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PRUDENTIAL EMERGING GROWTH FUND, INC.
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PROSPECTUS DATED NOVEMBER 18, 1996
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Prudential Emerging Growth Fund, Inc. (the Fund) is a diversified, open-end,
management investment company with an investment objective of long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
equity securities of small and medium sized U.S. companies, ranging from $500
million to $4.5 billion in market capitalization, with the potential for
above-average growth. The Fund may also invest in (i) equity securities of other
companies, including foreign issuers, (ii) investment grade debt securities,
including of foreign issuers, and (iii) obligations issued or guaranteed by the
U.S. Government, its agencies and instrumentalities. The Fund may engage in
various derivative securities transactions, such as options on stocks, stock
indices and foreign currencies, foreign currency exchange contracts and futures
contracts on stock indices and options thereon to hedge its portfolio and to
attempt to enhance return. There can be no assurance that the Fund's investment
objective will be achieved. See "How the Fund Invests--Investment Objective and
Policies." The Fund's address is Gateway Center Three, Newark, New Jersey 07102,
and its telephone number is (800) 225-1852.
Prudential Securities will solicit subscriptions for Class A, Class B, Class C
and Class Z shares of the Fund during a subscription period commencing on or
about November 18, 1996 and currently expected to end on or about December 26,
1996.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Additional information about
the Fund has been filed with the Securities and Exchange Commission in a
Statement of Additional Information, dated November 18, 1996, which information
is incorporated herein by reference (is legally considered a part of this
Prospectus) and is available without charge upon request to the Fund at the
address or telephone number noted above.
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INVESTORS ARE ADVISED TO READ THE PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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FUND HIGHLIGHTS
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The following summary is intended to highlight certain information contained
in this Prospectus and is qualified in its entirety by the more detailed
information appearing elsewhere herein.
WHAT IS THE PRUDENTIAL EMERGING GROWTH FUND?
Prudential Emerging Growth Fund, Inc. is a mutual fund. A mutual fund
pools the resources of investors by selling its shares to the public and
investing the proceeds of such sale in a portfolio of securities designed to
achieve its investment objective. Technically, the Fund is an open-end,
diversified management investment company.
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term capital appreciation. It
seeks to achieve its objective by investing primarily in equity securities
of small and medium sized U.S. companies, ranging from $500 million to $4.5
billion in market capitalization, with the potential for above-average
growth. See "How the Fund Invests--Investment Objective and Policies" at
page 5.
RISK FACTORS AND SPECIAL CHARACTERISTICS
The small and medium sized companies in which the Fund invests may be
subject to significant price fluctuation and above-average risk. As with an
investment in any mutual fund, an investment in this Fund can decrease in
value and you can lose money. In addition, these companies are likely to
reinvest their earnings rather than distribute them; as a result, the Fund
is not likely to receive significant dividend income on its portfolio
securities. An investment in the Fund should not be considered a complete
investment program and may not be appropriate for all investors.
Under normal market conditions, the Fund intends to invest primarily in
equity securities of small and medium sized U.S. companies, ranging from
$500 million to $4.5 billion in market capitalization. See "How the Fund
Invests--Investment Objective and Policies" at page 5. In addition, the Fund
may also invest in (i) equity securities of other companies, including
foreign issuers, (ii) investment grade debt securities, including of foreign
issuers, and (iii) obligations issued or guaranteed by the U.S. Government,
its agencies and instrumentalities. Investing in securities of foreign
companies and countries involves certain risks and considerations not
typically associated with investments in domestic companies. See "How the
Fund Invests--Risk Factors and Special Considerations of Investing in
Foreign Securities" at page 9. The Fund may engage in various derivative
securities transactions, such as options on stocks, stock indices and
foreign currencies, foreign currency exchange contracts and futures
contracts on stock indices and options thereon to hedge its portfolio and to
attempt to enhance return. See "How the Fund Invests--Hedging and Return
Enhancement Strategies--Risks of Hedging and Return Enhancement Strategies"
at page 11.
WHO MANAGES THE FUND?
Prudential Mutual Fund Management LLC (PMF or the Manager), is the manager
of the Fund and is compensated for its services at an annual rate of .60 of
1% of average daily net assets of the Fund. As of September 30, 1996, PMF
served as manager or administrator to 60 investment companies, including 38
mutual funds, with aggregate assets of approximately $52 billion. The
Prudential Investment Corporation (PIC or the Subadviser) furnishes
investment advisory services in connection with the management of the Fund
under a Subadvisory Agreement with PMF. See "How the Fund is
Managed--Manager" at page 12.
WHO DISTRIBUTES THE FUND'S SHARES?
Prudential Securities Incorporated (Prudential Securities or PSI), a major
securities underwriter and securities and commodities broker, acts as the
Distributor of the Fund's Class A, Class B, Class C and Class Z shares. PSI
is paid a distribution and service fee with respect to Class A, Class B, and
Class C shares, which is currently being charged at the annual rate of .25
of 1% of the average daily net assets of the Class A shares and 1% of the
average daily net assets of each of the Class B and Class C shares.
Prudential Securities incurs the expense of distributing the Fund's Class Z
shares under a Distribution Agreement with the Fund, none of which is paid
for or reimbursed by the Fund. See "How the Fund is Managed--Distributor" at
page 13.
2
<PAGE>
WHAT IS THE MINIMUM INVESTMENT?
The minimum initial investment is $1,000 for Class A or Class B shares and
$5,000 for Class C shares. The minimum subsequent investment is $100 for
Class A, Class B and Class C shares. Class Z shares are not subject to any
minimum investment requirements. There is no minimum investment requirement
for certain employee savings plans or custodial accounts for the benefit of
minors. For purchases made through the Automatic Savings Accumulation Plan,
the minimum initial and subsequent investment is $50. See "Shareholder
Guide--How to Buy Shares of the Fund" at page 19 and "Shareholder
Guide--Shareholder Services" at page 29.
HOW DO I PURCHASE SHARES?
You may purchase shares of the Fund through Prudential Securities, Pruco
Securities Corporation (Prusec) or directly from the Fund, through its
transfer agent, Prudential Mutual Fund Services, Inc. (PMFS or the Transfer
Agent), at the net asset value per share (NAV) next determined after receipt
of your purchase order by the Transfer Agent or Prudential Securities plus a
sales charge, which may be imposed either (i) at the time of purchase (Class
A shares) or (ii) on a deferred basis (Class B or Class C shares). Class Z
shares are offered to a limited group of investors at net asset value
without any sales charge. See "How The Fund Values its Shares" at page 15
and "Shareholder Guide--How to Buy Shares of the Fund" at page 19.
WHAT ARE MY PURCHASE ALTERNATIVES?
The Fund offers four classes of shares:
<TABLE>
<S> <C>
- - Class A Shares: Sold with an initial sales charge of up to 5% of the offering
price.
- - Class B Shares: Sold without an initial sales charge, but subject to a
contingent deferred sales charge (CDSC), declining to zero
from 5% of the lower of the amount invested or the redemption
proceeds, which will be imposed on certain redemptions made
within six years of purchase. Although Class B shares are
subject to higher ongoing distribution-related expenses than
Class A shares, Class B shares will automatically convert to
Class A shares approximately seven years after purchase.
- - Class C Shares: Sold without an initial sales charge but, for one year after
purchase, are subject to a CDSC of 1% on redemptions. Like
Class B shares, Class C shares are subject to higher ongoing
distribution-related expenses than Class A shares, but Class C
shares do not convert to another class.
- - Class Z Shares: Sold without either an initial or contingent deferred sales
charge to a limited group of investors. Class Z shares are not
subject to any ongoing service or distribution-related
expenses.
See "Shareholder Guide--Alternative Purchase Plan" at page 21.
</TABLE>
HOW DO I SELL MY SHARES?
You may redeem your shares at any time at the NAV next determined after
Prudential Securities or the Transfer Agent receives your sell order.
However, the proceeds of redemptions of Class B and Class C shares may be
subject to a CDSC. See "Shareholder Guide--How to Sell Your Shares" at page
24.
HOW ARE DIVIDENDS AND DISTRIBUTIONS PAID?
The Fund expects to pay dividends of net investment income, if any,
annually and distributions of any net capital gains at least annually.
Dividends and distributions will be automatically reinvested in additional
shares of the Fund at NAV without a sales charge unless you request that
they be paid to you in cash. See "Taxes, Dividends and Distributions" at
page 16.
3
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FUND EXPENSES
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<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES+ CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS Z SHARES
------------------ ----------------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price).................... 5% None None None
Maximum Sales Load Imposed on
Reinvested Dividends............... None None None None
Maximum Deferred Sales Load (as a
percentage of original purchase
price or redemption proceeds,
whichever is lower)................ None 5% during the first 1% on redemptions None
year, decreasing by 1% made within one
annually to 1% in the year of purchase
fifth and sixth years
and 0% in the seventh
year*
Redemption Fees..................... None None None None
Exchange Fees....................... None None None None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets) CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS Z SHARES
------------------ ----------------------- ------------------ -----------------
<S> <C> <C> <C> <C>
.60% .60% .60% .60%
Management Fees.....................
.25%++ 1.00% 1.00% None
12b-1 Fees (After Reduction)........
.50 % .50 % .50 % .50 %
Other Expenses......................
--- --- --- ---
Total Fund Operating Expenses (After
Reduction)......................... 1.35 % 2.10 % 2.10 % 1.10 %
--- --- --- ---
--- --- --- ---
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 3
YEAR YEARS
--- -----
<S> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period:
Class A................................................................................... $ 63 $ 91
Class B................................................................................... $ 71 $ 96
Class C................................................................................... $ 31 $ 66
Class Z................................................................................... $ 11 $ 35
You would pay the following expenses on the same investment, assuming no redemption:
Class A................................................................................... $ 63 $ 91
Class B................................................................................... $ 21 $ 66
Class C................................................................................... $ 21 $ 66
Class Z................................................................................... $ 11 $ 35
This example should not be considered a representation of past or future expenses. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.
The purpose of this table is to assist an investor in understanding the various types of costs and expenses that an
investor in the Fund will bear, whether directly or indirectly. For more complete descriptions of the various costs and
expenses, see "How the Fund is Managed." "Other Expenses" include estimated operating expenses of the Fund, for the
fiscal year ending October 31, 1997, such as Directors' and professional fees, registration fees, reports to
shareholders and transfer agency and custodian (domestic and foreign) fees (but excludes foreign withholding taxes).
<FN>
- ---------------
* Class B shares will automatically convert to Class A shares approximately
seven years after purchase. See "Shareholder Guide--Conversion
Feature--Class B Shares."+ Pursuant to rules of the National Association of
Securities Dealers, Inc., the aggregate initial sales charges, deferred
sales charges and asset-based sales charges (12b-1 fees) on shares of the
Fund may not exceed 6.25% of total gross sales, subject to certain
exclusions. This 6.25% limitation is imposed on the Fund rather than on a
per shareholder basis. Therefore, long-term Class B and Class C shareholders
of the Fund may pay more in total sales charges than the economic equivalent
of 6.25% of such shareholders' investment in such shares. See "How the Fund
is Managed--Distributor."++ Although the Class A Distribution and Service
Plan provides that the Fund may pay up to an annual rate of .30 of 1% of the
average daily net assets of the Class A shares, the Distributor has agreed
to limit its distribution fees with respect to Class A shares of the Fund so
as not to exceed .25 of 1% of the average daily net assets of the Class A
shares for the fiscal year ending October 31, 1997. See "How the Fund is
Managed--Distributor." Total Fund Operating Expenses for Class A shares
would be 1.40% absent this limitation.
</TABLE>
4
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HOW THE FUND INVESTS
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INVESTMENT OBJECTIVE AND POLICIES
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL APPRECIATION. IT SEEKS TO
ACHIEVE ITS OBJECTIVE BY INVESTING PRIMARILY (THAT IS, AT LEAST 65% OF ITS TOTAL
ASSETS) IN EQUITY SECURITIES OF SMALL AND MEDIUM SIZED U.S. COMPANIES WITH THE
POTENTIAL FOR ABOVE-AVERAGE GROWTH. THERE CAN BE NO ASSURANCE THAT THE FUND'S
OBJECTIVE WILL BE ACHIEVED. SEE "INVESTMENT OBJECTIVE AND POLICIES" IN THE
STATEMENT OF ADDITIONAL INFORMATION.
Under normal market conditions, the Fund intends to invest primarily in equity
securities of small and medium sized U.S. companies, ranging from $500 million
to $4.5 billion in market capitalization, with the potential for above-average
growth. (If a portfolio security increases to greater than $4.5 billion in
market capitalization, however, the Fund may not necessarily sell the security.)
Equity securities include common stocks, preferred stocks, securities
convertible into or exchangeable for common or preferred stocks, equity
investments in partnerships, joint ventures and other forms of non-corporate
investment, American Depositary Receipts, and warrants, options and rights
exercisable for equity securities. The Subadviser will select stocks on a
company-by-company basis generally through the use of both fundamental and
quantitative analyses. The Subadviser looks for companies that have demonstrated
growth in earnings and sales, have historically had high returns on equity and
assets, offer products or services that generate recurring revenues, or have
other strong financial characteristics, and that, in the judgment of the
Subadviser, are attractively valued. These companies tend to have a unique
market niche, a strong new product profile or superior management.
The Fund may also invest up to 35% of its total assets in (i) equity
securities of other companies, including foreign issuers, (ii) investment grade
debt securities, including of foreign issuers and (iii) obligations issued or
guaranteed by the U.S. Government, its agencies and instrumentalities. Investing
in securities of foreign companies and countries involves certain risks and
considerations not typically associated with investments in domestic companies.
Securities of small and medium sized companies have historically been more
volatile than those in the S&P 500 Index. Accordingly, during periods when stock
prices decline generally, it can be expected that the value of the Fund will
decline more than the market indices. In addition, these companies are likely to
reinvest their earnings rather than distribute them; as a result, the Fund is
not likely to receive significant dividend income on its portfolio securities.
The Fund may purchase and sell put and call options on stocks, stock indices
and foreign currencies, purchase and sell futures contracts on stock indices,
foreign currencies and options to hedge its portfolio and to attempt to enhance
return. The Fund may also lend its portfolio securities, enter into repurchase
agreements and purchase securities on a when-issued and delayed-delivery basis.
The Fund reserves the right as a defensive measure to hold temporarily other
types of securities without limit, including high quality commercial paper,
bankers' acceptances, non-convertible debt securities (corporate and government)
or government and high quality money market securities of United States and
non-United States issuers, or cash (foreign currencies or United States
dollars), in such proportions as, in the opinion of the Subadviser, prevailing
market, economic or political conditions warrant.
The Fund may also temporarily hold cash or invest in high quality foreign or
domestic money market instruments pending investment of proceeds from new sales
of Fund shares or to meet ordinary daily cash needs. See "Other Investments and
Policies" below.
5
<PAGE>
The Fund's investment objective is a fundamental policy and may not be changed
without the approval of the holders of a majority of the Fund's outstanding
voting securities, as defined in the Investment Company Act of 1940. Investment
policies that are not fundamental may be modified by the Board of Directors.
CONVERTIBLE SECURITIES
A convertible security is a bond or preferred stock which may be converted at
a stated price within a specified period of time into a certain quantity of the
common stock of the same or a different issuer. Convertible securities are
senior to common stocks in a corporation's capital structure, but are usually
subordinated to similar nonconvertible securities. While providing a fixed
income stream (generally higher in yield than the income derivable from a common
stock but lower than that afforded by a similar nonconvertible security), a
convertible security also affords an investor the opportunity, through its
conversion feature, to participate in the capital appreciation dependent upon a
market price advance in the convertible security's underlying common stock.
In general, the market value of a convertible security is at least the higher
of its "investment value" (I.E., its value as a fixed-income security) or its
"conversion value" (I.E., its value upon conversion into its underlying common
stock). As a fixed-income security, a convertible security tends to increase in
market value when interest rates decline and tends to decrease in value when
interest rates rise. However, the price of a convertible security is also
influenced by the market value of the security's underlying stock. The price of
a convertible security tends to increase as the market value of the underlying
stock rises, whereas it tends to decrease as the market value of the underlying
stock declines. The Fund will only invest in investment grade convertible
securities. See "Other Investments and Policies--Corporate and Other Debt
Obligations" below. While no securities investment is without some risk,
investments in convertible securities generally entail less risk than
investments in the common stock of the same issuer.
In recent years, convertibles have been developed which combine higher or
lower current income with options and other features. The Fund may invest in
these types of convertible securities.
OTHER INVESTMENTS AND POLICIES
U.S. GOVERNMENT SECURITIES
The Fund may invest in securities issued or guaranteed by the U.S. Treasury or
by an agency or instrumentality of the U.S. Government. Not all U.S. Government
securities are backed by the full faith and credit of the United States. Some
are supported only by the credit of the issuing agency. See "Investment
Objective and Policies--U.S. Government Securities" in the Statement of
Additional Information.
