadvisory fee will be based on the portfolio assets that it manages.
EACH AMENDED PIM SUBADVISORY AGREEMENT WILL OTHERWISE BE SIMILAR IN ALL OTHER
MATERIAL RESPECTS AS THE EXISTING PIM SUBADVISORY AGREEMENT, except as
16
<Page>
to the date of the Agreement. The Board of each Fund, including the Independent
Directors, has approved amending the existing PIM Subadvisory Agreement for each
Fund. Because the material features of each Amended PIM Subadvisory Agreement
are substantially similar to each other, we have attached as Exhibit E to this
proxy statement a form of the Amended PIM Subadvisory Agreement applicable to
all of the Funds. If the Amended Agreement is approved at the Meeting as to a
Fund, the Amended PIM Subadvisory Agreement will supersede the Existing PIM
Subadvisory Agreement between PI and PIM as to that Fund.
EXISTING PIM SUBADVISORY AGREEMENTS
The Existing PIM Subadvisory Agreements provide that PIM will furnish
investment advisory services in connection with the management of the Funds. In
connection with those services, PIM is obligated to keep certain books and
records of the Funds. Pursuant to the Existing Agreements, as well as under the
Amended Agreements, PI continues to have responsibility for all investment
advisory services.
The table below lists the compensation paid by PI to PIM under the Existing
PIM Subadvisory Agreements for the last fiscal year of each Fund, as well as the
date of that Agreement and the date on which that Agreement was last submitted
to shareholders for approval. Each such Agreement was most recently continued by
the Board on May 22, 2002.
<Table>
<Caption>
EXISTING PIM DATE SUBADVISORY
SUBADVISORY AGREEMENT FEE PAID TO PIM
AGREEMENT SUBMITTED TO (% OF AVERAGE DAILY
FUND DATE SHAREHOLDERS NET ASSETS)
- ---- ------------ ---------------- -------------------
CAT
Liquid Assets Fund............................. 12/12/97 12/11/97 .0350%
National Money Market Fund..................... 12/12/97 12/11/97 .1950%
Special Money.................................... 3/1/91 9/11/90 .2500%
Tax-Free Money................................... 5/2/88 3/16/88 .2500%
PILP............................................. 7/31/89 11/29/88 .1000%
Core............................................. 6/1/99 5/25/99 N/A
Global Total Return.............................. 1/1/00 12/6/95 .3750%
</Table>
The table beginning on page 23 lists the fees paid to PI by each Fund. The
table below sets forth the total fees paid by PI to PIM for each Fund during the
fiscal year:
<Table>
<Caption>
FISCAL YEAR FEE RECEIVED
FUND ENDED BY PIM
- ---- ----------- ------------
CAT
Liquid Assets Fund........................................ 9-30-02 $ 177,890
National Money Market Fund................................ 9-30-02 683,254
Special Money............................................... 6-30-02 622,909
Tax-Free Money.............................................. 12-31-02 501,523
PILP........................................................ 3-31-02 4,198,144
Core*....................................................... 1-31-03 --
Global Total Return......................................... 12-31-02 $ 848,866
</Table>
- ------------------------
* PI reimburses PIM for its direct costs, excluding profit and overhead,
incurred by PIM in furnishing services to PI.
17
<Page>
PIM currently advises the following mutual funds with investment objectives
and policies similar to those of the Funds:
<Table>
<Caption>
TOTAL NET
ASSETS AS OF
FUND 12-31-02 FEE
- ---- ------------ ------------------------
Prudential Government Securities Trust--Money Market
Series.............................................. $605,901,084 .40% of 1% to
$1 billion
.375% to $1.5 billion
.35% over $1.5 billion
Prudential Short-Term Bond Fund, Inc--Prudential
Short-Term Corporate Bond Fund...................... $227,340,586 .40%
</Table>
The table below lists the name and principal occupation of the principal
executive officers and each director of PIM. The address of each person, unless
otherwise noted, is Gateway Center Three, 100 Mulberry Street, Newark, NJ 07102.
<Table>
<Caption>
NAME POSITION WITH PIM PRINCIPAL OCCUPATIONS
- ---- ---------------------------------- ---------------------------------
John R. Strangfeld....... Chairman of the Board, President, Vice Chairman of Prudential
Chief Executive Officer and Financial, Inc. (Prudential);
Director Chairman, Director and CEO of
Prudential Securities Group;
Director and President of
Prudential Asset Management
Holding Company; Director of
Jennison Associates LLC;
Executive Vice President of The
Prudential Insurance Company of
America.
Bernard Winograd......... Director, President and CEO Senior Vice President of The
Prudential Insurance Company of
America; Director of Jennison
Associates LLC; Director and Vice
President of Prudential Asset
Management Holding Company
Matthew J. Chanin ....... Director and Senior Vice President Director and President of
Gateway Center Four Prudential Equity
100 Mulberry St. Investors, Inc.; Chairman,
Newark, NJ 07102 Director and President of
Prudential Private Placement
Investors, Inc.
Dennis M. Kass .......... Director and Vice President Chairman, Director and CEO of
466 Lexington Ave. Jennison Associates LLC; Director
18th floor of Prudential Trust Company
New York, NY 10017
Philip N. Russo.......... Director Director of Jennison Associates
LLC; Executive Vice President,
Chief Financial Officer and
Treasurer, PI
James J. Sullivan ....... Director, Vice President and Chairman, Director, President and
Gateway Center Two Managing Director CEO of Prudential Trust Company;
100 Mulberry St. Director and President of The
Newark, NJ 07102 Prudential Asset Management
Company, Inc.
</Table>
18
<Page>
As discussed above, if a Fund's shareholders approve this Proposal, the
relevant Existing Agreement would be amended to provide that PI may reallocate
Fund assets upon Board approval only and without further shareholder approval.
This would mean, for example, that a Fund that has allocated 100% of its assets
to one subadviser would be able to change the allocation to 50% to one
subadviser and 50% to a second subadviser with Board approval but without
seeking shareholder approval. (The Fund's Board could appoint the second
unaffiliated subadviser with shareholder approval or, if Proposal No. 2 is
approved, by Board action alone.) Alternatively, 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. PI will monitor each Fund's overall portfolio to ensure that any such
overlaps do not create an unintended industry concentration or result in a
violation of a Fund's diversification requirements. 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, but the Fund will have incurred additional costs. PI
will consider these costs in determining the allocation of assets. PI 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, PI 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 Management
Agreements and the Existing Management Agreements.
EXISTING MANAGEMENT AGREEMENTS
The Funds are currently managed under Existing Management Agreements with
PI, dated as shown in the following table.
The following table shows the date that each Fund's Existing Management
Agreement was most recently renewed by its Board, including a majority of the
Independent Directors, and the date that each Existing Management Agreement was
last approved by a vote of the Fund's shareholders.
<Table>
<Caption>
DATE AGREEMENT DATE AGREEMENT
MOST RECENTLY MOST RECENTLY
DATE OF RENEWED SUBMITTED FOR
FUND AGREEMENT WITH PI BY BOARD SHAREHOLDER APPROVAL
- ---- ----------------- -------------- --------------------
CAT
Liquid Assets Fund......................... 12/12/97 5-22-02 12/11/97
National Money Market Fund................. 12/12/97 5-22-02 12/11/97
Special Money................................ 3/1/91 5-22-02 9/11/90
Tax-Free Money............................... 5/2/88 5-22-02 3/16/88
PILP......................................... 7/31/89 5-22-02 11/29/88
Core......................................... 6/1/99 5-22-02 5/25/99
Global Total Return.......................... 1/15/96 5-22-02 12/6/95
</Table>
PI serves as manager to the Funds and to almost all of the other investment
companies that comprise the Prudential Mutual Funds. PI is organized in New York
as a limited liability company. As of December 31, 2002, PI managed and/or
administered open-end and closed-end management investment companies with assets
of approximately $86.1 billion.
19
<Page>
PI is a wholly-owned subsidiary of PIFM Holdco, Inc., which is a
wholly-owned subsidiary of Prudential Asset Management Holding Company (PAMHCO),
which is a wholly-owned subsidiary of Prudential Financial, Inc. The address of
PI, PIFM HoldCo, Inc. and PAMHCO is Gateway Center Three, 100 Mulberry Street,
Newark, NJ 07102. The address of Prudential Financial, Inc. is 751 Broad Street,
Newark, NJ 07102.
The table below lists the name and principal occupations of the principal
executive officers of PI. The address of each person is Gateway Center Three,
100 Mulberry Street, Newark, NJ 07102-4077.
<Table>
<Caption>
NAME POSITION AND PRINCIPAL OCCUPATIONS
- ---- ------------------------------------------------------------
Robert F. Gunia ................. Executive Vice President and Chief Administrative Officer,
PI; Vice President, The Prudential Insurance Company of
America; President, Prudential Investment Management
Services LLC (PIMS)
Judy A. Rice..................... Officer-In-Charge, President, Chief Executive Officer and
Chief Operating Officer, PI
William V. Healey................ Executive Vice President, Chief Legal Officer and Secretary,
PI; Vice President and Associate General Counsel, The
Prudential Insurance Company of America; Senior Vice
President, Chief Legal Officer and Secretary, PIMS
Kevin B. Osborn.................. Executive Vice President, PI
Philip N. Russo.................. Executive Vice President, Chief Financial Officer and
Treasurer, PI; Director of Jennison Associates LLC
Lynn M. Waldvogel................ Executive Vice President, PI
</Table>
For its services, PI was paid as compensation the following amounts during
each Fund's most recent fiscal year:
<Table>
<Caption>
FISCAL YEAR TOTAL MANAGEMENT FEES AS % MANAGEMENT
FUND ENDED OF AVERAGE NET ASSETS FEES PAID
- ---- ----------- -------------------------- -----------
CAT
Liquid Assets Fund.......................... 9-30-02 .06% $ 325,000
National Money Market Fund.................. 9-30-02 .39% 1,366,508
Special Money................................. 6-30-02 .50% 1,245,818
Tax-Free Money................................ 12-31-02 .50% 1,003,046
PILP*......................................... 3-31-02 .20% 8,396,288
Core**........................................ 1-31-03 .023% 1,600,000
Global Total Return........................... 12-31-02 .75% 1,697,732
</Table>
- ------------------------
* PI has agreed to waive a portion (.05% of the fund's average daily net
assets) of its management fee, which amounted to $2,099,072 for the year
ended March 31, 2002.
** PI is reimbursed for its costs and expenses incurred in managing the Fund's
investment operations and administering its business affairs.
20
<Page>
AMOUNTS PAID TO AFFILIATES
THE DISTRIBUTOR
PIMS, Gateway Center Three, 100 Mulberry Street, Newark, New Jersey
07102-4077, acts as the distributor of the shares of the Funds. PIMS is a
subsidiary of Prudential. Pursuant to distribution and service plans adopted
under Rule 12b-1 under the 1940 Act, the Funds bear the expense of distribution
and service (12b-1) fees paid to PIMS with respect to their respective Class A,
Class B and Class C shares. For their most recently completed fiscal years, PIMS
received distribution and service fees from the Funds as follows.
<Table>
<Caption>
Class B Class C
FISCAL CLASS A 12b-1 12b-1
FUND YEAR ENDED 12b-1 Fees Fees Fees
- ---- ---------- ----------- -------- --------
CAT
Liquid Assets Fund.......... 9-30-02 -- -- --
National Money Market Fund.. 9-30-02 $ 350,386 -- --
Special Money................. 6-30-02 2,597 -- --
Tax-Free Money................ 12-31-02 250,761 -- --
PILP.......................... 3-31-02 562,566 -- --
Core.......................... 1-31-03 -- -- --
Global Total Return........... 12-31-02 532,070 74,608 5,558
</Table>
PIMS also receives front-end sales charges resulting from the sales of
Class A and Class C shares. From these fees, PIMS pays sales charges to
affiliated broker-dealers, who in turn pay commissions to salespersons and incur
other distribution costs. PIMS has advised the Funds that it received the
following front-end sales charges during the Funds' most recently completed
fiscal years, as indicated above.
<Table>
<Caption>
CLASS A CLASS C
FUND SALES CHARGES SALES CHARGES
- ---- ------------- -------------
CAT
Liquid Assets Fund............................ -- --
National Money Market Fund.................... -- --
Special Money................................... -- --
Tax-Free Money.................................. -- --
PILP............................................ -- --
Core............................................ -- --
Global Total Return............................. $16,900 $300
</Table>
PIMS also received approximately the following contingent deferred sales
charges (CDSCs) imposed on certain redemptions by certain Class B and Class C
shareholders of the Funds for their most recently completed fiscal years, as
indicated above.
<Table>
<Caption>
CLASS B CLASS C
FUND CDSCS CDSCS
- ---- -------- --------
CAT
Liquid Assets Fund................................... -- --
National Money Market Fund........................... -- --
Special Money.......................................... -- --
Tax-Free Money......................................... -- --
PILP................................................... -- --
Core................................................... -- --
Global Total Return.................................... $16,900 $200
</Table>
21
<Page>
THE TRANSFER AGENT
The Funds' transfer agent, Prudential Mutual Fund Services LLC (PMFS), 194
Wood Avenue South, Iselin, New Jersey 08830, is a wholly-owned subsidiary of PI.
PMFS received approximately the following fees for its services to the Funds for
each Fund's most recently completed fiscal year, as indicated above.
<Table>
<Caption>
TRANSFER AGENT
FUND FEES
- ---- --------------
CAT
Liquid Assets Fund........................................ $ 418,300
National Money Market Fund................................ 229,000
Special Money............................................... 228,000
Tax-Free Money.............................................. 108,300
PILP........................................................ 240,000
Core........................................................ 100,000
Global Total Return......................................... 403,800
</Table>
COMMISSIONS PAID TO PRUDENTIAL SECURITIES INCORPORATED
Prudential Securities Incorporated (PSI), One Seaport Plaza, New York, New
York 10292, is a wholly-owned subsidiary of Prudential Financial, Inc. None of
the Funds paid any commissions to PSI during each Fund's most recently completed
fiscal year.
AMENDED MANAGEMENT AGREEMENTS
Pursuant to the Existing Management Agreements, PI, 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
Management Agreements, PI may delegate the subadvisory function to one or more
than one subadviser. As discussed in Proposal No. 2 above, PI would like the
ability to manage in a "Manager-of-Managers" style in which PI 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 Management
Agreements, PI must keep certain books and records of each Fund. PI 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 and PMFS, the Funds' transfer and dividend
disbursing agent. Officers and employees of PI serve as officers and Directors
of the Funds without compensation.
A model Amended Management Agreement under which PI would provide management
services to the Funds is attached as Exhibit D to this proxy statement. In
brief, the Amended Agreement provides that:
- PI will administer a Fund's business affairs and supervise the Fund's
investments. Subject to Board approval, PI 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;
- Subject to Board approval, PI may reallocate a Fund's assets among
subadvisers;
- PI (or a subadviser, acting under PI'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;
- PI 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
22
<Page>
- For each Fund, PI will be paid at the same advisory fee rate as is
currently charged to each such Fund under the Existing Management
Agreements; and
- Each Fund will indemnify PI for all liabilities, costs and expenses
incurred by PI in any action or proceeding arising out of the performance
of its duties under the Amended Management Agreement. But PI will not be
indemnified for any liability to the Fund or its shareholders to which it
would otherwise be subject due to gross negligence in or reckless
disregard of its duties under the Amended Management Agreement.
MATTERS CONSIDERED BY THE BOARD
The proposal to present the Amended Management Agreements to shareholders
was approved by the Board of each Fund, including the Independent Directors, on
March 4, 2003. The Board Members received materials relating to the Amended
Management Agreements in advance of the meeting at which these Agreements were
considered, and had the opportunity to ask questions and request further
information in connection with such consideration. The Board gave primary
consideration to the fact that the rate of fees will not change and that the
terms of the Amended Agreements were substantially similar to the Existing
Management Agreements, except that, under the Amended Management Agreements, PI
would be able to allocate Fund assets among subadvisers, subject to Board
approval. The Board also gave weight to the fact 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. 3 is reasonable, fair
and in the best interests of each Fund and its shareholders.
REQUIRED VOTE
For each Fund, approval of this Proposal 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 BOARD MEMBERS, RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL NO. 3.
TO APPROVE CHANGES TO FUNDAMENTAL INVESTMENT
RESTRICTIONS AND POLICIES
PROPOSAL NO. 4
THIS PROPOSAL APPLIES TO ALL FUNDS, EXCEPT AS DESCRIBED BELOW.
BACKGROUND
The Board of each Fund has approved, and recommends that shareholders of
each Fund approve, the amendment of certain fundamental investment restrictions
and policies of each Fund.
Each Fund has adopted fundamental investment restrictions and policies
regarding the management of the Fund's investments. The designation of these
restrictions and policies as "fundamental" means that they cannot be changed
without shareholder approval. You are being asked to approve changes to your
Fund's fundamental investment restrictions and policies in order to:
(a) provide the Fund's Manager 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 scale 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 were 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)' strategy to pursue your Fund's investment
objective.
23
<Page>
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. PI 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 it will be easier for the Funds' Manager and subadviser(s) to
monitor compliance issues relating to the Funds if they have uniform investment
restrictions.
The 1940 Act requires a mutual fund to disclose, in its 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 with 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 amended.
SPECIFIC RECOMMENDATIONS
The Board of each Fund has approved the adoption of a uniform set of
fundamental investment restrictions. Each Fund's current fundamental investment
restrictions appear in that Fund's Statement of Additional Information. In
addition to variations among the Funds arising from their historical
development, there are also, and will continue to be, differences resulting from
a Fund's investment objective or, with respect to other Funds, its operation as
a non-diversified Fund or its intention to concentrate its investments in a
specific industry or group of industries. Exhibit F provides a list of your
Fund's current fundamental investment restrictions and the proposed revisions to
those restrictions.
The proposed uniform fundamental investment restrictions and policies are as
follows (the information 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 majority of the Fund's outstanding voting securities. The term
"majority of the Fund's outstanding voting securities" for this purpose
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 and
Exemptions").
24
<Page>
(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 such as
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.
(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 such as 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, such as 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.
(5) Purchase any security if as a result 25% or more 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.
(6) 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.
(7) 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 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 75% of the
Fund's total assets, (i) more than 5% of the Fund's total assets (determined
at the time of 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.
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 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
change in percentage resulting from changing total asset values will not be
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considered a violation of such policy. However, if the Fund's asset coverage
for borrowings permitted by Investment Restriction 2 falls below 300%, the
Fund will take prompt action to reduce its borrowings, as required by the
1940 Act Laws, Interpretations and Exemptions.]
PROPOSAL 4(a): FUND DIVERSIFICATION
THIS PROPOSAL APPLIES TO ALL FUNDS EXCEPT GLOBAL TOTAL RETURN.