The Fund may invest in mortgage-backed securities and other derivative
mortgage products, including those representing an undivided ownership interest
in a pool of mortgages, E.G., Government National Mortgage Association (GNMA),
Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage
Corporation (FHLMC) certificates where the U.S. Government or its agencies or
instrumentalities guarantees the payment of interest and principal of these
securities. These guarantees do not extend to the securities' yield or value,
which are likely to vary inversely with fluctuations in interest rates, nor do
these guarantees extend to the yield or value of the Fund's shares. See
"Investment Objective and Policies--U.S. Government Securities" in the Statement
of Additional Information. These certificates are in most cases "pass-through"
instruments, through which the holder receives a share of all interest and
principal payments from the mortgages underlying the certificate, net of certain
fees.
Mortgage-backed securities are subject to the risk that the principal on the
underlying mortgage loans may be prepaid at any time. Although the extent of
prepayments on a pool of mortgage loans depends on various economic and other
factors, as a general rule prepayments on fixed rate mortgage loans will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. Accordingly, amounts available for reinvestment by the
Fund are likely to be greater during a period
6
<PAGE>
of declining interest rates and, as a result, likely to be reinvested at lower
interest rates than during a period of rising interest rates. Mortgage-backed
securities may decrease in value as a result of increases in interest rates and
may benefit less than other fixed income securities from declining interest
rates because of the risk of prepayment.
CORPORATE AND OTHER DEBT OBLIGATIONS
The Fund may invest in investment grade corporate and other debt obligations
of domestic and foreign issuers, including money market instruments. See "Money
Market Instruments" below. Bonds and other debt securities are used by issuers
to borrow money from investors. The issuer pays the investor a fixed or variable
rate of interest and must repay the amount borrowed at maturity. Investment
grade debt securities are rated within the four highest quality grades as
determined by Moody's Investors Service (Moody's) (currently Aaa, Aa, A and Baa
for bonds), Standard & Poor's Ratings Group (S&P) (currently AAA, AA, A and BBB
for bonds), or another nationally recognized statistical rating organization.
Unrated securities may also be investment grade
if, in the opinion of the Subadviser, they are of equivalent quality to those
rated in the four highest quality grades. Securities rated Baa by Moody's or BBB
by S&P, although considered to be investment grade, lack outstanding investment
characteristics and, in fact, have speculative characteristics. Changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make interest and principal payments than is the case with higher
grade bonds. Such lower rated securities are subject to a greater risk of loss
of principal and interest. A portfolio security whose rating is downgraded below
Baa by Moody's or BBB by S&P, or otherwise has a reduction in credit quality
below investment grade, will be disposed of as soon as practicable.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements whereby the seller of the
security agrees to repurchase that security from the Fund at a mutually
agreed-upon time and price. The repurchase date is usually within a day or two
of the original purchase, although it may extend over a number of months. The
Fund's repurchase agreements should at all times be fully collateralized in an
amount at least equal to the resale price. In the event of a default or
bankruptcy by a seller, the Fund will promptly seek to liquidate the collateral.
To the extent that the proceeds from any sale of such collateral upon a default
in the obligation to repurchase are less than the repurchase price, the Fund
will suffer a loss. See "Investment Objective and Policies--Repurchase
Agreements" in the Statement of Additional Information.
MONEY MARKET INSTRUMENTS
The Fund may hold cash or invest in high quality money market instruments,
including commercial paper of a U.S. or non-U.S. company, foreign government
securities, certificates of deposit, bankers' acceptances and time deposits of
domestic and foreign banks, and obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities. These obligations will be U.S.
dollar denominated or denominated in a foreign currency. Money market
instruments typically have a maturity of one year or less as measured from the
date of purchase. The Fund may hold cash or invest in money market instruments
without limit for temporary defensive purposes. To the extent that the Fund
otherwise holds cash or invests in money market instruments, it is subject to
its investment policies described above.
BORROWING
The Fund may borrow an amount equal to no more than 20% of the value of its
total assets (calculated when the loan is made) from banks for temporary,
extraordinary or emergency purposes or for the clearance of transactions. The
Fund may pledge up to 20% of its total assets to secure these borrowings. If the
Fund's asset coverage for borrowings falls below 300%, the Fund will take prompt
action to reduce its borrowings. The Fund will not purchase portfolio securities
when borrowings exceed 5% of the value of its total assets. See "Investment
Objective and Policies--Borrowing" in the Statement of Additional Information.
7
<PAGE>
ILLIQUID SECURITIES
The Fund may hold up to 15% of its net assets in illiquid securities including
repurchase agreements which have a maturity of longer than seven days,
securities with legal or contractual restrictions on resale (restricted
securities) and securities that are not readily marketable in securities markets
either within or outside of the United States. Restricted securities eligible
for resale pursuant to Rule 144A under the Securities Act of 1933, as amended
(the Securities Act) and privately placed commercial paper that have a readily
available market are not considered illiquid for purposes of this limitation.
See "Investment Restrictions" in the Statement of Additional Information. The
investment adviser will monitor the liquidity of such restricted securities
under the supervision of the Board of Directors. The Fund's investment in Rule
144A securities could have the effect of increasing illiquidity to the extent
that qualified institutional buyers become, for a limited time, uninterested in
purchasing Rule 144A securities. Repurchase agreements subject to demand are
deemed to have a maturity equal to the applicable notice period.
The staff of the Securities and Exchange Commission ("SEC") has taken the
position that purchased over-the-counter (OTC) options and the assets used as
"cover" for written OTC options are illiquid securities unless the Fund and the
counterparty have provided for the Fund, at the Fund's election, to unwind the
OTC option. The exercise of such an option would ordinarily involve the payment
by the Fund of an amount designed to reflect the counterparty's economic loss
from an early termination, but does allow the Fund to treat the securities used
as "cover" as liquid. The Fund will follow this position as long as it remains
the position of the staff of the SEC. See "Investment Objective and
Policies--Illiquid Securities" in the Statement of Additional Information.
PORTFOLIO TURNOVER
The Fund's portfolio turnover rate is generally not expected to exceed 100%.
High portfolio turnover (over 100%) may involve correspondingly greater
brokerage commissions and other transaction costs, which will be borne directly
by the Fund. See "Portfolio Transactions and Brokerage" in the Statement of
Additional Information. In addition, high portfolio turnover may result in
increased short-term capital gains, which, when distributed to shareholders, are
treated as ordinary income. See "Taxes, Dividends and Distributions."
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
The Fund may purchase or sell securities (including equity securities) on a
when-issued or delayed delivery basis. When-issued or delayed delivery
transactions arise when securities are purchased or sold by the Fund with
payment and delivery taking place a month or more in the future in order to
secure what is considered to be an advantageous price and/or yield to the Fund
at the time of entering into the transaction. While the Fund will only purchase
securities on a when-issued or delayed delivery basis with the intention of
acquiring the securities, the Fund may sell the securities before the settlement
date, if it is deemed advisable. At the time the Fund makes the commitment to
purchase securities on a when-issued or delayed delivery basis, the Fund will
record the transaction and thereafter reflect the value, each day, of such
security in determining the net asset value of the Fund. At the time of delivery
of the securities, the value may be more or less than the purchase price. The
Fund's Custodian will maintain, in a segregated account of the Fund, cash or
liquid securities having a value equal to or greater than the Fund's purchase
commitments. Subject to this requirement, the Fund may purchase securities on
such basis without limit. See "Investment Objective and Policies--When-Issued
and Delayed Delivery Securities" in the Statement of Additional Information.
SECURITIES LENDING
The Fund may lend its portfolio securities to brokers or dealers, banks or
other recognized institutional borrowers of securities, provided that the
borrower at all times maintains cash or equivalent collateral or secures a
letter of credit in favor of the Fund in an amount equal to at least 100%,
determined daily, of the market value of the securities loaned which are
maintained in a segregated account pursuant to applicable regulations. During
the time portfolio securities are on loan, the borrower will pay the Fund an
amount equivalent to any dividend or interest paid on such securities and the
Fund may invest the cash collateral and earn
8
<PAGE>
additional income, or it may receive an agreed-upon amount of interest income
from the borrower. As with any extensions of credit, there are risks of delay in
recovery and in some cases loss of rights in the collateral should the borrower
of the securities fail financially. As a matter of fundamental policy, the Fund
cannot lend more than 33 1/3% of the value of its total assets. See "Investment
Objective and Policies--Lending of Securities" in the Statement of Additional
Information. The Fund may pay reasonable administration and custodial fees in
connection with a loan.
SHORT SALES AGAINST-THE-BOX
The Fund may make short sales against-the-box for the purpose of deferring
realization of gain or loss for federal income tax purposes. A short sale
"against-the-box" is a short sale in which the Fund owns an equal amount of the
securities sold short or securities convertible into or exchangeable for,
without payment of any further consideration, securities of the same issue as,
and equal in amount to, the securities sold short. See "Investment Objective and
Policies--Short Sales Against-the-Box," in the Statement of Additional
Information.
RISK FACTORS AND SPECIAL CONSIDERATIONS OF INVESTING IN FOREIGN SECURITIES
Foreign securities involve certain risks, which should be considered carefully
by an investor in the Fund. These risks include political or economic
instability in the country of the issuer, the difficulty of predicting
international trade patterns, the possibility of imposition of exchange controls
and the risk of currency fluctuations. Such securities may be subject to greater
fluctuations in price than securities issued by U.S. corporations or issued or
guaranteed by the U.S. Government, its instrumentalities or agencies. In
addition, there may be less publicly available information about a foreign
company than about a domestic company. Foreign companies generally are not
subject to uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic companies. There is generally less
government regulation of securities exchanges, brokers and listed companies
abroad than in the United States and there is a possibility of expropriation,
confiscatory taxation or diplomatic developments which could affect investment.
Additional costs could be incurred in connection with the Fund's international
investment activities. Foreign brokerage commissions are generally higher than
United States brokerage commissions. Increased custodian costs as well as
administrative difficulties (such as the applicability of foreign laws to
foreign custodians in various circumstances) may be associated with the
maintenance of assets in foreign jurisdictions.
If a security is denominated in a foreign currency, it will be affected by
changes in currency exchange rates and in exchange control regulations, and
costs will be incurred in connection with conversions between currencies. A
change in the value of any such currency against the U.S. dollar will result in
a corresponding change in the U.S. dollar value of the Fund's securities
denominated in that currency. Such changes also will affect the Fund's income
and distributions to shareholders.
Shareholders should be aware that investing in the equity markets of
developing countries involves exposure to economies that are generally less
diverse and mature, and to political systems which can be expected to have less
stability than those of developed countries. Historical experience indicates
that the markets of developing countries have been more volatile than the
markets of developed countries. The risks associated with investments in foreign
securities, described above, may be greater with respect to investments in
developing countries.
HEDGING AND RETURN ENHANCEMENT STRATEGIES
THE FUND MAY ALSO ENGAGE IN VARIOUS PORTFOLIO STRATEGIES TO REDUCE CERTAIN
RISKS OF ITS INVESTMENTS AND TO ATTEMPT TO ENHANCE RETURN. THE FUND, AND THUS
THE INVESTOR, MAY LOSE MONEY IF THE FUND IS UNSUCCESSFUL IN ITS USE OF THESE
STRATEGIES. These strategies currently include the use of derivatives, such as
options, futures contracts and options thereon. The Fund's ability to use these
strategies may be limited by market conditions, regulatory limits and tax
considerations and there can be no assurance that any of these strategies will
succeed. See "Investment Objective and Policies" and "Taxes" in the Statement of
Additional Information. The Subadviser does not intend to buy all of these
instruments or use all of these strategies to the full
9
<PAGE>
extent permitted unless it believes that doing so will help the Fund achieve its
objective. New financial products and risk management techniques continue to be
developed and the Fund may use these new investments and techniques to the
extent consistent with its investment objective and policies.
OPTIONS TRANSACTIONS
THE FUND MAY PURCHASE AND WRITE (I.E., SELL) PUT AND CALL OPTIONS ON
SECURITIES, STOCK INDICES AND CURRENCIES THAT ARE TRADED ON U.S. OR FOREIGN
SECURITIES EXCHANGES OR IN THE OVER-THE-COUNTER MARKET TO ATTEMPT TO ENHANCE
RETURN OR TO HEDGE ITS PORTFOLIO. These options will be on equity securities,
stock indices (E.G., S&P 500) and foreign currencies. The Fund may write put and
call options to generate additional income through the receipt of premiums,
purchase put options in an effort to protect the value of securities (or
currencies) that it owns against a decline in market value and purchase call
options in an effort to protect against an increase in the price of securities
(or currencies) it intends to purchase. The Fund may also purchase put and call
options to offset previously written put and call options of the same series.
See "Investment Objective and Policies--Options on Securities" in the Statement
of Additional Information.
A CALL OPTION GIVES THE PURCHASER, IN EXCHANGE FOR A PREMIUM PAID, THE RIGHT
FOR A SPECIFIED PERIOD OF TIME TO PURCHASE THE SECURITIES OR CURRENCY SUBJECT TO
THE OPTION AT A SPECIFIED PRICE (THE EXERCISE PRICE OR STRIKE PRICE). The writer
of a call option, in return for the premium, has the obligation, upon exercise
of the option, to deliver, depending upon the terms of the option contract, the
underlying securities or a specified amount of cash to the purchaser upon
receipt of the exercise price. When the Fund writes a call option, the Fund
gives up the potential for gain on the underlying securities or currency in
excess of the exercise price of the option during the period that the option is
open.
A PUT OPTION GIVES THE PURCHASER, IN RETURN FOR A PREMIUM, THE RIGHT, FOR A
SPECIFIED PERIOD OF TIME, TO SELL THE SECURITIES OR CURRENCY SUBJECT TO THE
OPTION TO THE WRITER OF THE PUT AT THE SPECIFIED EXERCISE PRICE. The writer of
the put option, in return for the premium, has the obligation, upon exercise of
the option, to acquire the securities or currency underlying the option at the
exercise price. The Fund might, therefore, be obligated to purchase the
underlying securities or currency for more than their current market price.
THE FUND WILL WRITE ONLY "COVERED" OPTIONS AND OPTIONS FOR WHICH THE FUND
MAINTAINS IN A SEGREGATED ACCOUNT CASH OR LIQUID SECURITIES WITH A VALUE
EQUIVALENT AT ALL TIMES TO ITS OBLIGATIONS UNDER THE OPTION. An option is
covered if the Fund, so long as it is obligated under the option, owns an
offsetting position in the underlying security or currency. See "Investment
Objective and Policies--Options on Securities" in the Statement of Additional
Information. When the Fund writes a "covered" option, its losses are limited to
the current value of the offsetting position of the underlying security. When
the Fund otherwise writes an option, its losses are potentially unlimited. See
"Investment Objective and Policies--Limitations on Purchase and Sale of Stock
Options, Options on Stock Indices and Foreign Currencies and Futures Contracts
and Related Options" in the Statement of Additional Information.
FUTURES CONTRACTS AND OPTIONS THEREON
THE FUND MAY PURCHASE AND SELL FINANCIAL FUTURES CONTRACTS AND OPTIONS THEREON
WHICH ARE TRADED ON A COMMODITIES EXCHANGE OR BOARD OF TRADE TO REDUCE CERTAIN
RISKS OF ITS INVESTMENTS AND TO ATTEMPT TO ENHANCE RETURN IN ACCORDANCE WITH
REGULATIONS OF THE COMMODITY FUTURES TRADING COMMISSION (CFTC). THE FUND, AND
THUS THE INVESTOR, MAY LOSE MONEY IF THE FUND IS UNSUCCESSFUL IN ITS USE OF
THESE STRATEGIES. These futures contracts and related options will be on debt
securities, stock indices and foreign currencies. A futures contract is an
agreement to purchase or sell an agreed amount of securities or currencies at a
set price for delivery in the future. A stock index futures contract is an
agreement to purchase or sell cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of the last
trading day of the contract and the price at which the agreement is made. No
physical delivery of the underlying stocks in the index is made. The Fund may
purchase and sell futures contracts or related options as a hedge against
changes in market conditions.
10
<PAGE>
The Fund may not purchase or sell futures contracts and related options to
attempt to enhance return, if immediately thereafter the sum of the amount of
initial margin deposits on the Fund's existing futures and options on futures
and premiums paid for such related options would exceed 5% of the liquidation
value of the Fund's total assets. The Fund may purchase and sell futures
contracts and related options, without limitation, for bona fide hedging
purposes in accordance with regulations of the CFTC (I.E., to reduce certain
risks of its investments). The value of all futures contracts sold will not
exceed the total market value of the Fund's portfolio.
Futures contracts and related options are generally subject to segregation and
coverage requirements of the CFTC or the SEC. If the Fund does not hold the
security or currency underlying the futures contract, the Fund will be required
to segregate on an ongoing basis with its Custodian cash or liquid securities in
an amount at least equal to the Fund's obligations with respect to such futures
contracts.
THE FUND'S SUCCESSFUL USE OF FUTURES CONTRACTS AND RELATED OPTIONS DEPENDS
UPON THE INVESTMENT ADVISER'S ABILITY TO PREDICT THE DIRECTION OF THE MARKET AND
IS SUBJECT TO VARIOUS ADDITIONAL RISKS. The correlation between movements in the
price of a futures contract and the movements in the index or price of the
currencies underlying the futures contract is imperfect and there is a risk that
the value of the indices or currencies underlying the futures contract may
increase or decrease at a greater rate than the related futures contracts
resulting in losses to the Fund. Certain futures exchanges or boards of trade
have established daily limits on the amount that the price of futures contracts
or related options may vary, either up or down, from the previous day's
settlement price. These daily limits may restrict the Fund's ability to purchase
or sell certain futures contracts or related options on any particular day.
THE FUND'S ABILITY TO ENTER INTO FUTURES CONTRACTS AND OPTIONS THEREON IS
LIMITED BY THE REQUIREMENTS OF THE INTERNAL REVENUE CODE FOR QUALIFICATION AS A
REGULATED INVESTMENT COMPANY. SEE "TAXES" AND "INVESTMENT OBJECTIVE AND
POLICIES" IN THE STATEMENT OF ADDITIONAL INFORMATION.
RISKS OF HEDGING AND RETURN ENHANCEMENT STRATEGIES
PARTICIPATION IN THE OPTIONS OR FUTURES MARKETS AND IN CURRENCY EXCHANGE
TRANSACTIONS INVOLVES INVESTMENT RISKS AND TRANSACTION COSTS TO WHICH THE FUND
WOULD NOT BE SUBJECT ABSENT THE USE OF THESE STRATEGIES. THE FUND, AND THUS THE
INVESTOR, MAY LOSE MONEY IF THE FUND IS UNSUCCESSFUL IN ITS USE OF THESE
STRATEGIES. If the Subadviser's predictions of movements in the direction of the
securities, foreign currency and interest rate markets are inaccurate, the
adverse consequences to the Fund may leave the Fund in a worse position than if
such strategies were not used. Risks inherent in the use of options, foreign
currency and futures contracts and options on futures contracts include (1)
dependence on the Subadviser's ability to predict correctly movements in the
direction of interest rates, securities prices and currency markets; (2)
imperfect correlation between the price of options and futures contracts and
options thereon and movements in the prices of the securities or currencies
being hedged; (3) the fact that skills needed to use these strategies are
different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
(5) the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time that otherwise would be favorable for it
to do so, or the possible need for the Fund to sell a portfolio security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to
segregate securities in connection with hedging transactions. See "Taxes" in the
Statement of Additional Information.
The Fund will generally purchase options and futures on an exchange only if
there appears to be a liquid secondary market for such options or futures; the
Fund will generally purchase OTC options only if management believes that the
other party to the options will continue to make a market for such options.
INVESTMENT RESTRICTIONS
The Fund is subject to certain investment restrictions which, like its
investment objective, constitute fundamental policies. Fundamental policies
cannot be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities as defined in the Investment Company Act.
See "Investment Restrictions" in the Statement of Additional Information.
11
<PAGE>
- --------------------------------------------------------------------------------
HOW THE FUND IS MANAGED
- --------------------------------------------------------------------------------
THE FUND HAS A BOARD OF DIRECTORS WHICH, IN ADDITION TO OVERSEEING THE ACTIONS
OF THE FUND'S MANAGER, SUBADVISER AND DISTRIBUTOR, DECIDES UPON MATTERS OF
GENERAL POLICY. THE FUND'S MANAGER CONDUCTS AND SUPERVISES THE DAILY BUSINESS
OPERATIONS OF THE FUND. THE FUND'S SUBADVISER FURNISHES DAILY INVESTMENT
ADVISORY SERVICES.
The Fund is responsible for the payment of certain fees and expenses
including, among others, the following: (i) management and distribution fees;
(ii) the fees of unaffiliated Directors; (iii) the fees of the Fund's Custodian
and Transfer and Dividend Disbursing Agent; (iv) the fees of the Fund's legal
counsel and independent accountants; (v) brokerage commissions incurred in
connection with portfolio transactions; (vi) all taxes and charges of
governmental agencies; (vii) the reimbursement of organization expenses; and
(viii) expenses related to shareholder communications including all expenses of
shareholders' and Board of Directors' meetings and of preparing, printing and
mailing reports, proxy statements and prospectuses to shareholders.
MANAGER
PRUDENTIAL MUTUAL FUND MANAGEMENT LLC (PMF OR THE MANAGER), GATEWAY CENTER
THREE, NEWARK, NEW JERSEY 07102, IS THE MANAGER OF THE FUND AND IS COMPENSATED
FOR ITS SERVICES AT AN ANNUAL RATE OF .60 OF 1% OF THE FUND'S AVERAGE DAILY NET
ASSETS. PMF is organized in New York as a limited liability company. It is the
successor to Prudential Mutual Fund Management, Inc., which transferred its
assets to PMF in September 1996. See "Manager" in the Statement of Additional
Information.
As of September 30, 1996, PMF served as the manager to 38 open-end investment
companies, constituting all of the Prudential Mutual Funds, and as manager or
administrator to 22 closed-end investment companies with aggregate assets of
approximately $52 billion.
UNDER THE MANAGEMENT AGREEMENT WITH THE FUND, PMF MANAGES THE INVESTMENT
OPERATIONS OF THE FUND AND ALSO ADMINISTERS THE FUND'S CORPORATE AFFAIRS. See
"Manager" in the Statement of Additional Information.
UNDER THE SUBADVISORY AGREEMENT BETWEEN PMF AND THE PRUDENTIAL INVESTMENT
CORPORATION (PIC OR THE SUBADVISER), PIC FURNISHES INVESTMENT ADVISORY SERVICES
IN CONNECTION WITH THE MANAGEMENT OF THE FUND AND IS REIMBURSED BY PMF FOR ITS
REASONABLE COSTS AND EXPENSES INCURRED IN PROVIDING SUCH SERVICES. Under the
Management Agreement, PMF continues to have responsibility for all investment
advisory services and supervises PIC's performance of such services. PMF and PIC
are wholly-owned subsidiaries of The Prudential Insurance Company of America
(Prudential), a major diversified insurance and financial services company, and
are part of Prudential Investments, a business group of Prudential.
The portfolio manager of the Fund is Susan Hirsch, a Vice President of PIC,
who is responsible for the day-to-day management of the Fund's portfolio. Ms.
Hirsch has been employed by PIC as a portfolio manager since July 1996. Ms.
Hirsch joined PIC from Delphi Asset Management (Delphi), where she was solely
responsible for the management of the U.S. Selected Growth Portfolio of the AMT
Capital Fund. Prior to that, she was at Lehman Brothers Global Asset Management
Inc. where she was the sole portfolio manager of the Lehman Selected Growth
Stock Portfolio (Lehman Growth Portfolio) since the fund's inception in May,
1994, and a Lehman Brothers research analyst for small growth stocks since 1988.
The Lehman Growth Portfolio was merged into AMT's U.S. Selected Growth Portfolio
in March, 1996 coinciding with Ms. Hirsch joining Delphi. The merger enabled Ms.
Hirsch to continue to manage a substantially similar portfolio for the
shareholders of what was previously the Lehman Growth Portfolio and to maintain
the track record of the Lehman fund's performance.
12
<PAGE>
Set forth below is historical performance data relating to the Lehman Growth
Portfolio and the U.S. Selected Growth Portfolio (collectively, the Growth
Portfolios). Ms. Hirsch was always the sole portfolio manager responsible for
the day-to-day management of each fund, and no other person played a significant
part in their management. The U.S. Selected Growth Portfolio began liquidating
its portfolio on June 1, 1996, in anticipation of its closing. The data is
provided to illustrate Ms. Hirsch's past performance in managing registered
investment companies with investment objectives, policies and strategies
substantially similar to the Fund, as measured against the Russell 2000
Small-Cap Index, an unmanaged index comprised of 2000 small-cap stocks (Russell
2000), and the Standard & Poor's Mid-Cap 400 Index, an unmanaged index comprised
of 400 mid-cap stocks (S&P 400). The returns quoted are annualized total rates
of return which include the impact of capital appreciation as well as the
reinvestment of interest and dividends, as appropriate. The returns of the
Growth Portfolios reflect the deduction of applicable advisory fees and
operating expenses, but not any sales charges (the indices do not incur fees,
operating expenses, or charges). Investors should not consider this performance
data as an indication of the future performance of the Fund.
GROWTH PORTFOLIOS ANNUALIZED TOTAL RETURN
FOR PERIODS ENDED MAY 31, 1996
<TABLE>
<CAPTION>
GROWTH PORTFOLIOS RUSSELL 2000 S&P 400
----------------- ------------- -----------
<S> <C> <C> <C>
One-Year Period........................................................... 49.03% 35.90% 28.46%
Since Growth Portfolios' Inception (5/19/94).............................. 29.53% 22.21% 20.52%
</TABLE>
DISTRIBUTOR
PRUDENTIAL SECURITIES INCORPORATED (PRUDENTIAL SECURITIES OR PSI), ONE SEAPORT
PLAZA, NEW YORK, NEW YORK 10292, IS A CORPORATION ORGANIZED UNDER THE LAWS OF
THE STATE OF DELAWARE THAT SERVES AS THE DISTRIBUTOR OF THE CLASS A, CLASS B,
CLASS C AND CLASS Z SHARES OF THE FUND. IT IS AN INDIRECT, WHOLLY-OWNED
SUBSIDIARY OF PRUDENTIAL.
UNDER SEPARATE DISTRIBUTION AND SERVICE PLANS (THE CLASS A PLAN, THE CLASS B
PLAN AND THE CLASS C PLAN, COLLECTIVELY, THE PLANS) ADOPTED BY THE FUND UNDER
RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT AND A DISTRIBUTION AGREEMENT (THE
DISTRIBUTION AGREEMENT), PRUDENTIAL SECURITIES INCURS THE EXPENSES OF
DISTRIBUTING THE FUND'S CLASS A, CLASS B AND CLASS C SHARES. Prudential
Securities also incurs the expenses of distributing the Fund's Class Z shares
under the Distribution Agreement, none of which is paid for or reimbursed by the
Fund. These expenses include commissions and account servicing fees paid to, or
on account of, financial advisers of Prudential Securities and Pruco Securities
Corporation (Prusec), an affiliated broker-dealer, commissions and account
servicing fees paid to, or on account of, other broker-dealers or financial
institutions (other than national banks) which have entered into agreements with
the Distributor, advertising expenses, the cost of printing and mailing
prospectuses to potential investors and indirect and overhead costs of
Prudential Securities and Prusec associated with the sale of Fund shares,
including lease, utility, communications and sales promotion expenses. The State
of Texas requires that shares of the Fund may be sold in that state only by
dealers or other financial institutions which are registered there as
broker-dealers.
Under the Plans, the Fund is obligated to pay distribution and/or service fees
to the Distributor as compensation for its distribution and service activities,
not as reimbursement for specific expenses incurred. If the Distributor's
expenses exceed its distribution and service fees, the Fund will not be
obligated to pay any additional expenses. If the Distributor's expenses are less
than such distribution and service fees, it will retain its full fees and
realize a profit.
UNDER THE CLASS A PLAN, THE FUND MAY PAY PRUDENTIAL SECURITIES FOR ITS
DISTRIBUTION-RELATED EXPENSES WITH RESPECT TO CLASS A SHARES AT AN ANNUAL RATE
OF UP TO .30 OF 1% OF THE AVERAGE DAILY NET ASSETS OF THE CLASS A SHARES. The
Class A Plan provides that (i) up to .25 of 1% of the average daily net assets
of the Class A shares may be used to pay for personal service and/or the
maintenance of shareholder accounts (service fee) and (ii) total distribution
fees (including the service fee of .25 of 1%) may not exceed .30 of 1% of the
average daily net assets of the Class A shares. Prudential Securities has agreed
to limit its distribution-related fees payable under the Class A Plan to .25 of
1% of the average daily net assets of the Class A shares for the fiscal year
ending October 31, 1997.
13
<PAGE>
UNDER THE CLASS B AND CLASS C PLANS, THE FUND PAYS PRUDENTIAL SECURITIES FOR
ITS DISTRIBUTION-RELATED EXPENSES WITH RESPECT TO CLASS B AND CLASS C SHARES AT
AN ANNUAL RATE OF 1% OF THE AVERAGE DAILY NET ASSETS OF EACH OF THE CLASS B AND
CLASS C SHARES. The Class B and Class C Plans provide for the payment to
Prudential Securities of (i) an asset-based sales charge of .75 of 1% of the
average daily net assets of the Class B and Class C shares, respectively, and
(ii) a service fee of .25 of 1% of the average daily net assets of each of the
Class B and Class C shares. The service fee is used to pay for personal service
and/or the maintenance of shareholder accounts. Prudential Securities also
receives contingent deferred sales charges from certain redeeming shareholders.
See "Shareholder Guide--How to Sell Your Shares--Contingent Deferred Sales
Charges."
Distribution expenses attributable to the sale of Class A, Class B or Class C
shares of the Fund will be allocated to each class based upon the ratio of sales
of each class to the sales of all shares of the Fund other than expenses
allocable to a particular class. The distribution fee and sales charge of one
class will not be used to subsidize the sale of another class.
Each Plan provides that it shall continue in effect from year to year provided
that a majority of the Board of Directors of the Fund, including a majority of
the Directors who are not "interested persons" of the Fund (as defined in the
Investment Company Act) and who have no direct or indirect financial interest in
the operation of the Plan or any agreement related to the Plan (the Rule 12b-1
Directors), vote annually to continue the Plan. Each Plan may be terminated at
any time by vote of a majority of the Rule 12b-1 Directors or of a majority of
the outstanding shares of the applicable class of the Fund. The Fund will not be
obligated to pay expenses incurred under any Plan if it is terminated or not
continued.
In addition to distribution and service fees paid by the Fund under the Class
A, Class B and Class C Plans, the Manager (or one of its affiliates) may make
payments to dealers (including Prudential Securities) and other persons which
distribute shares of the Fund (including Class Z shares). Such payments may be
calculated by reference to the net asset value of shares sold by such persons or
otherwise.
The Distributor is subject to the rules of the National Association of
Securities Dealers, Inc. (NASD) governing maximum sales charges. See
"Distributor" in the Statement of Additional Information.
On October 21, 1993, PSI entered into an omnibus settlement with the SEC,
state securities regulators (with the exception of the Texas Securities
Commissioner who joined the settlement on January 18, 1994) and the NASD to
resolve allegations that from 1980 through 1990 PSI sold certain limited
partnership interests in violation of securities laws to persons for whom such
securities were not suitable and misrepresented the safety, potential returns
and liquidity of these investments. Without admitting or denying the allegations
asserted against it, PSI consented to the entry of an SEC Administrative Order
which stated that PSI's conduct violated the federal securities laws, directed
PSI to cease and desist from violating the federal securities laws, pay civil
penalties, and adopt certain remedial measures to address the violations.
Pursuant to the terms of the SEC settlement, PSI agreed to the imposition of
$10,000,000 civil penalty, established a settlement fund in the amount of
$330,000,000 and procedures to resolve legitimate claims for compensatory
damages by purchasers of the partnership interests. PSI has agreed to provide
additional funds, if necessary, for the purposes of the settlement fund. PSI's
settlement with the state securities regulators included an agreement to pay a
penalty of $500,000 per jurisdiction. PSI consented to a censure and to the
payment of a $5,000,000 fine in settling the NASD action.
In October 1994, a criminal complaint was filed with the United States
Magistrate for the Southern District of New York alleging that PSI committed
fraud in connection with the sale of certain limited partnership interests in
violation of federal securities laws. An agreement was simultaneously filed to
defer prosecution of these charges for a period of three years from the signing
of the agreement, provided that PSI complies with the terms of the agreement.
If, upon completion of the three year period, PSI has complied with the terms of
the agreement, no prosecution will be instituted by the United States for the
offenses charged in the complaint. If on the other hand, during the course of
the three year period, PSI violates the terms of the agreement, the U.S.
Attorney can then elect to pursue these charges. Under the terms of the
agreement, PSI agreed, among other things, to pay an additional $330,000,000
into the fund established by the SEC to pay restitution to investors who
purchased certain PSI limited partnership interests.
14
<PAGE>
For more detailed information concerning the foregoing matters, see
"Distributor" in the Statement of Additional Information, a copy of which may be
obtained at no cost by calling (800) 225-1852.
The Fund is not affected by PSI's financial condition and is an entirely
separate legal entity from PSI, which has no beneficial ownership therein and
the Fund's assets which are held by State Street Bank and Trust Company, an
independent custodian, are separate and distinct from PSI.
FEE WAIVERS AND SUBSIDY
PMF may from time to time waive all or a portion of its management fee and
subsidize all or a portion of the operating expenses of the Fund. Fee waivers
and expense subsidies will increase the Fund's total return. See "Performance
Information" in the Statement of Additional Information and "Fund Expenses."
PORTFOLIO TRANSACTIONS
Prudential Securities may act as a broker or futures commission merchant for
the Fund provided that the commissions, fees or other remuneration it receives
are fair and reasonable. See "Portfolio Transactions and Brokerage" in the
Statement of Additional Information.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for the Fund's portfolio securities and
cash and, in that capacity, maintains certain financial and accounting books and
records pursuant to an agreement with the Fund.
Prudential Mutual Fund Services, Inc. (PMFS), Raritan Plaza One, Edison, New
Jersey 08837, serves as Transfer Agent and Dividend Disbursing Agent and in
those capacities maintains certain books and records for the Fund. PMFS is a
wholly-owned subsidiary of PMF. Its mailing address is P.O. Box 15005, New
Brunswick, New Jersey 08906-5005.