The Funds are operated as diversified investment companies under the 1940
Act. In general, this means that, with respect to 75% of the value of a Fund's
total assets, the Fund invests in cash, 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
additional requirement that not more than 5% of total assets will be invested in
the securities of a single issuer and that the Fund will not hold more than 10%
of an issuer's outstanding voting securities.
The proposed amendment would restrict such a Fund from purchasing the
securities of any issuer if, as a result, the Fund would fail to be a
diversified management company within the meaning of the 1940 Act and the rules
and regulations promulgated thereunder, except to the extent that the Fund may
be permitted to do so by the 1940 Act Laws, Interpretations and Exemptions. The
restriction is accompanied by a note that indicates what the 1940 Act currently
requires for the Fund to be "diversified." The 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 these Funds to comply with the
currently applicable definition of a "diversified" investment company, the Board
of each such 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").
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 the Fund's total assets
(determined at the time of 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.
PROPOSAL 4(b): ISSUING SENIOR SECURITIES, BORROWING MONEY OR PLEDGING ASSETS
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.
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,
Interpretations 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
law changes or the Fund receives an exemption from the requirements
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imposed by applicable law. None of the Funds 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 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 addition, under the proposed investment restriction, the Fund
would not be precluded from lending to and borrowing from other Prudential
Mutual Funds if the SEC staff grants exemptive relief which would permit
borrowing and lending between the Funds and the Funds adopt such an inter-fund
lending program. If the Fund 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.
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 "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.
Short sales involve costs and risks. The Fund must pay the lender interest
on the security it borrows, and the Fund will lose money if the price of the
security increases between the time of the short sale and the date when the Fund
replaces the borrowed security.
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,
dollar rolls, short sales, derivative and hedging transactions such as
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:
If 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 4(c): BUYING AND SELLING REAL ESTATE
None of the Funds is permitted to buy or sell real estate. However, 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.
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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 and 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, 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 4(d): BUYING AND SELLING COMMODITIES AND COMMODITY CONTRACTS
None of the Funds is permitted to buy or sell commodities or commodity
contracts. The Funds are permitted to invest in financial futures contracts,
options on financial futures contracts and forward currency exchange contracts,
and in the securities of companies that sponsor mineral exploration or
development programs, 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, options on financial futures
contracts and forward currency exchange contracts is not subject to the
restriction applicable to commodity contracts and similar types of instruments.
If your Fund intends to utilize financial futures contracts, options on
financial futures contracts or formal currency exchange contracts, a description
of these instruments will appear in the Fund's Prospectus or Statement of
Additional Information.
If the proposed investment restriction is approved as to a Fund, that Fund's
restriction, if any, prohibiting the Fund from investing in interests in oil,
gas or other mineral exploration or development programs, will be eliminated.
RISKS: Financial futures contracts, options on financial futures contracts
and similar types of instruments and forward currency exchange 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 a 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, even correct forecast of currency rates,
market trends or international political trends by your Fund's investment
adviser does not assume a successful hedging transaction.
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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 futures contract or option on a
particular futures contract. If no liquid market exists for a particular futures
contract or option on 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, options on futures contracts and
forward currency exchange contracts and similar types of instruments 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 markets
generally. If the investment adviser's expectations are not met, the Fund may be
in a worse position than if the strategy had not been pursued.
RECOMMENDATION: In order to clarify and provide uniformity among the Funds'
restrictions 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 such as 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, such as 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.
PROPOSAL 4(e): FUND CONCENTRATION
All 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 in its registration statement 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 net assets will be invested
in the securities of issuers 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 a Fund's policy regarding
concentration, but to provide uniformity in disclosure of the policy among the
Funds and the other Prudential Mutual Funds having a policy not to concentrate
their investments.
RISKS: Although the Funds do not concentrate their investment in a
particular industry or 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 demand for a particular product or service.
RECOMMENDATION: The Board of each Fund recommends that shareholders adopt
the following as a fundamental investment restriction:
The Fund may not:
Purchase any security if as a result 25% or more 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
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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.
PROPOSAL 4(f): MAKING LOANS
The Funds currently lend money and assets in limited situations. The Funds
may, for example, purchase certain debt securities of governments, corporate
issuers or banks, as described in each Fund's current registration statement and
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 repurchase 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 investment in repurchase
agreements is not an 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 right to receive
income from the borrower and the right to have the security returned to the Fund
on 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 intended to eliminate the current investment
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 policy would permit the Funds to lend money to the other Prudential
Mutual Funds, as explained in Proposal 4(b). The new investment policy 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 required amount of collateral. The Fund or its
lending agent would be required to pursue the borrower for any excess
replacement cost over the value of the collateral. As with any extensions of
credit, there are risks of delay in recovery and in some cases loss of rights in
the collateral if the borrower of the securities fails financially. To mitigate
these risks, each Fund's investment adviser makes loans of portfolio securities
only to firms determined to be creditworthy.
In repurchase agreement transactions, a seller of a security agrees to
repurchase that security from a Fund at a mutually agreed-upon time and price.
The repurchase price is in excess 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 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' policies
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,
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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 4(g): OTHER INVESTMENT RESTRICTIONS
Certain Funds have adopted additional fundamental investment restrictions
which were required to be designated as fundamental by state securities laws.
These state securities laws have since been repealed or are otherwise no longer
applicable to these Funds.
To provide maximum flexibility in managing the Funds and uniformity in the
restrictions applicable to these Funds, the Board of each such Fund proposes
that all investment restrictions and policies of each such Fund, apart from its
investment objective and other than those listed in Proposals No. 4(a) through
4(f), and each Fund's current fundamental restriction on underwriting, be
designated as non-fundamental or be eliminated. The specific investment
restrictions and policies affected by Proposal No. 4 are identified in
Exhibit F. If shareholders of a Fund approve Proposal No. 4(g), all of the
Fund's investment restrictions and policies (apart from its investment
objective, those restrictions listed in Proposals No. 4(a) through 4(f) and each
Fund's current fundamental restriction on underwriting) will be non-fundamental
or eliminated as indicated in Exhibit F. If shareholders of a Fund reject
Proposal No. 4(g), the Fund's additional current fundamental investment
restrictions will remain fundamental.
If designated non-fundamental, such investment restriction or policy could
be changed by the Board of Directors without shareholder approval, although
shareholders would be informed of any material change to any non-fundamental
restriction or policy prior to the implementation of the change. There is no
current intention to change the investment restrictions of each such Fund that
will be designated non-fundamental apart from the restrictions relating to
investing in other investment companies, as described below.
Currently, under the 1940 Act, a Fund may invest in securites of other
investment companies subject to certain limitations. The Funds have obtained an
exemptive order from the SEC that allows each Fund greater flexibility to invest
in securities of other investment companies -- up to 25% of each Fund's assets
in shares of affiliated mutual funds. 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
instruments and short-term debt securities. Each Fund would be permitted to
invest in an affiliated mutual fund only if the investment is consistent with
the Fund's investment objective and strategy. If shareholders approve the
designation of a Fund's investment in mutual funds as a non-fundamental
investment restriction, we anticipate that such Fund's Board will amend the
investment restriction to implement the cash management strategy permitted by
the SEC relief.
REQUIRED VOTE
For each Fund, approval of these Proposals requires the affirmative vote of
a majority of the Fund's outstanding voting securities, as defined in the 1940
Act.
EACH BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU
VOTE "FOR" PROPOSALS NO. 4(a), 4(b), 4(c), 4(d), 4(e), 4(f) AND 4(g), AS
APPLICABLE.
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TO APPROVE AMENDMENTS TO THE ARTICLES OF INCORPORATION
OR DECLARATION OF TRUST FOR EACH FUND
PROPOSAL NO. 5
THIS PROPOSAL APPLIES TO ALL FUNDS AS DESCRIBED BELOW.
BACKGROUND
The Board of each Fund has approved, submitted for shareholder approval, and
recommends that shareholders approve, amendments (collectively, the "Charter
Amendments") to each Fund's governing documents, which are either a declaration
of trust or articles of incorporation, as applicable (either, a "Charter"). Each
of the Funds is organized and operates under a state Charter (either Maryland,
Massachusetts or Delaware). The chart below identifies the applicable state
Charter for each Fund.
<Table>
<Caption>
NAME OF FUND JURISDICTION
- ------------ ------------
Cash Accumulation Trust Massachusetts
Special Money Market Fund, Inc. Maryland
Prudential Tax-Free Money Fund, Inc. Maryland
Prudential Core Investment Fund Delaware
Prudential Global Total Return Fund, Inc. Maryland
Prudential Institutional Liquidity Portfolio, Inc. Maryland
</Table>
The Charter Amendments are intended to reflect changes to state laws that
have occurred over the years, to eliminate unnecessary or unduly burdensome
provisions that do not optimally protect the interests of shareholders, to
eliminate potential uncertainty regarding the application of certain state laws
and to achieve consistent Charter provisions for the Funds in each jurisdiction
and, where possible, across jurisdictions. The Board of each Fund believes that
approval of the Charter Amendments is in the best interests of the Fund and its
shareholders, and recommends that shareholders approve the Charter Amendments
for their respective Funds.
There are certain material differences between the proposed Charter
Amendments for each Fund and each Fund's current Charter. These are summarized
in Exhibits G, H and I. The text of the proposed Charter Amendments is also
included in Exhibits G, H and I.
Set forth below is a detailed analysis of the proposed Charter Amendments:
1. Charter Amendments. Each Charter would be amended to remove any
provisions that require shareholder approval for Charter amendments other than
for those amendments for which shareholder vote is specifically required by the
Investment Company Act of 1940 (the "1940 Act") or other law, if any, so that
the Board of Directors or Trustees would have the right to amend the Charter
without shareholder action to the fullest extent permitted by law.
THIS AMENDMENT IS INTENDED TO GIVE EACH FUND MAXIMUM FLEXIBILITY TO
PERMIT AMENDMENT OF ITS CHARTER BY THE BOARD TO ADDRESS ANY FUTURE
CIRCUMSTANCES WITHOUT THE NECESSITY OF THE TIME AND EXPENSE OF OBTAINING
A SHAREHOLDER VOTE UNLESS SUCH VOTE IS REQUIRED BY THE 1940 ACT OR OTHER
LAW. IN ADDITION, EACH MARYLAND FUND CHARTER WOULD BE AMENDED TO
SPECIFICALLY RESERVE THE FUND'S RIGHT TO ALTER THE "CONTRACT RIGHTS" OF
OUTSTANDING SHARES, IN ORDER TO CLARIFY THAT THE FUND IS EXEMPT FROM
CERTAIN MARYLAND APPRAISAL RIGHTS STATUTES.
Under Maryland law, a shareholder may be entitled to require a
corporation to pay her "fair value" for her shares if a charter amendment
substantially adversely affects her rights as a shareholder. WE DO NOT
BELIEVE ANY OF THE MARYLAND FUNDS ARE CURRENTLY SUBJECT TO SUCH STATUTES,
BECAUSE MARYLAND LAW GENERALLY DENIES APPRAISAL RIGHTS TO SHAREHOLDERS OF
PUBLIC COMPANIES AND OF OPEN-END INVESTMENT COMPANIES. HOWEVER, THE BOARD
OF DIRECTORS OF EACH MARYLAND FUND HAS
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DETERMINED THAT IT IS IN THE BEST INTEREST OF EACH MARYLAND FUND AND ITS
SHAREHOLDERS TO REDUCE, TO THE EXTENT POSSIBLE, ANY UNCERTAINTY REGARDING
THE POTENTIAL APPLICATION OF THE APPRAISAL STATUTES TO THE MARYLAND
FUNDS.
2. Redemption Provisions. Each Massachusetts Fund Charter would be
amended, if necessary, to give the Board of Trustees the authority to redeem
shares for any reason under terms set by the Board of Trustees, including the
failure by a shareholder to provide required information or maintain a minimum
required investment. Any such required redemption would be effected at the
redemption price, and in accordance with the redemption procedures for voluntary
redemptions. The Maryland Fund Charters already provide for redemption rights;
as permitted by state law, these Fund Charters would be amended to allow for
redemptions at net asset value less any redemption fee or other charge as may be
fixed by resolution of the Board. The Delaware Fund Charters already provide for
redemption and will not require amendment.
THIS AMENDMENT IS INTENDED TO ALLOW EACH MASSACHUSETTS FUND TO BE
OPERATED MORE EFFICIENTLY BY PERMITTING REDEMPTION AT THE DISCRETION OF
THE BOARD OF TRUSTEES, AND ALLOCATING REDEMPTION COSTS ONLY TO THE
AFFECTED SHARES.
In addition, each Maryland Fund Charter would be amended to clarify that
a redemption by such Fund, even if it is of all of the outstanding shares
of a series or class, will not constitute a "liquidation" under Maryland
law that would require a shareholder vote. ABSENT THIS EXPLICIT
PROVISION, IT WOULD NOT ALWAYS BE CLEAR UNDER MARYLAND LAW WHETHER SUCH A
VOTE WOULD BE REQUIRED. THIS UNCERTAINTY COULD CAUSE THE FUND TO INCUR
THE COSTS, AND SHAREHOLDERS TO INCUR THE INCONVENIENCE, OF HOLDING A
SHAREHOLDER VOTE TO REDEEM THE SHARES.
3. Quorum; Action by Stockholders. Each Charter would be amended to
provide that a quorum would be one-third of the outstanding shares of a Fund
entitled to be cast. In addition, the amendment would clearly provide that
one-third of all votes entitled to be cast on a specific matter would be
sufficient to constitute a quorum for that matter, even if only some of the
outstanding classes or series are entitled to vote on that matter. In addition,
each Massachusetts and Delaware Charter would be amended to require a plurality
vote in the election of Directors or Trustees and would be amended to require
that other matters can be approved by a majority of votes cast at a meeting at
which a quorum is present, subject in all cases to any higher vote requirements
under the 1940 Act or applicable state law.
THIS AMENDMENT IS INTENDED TO INCREASE THE LIKELIHOOD THAT A QUORUM WILL
BE PRESENT AT ALL SHAREHOLDER MEETINGS TO AVOID THE TIME AND EXPENSE OF
CONTINUED SOLICITATION.
4. Number of Trustees. Each Delaware and Massachusetts Charter (or
By-laws) would be amended to provide that the number of Directors or Trustees
would be as determined pursuant to a written instrument or the By-laws, which
generally allow the Directors or Trustees to establish the number, without
setting any maximum. However, if a maximum is required by applicable law, it
would be set at 20 Directors or Trustees. Each Maryland Charter already contains
comparable provisions, so no amendment is recommended.
THIS AMENDMENT IS INTENDED TO GIVE EACH FUND MAXIMUM FLEXIBILITY WITH
RESPECT TO THE NUMBER OF TRUSTEES.
5. Board Authority to Classify and Reclassify Stock. Each Massachusetts
Charter would specifically authorize the Board of Directors or Trustees to
classify and reclassify its stock and in the case of the Delaware Charters, to
increase the number of shares available for issuance. Each Maryland Charter
already contains comparable provisions, so no amendment is recommended. Each
Delaware Charter also contains comparable provisions.
THIS AMENDMENT IS INTENDED TO GIVE EACH FUND MAXIMUM FLEXIBILITY WITH
RESPECT TO THE CLASSIFICATION AND ISSUANCE OF SHARES.
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6. Adjournments. The By-laws (or Charter) of each Fund would be amended to
clarify that a meeting of shareholders may be adjourned by shareholders holding
a majority of the outstanding shares present and entitled to vote on a proposal
to adjourn whether or not a quorum is present.
THIS AMENDMENT IS INTENDED TO CLARIFY THE PROCEDURE AND REQUISITE VOTE
FOR ADJOURNING SHAREHOLDER MEETINGS AND TO AVOID HAVING TO RE-NOTICE THE
MEETING WITH ITS ATTENDANT TIME AND EXPENSE TO THE FUND.
7. Derivative Actions. Each Massachusetts Fund Charter would be amended to
set forth the requirements for the bringing of a derivative action on behalf of
the Fund by a shareholder. Such requirements would include the making of
pre-suit demand upon the Trustees by shareholders who collectively hold at least
10% of the outstanding shares and the consideration of any shareholders'
pre-suit demand by independent Trustees.
THIS AMENDMENT IS INTENDED TO ALLOW EACH MASSACHUSETTS FUND TO LIMIT
LITIGATION AGAINST THE FUND TO THOSE SITUATIONS WHERE IT IS SUPPORTED BY
SHAREHOLDERS WITH A MATERIAL STAKE IN THE FUND AND TO ADDRESS THE NEED
FOR THE EVALUATION OF THE MERITS OF A POTENTIAL LAWSUIT BY DISINTERESTED
DIRECTORS OR TRUSTEES.
8. Master/Feeder Transactions. Each Charter would be amended to permit the
Directors or Trustees to invest the property of the Fund or any series thereof
in cash or securities of other investment companies.
THIS AMENDMENT IS INTENDED TO GIVE EACH FUND MAXIMUM FLEXIBILITY
REGARDING IMPLEMENTING A MASTER/ FEEDER STRUCTURE.
9. Shareholder Voting. The Charters for each Massachusetts Fund would be
amended to permit dollar based voting by the shareholders. The provision would
provide that with respect to each matter submitted to a shareholder vote, the
Trustees could determine whether the shareholder vote would be done on a per
share basis or net asset value basis. Maryland Fund Charters that consist of
series funds would be amended to require dollar based voting by the
shareholders. In addition, each Massachusetts and Delaware Charter would be
amended to limit the requirement of a shareholder vote to the election and
removal of Directors or Trustees and to additional matters as to which
shareholder approval is required under the 1940 Act.
THIS AMENDMENT IS INTENDED TO GIVE EACH FUND MAXIMUM FLEXIBILITY
REGARDING THE APPLICABILITY OF SHAREHOLDER VOTING AND TO REDUCE THE NEED
TO CALL SHAREHOLDERS' MEETINGS AND THE ATTENDANT EXPENSE TO THE FUNDS.
10. Termination of Fund, Series or Class. Each Massachusetts and Delaware
Charter would be amended to provide that the Directors or Trustees would have
the authority to dissolve the Fund or any series or class without shareholder
approval.
THIS AMENDMENT IS INTENDED TO ALLOW THE DIRECTORS OR TRUSTEES TO CONTROL
THE BASIC ADMINISTRATIVE MATTER OF DISSOLUTION OF THE FUND OR ANY SERIES
OR CLASS.
11. Election of Trustees. Each Massachusetts and Delaware Fund Charter
would be amended to provide that the calling of a shareholders' meeting for the
election of Directors or Trustees when less than a majority of Trustees holding
office had been elected by the shareholders would only be required to the extent
that the calling of such a meeting was required under the 1940 Act.
THIS AMENDMENT IS INTENDED TO REDUCE THE NEED TO CALL SHAREHOLDERS'
MEETINGS FOR THE ELECTION OF TRUSTEES AND THE ATTENDANT EXPENSE TO THE
FUNDS.