- --------------------------------------------------------------------------------
HOW THE FUND VALUES ITS SHARES
- --------------------------------------------------------------------------------
THE FUND'S NET ASSET VALUE PER SHARE OR NAV IS DETERMINED BY SUBTRACTING ITS
LIABILITIES FROM THE VALUE OF ITS ASSETS AND DIVIDING THE REMAINDER BY THE
NUMBER OF OUTSTANDING SHARES. NAV IS CALCULATED SEPARATELY FOR EACH CLASS. FOR
VALUATION PURPOSES, QUOTATIONS OF FOREIGN SECURITIES IN A FOREIGN CURRENCY ARE
CONVERTED TO U.S. DOLLAR EQUIVALENTS. THE BOARD OF DIRECTORS HAS FIXED THE
SPECIFIC TIME OF DAY FOR THE COMPUTATION OF THE FUND'S NAV TO BE AS OF 4:15
P.M., NEW YORK TIME.
Portfolio securities are valued based on market quotations or, if not readily
available, at fair value as determined in good faith under procedures
established by the Fund's Board of Directors. See "Net Asset Value" in the
Statement of Additional Information.
The Fund will compute its NAV once daily on days that the New York Stock
Exchange is open for trading except on days on which no orders to purchase, sell
or redeem shares have been received by the Fund or days on which changes in the
value of the Fund's portfolio securities do not materially affect the NAV. The
New York Stock Exchange is closed on the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. See "Net Asset Value" in the Statement of
Additional Information.
Although the legal rights of each class of shares are substantially identical,
the different expenses borne by each class will result in different NAVs and
dividends. The NAV of Class B and Class C shares will generally be lower than
the NAV of Class A shares as a result of the larger distribution-related fee to
which Class B and Class C shares are subject. The NAV of Class Z shares
15
<PAGE>
will generally be higher than the NAV of the other three classes because Class Z
shares are not subject to any distribution and/or service fees. It is expected,
however, that the NAV of the four classes will tend to converge immediately
after the recording of dividends, which will differ by approximately the amount
of distribution and/or service fee expense accrual differential among the
classes.
- --------------------------------------------------------------------------------
HOW THE FUND CALCULATES PERFORMANCE
- --------------------------------------------------------------------------------
FROM TIME TO TIME THE FUND MAY ADVERTISE ITS TOTAL RETURN (INCLUDING "AVERAGE
ANNUAL" TOTAL RETURN AND "AGGREGATE" TOTAL RETURN) AND YIELD IN ADVERTISEMENTS
OR SALES LITERATURE. TOTAL RETURN AND YIELD ARE CALCULATED SEPARATELY FOR CLASS
A, CLASS B, CLASS C AND CLASS Z SHARES. THESE FIGURES ARE BASED ON HISTORICAL
EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "total return"
shows how much an investment in the Fund would have increased (decreased) over a
specified period of time (I.E., one, five, or ten years or since inception of
the Fund) assuming that all distributions and dividends by the Fund were
reinvested on the reinvestment dates during the period and less all recurring
fees. The "aggregate" total return reflects actual performance over a stated
period of time. "Average annual" total return is a hypothetical rate of return
that, if achieved annually, would have produced the same aggregate total return
if performance had been constant over the entire period. "Average annual" total
return smooths out variations in performance and takes into account any
applicable initial or contingent deferred sales charges. Neither "average
annual" total return nor "aggregate" total return takes into account any federal
or state income taxes which may be payable upon redemption. The "yield" refers
to the income generated by an investment in the Fund over a one-month or 30-day
period. This income is then "annualized;" that is, the amount of income
generated by the investment during that 30-day period is assumed to be generated
each 30-day period for twelve periods and is shown as a percentage of the
investment. The income earned on the investment is also assumed to be reinvested
at the end of the sixth 30-day period. The Fund also may include comparative
performance information in advertising or marketing the Fund's shares. Such
performance information may include data from Lipper Analytical Services, Inc.,
Morningstar Publications, Inc., and other industry publications, business
periodicals and market indices. See "Performance Information" in the Statement
of Additional Information. Further performance information will be contained in
the Fund's annual and semi-annual reports to shareholders, which will be
available without charge. See "Shareholder Guide--Shareholder Services--Reports
to Shareholders."
- --------------------------------------------------------------------------------
TAXES, DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
TAXATION OF THE FUND
THE FUND INTENDS TO ELECT TO QUALIFY AND INTENDS TO REMAIN QUALIFIED AS A
REGULATED INVESTMENT COMPANY UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE INTERNAL REVENUE CODE). ACCORDINGLY, THE FUND WILL NOT BE SUBJECT TO
FEDERAL INCOME TAXES ON ITS NET INVESTMENT INCOME AND CAPITAL GAINS, IF ANY,
THAT IT DISTRIBUTES TO ITS SHAREHOLDERS.
The Fund may, from time to time, invest in Passive Foreign Investment
Companies (PFICs). PFICs are foreign corporations which derive a majority of
their income from passive sources. For tax purposes, the Fund's investments in
PFICs are subject to special tax provisions that may result in the taxation of
certain gains realized by the Fund. See "Taxes" in the Statement of Additional
Information.
In addition, under the Internal Revenue Code, special rules apply to the
treatment of certain options and futures contracts (Section 1256 contracts). At
the end of each year, such investments held by the Fund will be required to be
"marked to market"
16
<PAGE>
for federal income tax purposes; that is, treated as having been sold at market
value. Sixty percent of any gain or loss recognized on these "deemed sales" and
on actual dispositions may be treated as long-term capital gain or loss, and the
remainder will be treated as short-term capital gain or loss. See "Taxes" in the
Statement of Additional Information.
Gains or losses on disposition of debt securities denominated in a foreign
currency attributable to fluctuations in the value of foreign currency between
the date of acquisition of the security and the date of disposition may be
treated as ordinary gain or loss. These gains or losses increase or decrease the
amount of the Fund's investment company taxable income available to be
distributed to shareholders as ordinary income, rather than increasing or
decreasing the amount of the Fund's net capital gain. If currency fluctuation
losses exceed other investment company taxable income during a taxable year,
distributions made by the Fund during the year would be characterized as a
return of capital to shareholders, reducing the shareholder's basis in his or
her Fund shares.
TAXATION OF SHAREHOLDERS
All dividends out of net investment income, together with distributions of net
short-term capital gains, will be taxable as ordinary income to the shareholder
whether or not reinvested. Any net long-term capital gains distributed to
shareholders will be taxable as such to the shareholder, whether or not
reinvested and regardless of the length of time a shareholder has owned his or
her shares. The maximum long-term capital gains rate for corporate shareholders
is currently the same as the maximum tax rate for ordinary income. The maximum
long-term capital gains rate for individual shareholders is currently 28% and
the maximum tax rate for ordinary income is 39.6%.
Any gain or loss realized upon a sale or redemption of shares by a shareholder
who is not a dealer in securities will be treated as long-term capital gain or
loss if the shares have been held more than one year and otherwise as short-term
capital gain or loss. Any such loss with respect to shares that are held six
months or less, however, will be treated as a long-term capital loss to the
extent of any capital gain distributions received by the shareholder.
The Fund has obtained opinions of counsel to the effect that neither (i) the
conversion of Class B shares into Class A shares nor (ii) the exchange of any
class of the Fund's shares for any other class of its shares constitutes a
taxable event for federal income tax purposes. However, such opinions are not
binding on the Internal Revenue Service.
WITHHOLDING TAXES
Under U.S. Treasury Regulations, the Fund is required to withhold and remit to
the U.S. Treasury 31% of dividend, capital gain income and redemption proceeds,
payable on the accounts of those shareholders who fail to furnish their tax
identification numbers on IRS Form W-9 (or IRS Form W-8 in the case of certain
foreign shareholders) with the required certifications regarding the
shareholder's status under the federal income tax law.
Shareholders are urged to consult their own tax advisers regarding specific
questions as to federal, state or local taxes. See "Taxes" in the Statement of
Additional Information.
DIVIDENDS AND DISTRIBUTIONS
THE FUND EXPECTS TO PAY DIVIDENDS OF NET INVESTMENT INCOME, IF ANY, ANNUALLY
AND TO MAKE DISTRIBUTIONS OF ANY CAPITAL GAINS IN EXCESS OF NET LONG-TERM
CAPITAL LOSSES AT LEAST ANNUALLY. Dividends paid by the Fund with respect to
each class of shares, to the extent any dividends are paid, will be calculated
in the same manner, at the same time, on the same day and will be in the same
amount except that each class will bear its own distribution and/or service fee
charges, generally resulting in lower dividends for Class B and Class C shares
in relation to Class A and Class Z shares and lower dividends for Class A shares
in relation to Class Z shares. Distribution of net capital gains, if any, will
be paid in the same amount for each class of shares. See "How The Fund Values
its Shares."
17
<PAGE>
DIVIDENDS AND DISTRIBUTIONS WILL BE PAID IN ADDITIONAL FUND SHARES, BASED ON
THE NAV OF EACH CLASS ON THE RECORD DATE OR SUCH OTHER DATE AS THE BOARD OF
DIRECTORS MAY DETERMINE, UNLESS THE SHAREHOLDER ELECTS IN WRITING NOT LESS THAN
FIVE BUSINESS DAYS PRIOR TO THE RECORD DATE TO RECEIVE SUCH DIVIDENDS AND
DISTRIBUTIONS IN CASH. Such election should be submitted to Prudential Mutual
Fund Services, Inc., Attn: Account Maintenance Unit, P.O. Box 15015, New
Brunswick, New Jersey 08906-5015. The Fund will notify each shareholder after
the close of the Fund's taxable year both of the dollar amount and the taxable
status of that year's dividends and distributions on a per share basis. If you
hold shares through Prudential Securities, you should contact your financial
adviser to elect to receive dividends and distributions in cash.
WHEN THE FUND GOES "EX-DIVIDEND," ITS NAV IS REDUCED BY THE AMOUNT OF THE
DIVIDEND OR DISTRIBUTION. IF YOU BUY SHARES JUST PRIOR TO THE EX-DIVIDEND DATE
(WHICH GENERALLY OCCURS FOUR BUSINESS DAYS PRIOR TO THE RECORD DATE), THE PRICE
YOU PAY WILL INCLUDE THE DIVIDEND OR DISTRIBUTION AND A PORTION OF YOUR
INVESTMENT WILL BE RETURNED TO YOU AS A TAXABLE DISTRIBUTION. YOU SHOULD,
THEREFORE, CONSIDER THE TIMING OF DIVIDENDS WHEN MAKING YOUR PURCHASES.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMON STOCK
THE FUND WAS INCORPORATED IN MARYLAND ON AUGUST 23, 1996. THE FUND IS
AUTHORIZED TO ISSUE 2 BILLION SHARES OF COMMON STOCK, $.001 PAR VALUE PER SHARE,
DIVIDED INTO FOUR CLASSES, DESIGNATED CLASS A, CLASS B, CLASS C AND CLASS Z
COMMON STOCK. Of the authorized shares of common stock of the Fund, 1 billion
shares consist of Class A common stock, 500 million shares consist of Class B
common stock, 300 million shares consist of Class C common stock and 200 million
shares consist of Class Z common stock. Each class of common stock of the Fund
represents an interest in the same assets of the Fund and is identical in all
respects except that (i) each class (with the exception of Class Z shares) is
subject to different sales charges and distribution and/or service fees which
may affect performance, (ii) each class has exclusive voting rights on any
matter submitted to shareholders that relates solely to its distribution
arrangement and has separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the interests of
any other class, (iii) each class has a different exchange privilege, (iv) only
Class B shares have a conversion feature and (v) Class Z shares are offered
exclusively for sale to a limited group of investors. See "How the Fund is
Managed--Distributor." In accordance with the Fund's Articles of Incorporation,
the Board of Directors may authorize the creation of additional series of common
stock and classes within such series, with such preferences, privileges,
limitations and voting and dividend rights as the Board may determine.
The Board of Directors may increase or decrease the number of authorized
shares without the approval of shareholders. Shares of the Fund, when issued,
are fully paid, nonassessable, fully transferable and redeemable at the option
of the holder. Shares are also redeemable at the option of the Fund under
certain circumstances as described under "Shareholder Guide--How to Sell Your
Shares." Each share of each class of common stock is equal as to earnings,
assets and voting privileges, except as noted above, and each class bears the
expenses related to the distribution of its shares (with the exception of Class
Z shares, which are not subject to any distribution or service fees). Except for
the conversion feature applicable to the Class B shares, there are no
conversion, preemptive or other subscription rights. In the event of
liquidation, each share of common stock of the Fund is entitled to its portion
of all of the Fund's assets after all debts and expenses of the Fund have been
paid. Since Class B and Class C shares generally bear higher distribution
expenses than Class A shares, the liquidation proceeds to shareholders of those
classes are likely to be lower than to Class A shareholders and to Class Z
shareholders, whose shares are not subject to any distribution and/ or service
fees. The Fund's shares do not have cumulative voting rights for the election of
Directors.
THE FUND DOES NOT INTEND TO HOLD ANNUAL MEETINGS OF SHAREHOLDERS UNLESS
OTHERWISE REQUIRED BY LAW. THE FUND WILL NOT BE REQUIRED TO HOLD MEETINGS OF
SHAREHOLDERS UNLESS, FOR EXAMPLE, THE ELECTION OF DIRECTORS IS REQUIRED TO BE
ACTED
18
<PAGE>
ON BY SHAREHOLDERS UNDER THE INVESTMENT COMPANY ACT. SHAREHOLDERS HAVE CERTAIN
RIGHTS, INCLUDING THE RIGHT TO CALL A MEETING UPON A VOTE OF 10% OR MORE OF THE
FUND'S OUTSTANDING SHARES FOR THE PURPOSE OF VOTING ON THE REMOVAL OF ONE OR
MORE DIRECTORS OR TO TRANSACT ANY OTHER BUSINESS.
ADDITIONAL INFORMATION
This Prospectus, including the Statement of Additional Information which has
been incorporated by reference herein, does not contain all the information set
forth in the Registration Statement filed by the Fund with the SEC under the
Securities Act. Copies of the Registration Statement may be obtained at a
reasonable charge from the SEC or may be examined, without charge, at the office
of the SEC in Washington, D.C.
- --------------------------------------------------------------------------------
SHAREHOLDER GUIDE
- --------------------------------------------------------------------------------
HOW TO BUY SHARES OF THE FUND
INITIAL OFFERING OF SHARES
Prudential Securities will solicit subscriptions for Class A, Class B, Class C
and Class Z shares of the Fund during a subscription period (the Subscription
Period) commencing on or about November 18, 1996, and currently expected to end
on or about December 20, 1996. Shares of the Fund subscribed for during the
Subscription Period will be issued at a net asset value of $10.00 per share on a
closing date (which is expected to occur on December 26, 1996 or the third
business day after the end of the Subscription Period). An initial sales charge
of 5% (5.26% of the net amount invested) is imposed on each transaction in Class
A shares. This initial sale charge may be reduced, depending on the amount of
the purchase, as set forth in the table under "Alternative Purchase Plan." Each
investor's dealer will notify such investor of the end of the Subscription
Period and payment will be due within three days thereafter. If any orders
received during the Subscription Period are accompanied by payment, such payment
will be returned unless instructions have been received authorizing investment
in a money market fund. All such funds received and invested in a money market
fund, including any dividends received on these funds, will be automatically
invested in the Fund on the closing date without any further action by the
investor. Shareholders who purchase their shares during the Subscription Period
will not receive stock certificates. The minimum initial investment during the
Subscription Period is $1,000 per class for Class A and Class B shares and
$5,000 for Class C shares. There are no minimum investment requirements for
Class Z shares and for certain retirement and employee saving plans or custodial
accounts for the benefit of minors.
Subscribers for shares will not have any of the rights of a shareholder of the
Fund until the shares subscribed for have been paid for and their issuance has
been reflected in the books of the Fund. The Fund reserves the right to
withdraw, modify or terminate the initial offering without notice and to refuse
any order in whole or in part.
CONTINUOUS OFFERING OF SHARES
The Fund reserves the right to delay commencement of the continuous offering
of its shares to the public for a period (the Closing Period) of up to 30
business days after the end of the Subscription Period, although redemptions
will be permitted during this time. Immediately after the expiration of the
Closing Period, the Fund expects to commence a continuous offering of its
shares.
You may purchase shares of the Fund through Prudential Securities, Prusec or
directly from the Fund, through its Transfer Agent, Prudential Mutual Fund
Services, Inc. (PMFS or the Transfer Agent), Attention: Investment Services,
P.O. Box 15020, New Brunswick, New Jersey 08906-5020. Participants in programs
sponsored by Prudential Retirement Services should contact their client
representative for more information about Class Z shares. The purchase price is
the NAV next determined following receipt
19
<PAGE>
of an order by the Transfer Agent or Prudential Securities plus a sales charge
which, at your option, may be imposed either (i) at the time of purchase (Class
A shares) or (ii) on a deferred basis (Class B or Class C shares). Class Z
shares are offered to a limited group of investors at net asset value without
any sales charge. See "Alternative Purchase Plan" below. See also "How the Fund
Values its Shares."
Application forms can be obtained from PMFS, Prudential Securities or Prusec.
If a stock certificate is desired, it must be requested in writing for each
transaction. Certificates are issued only for full shares. Shareholders who hold
their shares through Prudential Securities will not receive stock certificates.