12. Indemnification and Limited Liability. The Maryland Fund Charters
would be amended to provide for uniform indemnification, including advance of
expenses, of each Fund's current and former directors and officers to the full
extent required or permitted by law, and for other employees and agents to the
extent authorized by the Board of Directors or the Fund's By-laws and as
permitted by law. The Fund Charter for Special Money Market Fund would also be
amended to provide that directors and
34
<Page>
officers will not be liable to the Fund or its shareholders for monetary damages
for breach of fiduciary duty, to the extent permitted by law, to conform its
Fund Charter to the existing Charter provisions of the other Maryland Funds.
Pursuant to Maryland law, this provision specifically does not protect a
director or officer from liability for (a) receipt of an improper benefit or
profit or (b) active and deliberate dishonesty.
THIS AMENDMENT IS INTENDED TO ENSURE THAT THE MARYLAND CHARTERS ARE
CONSISTENT WITH EACH OTHER AND RELEVANT MARYLAND LAW.
REQUIRED VOTE
Approval of this Proposal for CAT and Core requires the affirmative vote of
a majority of each Fund's voted shares. Approval of this Proposal for all other
Funds requires an affirmative vote of a majority of each Fund's outstanding
voting securities.
EACH BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL NUMBER 5.
TO APPROVE A NAME CHANGE FOR
PRUDENTIAL TAX-FREE MONEY FUND, INC.
PROPOSAL NO. 6
THIS PROPOSAL APPLIES ONLY TO PRUDENTIAL TAX-FREE MONEY FUND, INC.
The Board of Directors of Prudential Tax-Free Money Fund, Inc. has approved,
and recommends that shareholders approve, a change in the Fund's name. If
approved by shareholders, the name of the Fund will be changed to Dryden
Tax-Free Money Fund, Inc. The proposed name change for the Fund is part of a
larger re-naming initiative that affects many of the other funds in the
Prudential mutual fund complex. Pursuant to this initiative, many of the other
funds in the Prudential mutual fund complex will undergo name changes on or
about July 7, 2003.
For most of the other funds that will adopt new names, shareholder approval
of the new fund names is not required. However, due to a provision in the
articles of incorporation for Prudential Tax-Free Money Fund, Inc., shareholder
approval is required before the Fund can amend its articles of incorporation to
legally change its name. If shareholders approve Proposal No. 5, certain future
revisions to the Fund's articles of incorporation, including name changes, would
only require approval by the Fund's board of directors and would no longer
require shareholder approval. Please refer to Proposal No. 5 and Exhibit H for
additional information.
REQUIRED VOTE
Approval of this Proposal requires the affirmative vote of a majority of the
Fund's outstanding voting securities.
THE BOARD, INCLUDING THE INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU VOTE
"FOR" PROPOSAL NO. 6.
35
<Page>
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 PI, who will not
receive any compensation therefore from the Funds or by Georgeson Shareholder
Communications Inc., a proxy solicitation firm retained by the Funds, who will
be paid the approximate fees and expenses for soliciting services set forth
below. Proxies may be recorded 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 Georgeson Shareholder Communications
Inc. by a particular Fund are a function of the number of shareholders in that
Fund. All of the cost of the meetings will be borne by the Funds.
<Table>
<Caption>
ESTIMATED SOLICITATION
FUND FEES AND EXPENSES
- ---- ----------------------
CAT....................................................
Liquid Assets Fund...................................
National Money Market Fund...........................
Special Money..........................................
Tax-Free Money.........................................
PILP...................................................
Core...................................................
Global Total Return....................................
</Table>
36
<Page>
SHAREHOLDER PROPOSALS
The Funds will not be required to hold annual meetings of shareholders if
the election of Board Members is not required under the 1940 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.
Any shareholder who wishes to submit a proposal to be considered at a Fund's
next meeting of shareholders should send the proposal to that Fund at Gateway
Center Three, 100 Mulberry Street, 4th Floor, Newark, New 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 or be brought before such meeting without
being included in the proxy statement.
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.
OTHER BUSINESS
Management knows of no business to be presented at the Meeting other than
the matters set forth in this proxy statement, but should any other matter
requiring a vote of shareholders arise, the proxies will vote according to their
best judgment in the interest of each Fund, respectively.
<Table>
/s/ Jonathan D. Shain /s/ Maria Master
Jonathan D. Shain Maria Master
SECRETARY SECRETARY
</Table>
April , 2003
It is important that you execute and return ALL of your proxies promptly.
37
<Page>
INDEX TO EXHIBITS TO PROXY STATEMENT
<Table>
Exhibit A Five Percent Shareholder Report
Exhibit B Board and Committee Information
Exhibit C Officer Information
Exhibit D Form of Amended Management Agreement
Exhibit E Form of PIM Subadvisory Agreement
Exhibit F Proposed Amendments to Fundamental Investment Restrictions
and Policies
Exhibit G Delaware Summary and Text of Charter Amendments
Exhibit H Maryland Summary and Text of Charter Amendments
Exhibit I Massachusetts Summary and Text of Charter Amendments
</Table>
38
<Page>
EXHIBIT A
FIVE PERCENT SHAREHOLDER REPORT
As of April 11, 2003, the beneficial owners, directly or indirectly, of more
than 5% of the outstanding shares of the Funds are listed below.
<Table>
<Caption>
FUND NAME REGISTRATION SHARES/CLASS PERCENT
- --------- --------------------------------------- ------------ --------
CAT
Liquid Assets Fund......................
National Money Market Fund..............
Special Money
Tax-Free Money
PILP
Core
Global Total Return
</Table>
A-1
<Page>
EXHIBIT B
BOARD AND COMMITTEE INFORMATION(1)
<Table>
<Caption>
GLOBAL
TAX-FREE TOTAL SPECIAL
ANNUAL FEE(2) CAT MONEY CORE PILP RETURN MONEY
- ------------- ---- -------- ---- ---- ------ -------
N/A N/A N/A N/A N/A N/A
Fee for Attendance at Board Meetings(2)...... N/A N/A N/A N/A N/A N/A
Fee for Attendance at Committee
Meetings(2)................................ N/A N/A N/A N/A N/A N/A
Number of Board Meetings during the Last
Fiscal Year................................ 4 4 4 4 4 4
Number of Audit Committee Meetings during the
Last Fiscal Year*.......................... 4 4 4 4 4 4
Number of Nominating Committee Meetings
during the Last Fiscal Year*............... -- -- -- -- -- --
Size of Current Board........................ 9 9 9 9 13 9
</Table>
* Only Independent Directors/Trustees serve on a Fund's Audit and Nominating
Committees. For each Fund except Global Total Return, the member of each
Fund's Audit and Nominating Committees are Delayne Dedrick Gold, Robert E.
La Blanc, Robin B. Smith, Stephen Stoneburn, Nancy H. Teeters, and Clay T.
Whitehead. For Global Total Return, the members of the Audit and Nominating
Committees are Saul K. Fenster, Delayne Dedrick Gold, Douglas H.
McCorkindale, W. Scott McDonald, Jr., Thomas T. Mooney, Stephen P. Munn,
Richard A. Redeker, Robin B. Smith, Louis A. Weil, III, and Clay T.
Whitehead.
(1) No fund within the Fund Complex has a bonus, pension, profit sharing or
retirement plan.
(2) While Board and Committee members do not receive attendance fees, they do
receive compensation for Board and Committee membership. See page 11 of
this proxy statement. No Director/Trustee attended fewer than 75% of the
total number of Board and Committee meetings during the last fiscal year of
each Fund.
The charter of each Fund's Audit Committee provides the following:
The responsibilities of the Audit Committee of each Fund are to assist the
Board of Directors/Trustees in overseeing the Fund's independent public
accountants, accounting policies and procedures, and other areas relating to
each Fund's auditing processes. The function of the Audit Committee and the
Board of Directors is oversight. It is management's responsibility to maintain
appropriate systems for accounting and internal control and the independent
public accountants' responsibility to plan and carry out a proper audit. The
independent public accountants are responsible to the Board of Directors and the
Audit Committee.
The Committee will assist the Board of Directors by:
- Advising the Board of Directors with respect to the selection, retention
or termination, as appropriate, of the independent public accountants for
the Fund.
- Reviewing the independent public accountants' compensation and the
proposed terms of their engagement.
- Monitoring the independence of the independent public accountants.
- Recommending to the Board of Directors the appointment of the Fund's
principal accounting officer and principal financial officer.
- Recommending to the Board of Directors, when the Committee deems it
advisable, that the independent public accountants engage in specific
studies and reports regarding auditing matters, accounting procedures, and
tax and other matters.
- Reviewing the arrangements for and scope of the audit of annual financial
statements.
- Reviewing annual financial statements.
- Reviewing, as appropriate and in consultation with the independent public
accountants, accounting policies and procedures applicable to the Fund as
well as any management responses to comments relating to those policies
and procedures.
B-1
<Page>
- Reviewing the independent public accountants' opinions.
- Considering, in consultation with the independent public accountants, the
adequacy of internal controls to help provide reasonable assurance that
publicly reported financial statements are presented fairly and in
conformity with generally accepted accounting principles.
- Investigating, when the Committee deems it necessary, potential
improprieties or improprieties in Fund operations.
- Meeting, as appropriate, with management of the Fund (outside the presence
of the independent public accountants) and with the independent public
accountants of the Fund (outside the presence of management) to discuss
any issues relating to the Fund's audited financial statements or
otherwise arising from the Committee's functions.
- Reporting the Committee's activities on a regular basis to the Board of
Directors and making such recommendations as the Committee deems
appropriate.
- Annually reviewing and, as appropriate, implementing changes to its
Charter.
In fulfilling the functions outlined above, the Audit Committee will be
entitled to rely on (1) the integrity of those persons and organizations within
and outside each Fund from whom it receives information and (2) the accuracy of
financial and other information that these persons and organizations provide to
the Committee. "Management" means the Fund's Manager, acting through its
officers and employees, not the Fund's officers as such.
B-2
<Page>
EXHIBIT C
OFFICER INFORMATION
<Table>
<Caption>
OFFICER SINCE
-----------------------------------------
NAME, AGE, PRINCIPAL GLOBAL
BUSINESS OCCUPATION FOR THE TAX-FREE TOTAL SPECIAL
PAST FIVE YEARS OFFICE CAT MONEY CORE PILP RETURN MONEY
- --------------------------- ------------- ----- -------- ----- ----- ------ -------
Judy A. Rice (55) President 2000 2000 2000 2000 2000 2000
President, Chief Executive
Officer, Chief Operating Officer
and Officer-In-Charge (since 2003)
of PI; formerly various positions
to Senior Vice President
(1992-1999) of PSI; and various
positions to Managing Director
(1975-1992) of Salomon Smith
Barney; Member of Board of
Governors of the Money Management
Institute.
Robert F. Gunia (56) Vice 1997 1996 1999 1996 1996 1996
Executive Vice President and Chief President
Administrative Officer (since June
1999) of PI; Executive Vice
President and Treasurer (since
January 1996) of PI; President
(since April 1999) of PIMS;
Corporate Vice President (since
September 1997) of The Prudential
Insurance Company of America;
formerly Senior Vice President
(March 1987-May 1999) of PSI;
formerly Chief Administrative
Officer (July 1989-September
1996), Director (January
1989-September 1996) and Executive
Vice President, Treasurer and
Chief Financial Officer (June
1987-December 1996) of Prudential
Mutual Fund Management, Inc.
(PMF); Vice President and Director
(since May 1989) and Treasurer
(since 1999) of The Asia Pacific
Fund, Inc.
Grace C. Torres (43) Treasurer & 1997 1995 1999 1997 1997 1997
Senior Vice President (since Principal
January 2000) of PI; formerly Financial and
First Vice President (December Accounting
1996-January 2000) of PI and First Officer
Vice President (March 1993-1999)
of PSI.
Jonathan D. Shain (44) Secretary 2001 2001 2001 2001 N/A 2001
Vice President and Corporate
Counsel (since August 1998) of
Prudential; formerly Attorney with
Fleet Bank, N.A. (January
1997-July 1998) and Associate
Counsel (August 1994-January 1997)
of New York Life Insurance
Company.
Maria Master (32) Secretary N/A N/A N/A N/A 2002 N/A
Vice President and Corporate
Counsel (since August 2001) of
Prudential; formerly
Financial/Economic Analyst with
the Federal Reserve Bank of New
York (April 1999-July 2001),
Associate Attorney of Swidler
Berlin Shereff Friedman, LLP
(March 1997-April 1999) and
Associate Attorney of Riker,
Danzing, Scherer, Hyland &
Perretti LLP (August 1995-March
1997).
Marguerite E.H. Morrison (46) Assistant 2002 2002 2002 2002 2002 2002
Vice President and Chief Legal Secretary
Officer-Mutual Funds and Unit
Investment Trusts (since August
2000) of Prudential; Senior Vice
President and Assistant Secretary
(since February 2001) of PI; Vice
President and Assistant Secretary
of PIMS (since October 2001),
previously Vice President and
Associate General Counsel
(December 1996-February 2001) of
PI and Vice President and
Associate General Counsel
(September 1987-September 1996) of
PSI.
Maryanne Ryan (38) Anti-Money 2002 2002 2002 2002 2002 2002
Vice President, Prudential (since Laundering
November 1998), First Vice Compliance
President of PSI (March 1997-May Officer
1998).
</Table>
C-1
<Page>
EXHIBIT D
FUND
MANAGEMENT AGREEMENT
Agreement made the day of , 2003 between
Fund (the Fund), a [Delaware statutory trust][Massachusetts business
trust][Maryland corporation], and Prudential Investments 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, 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 one
or more of its series (individually and collectively with the Fund, referred to
herein as 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 Prudential
Investment Management, Inc., 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, and if the Fund has more than one
Subadviser, the Manager is authorized to allocate the Fund'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 each
Subadviser to the Fund, if applicable, through quantitative and qualitative
analysis and consultations with such Subadviser; (ii) periodically make
recommendations to the Board as to whether the contract with one or more
Subadvisers should be renewed, modified, or terminated; and
(iii) periodically report to the Board regarding the results of its
evaluation and monitoring functions. The Fund recognizes that 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], 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 portfolio, including the purchase, retention and disposition
D-1
<Page>
thereof, in accordance with the Fund'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 investments, and shall determine from time
to time what investments or securities will be purchased, retained, sold or
loaned by the Fund, 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 [Declaration of
Trust][Articles of Incorporation] of the Fund and the Fund's SEC
registration statement and with the instructions and directions of the Board
of [Trustees][Directors], 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 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 the policy with respect to brokerage as set forth in the
Fund's registration statement or as the Board of [Trustees][Directors] 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, the size and
difficulty in executing an order, and the value of the expected contribution
of the broker-dealer to the investment performance of the Fund on a
continuing basis. The Manager (or Subadviser) to the Fund each shall have
discretion to effect investment transactions for the Fund through
broker-dealers (including, to the extent legally permissible, broker-dealers
affiliated with the Subadviser(s)) qualified to obtain best execution of
such transactions who provide brokerage and/or research services, as such
services are defined in Section 28(e) of the Securities Exchange Act, as
amended (the "1934 Act"), and to cause the Fund to pay any such
broker-dealers an amount of commission for effecting a portfolio transaction
in excess of the amount of commission another broker-dealer would have
charged for effecting that transaction, if the brokerage or research
services provided by such broker-dealer, viewed in light of either that
particular investment transaction or the overall responsibilities of the
Manager (or the Subadviser) with respect to the Fund and other accounts as
to which they or it may exercise investment discretion (as such term is
defined in Section 3(a)(35) of the 1934 Act), are reasonable in relation to
the amount of commission.
On occasions when the Manager (or a Subadviser under the Manager's
supervision) deems the purchase or sale of 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 to 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 so 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.
D-2
<Page>
(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 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 [Trustees][Directors] 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) [Declaration of Trust][Articles of Incorporation];
(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 [Trustees][Directors] 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 [beneficial interest][common
stock], and all amendments thereto; and
(e) Prospectus and Statement of Additional Information of the Fund.
4. The Manager shall authorize and permit any of its officers and employees
who may be elected as [Trustees][Directors] 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.
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 that 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.
D-3
<Page>
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 [Trustees][Directors] 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
[Trustees][Directors], 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,
(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 SEC, 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 [Trustees'][Directors'] 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 the Fund. This fee will be
computed daily, and will be paid to the Manager monthly. The Fund shall not
pay any fee or other compensation to the Manager for the services provided
and the expenses assumed pursuant to this Agreement.
D-4
<Page>
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.
The Fund shall indemnify the Manager and hold it harmless from and against
all damages, liabilities, costs and expenses (including reasonable
attorneys' fees and amounts reasonably paid in settlements) incurred by the
Manager in or by reason of any pending, threatened or completed action,
suit, investigation or other proceeding (including an action or suit by or
in the right of the Fund or its security holders) arising out of or
otherwise based upon any action actually or allegedly taken or omitted to be
taken by the Manager in connection with the performance of any of its duties
or obligations under this Agreement; provided, however, that nothing
contained herein shall protect or be deemed to protect the Manager against
or entitle or be deemed to entitle the Manager to indemnification in respect
of any liability to the Fund or its security holders to which the Manager
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties, by reason of its reckless
disregard of their duties and obligations under this Agreement.
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 the Fund at any time, without the payment of any penalty, by the Board of
[Trustees][Directors] 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 at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days' written notice to the Fund. 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
officer or employee of the Manager who may also be a [Trustee][Director],
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 dissimilar nature, nor limit or
restrict the right of the Manager to engage in any other business or to
render services of any kind to any other corporation, firm, individual or
association.
11. Except as otherwise provided herein or authorized by the Board of
[Trustees][Directors] of the Fund from time to time, the Manager shall for
all purposes herein be deemed to be an independent contractor, and shall
have no authority to act for or represent the Fund in any way or otherwise
be deemed an agent of the Fund.
12. During the term of this Agreement, the Fund agrees to furnish the
Manager 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 in any
way to the Manager, prior to use thereof and not to use such material if the
Manager reasonably objects in writing 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.
D-5
<Page>
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.
14. Any notice or other communication required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed 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 laws of the State of New York.
16. The Fund may use the name " Fund" 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 will (to the extent that it lawfully can) cease to use such
a name or any other name indicating that it is advised by, managed by or
otherwise connected with the Manager, or any organization which shall have
so succeeded to such businesses. In no event shall the Fund use the name
" Fund" or any name including the word "Prudential" if
the Manager's function is transferred or assigned to a company of which The
Prudential Insurance Company of America does not have control.
[17. A copy of the Agreement and Declaration of Trust is on file with the
Secretary of the State of Delaware, and notice is hereby given that this
instrument is not binding upon any of the Trustees or shareholders
individually but is binding only upon the assets and property of the Fund.]
18. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act, shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the
United States courts or, in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to the 1940 Act. In addition, where the effect of
a requirement of the 1940 Act, reflected in any provision of this Agreement,
is related by rules, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year above
written.
<Table>
FUND
By: /s/
--------------------------------------------
PRUDENTIAL INVESTMENTS LLC
By: /s/
--------------------------------------------
</Table>
D-6
<Page>
SCHEDULE A
Schedule dated , 2003
D-7
<Page>
EXHIBIT E
FUND
SUBADVISORY AGREEMENT
Agreement made as of this day of , 2003 between Prudential
Investments LLC (PI or the Manager), a New York limited liability company and
(or the Subadviser),
WHEREAS, the Manager has entered into a Management Agreement (the Management
Agreement) dated , with Fund, a [Delaware statutory
trust][Massachusetts business trust][Maryland corporation] (the Fund) and a
diversified, open-end management investment company registered under the
Investment Company Act of 1940 as amended (the 1940 Act), pursuant to which PI
acts as Manager of the Fund; and
WHEREAS, the Manager desires to retain the Subadviser to provide investment
advisory services to the Fund and one or more of its series as specified in
Schedule A hereto (individually and collectively, with the Fund, referred to
herein as the Fund) and to 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
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 Fund's portfolio, including the purchase, retention and disposition
thereof, in accordance with the Fund's investment objectives, policies and
restrictions as stated in its then current prospectus 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 investments as the Manager shall direct, and shall
determine from time to time what investments and securities will be
purchased, retained, sold or loaned by the Fund, and what portion of
the assets will be invested or held uninvested as cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Subadviser shall act in conformity with the copies of
the [Declaration of Trust][Articles of Incorporation], By-Laws and
Prospectus of the Fund provided to it by the Manager (the Fund
Documents) and with the instructions and directions of the Manager
and of the Board of [Directors][Trustees] of the Fund, co-operate
with the Manager's (or its designee's) personnel responsible for
monitoring the Fund's compliance and will conform to and comply with
the requirements of the 1940 Act, the Internal Revenue Code of 1986,
as amended, 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 (the
Commission). The Manager shall provide Subadviser timely with copies
of any updated Fund documents.
(iii) The Subadviser shall determine the securities and futures
contracts to be purchased or sold by such portion of the Fund's
portfolio, 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,
E-1
<Page>
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. The Manager (or
Subadviser) to the Fund each shall have discretion to effect
investment transactions for the Fund through broker-dealers
(including, to the extent legally permissible, broker-dealers
affiliated with the Subadviser(s)) qualified to obtain best execution
of such transactions who provide brokerage and/or research services,
as such services are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and to cause the
Fund to pay any such broker-dealers an amount of commission for
effecting a portfolio transaction in excess of the amount of
commission another broker-dealer would have charged for effecting
that transaction, if the brokerage or research services provided by
such broker-dealer, viewed in light of either that particular
investment transaction or the overall responsibilities of the Manager
(or the Subadviser) with respect to the Fund and other accounts as to
which they or it may exercise investment discretion (as such term is
defined in Section 3(a)(35) of the 1934 Act), are reasonable in
relation to the amount of commission.
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 effected by it as
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 [Trustees][Directors] may reasonably request. The
Subadviser shall make reasonably available its employees and officers
for consultation with any of the [Trustees][Directors] 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 or an affiliate 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, the Subadviser and Manager understand and agree that if
the Manager manages the Fund in a "manager-of-managers" style, the
Manager will, among other things, (i) continually evaluate the
performance of the Subadviser through quantitative and qualitative
analysis and consultations with the 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. The
Subadviser recognizes that its services may be terminated or modified
pursuant to this process.
(vii) The Subadviser acknowledges that the Manager and the Fund
intend to rely on Rules 17a-10 and 10f-3 under the 1940 Act, and the
Subadviser hereby agrees that it shall not
E-2
<Page>
consult with any other subadviser to the Fund with respect to
transactions in securities for the Fund's portfolio or any other
transactions of Fund assets.
The Subadviser further acknowledges that it shall not consult with any
other subadviser of the Fund that is a principal underwriter or an
affiliated person of a principal underwriter with respect to transactions in
securities for the Fund's portfolio or any other transaction of Fund assets,
and that its investment advisory responsibilities as set forth in this
Agreement are limited to such discrete portion of the Fund's portfolio as
determined by the Manager.
(b) The Subadviser shall authorize and permit any of its directors,
officers and employees who may be elected as [Trustees][Directors] 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 Fund required by Rule 31a-1 under the 1940 Act or any successor
regulation. The Subadviser agrees that all records which it maintains for
the Fund are the property of the Fund, 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 or any successor regulation
any such records as are required to be maintained by it pursuant to
paragraph 1(a) hereof.
(d) In connection with its duties under this Agreement, the Subadviser
agrees to maintain adequate compliance procedures to ensure its compliance
with the 1940 Act, the Investment Advisers Act of 1940, as amended, 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.
(f) The Subadviser shall be responsible for the voting of all
shareholder proxies with respect to the investments and securities held in
the Fund's portfolio, subject to such reporting and other requirements as
shall be established by the Manager.
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. The Manager shall provide
(or cause the Fund's custodian to provide) timely information to the
Subadviser regarding such matters as the composition of assets in the
portion of the Fund managed by the Subadviser, cash requirements and cash
available for investment in such portion of the Fund, and all other
information as may be reasonably necessary for the Subadviser to perform its
duties hereunder (including any excerpts of minutes of meetings of the Board
of [Trustees][Directors] of the Fund that affect the duties of the
Subadviser).
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. Liability for payment of compensation by the
Manager to the Subadviser under this Agreement is contingent upon the
Manager's receipt of payment from the Fund for management services described
under the Management Agreement between the Fund and the Manager. Expense
caps or fee waivers for the Fund that may be agreed to by the Manager, but
not agreed to by the
E-3
<Page>
Subadviser, shall not cause a reduction in the amount of the payment to the
Subadviser by the Manager.
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, provided, however, that nothing in this
Agreement shall be deemed to waive any rights the Manager or the Fund may
have against the Subadviser under federal or state securities laws. The
Manager shall indemnify the Subadviser, its affiliated persons, its
officers, directors and employees, for any liability and expenses, including
attorneys' fees, which may be sustained as a result of the Manager's willful
misfeasance, bad faith, gross negligence, reckless disregard of its duties
hereunder or violation of applicable law, including, without limitation, the
1940 Act and federal and state securities laws. The Subadviser shall
indemnify the Manager, its affiliated persons, its officers, directors and
employees, for any liability and expenses, including attorneys' fees, which
may be sustained as a result of the Subadviser's willful misfeasance, bad
faith, gross negligence, or reckless disregard of its duties hereunder or
violation of applicable law, including, without limitation, the 1940 Act and
federal and state securities laws.
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
[Trustees][Directors] 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. The Subadviser agrees that it will promptly notify
the Fund and the Manager of the occurrence or anticipated occurrence of any
event that would result in the assignment (as defined in the 1940 Act) of
this Agreement, including, but not limited to, a change or anticipated
change in control (as defined in the 1940 Act) of the Subadviser; provided
that the Subadviser need not provide notice of such an anticipated event
before the anticipated event is a matter of public record.
Any notice or other communication required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (1) to the Manager at Gateway Center Three, 100
Mulberry Street, 4th Floor, Newark, NJ 07102-4077, Attention: Secretary;
(2) to the Fund at Gateway Center Three, 4th Floor, 100 Mulberry Street,
Newark, NJ 07102-4077, Attention: Secretary; or (3) to the Subadviser at
.
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
[Trustee][Director], 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.
E-4
<Page>
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.
10. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act, shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the
United States courts or, in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Commission issued
pursuant to the 1940 Act. In addition, where the effect of a requirement of
the 1940 Act, reflected in any provision of this Agreement, is related by
rules, regulation or order of the Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
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.
<Table>
PRUDENTIAL INVESTMENTS LLC
By: /s/
--------------------------------------------
Name:
Title:
By: /s/
--------------------------------------------
Name:
Title:
</Table>
E-5
<Page>
SCHEDULE A
FUND
As compensation for services provided by, Prudential Investments LLC will
pay a fee equal, on an annualized basis, to the following:
Dated as of , 2003.
E-6
<Page>
EXHIBIT F
PROPOSED AMENDMENTS TO FUNDAMENTAL
INVESTMENT RESTRICTIONS AND POLICIES
The following chart compares each Fund's fundamental investment restrictions
and policies as they currently exist to the proposed amended provisions.
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
CASH ACCUMULATION TRUST -- LIQUID ASSETS
FUND
PURCHASING SECURITIES ON MARGIN The restriction will be eliminated.
The Fund may not: Purchase securities on
margin (but the Fund may obtain short-term
credits as may be necessary 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.
SHORT SALES OF SECURITIES The restriction will be eliminated.
The Fund may not: Make short sales of
securities or maintain a short position.
ISSUING SENIOR SECURITIES, BORROWING MONEY The Fund may not: Issue senior securities or
OR PLEDGING ASSETS borrow money or pledge its assets, except as
The Fund may not: Issue senior securities, permitted by the Investment Company Act of
borrow money or pledge its assets, except 1940, and the rules and regulations
that the Fund may borrow from banks up to promulgated thereunder, as each may be
33 1/3% of the value of its total assets amended from time to time except to the
(calculated when the loan is made) for extent that the Fund may be permitted to do
temporary, extraordinary or emergency so by exemptive order, SEC release,
purposes or for the clearance of no-action letter or similar relief or
transactions and may pledge up to 33 1/3% of interpretations (collectively, the "1940 Act
the value of its total assets to secure such Laws, Interpretations and Exemptions"). For
borrowings. The Fund will not purchase purposes of this restriction, the purchase
portfolio securities if its borrowings or sale of securities on a when-issued or
exceed 5% of the Fund's net assets. The delayed delivery basis, reverse repurchase
purchase or sale of securities on a agreements, dollar rolls, short sales,
"when-issued" or delayed delivery basis, the derivative and hedging transactions such as
entry into reverse repurchase agreements, interest rate swap transactions, and
the purchase and sale of financial futures collateral arrangements with respect
contracts and collateral arrangements thereto, and transactions similar to any of
relating thereto and with respect to the the foregoing, and collateral arrangements
writing of options and obligations of the with respect thereto, and obligations of the
Trust pursuant to deferred compensation Fund to [Directors/Trustees] pursuant to
arrangements are not deemed to be a pledge deferred compensation arrangements are not
of assets and such arrangements are not deemed to be a pledge of assets or the
deemed to be the issuance of a senior issuance of a senior security.
security.
PURCHASING SECURITIES OF A SINGLE ISSUER The Fund may not: Purchase the securities of
The Fund may not: Purchase any security any issuer if, as a result, the Fund would
(other than obligations of the U.S. fail to be a diversified company within the
Government, its agencies or meaning of the 1940 Act Laws,
instrumentalities) if as a result, with Interpretations and Exemptions.
</Table>
F-1
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
respect to 75% of the value of the Fund's
total assets, more than 5% of the value of
the Fund's total assets would be invested in
the securities of a single issuer.
The Fund may not: Purchase more than 10% of
the outstanding voting securities of any one
issuer.
PURCHASING SECURITIES OF A SINGLE INDUSTRY The Fund may not: Purchase any security if
The Fund may not: Purchase any securities as a result more than 25% of the Fund's
(other than obligations of the U.S. total assets would be invested in the
Government, its agencies and securities of issuers having their principal
instrumentalities) if, as a result, 25% or business activities in the same industry,
more of the value of the Fund's total assets except for temporary defensive purposes, and
(determined at the time of investment) would except that this limitation does not apply
be invested in the securities of one or more to securities issued or guaranteed by the
issuers conducting their principal business U.S. government, its agencies or
activities in the same industry, provided instrumentalities.
that there is no limitation with respect to
money market instruments of domestic banks.
For purposes of this exception, domestic
banks shall include all banks which are
organized under the laws of the United
States or a state (as defined in the 1940
Act), U.S. branches of foreign banks that
are subject to the same regulations as U.S.
banks and foreign branches of domestic
banks.
BUYING OR SELLING REAL ESTATE OR INTERESTS The Fund may not: Buy or sell real estate,
IN REAL ESTATE except that investment in securities of
The Fund may not: Buy or sell real estate or issuers that invest in real estate and
interests in real estate, except that the investments in mortgage-backed securities,
Fund may purchase and sell securities which mortgage participations or other instruments
are secured by real estate, securities of supported or secured by interests in real
companies which invest or deal in real estate are not subject to this limitation,
estate and publicly traded securities of and except that the Fund may exercise rights
real estate investment trusts. 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.
BUYING OR SELLING COMMODITIES OR COMMODITY The Fund may not: Buy or sell physical
CONTRACTS commodities or contracts involving physical
The Fund may not: Buy or sell commodities or commodities. The Fund may purchase and sell
commodity contracts, except that the Fund (i) derivative, hedging and similar
may purchase and sell futures contracts and instruments such as financial futures and
options thereon. options thereon, and (ii) securities or
instruments backed by, or the return from
which is linked to, physical commodities or
currencies, such as forward currency
exchange contracts, and the Fund may
exercise rights relating to such
instruments, including the right to enforce
security interests
</Table>
F-2
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
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.
ACTING AS AN UNDERWRITER No change.
The Fund may not: 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.
INVESTING TO EXERCISE CONTROL OR MANAGEMENT This restriction will not change, but will
The Fund may not: Make investments for the become non-fundamental.
purpose of exercising control or management.
INVESTING IN SECURITIES OF OTHER INVESTMENT This restriction will become
COMPANIES non-fundamental, and is expected to be
The Fund may not: Invest in securities of changed by the Board.
other non-affiliated 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% 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.
MAKING LOANS The Fund may make loans, including loans of
The Fund may not: Make loans, except through assets of the Fund, repurchase agreements,
(a) repurchase agreements and (b) loans of trade claims, loan participations or similar
portfolio securities (limited to 33 1/3% of investments, or as permitted by the 1940 Act
the value of the Fund's total assets. 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.
</Table>
F-3
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
CASH ACCUMULATION TRUST -- NATIONAL MONEY
MARKET FUND
SHORT SALES OF SECURITIES AND PURCHASING The restrictions will be eliminated.
SECURITIES ON MARGIN
The Fund may not: Make short sales of
securities, maintain a short position or
purchase securities on margin, except that
the Fund may obtain short-term credits as
necessary for the clearance of security
transactions.
ISSUING SENIOR SECURITIES, BORROWING MONEY The Fund may not: Issue senior securities or
OR PLEDGING ASSETS borrow money or pledge its assets, except as
The Fund may not: Borrow money except for permitted by the Investment Company Act of
temporary or emergency purposes and then 1940, and the rules and regulations
only in an amount not exceeding 10% of its promulgated thereunder, as each may be
total assets taken at cost; provided, amended from time to time except to the
however, that the Fund may loan its extent that the Fund may be permitted to do
securities as described in the Prospectus so by exemptive order, SEC release,
and this SAI under the caption "Description no-action letter or similar relief or
of the Funds, Their Investments and interpretations (collectively, the "1940 Act
Risks -- Lending of Securities." However, Laws, Interpretations and Exemptions"). For
the Fund will not borrow if the value of the purposes of this restriction, the purchase
Fund's assets would be less than 300% of its or sale of securities on a when-issued or
borrowing obligations. In addition, when delayed delivery basis, reverse repurchase
borrowings (other than permissible agreements, dollar rolls, short sales,
securities loans) exceed 5% of its total derivative and hedging transactions such as
assets, the Fund will not purchase interest rate swap transactions, and
additional portfolio securities. Permissible collateral arrangements with respect
borrowings will be entered into solely for thereto, and transactions similar to any of
the purpose of facilitating the orderly sale the foregoing, and collateral arrangements
of portfolio securities to accommodate with respect thereto, and obligations of the
redemption requests. Fund to [Directors/Trustees] pursuant to
deferred compensation arrangements are not
The Fund may not: Pledge, mortgage or deemed to be a pledge of assets or the
hypothecate more than 10% of its net assets issuance of a senior security.
taken at cost at the time of the incurrence
of such borrowings.
PURCHASING SECURITIES OF A SINGLE ISSUER The Fund may not: Purchase the securities of
The Fund may not: Purchase any security if, any issuer if, as a result, the Fund would
as a result, more than 5% of its total fail to be a diversified company within the
assets (based on current value) would then meaning of the Investment Company Act of
be invested in the securities of a single 1940, and the rules and regulations
issuer, except that the Fund may invest up promulgated thereunder, as each may be
to 15% of its total net assets (based on amended from time to time, except to the
current value) in the obligations of any one extent that the Fund may be permitted to do
bank. This limitation does not apply to U.S. so by exemptive order, SEC release, no-
Government securities. action letter or similar relief or
interpretations (collectively, the "1940 Act
Laws, Interpretations and Exemptions").
PURCHASING SECURITIES OF A SINGLE INDUSTRY The Fund may not: Purchase any security if
The Fund may not: Invest more than 25% of as a result more than 25% of the Fund's
its total assets in any one industry. This total assets would be invested in the
restriction securities of issuers
</Table>
F-4
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
does not apply to U.S. Government Securities having their principal business activities
or to bank obligations. For purposes of this in the same industry, except for temporary
restriction, telephone, gas and electric defensive purposes, and except that this
public utilities are each regarded as limitation does not apply to securities
separate industries and finance companies issued or guaranteed by the U.S. government,
whose financing activities are related its agencies or instrumentalities.
primarily to the activities of their parent
companies are classified in the industry of
their parents.
BUYING OR SELLING REAL ESTATE OR INTERESTS The Fund may not: Buy or sell real estate,
IN REAL ESTATE, BUYING OR SELLING except that investment in securities of
COMMODITIES OR COMMODITY CONTRACTS issuers that invest in real estate and
The Fund may not: Buy or sell oil, gas or investments in mortgage-backed securities,
other mineral leases, rights or royalty mortgage participations or other instruments
contracts, commodities or commodity supported or secured by interests in real
contracts or real estate. This restriction estate are not subject to this limitation,
does not prevent the Fund from purchasing and except that the Fund may exercise rights
the securities of companies investing in relating to such securities, including the
real estate or of companies which are not right to enforce security interests and to
principally engaged in the business of hold real estate acquired by reason of such
buying or selling such leases, rights or enforcement until that real estate can be
contracts nor does it prevent the Fund from liquidated in an orderly manner.
purchasing securities secured by real estate
or interests therein. 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 such as financial futures and
options thereon, and (ii) securities or
instruments backed by, or the return from
which is linked to, physical commodities or
currencies, such as 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.
The remainder of the restriction is
eliminated.
INVESTING TO EXERCISE CONTROL OR MANAGEMENT The restriction will not change, but will
The Fund may not: Purchase voting securities become non-fundamental.
or make investments for the purpose of
exercising control or management.
ACTING AS AN UNDERWRITER No change.
The Fund may not: Act as an underwriter of
securities of other issuers except that, in
the disposition of portfolio securities, it
may be
</Table>
F-5
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
deemed to be an underwriter under the
federal securities laws.