The minimum initial investment is $1,000 per class for Class A and Class B
shares and $5,000 for Class C shares, except that the minimum initial investment
for Class C shares may be waived from time to time. The minimum subsequent
investment is $100 for Class A, Class B and Class C shares. Class Z shares are
not subject to any minimum investment requirements. All minimum investment
requirements are waived for certain employee savings plans or custodial accounts
for the benefit of minors. For purchases through the Automatic Savings
Accumulation Plan, the minimum initial and subsequent investment is $50. See
"Shareholder Services" below.
The Fund reserves the right to reject any purchase order (including an
exchange into the Fund) or to suspend or modify the continuous offering of its
shares. See "How to Sell Your Shares."
Your dealer is responsible for forwarding payment promptly to the Fund. The
Distributor reserves the right to cancel any purchase order for which payment
has not been received by the third business day following the investment.
Transactions in Fund shares may be subject to postage and handling charges
imposed by your dealer.
PURCHASE BY WIRE. For an initial purchase of shares of the Fund by wire, you
must first telephone PMFS to receive an account number at (800) 225-1852
(toll-free). The following information will be requested: your name, address,
tax identification number, class election, dividend distribution election,
amount being wired and wiring bank. Instructions should then be given by you to
your bank to transfer funds by wire to State Street Bank and Trust Company
(State Street), Boston, Massachusetts, Custody and Shareholder Services
Division, Attention: Prudential Emerging Growth Fund, Inc., specifying on the
wire the account number assigned by PMFS and your name and identifying Class A,
Class B, Class C or Class Z shares.
If you arrange for receipt by State Street of federal funds prior to 4:15
P.M., New York time, on a business day, you may purchase shares of the Fund as
of that day.
In making a subsequent purchase order by wire, you should wire State Street
directly and should be sure that the wire specifies Prudential Emerging Growth
Fund, Inc., Class A, Class B, Class C or Class Z shares and your name and
individual account number. It is not necessary to call PMFS to make subsequent
purchase orders utilizing federal funds. The minimum amount which may be
invested by wire is $1,000.
20
<PAGE>
ALTERNATIVE PURCHASE PLAN
THE FUND OFFERS FOUR CLASSES OF SHARES (CLASS A, CLASS B, CLASS C AND CLASS Z
SHARES) WHICH ALLOWS YOU TO CHOOSE THE MOST BENEFICIAL SALES CHARGE STRUCTURE
FOR YOUR INDIVIDUAL CIRCUMSTANCES GIVEN THE AMOUNT OF THE PURCHASE, THE LENGTH
OF TIME YOU EXPECT TO HOLD THE SHARES AND OTHER RELEVANT CIRCUMSTANCES
(ALTERNATIVE PURCHASE PLAN).
<TABLE>
<CAPTION>
ANNUAL 12B-1 FEES
(AS A % OF AVERAGE
DAILY
SALES CHARGE NET ASSETS) OTHER INFORMATION
-------------------------------------- ----------------------- --------------------------------------
<S> <C> <C> <C>
CLASS A Maximum initial sales charge of 5% of .30 of 1% (currently Initial sales charge waived or reduced
the public offering price being charged at a rate for certain purchases
of .25 of 1%)
CLASS B Maximum contingent deferred sales 1% Shares convert to Class A shares
charge or CDSC of 5% of the lesser of approximately seven years after
the amount invested or the redemption purchase
proceeds; declines to zero after six
years
CLASS C Maximum CDSC of 1% of the lesser of 1% Shares do not convert to another class
the amount invested or the redemption
proceeds on redemptions made within
one year of purchase.
CLASS Z None None Sold to a limited group of investors
</TABLE>
The four classes of shares represent an interest in the same portfolio of
investments of the Fund and have the same rights, except that (i) each class
(with the exception of Class Z shares, which are not subject to any distribution
and/or service fees) bears the separate expenses of its Rule 12b-1 distribution
and service plan, (ii) each class has exclusive voting rights on any matter
submitted to shareholders that relates solely to its arrangement and has
separate voting rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other class, (iii) each
class has a different exchange privilege, (iv) only Class B shares have a
conversion feature and (v) Class Z shares are offered exclusively for sale to a
limited group of investors. See "How to Exchange Your Shares" below. The income
attributable to each class and the dividends payable on the shares of each class
will be reduced by the amount of the distribution fee, if any, of each class.
Class B and Class C shares bear the expenses of a higher distribution fee which
will generally cause them to have higher expense ratios and to pay lower
dividends than the Class A and Class Z shares.
Financial advisers and other sales agents who sell shares of the Fund will
receive different compensation for selling Class A, Class B, Class C and Class Z
shares and will generally receive more compensation initially for selling Class
A and Class B shares than for selling Class C or Class Z shares.
IN SELECTING A PURCHASE ALTERNATIVE, YOU SHOULD CONSIDER, AMONG OTHER THINGS,
(1) the length of time you expect to hold your investment, (2) the amount of any
applicable sales charge (whether imposed at the time of purchase or redemption)
and distribution-related fees, as noted above, (3) whether you qualify for any
reduction or waiver of any applicable sales charge, (4) the various exchange
privileges among the different classes of shares (see "How to Exchange Your
Shares" below) and (5) the fact that Class B shares automatically convert to
Class A shares approximately seven years after purchase (see "Conversion
Feature--Class B Shares" below).
The following is provided to assist you in determining which method of
purchase best suits your individual circumstances and is based on current fees
and expenses being charged to the Fund.
21
<PAGE>
If you intend to hold your investment in the Fund for less than 7 years and do
not qualify for a reduced sales charge on Class A shares, since Class A shares
are subject to an initial sales charge of 5% and Class B shares are subject to a
CDSC of 5% which declines to zero over a 6-year period, you should consider
purchasing Class C shares over either Class A or Class B shares.
If you intend to hold your investment for 7 years or more and do not qualify
for a reduced sales charge on Class A shares, since Class B shares convert to
Class A shares approximately 7 years after purchase and because all of your
money would be invested initially in the case of Class B shares, you should
consider purchasing Class A or Class B shares over Class C shares.
If you qualify for a reduced sales charge on Class A shares, it may be more
advantageous for you to purchase Class A shares over either Class B or Class C
shares regardless of how long you intend to hold your investment. However,
unlike Class B and Class C shares, you would not have all of your money invested
initially because the sales charge on Class A shares is deducted at the time of
purchase.
If you do not qualify for a reduced sales charge on Class A shares and you
purchase Class B or Class C shares, you would have to hold your investment for
more than 6 years in the case of Class B shares and Class C shares for the
higher cumulative annual distribution-related fee on those shares to exceed the
initial sales charge plus cumulative annual distribution-related fees on Class A
shares. This does not take into account the time value of money, which further
reduces the impact of the higher Class B or Class C distribution-related fee on
the investment, fluctuations in net asset value, the effect of the return on the
investment over this period of time or redemptions when the CDSC is applicable.
ALL PURCHASES OF $1 MILLION OR MORE, EITHER AS PART OF A SINGLE INVESTMENT OR
UNDER RIGHTS OF ACCUMULATION OR LETTERS OF INTENT, MUST BE FOR CLASS A SHARES
UNLESS THE PURCHASER IS ELIGIBLE TO PURCHASE CLASS Z SHARES. SEE "REDUCTION AND
WAIVER OF INITIAL SALES CHARGES" AND "CLASS Z SHARES" BELOW.
CLASS A SHARES
The offering price of Class A shares for investors choosing the initial sales
charge alternative is the next determined NAV plus a sales charge (expressed as
a percentage of the offering price and of the amount invested) as shown in the
following table:
<TABLE>
<CAPTION>
DEALER
SALES CONCESSION
CHARGE AS SALES AS
PERCENTAGE CHARGE AS PERCENTAGE
OF PERCENTAGE OF
OFFERING OF AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
- ------------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Less than $25,000 5.00% 5.26% 4.75%
$25,000 to $49,999 4.50 4.71 4.25
$50,000 to $99,999 4.00 4.17 3.75
$100,000 to $249,999 3.25 3.36 3.00
$250,000 to $499,999 2.50 2.56 2.40
$500,000 to $999,999 2.00 2.04 1.90
$1,000,000 and above None None None
</TABLE>
The Distributor may reallow the entire initial sales charge to dealers.
Selling dealers may be deemed to be underwriters, as that term is defined in the
Securities Act of 1933.
In connection with the sale of the Class A shares at NAV (without payment of
an initial sales charge), the Manager, the Distributor or one of their
affiliates will pay dealers, financial advisers and other persons who distribute
shares a finders' fee based on a percentage of the net asset value of shares
sold by such persons. See "Reduction and Waiver of Initial Sales Charges" below.
REDUCTION AND WAIVER OF INITIAL SALES CHARGES. Reduced sales charges are
available through Rights of Accumulation and Letters of Intent. Shares of the
Fund and shares of other Prudential Mutual Funds (excluding money market funds
other than those
22
<PAGE>
acquired pursuant to the exchange privilege) may be aggregated to determine the
applicable reduction. See "Purchase and Redemption of Fund Shares--Reduction and
Waiver of Initial Sales Charges--Class A Shares" in the Statement of Additional
Information.
BENEFIT PLANS. Class A shares may be purchased at NAV, without payment of an
initial sales charge, by pension, profit-sharing or other employee benefit plans
qualified under Section 401 of the Internal Revenue Code and deferred
compensation and annuity plans under Sections 457 or 403(b)(7) of the Internal
Revenue Code (Benefit Plans), provided that the plan has existing assets of at
least $1 million invested in shares of Prudential Mutual Funds (excluding money
market funds other than those acquired pursuant to the exchange privilege) or
250 eligible employees or participants. In the case of Benefit Plans whose
accounts are held directly with the Transfer Agent or Prudential Securities and
for which the Transfer Agent or Prudential Securities does individual account
recordkeeping (Direct Account Benefit Plans) and Benefit Plans sponsored by PSI
or its subsidiaries (PSI or Subsidiary Prototype Benefit Plans), Class A shares
may be purchased at NAV by participants who are repaying loans made from such
plans to the participant.
PRUARRAY AND SMARTPATH PLANS. Class A shares may be purchased at NAV by
certain retirement and deferred compensation plans, qualified or non-qualified
under the Internal Revenue Code, including pension, profit-sharing, stock-bonus
or other employee benefit plans under Section 401 of the Internal Revenue Code
and deferred compensation and annuity plans under Sections 457 or 403(b)(7) of
the Internal Revenue Code that participate in the Prudential's PruArray and
SmartPath Programs (benefit plan recordkeeping services) (hereafter referred to
as a PruArray or SmartPath Plan); provided that the plan has at least $1 million
in existing assets or 250 eligible employees or participants. The term "existing
assets" for this purpose includes stock issued by a PruArray or SmartPath Plan
sponsor, shares of non-money market Prudential Mutual Funds and shares of
certain unaffiliated non-money market mutual funds that participate in the
PruArray or SmartPath Program (Participating Funds). "Existing assets" also
include shares of money market funds acquired by exchange from a Participating
Fund.
SPECIAL RULES APPLICABLE TO RETIREMENT PLANS. After a Benefit Plan or
PruArray or SmartPath Plan qualifies to purchase Class A shares at NAV, all
subsequent purchases will be made at NAV.
OTHER WAIVERS. In addition, Class A shares may be purchased at NAV, through
Prudential Securities or the Transfer Agent, by the following persons: (a)
officers and current and former Directors/Trustees of the Prudential Mutual
Funds (including the Fund), (b) employees of Prudential Securities and PMF and
their subsidiaries and members of the families of such persons who maintain an
"employee related" account at Prudential Securities or the Transfer Agent, (c)
employees and special agents of Prudential and its subsidiaries and all persons
who have retired directly from active service with Prudential or one of its
subsidiaries, (d) registered representatives and employees of dealers who have
entered into a selected dealer agreement with Prudential Securities provided
that purchases at NAV are permitted by such person's employer and (e) investors
who have a business relationship with a financial adviser who joined Prudential
Securities from another investment firm, provided that (i) the purchase is made
within 180 days of the commencement of the financial adviser's employment at
Prudential Securities, or within one year in the case of benefit plans, (ii) the
purchase is made with proceeds of a redemption of shares of any open-end fund
sponsored by the financial adviser's previous employer (other than a money
market fund or other no-load fund which imposes a distribution or service fee of
.25 of 1% or less) and (iii) the financial adviser served as the client's broker
on the previous purchase.
You must notify the Transfer Agent either directly or through Prudential
Securities or Prusec that you are entitled to the reduction or waiver of the
sales charge. The reduction or waiver will be granted subject to confirmation of
your entitlement. No initial sales charges are imposed upon Class A shares
purchased upon the reinvestment of dividends and distributions. See "Purchase
and Redemption of Fund Shares--Reduction and Waiver of Initial Sales
Charges--Class A Shares" in the Statement of Additional Information.
CLASS B AND CLASS C SHARES
The offering price of Class B and Class C shares for investors choosing one of
the deferred sales charge alternatives is the NAV next determined following
receipt of an order by the Transfer Agent, Prudential Securities or Prusec.
Although there is no sales
23
<PAGE>
charge imposed at the time of purchase, redemption of Class B and Class C shares
may be subject to a CDSC. See "How to Sell Your Shares--Contingent Deferred
Sales Charges." The Distributor will pay sales commissions of up to 4% of the
purchase price of Class B shares to dealers, financial advisers and other
persons who sell Class B shares at the time of sale from its own resources. This
facilitates the ability of the Fund to sell the Class B shares without an
initial sales charge being deducted at the time of purchase. The Distributor
anticipates that it will recoup its advancement of sales commissions from the
combination of the CDSC and the distribution fee. See "How the Fund is
Managed--Distributor." In connection with the sale of Class C shares, the
Distributor will pay dealers, financial advisers and other persons which
distribute Class C shares a sales commission of up to 1% of the purchase price
at the time of the sale.
CLASS Z SHARES
Class Z shares are available for purchase by (i) pension, profit sharing or
other employee benefit plans qualified under Section 401 of the Internal Revenue
Code, deferred compensation and annuity plans under Sections 457 and 403(b)(7)
of the Internal Revenue Code, and non-qualified plans for which the Fund is an
available option (Benefit Plans), provided such plans (in combination with other
plans sponsored by the same employer or group of related employers) have at
least $50 million in defined contribution assets, (ii) participants in any
fee-based program sponsored by Prudential Securities which includes mutual funds
as investment options and for which the Fund is an available option and (iii)
investors who are, or who have executed a letter of intent to become,
shareholders of any series of The Prudential Institutional Fund (Institutional
Fund) on or before one or more series of Institutional Fund reorganize, or who
on that date have investments in certain products for which Institutional Fund
provides exchangeability. After a Benefit Plan qualifies to purchase Class Z
shares, all subsequent purchases will be for Class Z shares.
In connection with the sale of Class Z Shares, the Manager, Distributor or one
of their affiliates may pay dealers, financial advisers and other persons who
distribute shares a finders' fee based on a percentage of the net asset value of
shares distributed by such persons.
HOW TO SELL YOUR SHARES
YOU CAN REDEEM SHARES OF THE FUND AT ANY TIME FOR CASH AT THE NAV PER SHARE
NEXT DETERMINED AFTER THE REDEMPTION REQUEST IS RECEIVED IN PROPER FORM BY THE
TRANSFER AGENT OR PRUDENTIAL SECURITIES. SEE "HOW THE FUND VALUES ITS SHARES."
In certain cases, however, redemption proceeds will be reduced by the amount of
any applicable contingent deferred sales charge, as described below. See
"Contingent Deferred Sales Charges."
IF YOU HOLD SHARES OF THE FUND THROUGH PRUDENTIAL SECURITIES, YOU MUST REDEEM
YOUR SHARES BY CONTACTING YOUR PRUDENTIAL SECURITIES FINANCIAL ADVISER. IF YOU
HOLD SHARES IN NON-CERTIFICATE FORM, A WRITTEN REQUEST FOR REDEMPTION SIGNED BY
YOU EXACTLY AS THE ACCOUNT IS REGISTERED IS REQUIRED. IF YOU HOLD CERTIFICATES,
THE CERTIFICATES SIGNED IN THE NAMES(S) SHOWN ON THE FACE OF THE CERTIFICATES,
MUST BE RECEIVED BY THE TRANSFER AGENT IN ORDER FOR THE REDEMPTION REQUEST TO BE
PROCESSED. IF REDEMPTION IS REQUESTED BY A CORPORATION, PARTNERSHIP, TRUST OR
FIDUCIARY, WRITTEN EVIDENCE OF AUTHORITY ACCEPTABLE TO THE TRANSFER AGENT MUST
BE SUBMITTED BEFORE SUCH REQUEST WILL BE ACCEPTED. All correspondence and
documents concerning redemptions should be sent to the Fund in care of its
Transfer Agent, Prudential Mutual Fund Services, Inc., Attention: Redemption
Services, P.O. Box 15010, New Brunswick, New Jersey 08906-5010.
If the proceeds of the redemption (a) exceed $50,000, (b) are to be paid to a
person other than the record owner, (c) are to be sent to an address other than
the address on the Transfer Agent's records, or (d) are to be paid to a
corporation, partnership, trust or fiduciary, the signature(s) on the redemption
request and on the certificates, if any, or stock power must be guaranteed by an
"eligible guarantor institution." An "eligible guarantor institution" includes
any bank, broker, dealer or credit union. The Transfer Agent reserves the right
to request additional information from, and make reasonable inquiries of, any
eligible guarantor institution. For clients of Prusec, a signature guarantee may
be obtained from the agency or office manager of most Prudential Insurance and
Financial Services or Prudential Preferred Financial Services offices.