INVESTING IN SECURITIES OF OTHER INVESTMENT This restriction will become
COMPANIES non-fundamental, and is expected to be
The Fund may not: Invest in securities of changed by the Board.
other investment companies, except by
purchases in the open market involving only
customary brokers' commissions, or in
connection with a merger, consolidation,
reorganization or similar transactions. For
the purposes of this restriction, foreign
banks or their agents and subsidiaries are
not considered investment companies. (Under
the 1940 Act no registered investment
company may (a) invest more than 10% of its
total assets (taken at current value) in
securities of other investment companies,
(b) own securities of any one investment
company having a value in excess of 5% of
its total assets (taken at current value),
or (c) own more than 3% of the outstanding
voting stock of any one investment company).
MAKING LOANS The Fund may make loans, including loans of
The Fund may not: Make loans, except that assets of the Fund, repurchase agreements,
the Fund may purchase or hold debt trade claims, loan participations or similar
instruments in accordance with its investments, or as permitted by the 1940 Act
investment objective and policies. This Laws, Interpretations and Exemptions. The
restriction does not apply to repurchase acquisition of bonds, debentures, other debt
agreements or loans of portfolio securities. 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.
The Fund may not: Purchase securities of any This restriction will not change, but will
company which has (with predecessor become non-fundamental.
businesses and entities) a record of less
than three years' continuous operation or
purchase securities whose source of
repayment is based, directly or indirectly,
on the credit of such a company if as a
result more than 5% of the total assets of
the Fund (taken at current value) would be
invested in such securities; provided,
however, that the Fund may purchase U.S.
Government Securities without regard to this
limitation.
The Fund may not: Participate on a joint or This restriction will not change, but will
joint and several basis in any trading become non-fundamental.
account in securities. (The "bunching" of
orders for the
</Table>
F-6
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
purchase or sale of portfolio securities
with other accounts managed by the Manager
or the Sub-Advisor to reduce acquisition
costs, to average prices among them, or to
facilitate such transactions, is not
considered participating in a trading
account in securities).
The Fund may not: Purchase or retain This restriction will be eliminated.
securities of an issuer if, to the knowledge
of the Trust, any officers, trustees and
directors of the Trust or any investment
adviser of the Trust, who individually own
beneficially more than 1/2 of 1% of the
shares or securities of that issuer, own in
the aggregate more than 5% of such shares or
securities.
The Fund may not: Purchase any illiquid This restriction will not change, but will
security, including any securities whose become non-fundamental.
disposition is restricted under federal
securities laws and securities that are not
readily marketable, if, as a result, more
than 10% of the Fund's total assets (based
on current value) would then be invested in
such securities. The staff of the Commission
is presently of the view that repurchase
agreements maturing in more than seven days
are subject to this restriction. Until that
position is revised, modified or rescinded,
the Fund will conduct its operations in a
manner consistent with this view.
The Fund may not: Write or purchase puts, This restriction will not change, but will
calls, warrants, straddles, spreads or become non-fundamental.
combinations thereof except that, as
described above under "Firm Commitment
Agreements," the Fund may enter into firm
commitment agreements with respect to
securities otherwise eligible for purchase
by the Fund.
SPECIAL MONEY MARKET FUND, INC.
PURCHASING SECURITIES ON MARGIN This restriction will be eliminated.
The Fund may not: Purchase securities on
margin (but the Fund may obtain such short-
term credits as may be necessary for the
clearance of transactions).
SHORT SALES OF SECURITIES This restriction will be eliminated.
The Fund may not: Make short sales of
securities or maintain a short position.
ISSUING SENIOR SECURITIES, BORROWING MONEY The Fund may not: Issue senior securities or
OR PLEDGING ASSETS borrow money or pledge its assets, except as
The Fund may not: Issue senior securities, permitted by the Investment Company Act of
</Table>
F-7
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
borrow money or pledge it assets, except 1940, and the rules and regulations
insofar as the Fund may be deemed to have promulgated thereunder, as each may be
issued a senior security by reason of amended from time to time except to the
entering into a reverse repurchase agreement extent that the Fund may be permitted to do
and except that the Fund may borrow up to so by exemptive order, SEC release,
20% of the value of its total assets no-action letter or similar relief or
(calculated when the loan is made) from interpretations (collectively, the "1940 Act
banks for temporary, extraordinary or Laws, Interpretations and Exemptions"). For
emergency purposes or for the clearance of purposes of this restriction, the purchase
transactions. The Fund may pledge up to 20% or sale of securities on a when-issued or
of the value of its total assets to secure delayed delivery basis, reverse repurchase
such borrowings or reverse repurchase agreements, dollar rolls, short sales,
agreements. For purposes of this derivative and hedging transactions such as
restriction, the purchase or sale of interest rate swap transactions, and
securities on a "when-issued" or delayed collateral arrangements with respect
delivery basis and obligations of the Fund thereto, and transactions similar to any of
to Directors pursuant to deferred the foregoing, and collateral arrangements
compensation arrangements are not deemed to with respect thereto, and obligations of the
be the issuance of a senior security and Fund to [Directors/Trustees] pursuant to
such arrangements are not deemed to be a deferred compensation arrangements are not
pledge of assets. deemed to be a pledge of assets or the
issuance of a senior security.
BUYING OR SELLING REAL ESTATE OR INTERESTS The Fund may not: Buy or sell real estate,
IN REAL ESTATE except that investment in securities of
The Fund may not: Buy or sell real estate or issuers that invest in real estate and
interests in real estate, except that the investments in mortgage-backed securities,
Fund may purchase and sell mortgage-backed mortgage participations or other instruments
securities, securities collateralized by supported or secured by interests in real
mortgages, securities which are secured by estate are not subject to this limitation,
real estate, securities of companies which and except that the Fund may exercise rights
invest or deal in real estate and publicly relating to such securities, including the
traded securities of real estate investment right to enforce security interests and to
trusts. The Fund may not purchase interests hold real estate acquired by reason of such
in real estate limited partnerships which enforcement until that real estate can be
are not readily marketable. liquidated in an orderly manner.
ACTING AS AN UNDERWRITER The restriction will not change.
The Fund may not: 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.
INVESTING TO EXERCISE CONTROL OR MANAGEMENT This restriction will not change, but will
The Fund may not: Make investments for the become non-fundamental.
purpose of exercising control or management.
INTERESTS IN OIL, GAS AND SIMILAR PROGRAMS This restriction will be eliminated.
The Fund may not: Invest in interests in
oil, gas or other mineral exploration or
development programs.
MAKING LOANS The Fund may make loans, including loans of
The Fund may not: Make loans to others, assets of the Fund, repurchase agreements,
except trade
</Table>
F-8
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
through the purchase of debt obligations, claims, loan participations or similar
repurchase agreements and loans of portfolio investments, or as permitted by the
securities limited to 10% of the value of permitted by the Investment Company Act of
the Fund's total assets. 1940, 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"). 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
PURCHASING STOCK This restriction will not change, but will
The Fund may not: Purchase common stock or become non-fundamental.
other voting securities, preferred stock,
warrants or other equity securities, except
as may be permitted by the Fund by
restriction number 13 (below) [relating to
investing in securities of other registered
investment companies].
BUYING OR SELLING COMMODITIES OR COMMODITY The Fund may not: Buy or sell physical
CONTRACTS commodities or contracts involving physical
The Fund may not: Buy or sell commodities or commodities. The Fund may purchase and sell
commodity contracts (including futures (i) derivative, hedging and similar
contracts and options thereon). instruments such as financial futures and
options thereon, and (ii) securities or
instruments backed by, or the return from
which is linked to, physical commodities or
currencies, such as 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.
PURCHASING SECURITIES OF A SINGLE ISSUER The Fund may not: Purchase the securities of
The Fund may not: Purchase any security any issuer if, as a result, the Fund would
(other than obligations of the U.S. fail to be a diversified company within the
Government, its agencies or meaning of the Investment Company Act of
instrumentalities) if as a result with 1940, and the rules and regulations
respect to 75% of the Fund's total assets, promulgated thereunder, as each may be
more than 5% of the Fund's total assets amended from time to time, except to the
(determined at the time of investment) would extent that the Fund may be permitted to
then be
</Table>
F-9
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
invested in securities of a single issuer. do so by the 1940 Act Laws, Interpretations
and Exemptions.
PURCHASING SECURITIES OF A SINGLE INDUSTRY The Fund may not: Purchase any security if
The Fund may not: Purchase any securities as a result more than 25% of the Fund's
(other than obligations of the U.S. total assets would be invested in the
Government, its agencies and securities of issuers having their principal
instrumentalities) if as a result 25% or business activities in the same industry,
more of the value of the Fund's total assets except for temporary defensive purposes, and
(determined at the time of investment) would except that this limitation does not apply
be invested in the securities of one or more to securities issued or guaranteed by the
issuers conducting their principal business U.S. government, its agencies or
activities in the same industry, provided instrumentalities.
that there is no limitation with respect to
money market instruments of domestic banks,
(including U.S. branches of foreign banks
that are subject to the same regulations as
U.S. banks and foreign branches of domestic
banks (provided that the domestic bank is
unconditionally liable in the event of the
failure of the foreign branch to make
payment on its instruments for any reason).
INVESTING IN SECURITIES OF OTHER INVESTMENT This restriction will become
COMPANIES non-fundamental, and is expected to be
The Fund may not: Invest in securities of changed by the Board.
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.
PRUDENTIAL TAX-FREE MONEY FUND, INC.
PURCHASING SECURITIES ON MARGIN This restriction will be eliminated.
The Fund may not: Purchase securities on
margin, except for such short-term credits
as are necessary for the clearance of
purchases and sales of portfolio securities.
SHORT SALES OF SECURITIES This restriction will be eliminated.
The Fund may not: Make short sales of
securities.
PURCHASING SECURITIES OF A SINGLE ISSUER The Fund may not: Purchase the securities of
The Fund may not: Invest more than 5% of the any issuer if, as a result, the Fund would
market or other fair value of its total fail to be a diversified company within the
assets in the securities of any one issuer meaning of the Investment Company Act of
(other than obligations of, or guaranteed 1940, and the rules and regulations
by, the United States Government, its promulgated thereunder, as each may be
agencies or instrumentalities or secured by amended from time to time, except to the
such obligations). extent that the Fund may be permitted to do
so by exemptive order, SEC release, no-
</Table>
F-10
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
action letter or similar relief or
interpretations (collectively, the "1940 Act
Laws, Interpretations and Exemptions").
BORROWING MONEY OR PLEDGING ASSETS The Fund may not: Issue Senior Securities or
The Fund may not: Borrow money, except that borrow money or pledge its assets, except as
the Fund may borrow for temporary purposes permitted by the 1940 Act Laws,
in amounts not exceeding 5% of the market or Interpretations and Exemptions. For purposes
other fair value (taken at the lower of cost of this restriction, the purchase or sale of
or current value) of its total assets (not securities on a when- issued or delayed
including the amount borrowed). Any such delivery basis, reverse repurchase
borrowings will only be made from banks. agreements, dollar rolls, short sales,
Secured temporary borrowings may take the derivative and hedging transactions such as
form of reverse repurchase agreements, interest rate swap transactions, and
pursuant to which the Fund would sell collateral arrangements with respect
portfolio securities for cash and thereto, and transactions similar to any of
simultaneously agree to repurchase them at a the foregoing, and collateral arrangements
specified date for the same amount of cash with respect thereto, and obligations of the
plus an interest component. The Fund would Fund to [Directors/Trustees] pursuant to
maintain, in a segregated account with its deferred compensation arrangements are not
custodian, liquid assets equal in value to deemed to be a pledge of assets.
the amount owed.
The Fund may not: Pledge its assets or
assign or otherwise encumber them in excess
of 10% of its assets (taken at market or
other fair value at the time of pledging)
and them only to secure borrowings effected
within the limitations set forth in
restriction (4) [relating to borrowing
money].
ACTING AS AN UNDERWRITER The restriction will not change.
The Fund may not: Engage in the underwriting
of securities.
BUYING OR SELLING REAL ESTATE LOANS The Fund may not: Buy or sell real estate,
The Fund may not: Purchase or sell real except that investment in securities of
estate mortgage loans, although it may issuers that invest in real estate and
purchase Municipal Bonds secured by investments in mortgage-backed securities,
interests in real estate. 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.
BUYING OR SELLING COMMODITIES OR COMMODITY The Fund may not: Buy or sell physical
CONTRACTS commodities or contracts involving physical
[No current restriction] commodities. The Fund may purchase and sell
(i) derivative, hedging and similar
instruments
</Table>
F-11
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
such as financial futures and options
thereon, and (ii) securities or instruments
backed by, or the return from which is
linked to, physical commodities or
currencies, such as 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.
MAKING LOANS The Fund may make loans, including loans of
The Fund may not: Make loans of money or assets of the Fund, repurchase agreements,
securities, except through the purchase of trade claims, loan participations or similar
debt obligations or repurchase agreements. 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.
INVESTING IN SECURITIES OF OTHER INVESTMENT This restriction will become
COMPANIES non-fundamental, and is expected to be
The Fund may not: Purchase securities of changed by the Board.
other investment companies, except 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.
INVESTING TO EXERCISE CONTROL OR MANAGEMENT This restriction will not change, but will
The Fund may not: Invest for the purpose of become non-fundamental.
exercising control or management of another
company.
The Fund may not: Purchase industrial This restriction will not change, but will
revenue bonds if, as a result of such become non-fundamental.
purchase, more than 5% of total Fund assets
would be invested in industrial revenue
bonds where payment of principal and
interest are the responsibility of
</Table>
F-12
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
companies with less than three years of
operating history.
The Fund will, under normal circumstances, This restriction will not change.
invest at least 80% of its investable assets
in money market instruments that pay income
exempt from federal income taxes.
PURCHASING SECURITIES OF A SINGLE INDUSTRY The Fund may not: Purchase any security if
The Fund may not purchase any security as a result more than 25% of the Fund's
(other than obligations of the U.S. total assets would be invested in the
Government, its agencies and securities of issuers having their principal
instrumentalities) if as a result 25% or business activities in the same industry,
more of the value of the Fund's total assets except for temporary defensive purposes, and
(determined at the time of investment) would except that this limitation does not apply
be invested in the securities of one or more to securities issued or guaranteed by the
issuers conducting their principal business U.S. government, its agencies or
activities in the same industry. instrumentalities.
PRUDENTIAL INSTITUTIONAL LIQUIDITY
PORTFOLIO, INC. -- INSTITUTIONAL MONEY
MARKET SERIES
PURCHASING SECURITIES ON MARGIN This restriction will be eliminated.
The Fund may not: Purchase securities on
margin (but the Fund may obtain such short-
term credits as may be necessary for the
clearance of transactions); provided that
the deposit or payment by the Fund of
initial or maintenance margin in connection
with options or futures contracts is not
considered the purchase of a security on
margin.
SHORT SALES This restriction will be eliminated.
The Fund may not: Make short sales of
securities or maintain a short position.
ISSUING SENIOR SECURITIES, BORROWING MONEY The Fund may not: Issue senior securities or
OR PLEDGING ASSETS borrow money or pledge its assets, except as
The Fund may not: Issue senior securities, permitted by the Investment Company Act of
borrow money (including through the entry 1940, and the rules and regulations
into reverse repurchase agreement promulgated thereunder, as each may be
transactions) or pledge its assets, except amended from time to time except to the
that the Fund may borrow up to 15% of the extent that the Fund may be permitted to do
value of its total assets (calculated when so by exemptive order, SEC release,
the loan is made) from banks for temporary, no-action letter or similar relief or
extraordinary or emergency purposes and may interpretations (collectively, the "1940 Act
pledge up to 15% of the value of its total Laws, Interpretations and Exemptions"). For
assets to secure such borrowings. The Fund purposes of this restriction, the purchase
will not purchase portfolio securities if or sale of securities on a when-issued or
its borrowings exceed 5% of its net assets. delayed delivery basis, reverse repurchase
The purchase or sale of securities on a agreements, dollar rolls, short sales,
"when-issued" or delayed delivery basis, the derivative and hedging transactions such as
entry into reverse repurchase agreements and interest rate swap transactions, and
the purchase and sale of financial futures collateral arrangements with respect
contracts and collateral thereto, and transactions similar to any
</Table>
F-13
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
arrangements with respect thereto are not of the foregoing, and collateral
deemed to be a pledge of assets and such arrangements with respect thereto, and
arrangements are not deemed to be the obligations of the Fund to
issuance of a senior security. [Directors/Trustees] pursuant to deferred
compensation arrangements are not deemed to
be a pledge of assets or the issuance of a
senior security.
PURCHASING SECURITIES OF A SINGLE ISSUER The Fund may not: Purchase the securities of
The Fund may not: Purchase any security any issuer if, as a result, the Fund would
(other than obligations of the U.S. fail to be a diversified company within the
Government, its agencies or meaning of the Investment Company Act of
instrumentalities) if, as a result, with 1940, and the rules and regulations
respect to 75% of the value of the Fund's promulgated thereunder, as each may be
total assets, more than 5% of the value of amended from time to time, except to the
the Fund's total assets would be invested in extent that the Fund may be permitted to do
the securities of a single issuer. so by the 1940 Act Laws, Interpretations and
Exemptions.
PURCHASING SECURITIES OF A SINGLE INDUSTRY The Fund may not: Purchase any security if
The Fund may not: Purchase any securities as a result more than 25% of the Fund's
(other than obligations of the U.S. total assets would be invested in the
Government, its agencies and securities of issuers having their principal
instrumentalities) if, as a result, 25% or business activities in the same industry,
more of the value of the Fund's total assets except for temporary defensive purposes, and
(determined at the time of investment) would except that this limitation does not apply
be invested in the securities of one or more to securities issued or guaranteed by the
issuers conducting their principal business U.S. government, its agencies or
activities in the same industry, provided instrumentalities.
that there is no limitation with respect to
money market instruments of domestic banks.
For purposes of this exception, domestic
banks shall include all banks which are
organized under the laws of United States or
a state (as defined in the 1940 Act), U.S.
branches of foreign banks that are subject
to the same regulations as U.S. banks and
foreign branches of domestic banks.
BUYING OR SELLING REAL ESTATE OR INTERESTS The Fund may not: Buy or sell real estate,
IN REAL ESTATE except that investment in securities of
The Fund may not: Buy or sell real estate or issuers that invest in real estate and
interests in real estate, except that the investments in mortgage-backed securities,
Fund may purchase and sell securities which mortgage participations or other instruments
are secured by real estate, securities of supported or secured by interests in real
companies which invest or deal in real estate are not subject to this limitation,
estate and publicly traded securities of and except that the Fund may exercise rights
real estate investment trusts. The Fund may relating to such securities, including the
not purchase interests in real estate right to enforce security interests and to
limited partnerships which are not readily hold real estate acquired by reason of such
marketable. enforcement until that real estate can be
liquidated in an orderly manner.
ACTING AS AN UNDERWRITER The restriction will not change.
The Fund may not: Act as underwriter except
to the extent that, in connection with the
disposition of portfolio securities, it may
be
</Table>
F-14
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
deemed to be an underwriter under certain
federal securities laws.
INVESTING TO EXERCISE CONTROL OR MANAGEMENT This restriction will not change, but will
The Fund may not: Make investments for the become non-fundamental.
purpose of exercising control or management.
INVESTING IN SECURITIES OF OTHER INVESTMENT This restriction will become
COMPANIES non-fundamental, and is expected to be
The Fund may not: Invest in securities of changed by the Board.
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 as part of a merger,
consolidation or other acquisition.
INTERESTS IN OIL, GAS AND SIMILAR PROGRAMS This restriction will be eliminated.
The Fund may not: 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.
MAKING LOANS The Fund may make loans, including loans of
The Fund may not: Make loans, except through assets of the Fund, repurchase agreements,
(a) repurchase agreements and (b) loans of trade claims, loan participations or similar
portfolio securities (limited to 15% of the investments, or as permitted by the 1940 Act
value of the Fund's total assets). 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.
PURCHASING STOCK This restriction will not change, but will
The Fund may not: Purchase common stock or become non-fundamental.
other voting securities, preferred stock,
warrants or other equity securities, except
as may be permitted by restriction number 9
[relating to investing in securities of
other registered investment companies].
The Fund may not: Enter into reverse This restriction will be eliminated.
repurchase agreements if, as a result
thereof, the Fund's obligations with respect
to reverse repurchase agreements would
exceed 15% of the value of the Fund's total
assets.
</Table>
F-15
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
BUYING OR SELLING COMMODITIES OR COMMODITY The Fund may not: Buy or sell physical
CONTRACTS commodities or contracts involving physical
The Fund may not: Purchase or sell commodities. The Fund may purchase and sell
commodities or commodity contracts, except (i) derivative, hedging and similar
that the Fund may purchase and sell futures instruments such as financial futures and
contracts and options thereon. options thereon, and (ii) securities or
instruments backed by, or the return from
which is linked to, physical commodities or
currencies, such as 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.
PRUDENTIAL CORE INVESTMENT FUND
SHORT-TERM BOND SERIES
SHORT-TERM MUNICIPAL BOND SERIES
NATIONAL MUNICIPAL MONEY MARKET SERIES
TAXABLE MONEY MARKET SERIES
GOVERNMENT MONEY MARKET SERIES
TREASURY MONEY MARKET SERIES
PURCHASING SECURITIES ON MARGIN This restriction will be eliminated.
[ Series] may not: Purchase
securities on margin (but the Series may
obtain such short-term credits as may be
necessary for the clearance of
transactions); provided that the deposit or
payment by the Series of initial or
maintenance margin in connection with
options or futures contracts is not
considered the purchase of a security on
margin.
SHORT SALES OF SECURITIES This restriction will be eliminated.
[ Series] may not: Make short sales
of securities or maintain a short position.
ISSUING SENIOR SECURITIES, BORROWING MONEY [ ] Series may not: Issue senior
OR PLEDGING ASSETS securities or borrow money or pledge its
[ Series] may not: Issue senior assets, except as permitted by the
securities, borrow money (including through Investment Company Act of 1940, and the
the entry into reverse repurchase agreement rules and regulations promulgated
transactions) or pledge its assets, except thereunder, as each may be amended from time
that the Series may borrow up to 33 1/3% of to time except to the extent that the Fund
the value of its total assets (calculated may be permitted to do so by exemptive
when the loan is made) from banks for order, SEC release, no-action letter or
temporary, extraordinary or emergency similar relief or interpretations
purposes and may pledge up to 33 1/3% of the (collectively, the "1940 Act Laws,
value of the Series' total assets to secure Interpretations and Exemptions"). For
such borrowings. The Series will purchase purposes of this restriction, the purchase
portfolio securities if its borrowings or sale of securities on a when- issued or
exceed 5% delayed delivery basis, reverse
</Table>
F-16
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
of the Series' net assets. The purchase or repurchase agreements, dollar rolls, short
sale of securities on a "when-issued" or sales, derivative and hedging transactions
delayed delivery basis, the entry into such as interest rate swap transactions, and
reverse repurchase agreements and the collateral arrangements with respect
purchase and sale of financial futures thereto, and transactions similar to any of
contracts and collateral arrangements with the foregoing, and collateral arrangements
respect thereto and with respect to the with respect thereto, and obligations of the
writing of options and obligations of the Series to [Directors/Trustees] pursuant to
Fund to Trustees pursuant to deferred deferred compensation arrangements are not
compensation arrangements are not deemed to deemed to be a pledge of assets or the
be a pledge of assets and such arrangements issuance of a senior security.
are not deemed to be the issuance of a
senior security.
PURCHASING SECURITIES OF A SINGLE ISSUER [ ] Series may not: Purchase the
[ Series] may not: Purchase any securities of any issuer if, as a result,
security (other than obligations of the U.S. the Series would fail to be a diversified
Government, its agencies or company within the meaning of the Investment
instrumentalities) if, as a result, with Company Act of 1940, and the rules and
respect to 75% of the value of the Series' regulations promulgated thereunder, as each
total assets, more than 5% of the value of may be amended from time to time, except to
the Series' total assets would be invested the extent that the Series may be permitted
in the securities of a single issuer. to do so by the 1940 Act Laws,
Interpretations and Exemptions.
PURCHASING SECURITIES OF A SINGLE INDUSTRY [ ] Series may not: Purchase any
[SHORT-TERM BOND SERIES AND SHORT-TERM security if as a result more than 25% of the
MUNICIPAL BOND SERIES ONLY] Series' total assets would be invested in
[Short-Term Bond Series][Short-Term the securities of issuers having their
Municipal Bond Series] may not: Purchase any principal business activities in the same
securities (other than obligations of the industry, except for temporary defensive
U.S. Government, its agencies and purposes, and except that this limitation
instrumentalities) if, as a result, 25% or does not apply to securities issued or
more of the value of the Series' total guaranteed by the U.S. government, its
assets (determined at the time of agencies or instrumentalities.
investment) would be invested in the
securities of one or more issuers conducting
their principal business activities in the
same industry, provided that there is no
limitation with respect to money market
instruments of domestic banks. For purposes
of this exception, domestic banks shall
include all banks which are organized under
the laws of United States or a state (as
defined in the 1940 Act), U.S. branches of
foreign banks that are subject to the same
regulations as U.S. banks and foreign
branches of domestic banks.
BUYING OR SELLING REAL ESTATE OR INTERESTS [ ] Series may not: Buy or sell
IN REAL ESTATE real estate, except that investment in
[ Series] may not: Buy or sell real securities of issuers that invest in real
estate or interests in real estate, except estate and investments in mortgage-backed
that the Series may purchase and sell securities, mortgage participations or other
securities which are secured by real estate, instruments supported or secured by
securities of companies which invest or deal interests in real estate are not subject to
in real estate and publicly this limitation, and except that the Series
may
</Table>
F-17
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
traded securities of real estate investment exercise rights relating to such securities,
trusts. 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.
ACTING AS AN UNDERWRITER The restriction will not change.
[ Series] may not: 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.
INVESTING TO EXERCISE CONTROL OR MANAGEMENT This restriction will not change, but will
[ Series] may not: Make investments become non-fundamental.
for the purpose of exercising control or
management.
MAKING LOANS [ Series] may make loans, including
[ Series] may not: Make loans, loans of assets of the Series, repurchase
except through (a) repurchase agreements and agreements, trade claims, loan
(b) loans of portfolio securities (limited participations or similar investments, or as
to 33 1/3% of the value of the Series' total permitted by the 1940 Act Laws,
assets). 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 Series' investment
objective.
BUYING OR SELLING COMMODITIES OR COMMODITY [ Series] may not: Buy or sell
CONTRACTS physical commodities or contracts involving
[ Series] may not: Buy or sell physical commodities. The Series may
commodities or commodity contracts, except purchase and sell (i) derivative, hedging
that the Series may purchase and sell and similar instruments such as financial
futures contracts and options thereon. futures and options thereon, and
(ii) securities or instruments backed by, or
the return from which is linked to, physical
commodities or currencies, such as forward
currency exchange contracts, and the Series
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
Series' ownership of instruments supported
or secured thereby until they can be
liquidated in an orderly manner.
TAX-EXEMPT STATUS [SHORT-TERM MUNICIPAL BOND This restriction will not change.
SERIES AND NATIONAL MUNICIPAL MONEY MARKET
</Table>
F-18
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
SERIES ONLY]
The [Short-Term Municipal Bond Series]
[National Municipal Money Market Series]
will, under normal circumstances, invest at
least 80% of its investable assets in bonds
that are exempt from federal income taxes.
However, the interest on such obligations
may be subject to the alternative minimum
tax.
PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC.
PURCHASING SECURITIES ON MARGIN This restriction will be eliminated.
The Fund may not: Purchase securities on
margin, except such short-term credits as
may be necessary 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.
SHORT SALES OF SECURITIES This restriction will be eliminated.
The Fund may not: Make short sales of
securities or maintain a short position.
ISSUING SENIOR SECURITIES, BORROWING MONEY The Fund may not: Issue senior securities or
OR PLEDGING ASSETS borrow money or pledge its assets, except as
The Fund may not: Issue senior securities, permitted by the Investment Company Act of
borrow money or pledge its assets, except 1940 Act, and the rules and regulations
that the Fund may borrow from banks up to promulgated thereunder, as each may be
20% of the value of its total assets amended from time to time except to the
(calculated when the loan is made) for extent that the Fund may be permitted to do
temporary, extraordinary or emergency so by exemptive order, SEC release,
purposes, for the clearance of transactions no-action letter or similar relief or
or for investment purposes. The Fund may interpretations (collectively, the "1940 Act
pledge up to 20% of the value of its total Laws, Interpretations and Exemptions.") For
assets to secure such borrowings. For purposes of this restriction, the purchase
purposes of this restriction, the purchase or sale of securities on a when- issued or
or sale of securities on a when-issued or delayed delivery basis, reverse repurchase
delayed delivery basis, foreign currency agreements, dollar rolls, short sales,
forward contracts and collateral derivative and hedging transactions, such as
arrangements relating thereto, and interest rate swap transactions and
collateral arrangements with respect to collateral arrangements thereto, and
interest rate swap transactions, reverse transactions similar to the foregoing and
repurchase agreements, dollar roll collateral arrangements with respect
transactions, options, futures contracts and thereto, and obligations of the Fund to
options thereon and obligations of the Fund Directors pursuant to deferred compensation
to Directors pursuant to deferred arrangements are not deemed to be a pledge
compensation arrangements are not deemed to of assets or the issuance of a senior
be pledge of assets or the issuance of a security.
senior security.
COMMODITIES CONTRACTS The Fund may not: Buy or sell physical
The Fund may not: Buy or sell commodities, commodities or contracts involving physical
commodity contracts, real estate or commodities. The Fund may purchase and sell
interests in real estate. Transactions in (i) derivative, hedging and similar
foreign currencies, instruments
</Table>
F-19
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
financial futures contracts and forward such as financial futures contracts and
contracts and any related options thereon options thereon, and (ii) securities or
are not considered by the Fund to be instruments backed by, or the return from
transactions in commodities or commodity which is linked to, physical commodities or
contracts. currencies, such as 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.
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 participants 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.
MAKING LOANS The Fund may make loans, including loans of
The Fund may not: Make loans, except through assets of the Fund, repurchase agreements,
(i) repurchase agreements and (ii) the trade claims, loan participations or similar
purchase of debt obligations and bank investments, or as permitted by the 1940 Act
deposits. Laws, Interpretations and Exemptions. The
acquisition of bonds, debenture, other debt
securities or instruments, or participations
or other interests therein and investments,
in government obligations, commercial paper,
certificates of deposit, banker's
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.
EXERCISING CONTROL This restriction will not change but will
The Fund may not: Make investments for the become non-fundamental.
purpose of exercising control or management.
ACTING AS AN UNDERWRITER No change.
The Fund may not: 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).
</Table>
F-20
<Page>
<Table>
<Caption>
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
FUND CONCENTRATION The Fund may not: Purchase any security if
The Fund may not: Except for securities as a result 25% or more of the Fund's total
issued or guaranteed by the U.S. government, assets would be invested in the securities
its agencies or instrumentalities, invest of issuers having their principal business
25% or more of its total assets at the time activities in the same industry, except for
of purchase in any one industry or in the temporary defensive purposes, except that
securities of any central government or this limitation does not apply to securities
supranational issuer. issued or guaranteed by the U.S. government,
its agencies or instrumentalities.
</Table>
F-21
<Page>
EXHIBIT G
DELAWARE SUMMARY AND TEXT OF CHARTER AMENDMENTS
<Table>
<Caption>
DECLARATION OF TRUST AMENDMENTS QUORUM
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND REQUIREMENT AMENDMENT REQUIREMENT AMENDMENT
- ---- --------------- --------------- --------------- ---------------
Prudential Core A vote of The Trustees The quorum The quorum
Investments Fund shareholders is would have requirement is requirement
required for authority to 40% of the would be one-
amendments that approve all shares entitled third of the
(i) affect the amendments for to vote at a shares entitled
voting rights routine and meeting, except to vote at a
of non- routine when a larger meeting, except
shareholders, matters other quorum is when a larger
(ii) amend the than those required by quorum is
amendment matters that applicable law, required by the
provision of are required to the Declaration 1940 Act, the
the be approved by or the By-Laws. Declaration or
Declaration, shareholders the By-Laws.
(iii) are under the 1940
required to be Act.
approved by
shareholders
under
applicable law,
and (iv) are
submitted to
the
shareholders by
the Trustees.
</Table>
<Table>
<Caption>
NUMBER OF TRUSTEES ADJOURNMENTS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND REQUIREMENT AMENDMENT REQUIREMENT AMENDMENT
- ---- ----------- --------- ----------- ---------
Prudential Core The number of The number of The existing Shareholders
Investments Fund Trustees shall Trustees would By- Laws do not holding a
at all time be be such number contain an majority of the
at least one as is express outstanding
and no more determined by provision shares present
than 15, as the Trustees regarding the and entitled to
determined from from time to requirements vote on
by the Trustees time but at for adjournment adjournment of
from time to least one. of a a meeting would
time. shareholders' have authority
meeting. to adjourn a
shareholders
meeting whether
or not a quorum
is present at
the meeting.
</Table>
G-1
<Page>
<Table>
<Caption>
TERMINATION OF FUND, SERIES OR
SHAREHOLDER VOTING CLASS
-------------------------- ------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND REQUIREMENT AMENDMENT REQUIREMENT AMENDMENT
- ---- ----------- --------- ----------- ---------
Prudential Core Shareholders Shareholders The Fund and The Fund and
Investments Fund have the would have any Series or any Series or
power to the power to Class of Class of
vote for the vote for the shares may be shares may be
election and election and dissolved at dissolved at
removal of removal of any time by any time by
Trustees and Trustees and vote of a the Trustees
such such majority of without
additional additional the shares of shareholder
Fund matters Fund matters each Series approval.
as may be as may be entitled to
required by required by vote, voting
applicable the 1940 separately by
law. Act. Series, or by
the Trustees
by written
notice to the
shareholders.
</Table>
<Table>
<Caption>
ELECTION OF TRUSTEES
--------------------------------
EXISTING PROPOSED
FUND REQUIREMENT AMENDMENT
- ---- ----------- ---------
Prudential Core If less than If less than
Investments Fund the majority of the majority of
Trustees Trustees
holding office holding office
have been have been
elected by elected by
shareholders, a shareholders, a
shareholders' shareholders'
meeting must be meeting for the
called for the election of
election of Trustees would
Trustees. be called to
the extent it
is required by
the 1940 Act.
</Table>
Set out below is the text of the proposed Charter Amendments summarized in
the preceding table:
- Amend Section 2 of Article I of the Declaration to add the following
definition:
"Prior Declaration of Trust" means the original declaration of trust of the
Trust as in effect from time to time up to the effectiveness of this Declaration
of Trust;
- Amend Section 1 of Article IV of the Declaration to delete the first two
sentences thereof in their entirety and replace them with one sentence to
read as follows:
The number of Trustees shall be the number established under or pursuant
to the Prior Declaration of Trust or such number as is determined, from
time to time, by the Trustees pursuant to Section 3 of this Article IV
but shall at all times be at least one.
G-2
<Page>
- Amend the fourth sentence of Section 1 of Article IV of the Declaration in
its entirety to read as follows:
In the event that less than the majority of Trustees holding office have
been elected by the Shareholders, to the extent required by the 1940
Act, but only to such extent, the Trustees then in office shall call a
Shareholders' meeting for the election of Trustees.
- Amend the first sentence of Section 1 of Article V of the Declaration in
its entirety to read as follows:
The Shareholders shall have power to vote only (i) for the election or
removal of Trustees as and to the extent provided in Article IV,
Section 1, and (ii) with respect to such additional matters relating to
the Trust as may be required by the 1940 Act, this Declaration of Trust,
the By-Laws or any registration of the Trust with the Commission (or any
successor agency) or any state, or as the Trustees may consider
necessary or desirable.
- Amend the first and second sentences of Section 2 of Article V of the
Declaration in their entirety to read as follows:
Except when a larger quorum is required by federal law, including the 1940
Act, by the By-Laws or by this Declaration of Trust, one-third of the Shares
entitled to vote shall constitute a quorum at a Shareholders' meeting. When any
one or more Series (or Classes) is to vote as a single class separate from any
other Shares, one-third of the Shares of all such Series (or Classes) entitled
to vote shall constitute a quorum at a Shareholders' meeting of such Series (or
Classes).
- Amend Section 2 of Article VIII of the Declaration in its entirety to read
as follows:
Section 2. TERMINATION OF THE TRUST OR ANY SERIES OR CLASS.
(a) Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be dissolved at any time by the
Trustees by written notice to the Shareholders. Any Series of Shares may be
dissolved at any time by the Trustees by written notice to the Shareholders
of such Series. Any Class of any Series of Shares may be terminated at any
time by the Trustees by written notice to the Shareholders of such Class.
Any action to dissolve the Trust shall be deemed to also be an action to
dissolve each Series and each Class thereof.
(b) Upon the requisite action by the Trustees to dissolve the Trust or
any one or more Series of Shares, after paying or otherwise providing for
all charges, taxes, expenses and liabilities, whether due or accrued or
anticipated, of the Trust or of the particular Series as may be determined
by the Trustees, the Trust shall in accordance with such procedures as the
Trustees consider appropriate reduce the remaining assets of the Trust or of
the affected Series to distributable form in cash or Shares (if any Series
remain) or other securities, or any combination thereof, and distribute the
proceeds to the Shareholders of the Trust or Series involved, ratably
according to the number of Shares of the Trust or such Series held by the
several Shareholders of such Series on the date of distribution. Thereupon,
any affected Series or Class shall terminate and the Trustees and the Trust
shall be discharged of any and all further liabilities and duties relating
thereto or arising therefrom, and the right, title and interest of all
parties with respect to such Series shall be canceled and discharged. Upon
the requisite action by the Trustees to terminate any Class of any Series of
Shares, the Trustees may, to the extent they deem it appropriate, follow the
procedures set forth in this Section 2(b) with respect to such Class that
are specified in connection with the dissolution and winding up of the Trust
or any Series of Shares. Alternatively, in connection with the termination
of any Class of any Series of Shares, the Trustees may treat such
termination as a redemption of the Shareholders of such Class effected
pursuant to Section 2(c) of Article VI of this Declaration of Trust provided
that the costs relating to the termination of such Class shall be included
in the determination of the net asset value of the Shares of such Class for
purposes of determining the redemption price to
G-3
<Page>
be paid to the Shareholders of such Class (to the extent not otherwise
included in such determination).