24
<PAGE>
PAYMENT FOR SHARES PRESENTED FOR REDEMPTION WILL BE MADE BY CHECK WITHIN SEVEN
DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE CERTIFICATE AND/OR WRITTEN
REQUEST EXCEPT AS INDICATED BELOW. Such payment may be postponed or the right of
redemption suspended at times (a) when the New York Stock Exchange is closed for
other than customary weekends and holidays, (b) when trading on such Exchange is
restricted, (c) when an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets, or (d) during any other period when the SEC, by order, so permits;
provided that applicable rules and regulations of the SEC shall govern as to
whether the conditions prescribed in (b), (c) or (d) exist.
PAYMENT FOR REDEMPTION OF RECENTLY PURCHASED SHARES WILL BE DELAYED UNTIL THE
FUND OR ITS TRANSFER AGENT HAS BEEN ADVISED THAT THE PURCHASE CHECK HAS BEEN
HONORED, UP TO 10 CALENDAR DAYS FROM THE TIME OF RECEIPT OF THE PURCHASE CHECK
BY THE TRANSFER AGENT. SUCH DELAY MAY BE AVOIDED BY PURCHASING SHARES BY WIRE OR
BY CERTIFIED OR OFFICIAL BANK CHECK.
REDEMPTION IN KIND. If the Board of Directors determines that it would be
detrimental to the best interests of the remaining shareholders of the Fund to
make payment wholly or partly in cash, the Fund may pay the redemption price in
whole or in part by a distribution in kind of securities from the investment
portfolio of the Fund, in lieu of cash, in conformity with applicable rules of
the SEC. Securities will be readily marketable and will be valued in the same
manner as a regular redemption. See "How the Fund Values its Shares." If your
shares are redeemed in kind, you would incur transaction costs in converting the
assets into cash. The Fund has, however, elected to be governed by Rule 18f-1
under the Investment Company Act, under which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net asset value
of the Fund during the 90-day period for any one shareholder.
INVOLUNTARY REDEMPTION. In order to reduce expenses of the Fund, the Board of
Directors may redeem all of the shares of any shareholder, other than a
shareholder which is an IRA or other tax-deferred retirement plan, whose account
has a net asset value of less than $500 due to a redemption. The Fund will give
any such shareholder 60 days' prior written notice in which to purchase
sufficient additional shares to avoid such redemption. No contingent deferred
sales charge will be imposed on any such involuntary redemption.
90-DAY REPURCHASE PRIVILEGE. If you redeem your shares and have not previously
exercised the repurchase privilege, you may reinvest any portion or all of the
proceeds of such redemption in shares of the Fund at the NAV next determined
after the order is received, which must be within 90 days after the date of
redemption. Any CDSC paid in connection with such redemption will be credited
(in shares) to your account. (If less than a full repurchase is made, the credit
will be on a PRO RATA basis.) You must notify the Fund's Transfer Agent, either
directly or through Prudential Securities, at the time the repurchase privilege
is exercised to adjust your account for the CDSC you previously paid.
Thereafter, any redemptions will be subject to the CDSC applicable at the time
of the redemption. See "Contingent Deferred Sales Charges" below. Exercise of
the repurchase privilege will generally not affect the federal tax treatment of
any gain realized upon redemption. However, if the redemption was made within a
30 day period of the repurchase and if the redemption resulted in a loss, some
or all of the loss, depending on the amount reinvested, may not be allowed for
federal income tax purposes.
CONTINGENT DEFERRED SALES CHARGES
Redemptions of Class B shares will be subject to a contingent deferred sales
charge (CDSC) declining to zero from 5% over a six-year period. Class C shares
redeemed within one year of purchase will be subject to a 1% CDSC. The CDSC will
be deducted from the redemption proceeds and reduce the amount paid to you. The
CDSC will be imposed on any redemption by you which reduces the current value of
your Class B or Class C shares to an amount which is lower than the amount of
all payments by you for shares during the preceding six years, in the case of
Class B shares, and one year, in the case of Class C shares. A CDSC will be
applied on the lesser of the original purchase price or the current value of the
shares being redeemed. Increases in the value of
25
<PAGE>
your shares or shares purchased through reinvestment of dividends or
distributions are not subject to CDSC. The amount of any contingent deferred
sales charge will be paid to and retained by the Distributor. See "How the Fund
is Managed--Distributor" and "Waiver of the Contingent Deferred Sales Charges"
below.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of your shares until the time of
redemption of such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchase of shares, all payments
during a month will be aggregated and deemed to have been made on the last day
of the month.
The following table sets forth the rates of the CDSC applicable to redemptions
of Class B shares:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE
YEAR SINCE PURCHASE OF DOLLARS INVESTED OR
PAYMENT MADE REDEMPTION PROCEEDS
------------------------------- -------------------------
<S> <C>
First.......................... 5.0%
Second......................... 4.0%
Third.......................... 3.0%
Fourth......................... 2.0%
Fifth.......................... 1.0%
Sixth.......................... 1.0%
Seventh........................ None
</TABLE>
In determining whether a CDSC is applicable to a redemption, the calculation
will be made in a manner that results generally in the lowest possible rate. It
will be assumed that the redemption is made first of amounts representing shares
acquired pursuant to the reinvestment of dividends and distributions; then of
amounts representing the increase in net asset value above the total amount of
payments for the purchase of Fund shares made during the preceding six years;
then of amounts representing the cost of shares held beyond the applicable CDSC
period; and finally, of amounts representing the cost of shares held for the
longest period of time within the applicable CDSC period.
For example, assume you purchased 100 Class B shares at $10 per share for a
cost of $1,000. Subsequently, you acquired 5 additional Class B shares through
dividend reinvestment. During the second year after the purchase, you decided to
redeem $500 of your investment. Assuming at the time of the redemption the NAV
had appreciated to $12 per share, the value of your Class B shares would be
$1,260 (105 shares at $12 per share). The CDSC would not be applied to the value
of the reinvested dividend shares and the amount which represents appreciation
($260). Therefore, $240 of the $500 redemption proceeds ($500 minus $260) would
be charged at a rate of 4% (the applicable rate in the second year after
purchase) for a total CDSC of $9.60.
For federal income tax purposes, the amount of the CDSC will reduce the gain
or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.
WAIVER OF CONTINGENT DEFERRED SALES CHARGES--CLASS B SHARES. The CDSC will be
waived in the case of a redemption following the death or disability of a
shareholder or, in the case of a trust account, following the death or
disability of the grantor. The waiver is available for total or partial
redemptions of shares owned by a person, either individually or in joint tenancy
(with rights of survivorship), or a trust, at the time of death or initial
determination or disability, provided that the shares were purchased prior to
death or disability.
The CDSC will also be waived in the case of a total or partial redemption in
connection with certain distributions made without penalty under the Internal
Revenue Code from a tax-deferred retirement plan, an IRA or Section 403(b)
custodial account. These distributions include: (i) in the case of a
tax-deferred retirement plan, a lump-sum or other distribution after retirement;
(ii) in the case of an IRA or Section 403(b) custodial account, a lump-sum or
other distribution after attaining age 59 1/2; and (iii) a tax-free return of an
excess contribution or plan distributions following the death or disability of
the shareholder, provided that the shares
26
<PAGE>
were purchased prior to death or disability. The waiver does not apply in the
case of a tax-free rollover or transfer of assets, other than one following a
separation from service, I.E., following voluntary or involuntary termination of
employment or following retirement. Under no circumstances will the CDSC be
waived on redemptions resulting from the termination of a tax-deferred
retirement plan unless such redemptions otherwise qualify as a waiver as
described above. In the case of Direct Account and PSI or Subsidiary Prototype
Benefit Plans, the CDSC will be waived on redemptions which represent borrowings
from such plans. Shares purchased with amounts used to repay a loan from such
plans on which a CDSC was not previously deducted will thereafter be subject to
a CDSC without regard to the time such amounts were previously invested. In the
case of a 401(k) plan, the CDSC will also be waived upon the redemption of
shares purchased with amounts used to repay loans made from the account to the
participant and from which a CDSC was previously deducted.
In addition, the CDSC will be waived on redemptions of shares held by a
Director of the Fund.
You must notify the Transfer Agent either directly or through Prudential
Securities or Prusec, at the time of redemption, that you are entitled to waiver
of the CDSC. The waiver will be granted subject to confirmation of your
entitlement.
CONVERSION FEATURE--CLASS B SHARES
Class B shares will automatically convert to Class A shares on a quarterly
basis approximately seven years after purchase. Conversions will be effected at
relative net asset value without the imposition of any additional sales charge.
Since the Fund tracks amounts paid rather than the number of shares bought on
each purchase of Class B shares, the number of Class B shares eligible to
convert to Class A shares (excluding shares acquired through the automatic
reinvestment of dividends and other distributions) (the Eligible Shares) will be
determined on each conversion date in accordance with the following formula: (i)
the ratio of (a) the amounts paid for Class B shares purchased at least seven
years prior to the conversion date to (b) the total amount paid for all Class B
shares purchased and then held in your account (ii) multiplied by the total
number of Class B shares then in your account. Each time any Eligible Shares in
your account convert to Class A shares, all shares or amounts representing Class
B shares then in your account that were acquired through the automatic
reinvestment of dividends and other distributions will convert to Class A
shares.
For purposes of determining the number of Eligible Shares, if the Class B
shares in your account on any conversion date are the result of multiple
purchases at different net asset values per share, the number of Eligible Shares
calculated as described above will generally be either more or less than the
number of shares actually purchased approximately seven years before such
conversion date. For example, if 100 shares were initially purchased at $10 per
share (for a total of $1,000) and a second purchase of 100 shares was
subsequently made at $11 per share (for a total of $1,100), 95.24 shares would
convert approximately seven years from the initial purchase (I.E., $1,000
divided by $2,100 or 47.62% multiplied by 200 shares or 95.24 shares). The
Manager reserves the right to modify the formula for determining the number of
Eligible Shares in the future as it deems appropriate on notice to shareholders.
Since annual distribution-related fees are lower for Class A shares than Class
B shares, the per share net asset value of the Class A shares may be higher than
that of the Class B shares at the time of conversion. Thus, although the
aggregate dollar value will be the same, you may receive fewer Class A shares
than Class B shares converted. See "How the Fund Values its Shares."
For purposes of calculating the applicable holding period for conversions, all
payments for Class B shares during a month will be deemed to have been made on
the last day of the month, or for Class B shares acquired through exchange, or a
series of exchanges, on the last day of the month in which the original payment
for purchases of such Class B shares was made. For Class B shares previously
exchanged for shares of a money market fund, the time period during which such
shares were held in the money market fund will be excluded. For example, Class B
shares held in a money market fund for one year will not convert to Class A
shares until approximately eight years from purchase. For purposes of measuring
the time period during which shares are
27
<PAGE>
held in a money market fund, exchanges will be deemed to have been made on the
last day of the month. Class B shares acquired through exchange will convert to
Class A shares after expiration of the conversion period applicable to the
original purchase of such shares.
The conversion feature is subject to the continuing availability of opinions
of counsel or rulings of the Internal Revenue Service (i) that the dividends and
other distributions paid on Class A, Class B, Class C and Class Z shares will
not constitute "preferential dividends" under the Internal Revenue Code and (ii)
that the conversion of shares does not constitute a taxable event. The
conversion of Class B shares into Class A shares may be suspended if such
opinions or rulings are no longer available. If conversions are suspended, Class
B shares of the Fund will continue to be subject, possibly indefinitely, to
their higher annual distribution and service fee.
HOW TO EXCHANGE YOUR SHARES
AS A SHAREHOLDER OF THE FUND YOU HAVE AN EXCHANGE PRIVILEGE WITH CERTAIN OTHER
PRUDENTIAL MUTUAL FUNDS, INCLUDING ONE OR MORE SPECIFIED MONEY MARKET FUNDS,
SUBJECT TO THE MINIMUM INVESTMENT REQUIREMENTS OF SUCH FUNDS. CLASS A, CLASS B,
CLASS C AND CLASS Z SHARES MAY BE EXCHANGED FOR CLASS A, CLASS B, CLASS C AND
CLASS Z SHARES, RESPECTIVELY, OF ANOTHER FUND ON THE BASIS OF THE RELATIVE NAV.
No sales charge will be imposed at the time of exchange. Any applicable CDSC
payable upon the redemption of shares exchanged will be that imposed by the fund
in which shares are initially purchased and will be calculated from the first
day of the month after the initial purchase, excluding the time shares were held
in a money market fund. Class B and Class C shares may not be exchanged into
money market funds other than Prudential Special Money Market Fund. For purposes
of calculating the holding period applicable to the Class B conversion feature,
the time period during which Class B shares were held in a money market fund
will be excluded. See "Conversion Feature--Class B Shares." An exchange will be
treated as a redemption and purchase for tax purposes. See "Shareholder
Investment Account--Exchange Privilege" in the Statement of Additional
Information.
IN ORDER TO EXCHANGE SHARES BY TELEPHONE, YOU MUST AUTHORIZE TELEPHONE
EXCHANGES ON YOUR INITIAL APPLICATION FORM OR BY WRITTEN NOTICE TO THE TRANSFER
AGENT AND HOLD SHARES IN NON-CERTIFICATE FORM. Thereafter, you may call the Fund
at (800) 225-1852 to execute a telephone exchange of shares, on weekdays, except
holidays, between the hours of 8:00 A.M. and 6:00 P.M., New York time. For your
protection and to prevent fraudulent exchanges, your telephone call will be
recorded and you will be asked to provide your personal identification number. A
written confirmation of the exchange transaction will be sent to you. NEITHER
THE FUND NOR ITS AGENTS WILL BE LIABLE FOR ANY LOSS, LIABILITY OR COST WHICH
RESULTS FROM ACTING UPON INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE UNDER
THE FOREGOING PROCEDURES. (The Fund or its agents could be subject to liability
if they fail to employ reasonable procedures.) All exchanges will be made on the
basis of the relative NAV of the two funds next determined after the request is
received in good order. The exchange privilege is available only in states where
the exchange may legally be made.
IF YOU HOLD SHARES THROUGH PRUDENTIAL SECURITIES, YOU MUST EXCHANGE YOUR
SHARES BY CONTACTING YOUR PRUDENTIAL SECURITIES FINANCIAL ADVISER.
IF YOU HOLD CERTIFICATES, THE CERTIFICATES, SIGNED IN THE NAME(S) SHOWN ON THE
FACE OF THE CERTIFICATES, MUST BE RETURNED IN ORDER FOR THE SHARES TO BE
EXCHANGED. SEE "HOW TO SELL YOUR SHARES" ABOVE.
You may also exchange shares by mail by writing to Prudential Mutual Fund
Services, Inc., Attention: Exchange Processing, P.O. Box 15010, New Brunswick,
New Jersey 08906-5010.
IN PERIODS OF SEVERE MARKET OR ECONOMIC CONDITIONS THE TELEPHONE EXCHANGE OF
SHARES MAY BE DIFFICULT TO IMPLEMENT AND YOU SHOULD MAKE EXCHANGES BY MAIL BY
WRITING TO PRUDENTIAL MUTUAL FUND SERVICES, INC., AT THE ADDRESS NOTED ABOVE.
SPECIAL EXCHANGE PRIVILEGES. A special exchange privilege is available for
shareholders who qualify to purchase Class A shares at NAV (see "Alternative
Purchase Plan--Class A Shares--Reduction and Waiver of Initial Sales Charges")
and for
28
<PAGE>
shareholders who qualify to purchase Class Z shares (see "Alternative Purchase
Plan--Class Z Shares"). Under this exchange privilege, amounts representing any
Class B and Class C shares (which are not subject to a CDSC) held in such a
shareholder's account will be automatically exchanged for Class A shares for
shareholders who qualify to purchase Class A shares at NAV on a quarterly basis,
unless the shareholder elects otherwise. Similarly, shareholders who qualify to
purchase Class Z shares, will have their Class B and Class C shares which are
not subject to a CDSC and their Class A shares exchanged for Class Z shares on a
quarterly basis. Eligibility for this exchange privilege will be calculated on
the business day prior to the date of the exchange. Amounts representing Class B
or Class C shares which are not subject to a CDSC include the following: (1)
amounts representing Class B or Class C shares acquired pursuant to the
automatic reinvestment of dividends and distributions, (2) amounts representing
the increase in the net asset value above the total amount of payments for the
purchase of Class B or Class C shares and (3) amounts representing Class B or
Class C shares held beyond the applicable CDSC period. Class B and Class C
shareholders must notify the Transfer Agent either directly or through
Prudential Securities or Prusec that they are eligible for this special exchange
privilege.
Participants in any fee-based program for which the Fund is an available
option will have their Class A shares, if any, exchanged for Class Z shares when
they join the program. Upon leaving the program (whether voluntarily or not),
such Class Z shares (and, to the extent provided for in the program, Class Z
shares acquired through participation in the program) will be exchanged for
Class A shares at net asset value. Similarly, participants in PSI's 401(k) Plan
for which the Fund's Class Z shares is an available option and who wish to
transfer their Class Z shares out of the PSI 401(k) Plan following separation of
service (I.E., voluntary or involuntary termination of employment or retirement)
will have their Class Z shares exchanged for Class A shares at net asset value.