(c) Following completion of winding up of the Trust's business, the
Trustees shall cause a certificate of cancellation of the Trust's
Certificate of Trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee. Upon
termination of the Trust, the Trustees shall be discharged of any and all
further liabilities and duties relating thereto or arising therefrom, and
the right, title and interest of all parties with respect to the Trust shall
be canceled and discharged.
- Amend Section 4 of Article VIII of the Declaration in its entirety to read
as follows:
Section 4. AMENDMENTS. Except as specifically provided in this Section 4,
the Trustees may, without Shareholder vote, restate, amend or otherwise
supplement this Declaration of Trust. Shareholders shall have the right to vote
(i) on any amendment that is required to be approved by Shareholders pursuant to
the 1940 Act and (ii) on any amendment submitted to the Shareholders by the
Trustees at their discretion. Any amendment required or permitted to be
submitted to the Shareholders that, as the Trustees determine, shall only affect
the Shareholders of one or more Series or one or more Classes shall be
authorized by a vote of only the Shareholders of each Series or Class affected
and no vote of Shareholders of a Series or Class not affected shall be required.
Notwithstanding anything else herein, no amendment hereof shall limit the rights
to insurance provided by Article VII, Section 4 of this Declaration of Trust
with respect to any acts or omissions of Persons covered thereby prior to such
amendment nor shall any such amendment limit the rights to indemnification
referenced in Article VII, Section 2 of this Declaration of Trust or as provided
in the By-Laws with respect to any actions or omissions of Persons covered
thereby prior to such amendment. The Trustees may, without Shareholder vote,
restate, amend, or otherwise supplement the Certificate of Trust as the Trustees
deem necessary or desirable.
- Amend Section 1 of Article III of the By-Laws to add a sentence at the end
thereof to read as follows:
Any meeting of Shareholders may be adjourned one or more times from time
to time to another time or place by Shareholders holding a majority of
the outstanding Shares present and entitled to vote on a proposal to
adjourn at such meeting, whether or not a quorum is present.
G-4
<Page>
EXHIBIT H
MARYLAND SUMMARY AND TEXT OF CHARTER AMENDMENTS
<Table>
<Caption>
FUND CHARTER QUORUM LIMITATION ON
AMENDMENTS LIABILITY
Global Total Existing Requirement: Existing Requirement: Existing Requirement:
Return The Charter reserves the The presence, in person or The Charter provides that,
Fund's right to adopt by proxy, of a majority of to the extent permitted by
Charter amendments to the all votes entitled to be law, a director or officer
extent permitted by law. cast at the meeting. of the Fund shall not be
For minor matters such as liable to the Fund or its
name changes, the Fund can AS AMENDED: shareholders for monetary
amend the Charter without THE PRESENCE, IN PERSON OR damages for breach of
shareholder approval. BY PROXY, OF ONE-THIRD OF fiduciary duty.
ALL VOTES ENTITLED TO BE
PROPOSED AMENDMENT: CAST AT THE MEETING OR ON PROPOSED AMENDMENT
THE EXISTING CHARTER A MATTER, CONSTITUTES A NO CHANGE PROPOSED.
PROVISION WOULD BE REVISED QUORUM FOR THE MEETING OR
TO MATCH LANGUAGE USED IN SUCH MATTER.
OTHER MARYLAND FUND
CHARTERS, AND WOULD
SPECIFICALLY INDICATE THAT
THE FUND RESERVES THE
RIGHT TO CHANGE THE
"CONTRACT RIGHTS" OF
OUTSTANDING STOCK BY
CHARTER AMENDMENT.
<Caption>
FUND INDEMNIFICATION MASTER/FEEDER SHAREHOLDER VOTING REDEMPTION
TRANSACTIONS FEES
AND VOTE
Global Total Existing Requirement: Existing Requirement: Existing Requirement: Existing Requirement:
Return The Fund's Charter No provision. One vote for each share No provision.
provides that the Fund held.
shall indemnify directors PROPOSED AMENDMENT: PROPOSED AMENDMENT:
and officers to the THE FUND WOULD HAVE PROPOSED AMENDMENT: THE FUND WOULD HAVE
fullest extent permitted EXPLICIT AUTHORITY TO NO CHANGE PROPOSED. EXPLICIT AUTHORITY TO
by law, including by INVEST ASSETS IN CASH OR SUBTRACT REDEMPTION FEES
advance of expenses, and IN INTERESTS ISSUED BY AND OTHER CHARGES, AS
the Fund's bylaws provide OTHER INVESTMENT DETERMINED BY THE BOARD OF
that the Fund shall COMPANIES. DIRECTORS, FROM THE AMOUNT
indemnify directors, PAYABLE TO SHAREHOLDERS IN
officers, employees and CONNECTION WITH A
agents against judgments, REDEMPTION BY SHAREHOLDERS
fines, settlements and OR BY THE FUND. CLARIFIES
expenses to the fullest THAT THE FUND CAN REDEEM
extent authorized and in ALL OUTSTANDING SHARES IN
the manner permitted by A SERIES OR CLASS WITHOUT
law, including by advance A SHAREHOLDER VOTE.
of expenses.
AS PROPOSED:
THE EXISTING CHARTER
PROVISION WOULD BE REVISED
TO MATCH THE LANGUAGE
INCLUDED IN THE OTHER
MARYLAND FUND CHARTERS,
AND WOULD BE EXPANDED TO
INCLUDE AUTHORITY FOR THE
FUND TO INDEMNIFY
EMPLOYEES AND AGENTS OTHER
THAN DIRECTORS AND
OFFICERS TO THE EXTENT
APPROVED BY THE BOARD OF
DIRECTORS AND PERMITTED BY
LAW. INDEMNIFICATION OF
PERSONS OTHER THAN
OFFICERS AND DIRECTORS
CURRENTLY APPEARS ONLY IN
THE FUND'S BYLAWS.
</Table>
H-1
<Page>
<Table>
<Caption>
FUND CHARTER QUORUM LIMITATION ON
AMENDMENTS LIABILITY
PILP Existing Requirement: Existing Requirement: Existing Requirement:
The Charter reserves the The presence in person or The Charter provides that,
Fund's right to adopt by proxy of one- third of to the extent permitted by
Charter amendments to the all votes entitled to be law, a director or officer
extent permitted by law. cast at a meeting, or on a of the Fund shall not be
For minor matters such as matter on which fewer than liable to the Fund or its
name changes, the Fund can all shares are entitled to shareholders for monetary
amend the Charter without vote, constitute a quorum damages for breach of
shareholder approval. for the meeting or such fiduciary duty.
matter.
PROPOSED AMENDMENT: PROPOSED AMENDMENT:
THE EXISTING CHARTER PROPOSED AMENDMENT: NO CHANGE PROPOSED.
PROVISION WOULD BE REVISED NO CHANGE PROPOSED.
TO MATCH LANGUAGE USED IN
OTHER MARYLAND FUND
CHARTERS, AND WOULD
SPECIFICALLY INDICATE THAT
THE FUND RESERVES THE
RIGHT TO CHANGE THE
"CONTRACT RIGHTS" OF
OUTSTANDING STOCK BY
CHARTER AMENDMENT.
<Caption>
FUND INDEMNIFICATION MASTER/FEEDER SHAREHOLDER VOTING REDEMPTION
TRANSACTIONS FEES
AND VOTE
PILP Existing Requirement: Existing Requirement: Existing Requirement: Existing Requirement:
The Fund's Bylaws provide No provision. One vote for each share No provision.
that the Fund shall held.
indemnify directors, PROPOSED AMENDMENT: PROPOSED AMENDMENT:
officers, employees and THE FUND WOULD HAVE PROPOSED AMENDMENT: THE FUND WOULD HAVE
agents against judgments, EXPLICIT AUTHORITY TO ONE VOTE FOR EACH DOLLAR EXPLICIT AUTHORITY TO
fines, settlements and INVEST ASSETS IN CASH OR OF NET ASSET VALUE SUBTRACT REDEMPTION FEES
expenses to the extent IN INTERESTS ISSUED BY REPRESENTED BY SHARES AND OTHER CHARGES, AS
permitted by law. The OTHER INVESTMENT HELD. DETERMINED BY THE BOARD OF
Charter does not include COMPANIES. DIRECTORS, FROM THE AMOUNT
any corresponding PAYABLE TO SHAREHOLDERS IN
provisions. CONNECTION WITH A
REDEMPTION BY SHAREHOLDERS
PROPOSED AMENDMENT: OR BY THE FUND. CLARIFIES
THE CHARTER WILL INCLUDE A THAT THE FUND CAN REDEEM
PROVISION PROVIDING THAT ALL OUTSTANDING SHARES IN
THE FUND SHALL INDEMNIFY A SERIES OR CLASS WITHOUT
(a) CURRENT AND FORMER A SHAREHOLDER VOTE.
DIRECTORS AND OFFICERS, TO
THE FULL EXTENT REQUIRED
OR PERMITTED BY LAW,
INCLUDING BY ADVANCE OF
EXPENSES; AND (b) OTHER
EMPLOYEES AND AGENTS TO
THE EXTENT APPROVED BY THE
BOARD OF DIRECTORS AND
PERMITTED BY LAW. AFTER
ADOPTION OF THIS
PROVISION, NO SUBSEQUENT
AMENDMENT OR REPEAL CAN
LIMIT THE INDEMNIFICATION
PROTECTION WITH RESPECT TO
ACTS OR OMISSIONS
OCCURRING PRIOR TO SUCH
AMENDMENT OR REPEAL.
</Table>
H-2
<Page>
<Table>
<Caption>
FUND CHARTER QUORUM LIMITATION ON
AMENDMENTS LIABILITY
Tax-Free Money Existing Requirement: Existing Requirement: Existing Requirement:
All Charter amendments The presence, in person or The Charter provides that,
require the approval of a by proxy, of a majority of to the extent permitted by
majority of the shares all votes entitled to be law, a director or officer
outstanding and entitled cast at the meeting. of the Fund shall not be
to vote. liable to the Fund or its
PROPOSED AMENDMENT: shareholders for monetary
PROPOSED AMENDMENT: THE PRESENCE, IN PERSON OR damages for breach of
THE FUND COULD EFFECT BY PROXY, OF ONE- THIRD OF fiduciary duty.
CERTAIN CHARTER AMENDMENTS ALL VOTES ENTITLED TO BE
WITHOUT SHAREHOLDER CAST AT THE MEETING OR ON PROPOSED AMENDMENT:
ACTION, INCLUDING NAME A MATTER, CONSTITUTES A NO CHANGE PROPOSED.
CHANGES AND CHANGES IN THE QUORUM FOR THE MEETING OR
NAME, DESIGNATION AND PAR SUCH MATTER.
VALUE OF SHARES. THE FUND
WOULD STILL NEED
SHAREHOLDER APPROVAL FOR
MOST OTHER CHARTER
AMENDMENTS. THE CHARTER
WOULD ALSO INCLUDE
SPECIFIC LANGUAGE
REVERSING THE RIGHT OF THE
FUND TO CHANGE THE
"CONTRACT RIGHTS" OF
OUTSTANDING STOCK.
<Caption>
FUND INDEMNIFICATION MASTER/FEEDER SHAREHOLDER VOTING REDEMPTION
TRANSACTIONS FEES
AND VOTE
Tax-Free Money Existing Requirement: Existing Requirement: Existing Requirement: Existing Requirement:
The Fund's Bylaws provide No provision. One vote for each share No provision.
that the Fund shall held.
indemnify directors, PROPOSED AMENDMENT: PROPOSED AMENDMENT:
officers, employees and THE FUND WOULD HAVE PROPOSED AMENDMENT: THE FUND WOULD HAVE
agents against judgments, EXPLICIT AUTHORITY TO NO CHANGE PROPOSED. EXPLICIT AUTHORITY TO
fines, settlements and INVEST ASSETS IN CASH OR SUBTRACT REDEMPTION FEES
expenses to the extent IN INTERESTS ISSUED BY AND OTHER CHARGES, AS
permitted by law. The OTHER INVESTMENT DETERMINED BY THE BOARD OF
Charter does not include COMPANIES. DIRECTORS, FROM THE AMOUNT
any corresponding PAYABLE TO SHAREHOLDERS IN
provisions. CONNECTION WITH A
REDEMPTION BY SHAREHOLDERS
PROPOSED AMENDMENT: OR BY THE FUND. CLARIFIES
THE CHARTER WOULD INCLUDE THAT THE FUND CAN REDEEM
A PROVISION PROVIDING THAT ALL OUTSTANDING SHARES IN
THE FUND SHALL INDEMNIFY A SERIES OR CLASS WITHOUT
(a) CURRENT AND FORMER A SHAREHOLDER VOTE.
DIRECTORS AND OFFICERS, TO
THE FULL EXTENT REQUIRED
OR PERMITTED BY LAW,
INCLUDING BY ADVANCE OF
EXPENSES; AND (b) OTHER
EMPLOYEES AND AGENTS TO
THE EXTENT APPROVED BY THE
BOARD OF DIRECTORS AND
PERMITTED BY LAW. AFTER
ADOPTION OF THIS
PROVISION, NO SUBSEQUENT
AMENDMENT OR REPEAL CAN
LIMIT THE INDEMNIFICATION
PROTECTION WITH RESPECT TO
ACTS OR OMISSIONS
OCCURRING PRIOR TO SUCH
AMENDMENT OR REPEAL.
</Table>
H-3
<Page>
<Table>
<Caption>
FUND CHARTER QUORUM LIMITATION ON
AMENDMENTS LIABILITY
Special Money Existing Requirement: Existing Requirement: Existing Requirement:
The Charter reserves the The presence, in person or The Fund's bylaws provide
Fund's right to adopt by proxy, of a majority of that directors, officers,
Charter amendments to the all votes entitled to be employees and agents shall
extent permitted by law. cast at the meeting. not be liable to the Fund
For minor matters such as or its shareholders,
name changes, the Fund can PROPOSED AMENDMENT: officers, directors,
amend the Charter without THE PRESENCE, IN PERSON OR employees or others, for
shareholder approval. BY PROXY, OF ONE-THIRD OF any action or failure to
ALL VOTES ENTITLED TO BE act except for willful
PROPOSED AMENDMENT: CAST AT THE MEETING OR ON misfeasance, bad faith,
THE EXISTING CHARTER A MATTER, CONSTITUTES A gross negligence or
PROVISION WOULD BE REVISED QUORUM FOR THE MEETING OR reckless disregard of the
TO MATCH LANGUAGE USED IN SUCH MATTER. duties involved in the
OTHER MARYLAND FUND conduct of their office.
CHARTERS, AND WOULD
SPECIFICALLY INDICATE THAT PROPOSED AMENDMENT:
THE FUND RESERVES THE THE CHARTER WOULD PROVIDE
RIGHT TO CHANGE THE THAT DIRECTORS AND
"CONTRACT RIGHTS" OF OFFICERS WOULD NOT BE
OUTSTANDING STOCK BY LIABLE TO THE FUND OR ITS
CHARTER AMENDMENT. SHAREHOLDERS FOR MONETARY
DAMAGES FOR BREACH OF
FIDUCIARY DUTIES, TO THE
EXTENT PERMITTED BY LAW.
TO BE EFFECTIVE IN
MARYLAND, THIS PROVISION
MUST APPEAR IN THE
CHARTER. NO SUBSEQUENT
MODIFICATION OR REPEAL OF
THIS PROVISION COULD
REVOKE THIS PROTECTION FOR
EVENTS BETWEEN ADOPTION OF
THE PROVISION AND SUCH
MODIFICATION OR REPEAL.
<Caption>
FUND INDEMNIFICATION MASTER/FEEDER SHAREHOLDER VOTING REDEMPTION
TRANSACTIONS FEES
AND VOTE
Special Money Existing Requirement: Existing Requirement: Existing Requirement: Existing Requirement:
The Fund's Charter No provision. One vote for each share No provision.
provides that the Fund held.
shall indemnify directors PROPOSED AMENDMENT: PROPOSED AMENDMENT:
and officers to the THE FUND WOULD HAVE PROPOSED AMENDMENT: THE FUND WOULD HAVE
fullest extent permitted EXPLICIT AUTHORITY TO ONE VOTE FOR EACH DOLLAR EXPLICIT AUTHORITY TO
by law, including by INVEST ASSETS IN CASH OR OF NET ASSET VALUE SUBTRACT REDEMPTION FEES
advance of expenses, and IN INTERESTS ISSUED BY REPRESENTED BY SHARES AND OTHER CHARGES, AS
the Fund's bylaws provide OTHER INVESTMENT HELD. DETERMINED BY THE BOARD OF
that the Fund shall COMPANIES. DIRECTORS, FROM THE AMOUNT
indemnify directors, PAYABLE TO SHAREHOLDERS IN
officers, employees and CONNECTION WITH A
agents against judgments, REDEMPTION BY SHAREHOLDERS
fines, settlements and OR BY THE FUND. CLARIFIES
expenses to the fullest THAT THE FUND CAN REDEEM
extent authorized and in ALL OUTSTANDING SHARES IN
the manner permitted by A SERIES OR CLASS WITHOUT
law, including by advance A SHAREHOLDER VOTE.
of expenses.
PROPOSED AMENDMENT:
THE EXISTING CHARTER
PROVISION WOULD BE REVISED
TO MATCH THE LANGUAGE
INCLUDED IN THE OTHER
MARYLAND FUND CHARTERS,
AND WOULD BE EXPANDED TO
INCLUDE AUTHORITY FOR THE
FUND TO INDEMNIFY
EMPLOYEES AND AGENTS OTHER
THAN DIRECTORS AND
OFFICERS TO THE EXTENT
APPROVED BY THE BOARD OF
DIRECTORS AND PERMITTED BY
LAW. INDEMNIFICATION OF
PERSONS OTHER THAN
OFFICERS AND DIRECTORS
CURRENTLY APPEARS ONLY IN
THE FUND'S BYLAWS.
</Table>
The text of the proposed Charter Amendments summarized in the preceding
table is set forth below:
(1) The Corporation reserves the right from time to time to make any
amendments to the charter of the Corporation which may now or hereafter be
authorized by law, including any amendment altering the terms or contract
rights, as expressly set forth in the charter of the Corporation, of any
shares of its outstanding stock by classification, reclassification, or
otherwise. In clarification and not limitation of the foregoing, a majority
of the entire Board of Directors, without action by the stockholders, may
amend the charter of the Corporation to increase or decrease the aggregate
number of shares of stock or the number of shares of stock of any class or
series that the Corporation has authority to issue.
H-4
<Page>
(2) At a meeting of stockholders the presence in person or by proxy of
stockholders entitled to cast one-third of all the votes entitled to be cast
at the meeting constitutes a quorum. At a meeting of stockholders the
presence in person or by proxy of stockholders entitled to cast one-third of
all the votes entitled to be cast on any matter shall constitute a quorum
for action on that matter (including matters on which fewer than all classes
or series are entitled to vote).
(3) Unless otherwise expressly provided in the charter of the
Corporation, on each matter submitted to a vote of the stockholders, each
holder of shares shall be entitled to one vote for each dollar of net asset
value represented by each share standing in his name on the books of the
Corporation, irrespective of the series or class thereof, and the exclusive
voting power for all purposes shall be vested in the holders of Common
Stock.
(4) A director or officer of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director or officer, except to the extent such exemption from
liability or limitation thereof is not permitted by law (including the
Investment Company Act of 1940) as currently in effect or as the same may
hereafter be amended. No amendment, modification or repeal of this
Article shall adversely affect any right or protection of a director or
officer that exists at the time of such amendment, modification or repeal.
(5) The Corporation shall indemnify (A) its current and former directors
and officers, whether serving or having served the Corporation or at its
request any other entity, to the full extent required or permitted by the
General Laws of the State of Maryland now or hereafter in force (as limited
by the Investment Company Act of 1940), including the advance of expenses
under the procedures and to the full extent permitted by law and (B) other
employees and agents to such extent as shall be authorized by the Board of
Directors or the Corporation's By-Laws and be permitted by law. The
foregoing rights of indemnification shall not be exclusive of any other
rights to which those seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt, approve and
amend from time to time such by-laws, resolutions or contracts implementing
such provisions or such further indemnification arrangements as may be
permitted by law. No amendment of the charter of the Corporation or repeal
of any of its provisions shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions
occurring prior to such amendment or repeal.
(6) The appropriate sections of the Charters shall be modified as
necessary to reflect the provisions set forth below, including, if
necessary, by adding new provisions and/or deletion and/or replacement of
contradictory provisions.
(a) All redemptions, whether by a stockholder or by the Corporation,
shall be at a redemption price equal to the current net asset value per
share as determined by the Board of Directors from time to time in
accordance with the provisions of the charter and applicable law, less
such redemption fee or other charge, if any, as may be fixed by
resolution of the Board of Directors. A redemption by the Corporation in
accordance with the charter of the Corporation, even if it is for all the
shares of a series or class, shall not be considered a liquidation
requiring a vote of stockholders.
(b) The Board of Directors is explicitly authorized to, without
action by stockholders (unless such approval is required by the
Investment Company Act of 1940), invest all or a portion of the assets of
any series or class, or dispose of all or a portion of the assets of any
series or class and invest the proceeds of such disposition, in cash or
in interests issued by one or more other investment companies registered
under the Investment Company Act of 1940. The Board of Directors is
explicitly authorized to, without action by stockholders, cause a series
or class that is organized in the master/feeder fund structure to
withdraw or redeem its assets from the master fund and cause such series
or class to invest its assets directly in cash or in securities and other
financial instruments or in another master fund.
H-5
<Page>
EXHIBIT I
MASSACHUSETTS SUMMARY AND TEXT OF CHARTER AMENDMENTS
<Table>
<Caption>
SHAREHOLDERS MEETINGS IF LESS THAN A MAJORITY OF
SHARE CLASSIFICATION OR RECLASSIFICATION TRUSTEES ELECTED BY SHAREHOLDERS
---------------------------------------------- ------------------------------------------------
FUND EXISTING REQUIREMENT PROPOSED AMENDMENT EXISTING REQUIREMENT PROPOSED AMENDMENT
- ---- ---------------------- ---------------------- ----------------------- -----------------------
Cash Accumulation Trustees may, in their Trustees would have No applicable In the event less than
Trust discretion, divide the power, in their provision. a majority of Trustees
Shares of any series discretion, to have been elected by
into classes. classify or reclassify the Shareholders, to
any unissued Shares of the extent required by
a series or class, or the 1940 Act, but only
any Shares of any to such extent, the
series or class Trustees then in office
previously issued and would be required to
thereafter reacquired call a Shareholders'
by the Trust, into one meeting for the
or more series or election of Trustees.
classes that may be
established and
designated from time
to time.
</Table>
<Table>
<Caption>
DOLLAR VOTING SHAREHOLDER DERIVATIVE ACTIONS QUORUM
-------------------------------- -------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED EXISTING PROPOSED
FUND REQUIREMENT AMENDMENT REQUIREMENT AMENDMENT REQUIREMENT AMENDMENT
- ---- --------------- --------------- --------------- --------------- --------------- ---------------
Cash Accumulation No applicable Trustees, No Applicable In order to Holders of a Holders of one-
Trust provision. without the Provision. bring majority of third of the
vote of the derivative outstanding Shares entitled
Shareholders, action, shares of the to vote on a
would determine Shareholder Trust or series matter would be
on any vote put must (a) make a of the Trust a quorum.
to the pre-suit demand present in Shares that
Shareholders on the Trustees person or by abstain or for
whether voting who do not have proxy and which the
will be per a financial entitled to broker or
Share voting or interest in the vote nominee cannot
dollar voting suit, constitutes a vote on all
(net asset (b) obtain quorum. matters would
value times holders of at count for the
number of least 10% of purpose of
shares owned). outstanding determining a
Shares to join quorum.
such request
and (c) afford
the Trustees a
reasonable
amount of time
to respond.
</Table>
I-1
<Page>
<Table>
<Caption>
PROCEDURE FOR CHARTER
MANDATORY REDEMPTION AMENDMENTS REORGANIZATION
-------------------------------- -------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED EXISTING PROPOSED
TRUST REQUIREMENT AMENDMENT REQUIREMENT AMENDMENT REQUIREMENT AMENDMENT
- ----- ----------- --------- ----------- --------- ----------- ---------
Cash Accumulation Only for Any time All charter Trustees, No applicable Reorganization
Trust excessively (a) if the amendments, without provision. would require
large or small Trustees other than Shareholder either
accounts. determine in clean-up action, would (a) vote of
their sole matters such as be authorized 2/3 of Shares
discretion that name changes, to amend of Trust (or
redemption is require the charter so long series being
in the best approval of a as such reorganized)
interests of majority of the amendment does (b) majority of
the Shares not adversely outstanding
Shareholders or outstanding and affect the shares of the
the holder of entitled to rights of any Trust (or
the Shares of a vote. Shareholder. series being
series, or reorganized) if
(b) for recommended by
account Trustees or
maintenance (c) vote of a
purposes as set majority of the
forth in the Trustees.
most recent Shareholders
Prospectus. would not have
appraisal
rights in a
reorganization.
Trustees would
have the power,
without a vote
of the
Shareholders,
to invest the
property of the
Trust or any
series in one
or more other
investment
companies.
</Table>
The text of the proposed Charter Amendments summarized in the preceding
table is set out below:
- ARTICLE III, Section 1 of the Declaration shall be amended to add the
following sentence to the end of Section 1:
The Trustees, in their discretion, without a vote of Shareholders, may
classify or reclassify any unissued Shares of a series or class, or any
Shares of any series or class previously issued and thereafter reacquired
by the Trust, into Shares of one or more other series or classes that may
be established and designated from time to time.
- ARTICLE IV, Section 2 of the Declaration shall be amended to add the
following sentences at the end of Section 2:
In the event that less than the majority of Trustees holding office have
been elected by the Shareholders, to the extent required by the 1940 Act,
but only to such extent, the Trustees then in office shall call a
Shareholders' meeting for the election of Trustees. The Trustees may
designate a Trustee who has resigned or retired "Trustee Emeritus", with
such rights and responsibilities as they shall specify by resolution.
I-2
<Page>
- ARTICLE V of the Declaration shall be amended in its entirety as follows:
General
Section 1. Shareholders shall have such power to vote as is provided for,
and may hold meetings and take actions pursuant to the provisions of the
By-Laws.
Quorum and Required Vote
Section 2. One-third of the Shares entitled to vote on a matter shall be
a quorum for the transaction of business with respect to such matter at a
Shareholders' meeting. Shares that abstain or do not vote with respect to
one or more proposals presented for Shareholder approval at any
Shareholders' meeting and Shares held in "street name" as to which the
broker or nominee with respect thereto indicates on the proxy that it
does not have discretionary authority to vote with respect to a
particular proposal, will be counted for purposes of determining whether
a quorum is present at a meeting, but will not be counted as Shares voted
with respect to any such proposal. A majority of the shares present at a
meeting (regardless of whether they are authorized to vote on all the
matters to be presented to the meeting) shall be sufficient to approve
adjournments. Any adjourned session or sessions may be held within a
reasonable time after the date set for the original meeting without the
necessity of further notice. A Majority Shareholder Vote at a meeting of
which a quorum is present shall decide any question, except (1) a
plurality vote in the case of the election of Trustees, or (2) when a
different vote is required or permitted by any provision of the 1940 Act
or other applicable law or by this Declaration or the By-Laws, or when
the Trustees shall in their discretion require a larger vote or the vote
of a majority or larger fraction of the Shares of one or more particular
series or classes.
Manner of Voting
Section 3. As determined by the Trustees without the vote or consent of
Shareholders (except as required by the 1940 Act), on any matter
submitted to a vote of Shareholders, either (i) each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote and
each fractional Share shall be entitled to a proportionate fractional
vote or (ii) each dollar of net asset value (number of Shares owned times
net asset value per share of such Series or Class, as applicable) shall
be entitled to one vote on any matter on which such Shares are entitled
to vote and each fractional dollar amount shall be entitled to a
proportionate fractional vote. Unless the Trustees designate otherwise in
accordance with the preceding sentence, each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote and
each fractional Share shall be entitled to a proportionate fractional
vote.
Derivative Actions
Section 4. A Shareholder may bring a derivative action on behalf of the
Trust only if the following conditions are met:
(a) The Shareholder or Shareholders must make a pre-suit demand upon the
Trustees to bring the subject action unless an effort to cause the
Trustees to bring such an action is not likely to succeed. For purposes
of this ARTICLE V, Section 4(a), a demand on the Trustees shall only be
deemed not likely to succeed and therefore excused if a majority of the
Board of Trustees, or a majority of any committee established to consider
the merits of such action, is composed of Trustees who have a personal
financial interest in the transaction at issue;
(b) Unless a demand is not required under paragraph (a) of this
ARTICLE V Section 4, Shareholders eligible to bring such derivative
action who collectively hold at least 10% of the outstanding Shares of
the Trust, or who collectively hold at least 10% of the outstanding
Shares of
I-3
<Page>
the Series or Class to which such action relates, shall join in the
request for the Trustees to commence such action; and
(c) Unless a demand is not required under paragraph (a) of this
ARTICLE V, Section 4, the Trustees must be afforded a reasonable amount
of time to consider such Shareholder request and to investigate the basis
of such claim. The Trustees shall be entitled to retain counsel or other
advisors in considering the merits of the request and shall require an
undertaking by the Shareholders making such request to reimburse the
Trust for the expense of any such advisors in the event that the Trustees
determine not to bring such action.
(d) For purposes of this ARTICLE V, Section 4, the Board of Trustees may
designate a committee of one Trustee to consider a Shareholder demand if
necessary to create a committee with a majority of Trustees who do not
have a personal financial interest in the transaction at issue.
- ARTICLE VI, Section 3 of the Declaration shall be amended in its entirety
to read:
REDEMPTION AT THE OPTION OF THE TRUST. Each Share of any series shall be
subject to redemption at the option of the Trust: (i) at any time, if the
Trustees determine in their sole discretion that such redemption is in
the best interests of the holders of the Shares of the Trust or of any
series, or (ii) upon such other conditions with respect to maintenance of
Shareholder accounts of a minimum amount as may from time to time be
determined by the Trustees. Upon such redemption the holders of the
Shares so redeemed shall have no further right with respect thereto other
than to receive payment of the redemption price for such shares.
- ARTICLE IX, Section 7 of the Declaration shall be amended in its entirety
to read as follows:
The provisions of this Declaration (whether or not related to the rights
of Shareholders) may be amended at any time, so long as such amendment
does not adversely affect the rights of any Shareholder with respect to
which such amendment is or purports to be applicable and so long as such
amendment is not in contravention of applicable law, including the 1940
Act, by an instrument in writing signed by a majority of the Trustees (or
by an officer of the Trust pursuant to the vote of a majority of the
Trustees). Any amendment to this Declaration that adversely affects the
rights of all Shareholders may be adopted at any time by an instrument in
writing signed by a majority of the Trustees (or by an officer of the
Trust pursuant to a vote of a majority of the Trustees) when authorized
to do so by the of Shareholders holding a majority of all the Shares
outstanding and entitled to vote, without regard to series, or if said
amendment adversely affects the rights of the Shareholders of less than
all of the series, or of less than all of the classes of any series
having classes, by the vote of the holders of a majority of all the
Shares entitled to vote of each series or class, as the case may be, so
affected.
- A new ARTICLE IX, Section 8 shall be added to the Declaration, which reads
as follows:
The Trustees may sell, convey and transfer all or substantially all of
the assets of the Trust, or the assets of any one or more series of the
Trust, to another trust, partnership, association or corporation
organized under the laws of any state of the United States, or may
transfer the assets of one series of the Trust to another series of the
Trust, in exchange for cash, shares of the transferee or other
securities, or to the extent permitted by law then in effect may merge or
consolidate the Trust or any series with any other trust or any
corporation, partnership, or association organized under the laws of any
state of the United States, all upon such terms and conditions and for
such consideration when and as authorized by (a) the affirmative vote of
not less than two-thirds of the outstanding Shares of each series of the
Trust in the case of the reorganization of the Trust, or by the
affirmative vote of not less than two-thirds of the outstanding Shares of
a particular series in the case of the reorganization of a particular
series, provided, however, that if such merger, consolidation or sale is
recommended by the Trustees, a
I-4
<Page>
Majority Shareholder Vote, or a vote of the majority of the outstanding
Shares in such series, shall be sufficient, or (b) a vote or written
consent of a majority of the Trustees. Shareholders shall not have
appraisal rights in connection with any such transaction. Following such
transfer, the Trustees shall distribute the cash, shares or other
securities or other consideration received in such transaction (giving
due effect to the assets belonging to and indebtedness of, and any other
differences among, the various series whose assets have so been
transferred) among the Shareholders of such series; and if all of the
assets of the Trust have been so transferred, the Trust shall be
terminated. Notwithstanding anything else herein, the Trustees may,
without Shareholder approval unless such approval is required by the 1940
Act, invest all or a portion of the Trust Property of any series, or
dispose of all or a portion of the Trust Property of any series, and
invest the proceeds of such disposition in interests issued by one or
more other investment companies registered under the 1940 Act. Any such
other investment company may (but need not) be a trust (formed under the
laws of the Commonwealth of Massachusetts or any other state or
jurisdiction) (or subtrust thereof) which is classified as a partnership
for federal income tax purposes. Notwithstanding anything else herein,
the Trustees may, without Shareholder approval unless such approval is
required by the 1940 Act, cause a series that is organized in the master/
feeder fund structure to withdraw or redeem its Trust Property from the
master fund and cause such series to invest its Trust Property directly
in securities and other financial instruments or in another master fund.
I-5
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PRUDENTIAL [ ] FUND
GATEWAY CENTER THREE
NEWARK, NJ 07102
PROXY
SPECIAL MEETING OF SHAREHOLDERS
JULY 2, 2003, 11:00 A.M.
THIS PROXY IS SOLICITED ON BEHALF OF DIRECTORS. The undersigned hereby appoints
Grace C. Torres, Marguerite E.H. Morrison and Jonathan D. Shain as Proxies, each
with the power of substitution, and hereby authorizes each of them to represent
and to vote, as designated on the reverse side, all the shares of Common Stock
of the Fund held of record by the undersigned on April 11, 2003 at the Meeting
to be held on July 2, 2003 or any adjournment thereof.
THE SHARES REPRESENTED BY THE PROXY, WHEN THIS PROXY IS PROPERLY EXECUTED, WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. THE PROXY
WILL BE VOTED FOR THE NOMINEES AND FOR PROPOSALS 2, 3, 4, AND 5 IF YOU DO NOT
SPECIFY OTHERWISE, PLEASE REFER TO THE PROXY STATEMENT DATE _____________ 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.
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PRUDENTIAL INVESTMENTS
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NJ 07102-4077
TO VOTE BY TELEPHONE
1) Read the Proxy Statement and have the proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the proxy card and follow
the simple instructions.
TO VOTE BY INTERNET
1) Read the Proxy Statement and have the proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the proxy card and follow
the simple instructions.
TO VOTE BY MAIL
1) Read the Proxy Statement.
2) Check the appropriate boxes on the proxy card below.
3) Sign and date the proxy card.
4) Return the proxy card in the envelope provided.
TO VOTE, MARK BLOCKS IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
FUND NAME HERE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES AND EACH OF THE
PROPOSALS.
VOTE ON DIRECTORS.
1) To elect ten Directors.
Nominees: 01) David E. A. Carson, 02)
Robert E. La Blanc, 03) Douglas H.
McCorkindale, 04) Stephen P. Munn, 05)
Richard A. Redeker, 06) Robin B. Smith,
07) Stephen Stoneburn, 08) Clay T.
Whitehead, 09) Judy A. Rice, 10) Robert
F. Gunia
FOR WITHHOLD FOR ALL TO WITHHOLD AUTHORITY TO VOTE, MARK "FOR
ALL ALL EXCEPT ALL EXCEPT" AND WRITE NOMINEES NUMBER
ON THE LINE BELOW.
/ / / / / /
___________________________________________
FOR AGAINST ABSTAIN
VOTE ON PROPOSALS
2) To Approve a Proposal to Permit the / / / / / /
Manager to Enter Into, or Make Material
Changes to, Subadvisory Agreements
Without Shareholder Approval.
3) To Permit an Amendment to the Management / / / / / /
Contract Between PI and Each Fund.
4) To Approve Changes to Fundamental / / / / / /
Investment Restrictions and Policies,
relating to:
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. making loans / / / / / /
g. other investment restrictions, / / / / / /
including investing in securities
of other investment companies.
5) To Approve Amendments to Each Fund's / / / / / /
Article of Incorporation or Declaration
of Trust.
NOTE: Please sign exactly as name appears hereon. 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.
_________________________________ __________
SIGNATURE (PLEASE SIGN WITHIN BOX) DATE
_________________________________ __________
SIGNATURE (JOINT OWNERS) DATE