The Fund reserves the right to reject any exchange order including exchanges
(and market timing transactions) which are of size and/or frequency engaged in
by one or more accounts acting in concert or otherwise, that have or may have an
adverse effect on the ability of the Subadviser to manage the portfolio. The
determination that such exchanges or activity may have an adverse effect and the
determination to reject any exchange order shall be in the discretion of the
Manager and the Subadviser.
The exchange privilege is not a right and may be suspended, terminated or
modified on 60 days' notice to shareholders.
SHAREHOLDER SERVICES
In addition to the exchange privilege, as a shareholder in the Fund, you can
take advantage of the following additional services and privileges:
- AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR DISTRIBUTION WITHOUT A SALES
CHARGE. For your convenience, all dividends and distributions are automatically
reinvested in full and fractional shares of the Fund at NAV without a sales
charge. You may direct the Transfer Agent in writing not less than 5 full
business days prior to the record date to have subsequent dividends and/or
distributions sent in cash rather than reinvested. If you hold shares through
Prudential Securities, you should contact your financial adviser.
- AUTOMATIC SAVINGS ACCUMULATION PLAN (ASAP). Under ASAP you may make regular
purchases of the Fund's shares in amounts as little as $50 via an automatic
debit to a bank account or Prudential Securities account (including a Command
Account). For additional information about this service, you may contact your
Prudential Securities financial adviser, Prusec registered representative or the
Transfer Agent directly.
- TAX-DEFERRED RETIREMENT PLANS. Various tax-deferred retirement plans,
including a 401(k) plan, self-directed individual retirement accounts and
"tax-sheltered accounts" under Section 403(b)(7) of the Internal Revenue Code
are available through the Distributor. These plans are for use by both
self-employed individuals and corporate employers. These plans permit either
self-direction of accounts by participants, or a pooled account arrangement.
Information regarding the establishment of these plans,
29
<PAGE>
the administration, custodial fees and other details is available from
Prudential Securities or the Transfer Agent. If you are considering adopting
such a plan, you should consult with your own legal or tax adviser with respect
to the establishment and maintenance of such a plan.
- SYSTEMATIC WITHDRAWAL PLAN. A systematic withdrawal plan is available to
shareholders, which provides for monthly or quarterly checks. Withdrawals of
Class B and Class C shares may be subject to a CDSC. See "How to Sell Your
Shares-- Contingent Deferred Sales Charges." See also "Shareholder Investment
Account--Systematic Withdrawal Plan" in the Statement of Additional Information.
- REPORTS TO SHAREHOLDERS. The Fund will send you annual and semi-annual
reports. The financial statements appearing in annual reports are audited by
independent accountants. In order to reduce duplicate mailing and printing
expenses, the Fund will provide one annual and semi-annual shareholder report
and annual prospectus per household. You may request additional copies of such
reports by calling (800) 225-1852 (toll-free) or by writing to the Fund at
Gateway Center Three, Newark, New Jersey 07102. In addition, monthly unaudited
financial data are available upon request from the Fund.
- SHAREHOLDER INQUIRIES. Inquiries should be addressed to the Fund at Gateway
Center Three, Newark, New Jersey 07102, or by telephone, at (800) 225-1852
(toll-free) or, from outside the U.S.A. at (908) 417-7555 (collect).
For additional information regarding the services and privileges described
above, see "Shareholder Investment Account" in the Statement of Additional
Information.
30
<PAGE>
- --------------------------------------------------------------------------------
THE PRUDENTIAL MUTUAL FUND FAMILY
- --------------------------------------------------------------------------------
Prudential Mutual Fund Management offers a broad range of mutual funds
designed to meet your individual needs. We welcome you to review the investment
options available through our family of funds. For more information on the
Prudential Mutual Funds, including charges and expenses, contact your Prudential
Securities financial adviser or Prusec representative or telephone the Fund at
(800) 225-1852 for a free prospectus. Read the prospectus carefully before you
invest or send money.
- --------------------
TAXABLE BOND FUNDS
- ------------------------------------
Prudential Diversified Bond Fund, Inc.
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential Mortgage Income Fund, Inc.
Prudential Structured Maturity Fund, Inc.
Income Portfolio
The BlackRock Government Income Trust
- ------------------------
TAX-EXEMPT BOND FUNDS
- ------------------------------------
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Yield Series
Insured Series
Intermediate Series
Prudential Municipal Series Fund
Florida Series
Hawaii Income Series
Maryland Series
Massachusetts Series
Michigan Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
- ---------------
GLOBAL FUNDS
- ------------------------------------
Prudential Europe Growth Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Global Limited Maturity Fund, Inc.
Limited Maturity Portfolio
Prudential Intermediate Global Income Fund, Inc.
Prudential Natural Resources Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Series
International Stock Series
The Global Government Plus Fund, Inc.
The Global Total Return Fund, Inc.
Global Utility Fund, Inc.
- ---------------
EQUITY FUNDS
- ------------------------------------
Prudential Allocation Fund
Balanced Portfolio
Strategy Portfolio
Prudential Distressed Securities Fund, Inc.
Prudential Dryden Fund
Prudential Active Balanced Fund
Prudential Stock Index Fund
Prudential Emerging Growth Fund, Inc.
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
Prudential Jennison Series Fund, Inc.
Prudential Jennison Growth Fund
Prudential Jennison Growth & Income Fund
Prudential Multi-Sector Fund, Inc.
Prudential Small Companies Fund, Inc.
Prudential Utility Fund, Inc.
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
- ---------------------
MONEY MARKET FUNDS
- ------------------------------------
- -TAXABLE MONEY MARKET FUNDS
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund, Inc.
Money Market Series
Prudential MoneyMart Assets, Inc.
- -TAX-FREE MONEY MARKET FUNDS
Prudential Tax-Free Money Fund, Inc.
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
- -COMMAND FUNDS
Command Money Fund
Command Government Fund
Command Tax-Free Fund
- -INSTITUTIONAL MONEY MARKET FUNDS
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
A-1
<PAGE>
No dealer, sales representative or any other person has been authorized to give
any information or to make any representations, other than those contained in
this Prospectus, in connection with the offer contained herein, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Fund or the Distributor. This Prospectus does not
constitute an offer by the Fund or by the Distributor to sell or a solicitation
of any offer to buy any of the securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such offer in such jurisdiction.
-------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FUND HIGHLIGHTS........................................ 2
Risk Factors and Special Characteristics............. 2
FUND EXPENSES.......................................... 4
HOW THE FUND INVESTS................................... 5
Investment Objective and Policies.................... 5
Other Investments and Policies....................... 6
Risk Factors and Special Considerations of Investing
in Foreign Securities............................... 9
Hedging and Return Enhancement Strategies............ 9
Investment Restrictions.............................. 11
HOW THE FUND IS MANAGED................................ 12
Manager.............................................. 12
Distributor.......................................... 13
Fee Waivers and Subsidy.............................. 15
Portfolio Transactions............................... 15
Custodian and Transfer and Dividend Disbursing
Agent............................................... 15
HOW THE FUND VALUES ITS SHARES......................... 15
HOW THE FUND CALCULATES PERFORMANCE.................... 16
TAXES, DIVIDENDS AND DISTRIBUTIONS..................... 16
GENERAL INFORMATION.................................... 18
Description of Common Stock.......................... 18
Additional Information............................... 19
SHAREHOLDER GUIDE...................................... 19
How to Buy Shares of the Fund........................ 19
Alternative Purchase Plan............................ 21
How to Sell Your Shares.............................. 24
Conversion Feature--Class B Shares................... 27
How to Exchange Your Shares.......................... 28
Shareholder Services................................. 29
THE PRUDENTIAL MUTUAL FUND FAMILY...................... A-1
</TABLE>
- -------------------------------------------
MF173A 42M2575
Class A: 744 31 L 107
CUSIP Nos.: Class B: 744 31 L 206
Class C: 744 31 L 305
Class Z: 744 31 L 404
PROSPECTUS
NOVEMBER 18, 1996
PRUDENTIAL
EMERGING GROWTH FUND, INC.
- --------------------------------------
[LOGO]
<PAGE>
PRUDENTIAL EMERGING GROWTH FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 18, 1996
Prudential Emerging Growth Fund, Inc. (the Fund) is an open-end, diversified
management investment company. The investment objective of the Fund is long-term
capital appreciation. The Fund seeks to achieve this objective by investing
primarily in equity securities of small and medium sized U.S. companies, ranging
from $500 million to $4.5 billion in market capitalization, with the potential
for above-average growth. The Fund may also invest in (i) equity securities of
other companies, including foreign issuers, (ii) investment grade debt
securities, including of foreign issuers, and (iii) obligations issued or
guaranteed by the U.S. Government, its agencies and instrumentalities. The Fund
may engage in various derivative securities transactions, such as options on
stocks, stock indices and foreign currencies, foreign currency exchange
contracts and futures contracts on stock indices and options thereon to hedge
its portfolio and to attempt to enhance return. There can be no assurance that
the Fund's investment objective will be achieved. See "Investment Objective and
Policies."
The Fund's address is Gateway Center Three, Newark, New Jersey 07102, and
its telephone number is (800) 225-1852.
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus of Prudential Emerging Growth Fund dated
November 18, 1996, copies of which may be obtained from the Fund upon request.
TABLE OF CONTENTS
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CROSS-REFERENCE
TO PAGE IN THE
PAGE PROSPECTUS
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<S> <C> <C>
Investment Objective and Policies..................... B-2 5
Investment Restrictions............................... B-13 11
Directors and Officers................................ B-15 --
Manager............................................... B-17 12
Distributor........................................... B-19 13
Portfolio Transactions and Brokerage.................. B-21 15
Purchase and Redemption of Fund Shares................ B-22 19
Shareholder Investment Account........................ B-24 19
Net Asset Value....................................... B-28 15
Taxes................................................. B-28 16
Performance Information............................... B-31 16
Custodian, Transfer and Dividend Disbursing Agent and
Independent Accountants.............................. B-32 15
Report of Independent Accountants..................... B-33 --
Statement of Assets and Liabilities................... B-34 --
Appendix--Historical Performance Data................. A-1 --
Appendix--General Investment Information.............. A-6 --
Appendix--Information Relating to The Prudential...... A-7 --
</TABLE>
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MF168B
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INVESTMENT OBJECTIVES AND POLICIES
Prudential Emerging Growth Fund, Inc. (the Fund) is an open-end, diversified
management investment company. The investment objective of the Fund is long-term
capital appreciation. Under normal market conditions, the Fund intends to invest
primarily in equity securities of small and medium sized U.S. companies, ranging
from $500 million to $4.5 billion in market capitalization, with the potential
for above-average growth. The Fund may also invest in (i) equity securities of
other companies including foreign issuers, (ii) investment grade debt
securities, including of foreign issuers, and (iii) obligations issued or
guaranteed by the U.S. Government, its agencies and instrumentalities. The Fund
may engage in various derivative securities transactions, such as options on
stocks, stock indices and foreign currencies, foreign currency exchange
contracts and the purchase and sale of futures contracts on stock indices and
options thereon to hedge its portfolio and to attempt to enhance return. See
"How the Fund Invests--Investment Objective and Policies" in the Prospectus.
There can be no assurance that the Fund's investment objective will be achieved.
U.S. GOVERNMENT SECURITIES
U.S. TREASURY SECURITIES. The Fund is permitted to invest in U.S. Treasury
securities, including bills, notes, bonds and other debt securities issued by
the U.S. Treasury. These instruments are direct obligations of the U.S.
Government and, as such, are backed by the "full faith and credit" of the United
States. They differ primarily in their interest rates, the lengths of their
maturities and the dates of their issuances.
SECURITIES ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES. The Fund may invest in securities issued by agencies of the
U.S. Government or instrumentalities of the U.S. Government. These obligations,
including those which are guaranteed by Federal agencies or instrumentalities,
may or may not be backed by the full faith and credit of the United States.
Obligations of the Government National Mortgage Association (GNMA), the Farmers
Home Administration and the Small Business Administration are backed by the full
faith and credit of the United States. In the case of securities not backed by
the full faith and credit of the United States, the Fund must look principally
to the agency issuing or guaranteeing the obligation for ultimate repayment and
may not be able to assert a claim against the United States if the agency or
instrumentality does not meet its commitments. Securities in which the Fund may
invest which are not backed by the full faith and credit of the United States
include obligations such as those issued by the Federal Home Loan Bank, the
Federal Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage
Association, the Student Loan Marketing Association, Resolution Funding
Corporation and the Tennessee Valley Authority, each of which has the right to
borrow from the U.S. Treasury to meet its obligations, and obligations of the
Farm Credit System, the obligations of which may be satisfied only by the
individual credit of the issuing agency. FHLMC investments may include
collateralized mortgage obligations.
Obligations issued or guaranteed as to principal and interest by the United
States Government may be acquired by the Fund in the form of custodial receipts
that evidence ownership of future interest payments, principal payments or both
on certain United States Treasury notes or bonds. Such notes and bonds are held
in custody by a bank on behalf of the owners. These custodial receipts are
commonly referred to as Treasury strips.
MORTGAGE-RELATED SECURITIES ISSUED BY U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES. The Fund may invest in mortgage-backed securities, including
those which represent undivided ownership interests in pools of mortgages. The
U.S. Government or the issuing agency or instrumentality guarantees the payment
of interest on and principal of these securities. However, the guarantees do not
extend to the yield or value of the securities nor do the guarantees extend to
the yield or value of the Fund's shares. These securities are in most cases
"pass-through" instruments, through which the holders receive a share of all
interest and principal payments from the mortgages underlying the securities,
net of certain fees. Because the prepayment characteristics of the underlying
mortgages vary, it is not possible to predict accurately the average life of a
particular issue of pass-through certificates. Mortgage-backed securities are
often subject to more rapid repayment than their maturity date would indicate as
a result of the pass-through of prepayments of principal on the underlying
mortgage obligations. During periods of declining interest rates, prepayment of
mortgages underlying mortgage-backed securities can be expected to accelerate.
The Fund's ability to invest in high-yielding mortgage-backed securities will be
adversely affected to the extent that prepayments of mortgages must be
reinvested in securities which have lower yields than the prepaid mortgages.
Moreover, prepayments of mortgages which underlie securities purchased at a
premium could result in capital losses.
The Fund may purchase collateralized mortgage obligations (CMO) issued by
agencies or instrumentalities of the U.S. Government. A CMO is backed by a
portfolio of mortgages or mortgage-backed securities. The issuer's obligation to
make
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interest and principal payments is secured by the underlying portfolio of
mortgages or mortgage-backed securities. The issuer of a series of CMOs may
elect to be treated as a Real Estate Mortgage Investment Conduit (REMIC). All
future references to CMOs shall also be deemed to include REMICs.
In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMOs, often referred to as a "tranche," is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal prepayments on the underlying mortgage assets may cause the CMOs
to be retired substantially earlier than their stated maturities or final
distribution dates. Interest is paid or accrues on all classes of the CMOs on a
monthly, quarterly or semi-annual basis. The principal and interest on the
underlying mortgage assets may be allocated among the several classes of a CMO
series in a number of different ways. Generally, the purpose of the allocation
of the cash flow of a CMO to the various classes is to obtain a more predictable
cash flow to the individual tranches than exists with the underlying collateral
of the CMO. As a general rule, the more predictable the cash flow is on a CMO
tranche, the lower the anticipated yield will be on that tranche at the time of
issuance relative to prevailing market yields on mortgage-backed securities.
The Fund may also invest in mortgage-backed security strips (MBS strips)
issued by the U.S. Government or its agencies or instrumentalities. MBS strips
are usually structured with two classes that receive different proportions of
the interest and principal distributions on a pool of mortgage assets. A common
type of stripped mortgage security will have one class receiving some of the
interest and most of the principal from the mortgage assets, while the other
class will receive most of the interest and the remainder of the principal. In
the most extreme case, one class will receive all of the interest (the
interest-only or "IO" class), while the other class will receive all of the
principal (the principal-only or "PO" class). The yields to maturity on IOs and
POs are sensitive to the expected or anticipated rate of principal payments
(including prepayments) on the related underlying mortgage assets, and principal
payments may have a material effect on yield to maturity. If the underlying
mortgage assets experience greater than anticipated prepayments of principal,
the Fund may not fully recoup its initial investment in IOs. Conversely, if the
underlying mortgage assets experience less than anticipated prepayments of
principal, the yield on POs could be materially adversely affected.
In reliance on rules and interpretations of the Securities and Exchange
Commission (SEC), the Fund's investments in certain qualifying CMOs and REMICs
are not subject to the Investment Company Act's limitation on acquiring
interests in other investment companies.
The Fund may invest in both Adjustable Rate Mortgage Securities (ARMs),
which are pass-through mortgage securities collateralized by adjustable rate
mortgages, and Fixed-Rate Mortgage Securities (FRMs), which are collateralized
by fixed-rate mortgages.
The values of U.S. Government securities (like those of other fixed-income
securities generally) will change as interest rates fluctuate. During periods of
falling U.S. interest rates, the values of U.S. Government securities generally
rise and, conversely, during periods of rising interest rates, the values of
such securities generally decline. The magnitude of these fluctuations will
generally be greater for securities with longer-term maturities.
FOREIGN SECURITIES
The Fund is permitted to invest in foreign corporate and government
securities. "Foreign Government securities" include debt securities issued or
guaranteed, as to payment of principal and interest, by governments,
quasi-governmental entities, governmental agencies, supranational entities and
other governmental entities (collectively, Government Entities) of foreign
countries denominated in the currencies of such countries or in U.S. dollars
(including debt securities of a Government Entity in any such country
denominated in the currency of another such country).
A "supranational entity" is an entity constituted by the national
governments of several countries to promote economic development. Examples of
such supranational entities include, among others, the World Bank (International
Bank for Reconstruction and Development), the European Investment Bank and the
Asian Development Bank. Debt securities of "quasi-governmental entities" are
issued by entities owned by a national, state, or equivalent government or are
obligations of a political unit that are not backed by the national government's
"full faith and credit" and general taxing powers. Examples of quasi-government
issuers include, among others, the Province of Ontario and the City of
Stockholm. "Foreign government securities" shall also include debt securities of
Government Entities denominated in European Currency Units. A European Currency
Unit represents specified amounts of the currencies of certain of the member
states of the European Community.
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<PAGE>
If the security is denominated in a foreign currency, it will be affected by
changes in currency exchange rates and in exchange control regulations, and
costs will be incurred in connection with conversions between currencies. A
change in the value of any such currency against the U.S. dollar will result in
a corresponding change in the U.S. dollar value of the Fund's securities
denominated in that currency. Such changes also will affect the Fund's income
and distributions to shareholders. In addition, although the Fund will receive
income in such currencies, the Fund will be required to compute and distribute
its income in U.S. dollars. Therefore, if the exchange rate for any such
currency declines after the Fund's income has been accrued and translated into
U.S. dollars, the Fund could be required to liquidate portfolio securities to
make such distributions, particularly in instances in which the amount of income
the Fund is required to distribute is not immediately reduced by the decline in
such currency. Similarly, if an exchange rate declines between the time the Fund
incurs expenses in U.S. dollars and the time such expenses are paid, the amount
of such currency required to be converted into U.S. dollars in order to pay such
expenses in U.S. dollars will be greater than the equivalent amount in any such
currency of such expenses at the time they were incurred. The Fund may, but need
not, enter into forward foreign currency exchange contracts, options on foreign
currencies and futures contracts on foreign currencies and related options, for
hedging purposes, including: locking-in the U.S. dollar price of the purchase or
sale of securities denominated in a foreign currency; locking-in the U.S. dollar
equivalent of dividends to be paid on such securities which are held by the
Fund; and protecting the U.S. dollar value of such securities which are held by
the Fund.
OPTIONS ON SECURITIES
The Fund may purchase and write (i.e., sell) put and call options on
securities that are traded on U.S. or foreign securities exchanges or that are
traded in the over-the-counter markets. A call option is a short-term contract
pursuant to which the purchaser, in return for a premium paid, has the right to
buy the security underlying the option at a specified exercise price at any time
during the term of the option. The writer of the call option, who receives the
premium, has the obligation, upon exercise of the option, to deliver the
underlying security against payment of the exercise price. A put option is a
similar contract which gives the purchaser, in return for a premium, the right
to sell the underlying security at a specified price during the term of the
option. The writer of the put, who receives the premium, has the obligation to
buy the underlying security upon exercise at the exercise price. The Fund will
generally write put options when its investment adviser desires to invest in the
underlying security. The premium paid by the purchaser of an option will
reflect, among other things, the relationship of the exercise price to the
market price and volatility of the underlying security, the remaining term of
the option, supply and demand and interest rates.
A call option written by the Fund is "covered" if the Fund owns the security
underlying the option or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional cash
consideration held in a segregated account by its Custodian) upon conversion or
exchange of other securities held in its portfolio. A call option is also
covered if the Fund holds on a share-for-share basis a call on the same security
as the call written where the exercise price of the call held is equal to or
less than the exercise price of the call written; where the exercise price of
the call held is greater than the exercise price of the call written, the Fund
will maintain the difference in cash or liquid securities in a segregated
account with its Custodian. A put option written by the Fund is "covered" if the
Fund holds on a share-for-share basis a put on the same security as the put
written where the exercise price of the put held is equal to or greater than the
exercise price of the put written; otherwise the Fund will maintain cash or
liquid securities in a segregated account with its Custodian equivalent in value
to the exercise price of the option. "Liquid securities," as used in the Fund's
prospectus and statement of additional information include U.S. Government
securities, equity securities and investment-grade debt obligations.
If the writer of an option wishes to terminate the obligation, he or she may
effect a "closing purchase transaction." This is accomplished by buying an
option of the same series as the option previously written. The effect of the
purchase is that the writer's position will be canceled by the clearing
corporation. However, a writer may not effect a closing purchase transaction
after he or she had been notified of the exercise of an option. Similarly, an
investor who is the holder of an option may liquidate his or her position by
effecting a "closing sale transaction." This is accomplished by selling an
option of the same series as the option previously purchased. There is no
guarantee that either a closing purchase or a closing sale transaction can be
effected. To secure the obligation to deliver the underlying security in the
case of a call option, the writer of the option is generally required to pledge
for the benefit of the broker the underlying security or other assets in
accordance with the rules of the relevant exchange or clearinghouse, such as The
Options Clearing Corporation (OCC), an institution created to interpose itself
between buyers and sellers of options in the United States. Technically, the
clearinghouse assumes the other side of every purchase and sale transaction on
an exchange and, by doing so, guarantees the transaction.
The Fund will realize a profit from a closing transaction if the price of
the transaction is less than the premium received from writing the option or is
more than the premium paid to purchase the option; the Fund will realize a loss
from a closing transaction
B-4
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if the price of the transaction is more than the premium received from writing
the option or is less than the premium paid to purchase the option. Because
increases in the market price of a call option will generally reflect increases
in the market price of the underlying security, any loss resulting from the
repurchase of a call option may be offset in whole or in part if the Fund holds
the underlying security by appreciation of the underlying security owned by the
Fund.
The Fund may also purchase a "protective put," i.e., a put option acquired
for the purpose of protecting a portfolio security from a decline in market
value. In exchange for the premium paid for the put option, the Fund acquires
the right to sell the underlying security at the exercise price of the put
regardless of the extent to which the underlying security declines in value. The
loss to the Fund is limited to the premium paid for, and transaction costs in
connection with, the put plus the initial excess, if any, of the market price of
the underlying security over the exercise price. However, if the market price of
the security underlying the put rises, the profit the Fund realizes on the sale
of the security will be reduced by the premium paid for the put option less any
amount (net of transaction costs) for which the put may be sold. Similar
principles apply to the purchase of puts on stock indices, as described below.
OPTIONS ON SECURITIES INDICES. In addition to options on securities, the
Fund may also purchase and sell put and call options on securities indices
traded on U.S. or foreign securities exchanges or traded in the over-the-counter
markets. Options on securities indices are similar to options on securities
except that, rather than the right to take or make delivery of a security at a
specified price, an option on a securities index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the closing level of
the securities index upon which the option is based is greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
This amount of cash is equal to such difference between the closing price of the
index and the exercise price of the option expressed in dollars times a
specified multiple (the multiplier). The writer of the option is obligated, in
return for the premium received, to make delivery of this amount. All
settlements on options on indices are in cash, and gain or loss depends on price
movements in the securities market generally (or in a particular industry or
segment of the market) rather than price movements in individual securities.
The multiplier for an index option performs a function similar to the unit
of trading for a stock option. It determines the total dollar value per contract
of each point in the difference between the exercise price of an option and the
current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers. Because exercises of index options are settled in cash, a
call writer cannot determine the amount of its settlement obligations in advance
and, unlike call writing on specific stocks, cannot provide in advance for, or
cover, its potential settlement obligations by acquiring and holding the
underlying securities. In addition, unless the Fund has other liquid assets
which are sufficient to satisfy the exercise of a call, the Fund would be
required to liquidate portfolio securities or borrow in order to satisfy the
exercise.
Because the value of an index option depends upon movements in the level of
the index rather than the price of a particular security, whether the Fund will
realize a gain or loss on the purchase or sale of an option on an index depends
upon movements in the level of security prices in the market generally or in an
industry or market segment rather than movements in the price of a particular
security. Accordingly, successful use by the Fund of options on indices would be
subject to the investment adviser's ability to predict correctly movements in
the direction of the securities market generally or of a particular industry.
This requires different skills and techniques than predicting changes in the
price of individual stocks.
RISKS OF TRANSACTIONS IN OPTIONS
An option position may be closed out only on an exchange, board of trade or
other trading facility which provides a secondary market for an option of the
same series. Although the Fund will generally purchase or write only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular option, or at any particular time, and for some options no secondary
market on an exchange or otherwise may exist. In such event it might not be
possible to effect closing transactions in particular options, with the result
that the Fund would have to exercise its options in order to realize any profit
and would incur brokerage commissions upon the exercise of call options and upon
the subsequent disposition of underlying securities acquired through the
exercise of call options or upon the purchase of underlying securities for the
exercise of put options. If the Fund as a covered call option writer is unable
to effect a closing purchase transaction in a secondary market, it will not be
able to sell the underlying security until the option expires or it delivers the
underlying security upon exercise, and the Fund may lose money.
Reasons for the absence of a liquid secondary market on an exchange include
the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing
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transactions or both; (iii) trading halts, suspensions or other restrictions may
be imposed with respect to particular classes or series of options or underlying
securities; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or a clearing
corporation may not at all times be adequate to handle current trading volume;
or (vi) one or more exchanges could, for economic or other reasons, decide or be
compelled at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that exchange (or in the class or series of options) would cease to exist,
although outstanding options on that exchange that had been issued by a clearing
corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms. There is no assurance that higher
than anticipated trading activity or other unforeseen events might not, at
times, render certain of the facilities of any of the clearing corporations
inadequate, and thereby result in the institution by an exchange of special
procedures which may interfere with the timely execution of customers' orders.
The Fund intends to purchase and sell only those options which are cleared by
clearinghouses whose facilities are considered to be adequate to handle the
volume of options transactions.
RISKS OF OPTIONS ON INDICES
The Fund's purchase and sale of options on indices will be subject to risks
described above under "Risks of Transactions in Options." In addition, the
distinctive characteristics of options on indices create certain risks that are
not present with stock options.
Index prices may be distorted if trading of certain stocks included in the
index is interrupted. Trading in the index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
stocks included in the index. If this occurred, the Fund would not be able to
close out options which it had purchased or written and, if restrictions on
exercise were imposed, may be unable to exercise an option it holds, which could
result in substantial losses to the Fund. It is the policy of the Fund to
purchase or write options only on indices which include a number of stocks
sufficient to minimize the likelihood of a trading halt in the index.
The ability to establish and close out positions on such options will be
subject to the development and maintenance of a liquid secondary market. It is
not certain that this market will develop in all index option contracts. A Fund
will not purchase or sell any index option contract unless and until, in the
investment adviser's opinion, the market for such options has developed
sufficiently that the risk in connection with such transactions is not
substantially greater than the risk in connection with options on securities in
the index.
SPECIAL RISKS OF WRITING CALLS ON INDICES
Because exercises of index options are settled in cash, a call writer such
as the Fund cannot determine the amount of its settlement obligations in advance
and, unlike call writing on specific stocks, cannot provide in advance for, or
cover, its potential settlement obligations by acquiring and holding the
underlying securities. However, the Fund will write call options on indices only
under the circumstances described below under "Limitations on Purchase and Sale
of Stock Options, Options on Stock Indices and Foreign Currencies and Futures
Contracts and Related Options."
Price movements in the Fund's portfolio probably will not correlate
precisely with movements in the level of the index and, therefore, the Fund
bears the risk that the price of the securities held by the Fund may not
increase as much as the index. In such event, the Fund would bear a loss on the
call which is not completely offset by movements in the price of the Fund's
portfolio. It is also possible that the index may rise when the Fund's portfolio
of stocks does not rise. If this occurred, the Fund would experience a loss on
the call which is not offset by an increase in the value of its portfolio and
might also experience a loss in its portfolio. However, because the value of a
diversified portfolio will, over time, tend to move in the same direction as the
market, movements in the value of the Fund in the opposite direction as the
market would be likely to occur for only a short period or to a small degree.
Unless the Fund has other liquid assets which are sufficient to satisfy the
exercise of a call, the Fund would be required to liquidate portfolio securities
in order to satisfy the exercise. Because an exercise must be settled within
hours after receiving the notice of exercise, if the Fund fails to anticipate an
exercise, it may have to borrow from a bank (in amounts not exceeding 20% of
such Fund's total assets) pending settlement of the sale of securities in its
portfolio and would incur interest charges thereon.
When the Fund has written a call, there is also a risk that the market may
decline between the time the Fund has a call exercised against it, at a price
which is fixed as of the closing level of the index on the date of exercise, and
the time the Fund is
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able to sell stocks in its portfolio. As with stock options, the Fund will not
learn that an index option has been exercised until the day following the
exercise date but, unlike a call on stock where the Fund would be able to
deliver the underlying securities in settlement, the Fund may have to sell part
of its investment portfolio in order to make settlement in cash, and the price
of such investments might decline before they can be sold. This timing risk
makes certain strategies involving more than one option substantially more risky
with index options than with stock options. For example, even if an index call
which the Fund has written is "covered" by an index call held by the Fund with
the same strike price, the Fund will bear the risk that the level of the index
may decline between the close of trading on the date the exercise notice is
filed with the clearing corporation and the close of trading on the date the
Fund exercises the call it holds or the time the Fund sells the call which, in
either case, would occur no earlier than the day following the day the exercise
notice was filed.
If the Fund holds an index option and exercises it before final
determination of the closing index value for that day, it runs the risk that the
level of the underlying index may change before closing. If such a change causes
the exercised option to fall out-of-the-money, the Fund will be required to pay
the difference between the closing index value and the exercise price of the
option (times the applicable multiplier) to the assigned writer. Although the
Fund may be able to minimize this risk by withholding exercise instructions
until just before the daily cutoff time or by selling rather than exercising an
option when the index level is close to the exercise price, it may not be
possible to eliminate this risk entirely because the cutoff times for index
options may be earlier than those fixed for other types of options and may occur
before definitive closing index values are announced.
RISKS RELATED TO FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may enter into forward foreign currency exchange contracts to
protect the value of its assets against future changes in the level of currency
exchange rates. The Fund may enter into such contracts on a spot, I.E., cash,
basis at the rate then prevailing in the currency exchange market or on a
forward basis, by entering into a forward contract to purchase or sell currency.
A forward contract on foreign currency is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days agreed
upon by the parties from the date of the contract at a price set on the date of
the contract.
The Fund's dealings in forward contracts will be limited to hedging
involving either specific transactions or portfolio positions. Transaction
hedging is the purchase or sale of a forward contract with respect to specific
receivables or payables of the Fund generally arising in connection with the
purchase or sale of its portfolio securities and accruals of interest or
dividends receivable and Fund expenses. Position hedging is the sale of a
foreign currency with respect to portfolio security positions denominated or
quoted in that currency or in a different currency (cross hedge). Although there
are no limits on the number of forward contracts which the Fund may enter into,
the Fund may not position hedge (including cross hedges) with respect to a
particular currency for an amount greater than the aggregate market value
(determined at the time of making any sale of forward currency) of the
securities being hedged.
The Fund may enter into forward foreign currency exchange contracts in
several circumstances. When the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, or when the Fund
anticipates the receipt in a foreign currency of dividends or interest payments
on a security which it holds, the Fund may desire to "lock-in" the U.S. dollar
price of the security or the U.S. dollar equivalent of such dividend or interest
payment, as the case may be. By entering into a forward contract for a fixed
amount of dollars, for the purchase or sale of the amount of foreign currency
involved in the underlying transactions, the Fund may be able to protect itself
against a possible loss resulting from an adverse change in the relationship
between the U.S. dollar and the foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
Additionally, when the investment adviser believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, the Fund may enter into a forward contract for a fixed amount of
dollars, to sell the amount of foreign currency approximating the value of some
or all of the Fund's portfolio securities denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible since the future value of
securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the forward
contract is entered into and the date it matures. The projection of short-term
currency market movement is extremely difficult, and the successful execution of
a short-term hedging strategy is highly uncertain. If a Fund enters into a
hedging transaction as described above, the transaction will be "covered" by the
position being hedged, or the Fund's Custodian will place cash or liquid
securities into a segregated account of the Fund in an amount equal to
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the value of the Fund's total assets committed to the consummation of forward
foreign currency exchange contracts (less the value of the covering positions,
if any). If the value of the securities placed in the segregated account
declines, additional cash or securities will be placed in the account so that
the value of the account will, at all times, equal the amount of the Fund's net
commitments with respect to such contracts.
The Fund generally will not enter into a forward contract with a term of
greater than one year. At the maturity of a forward contract, the Fund may
either sell the portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate its contractual obligation to deliver
the foreign currency by purchasing an "offsetting" contract with the same
currency trader obligating it to purchase, on the same maturity date, the same
amount of the foreign currency.
It is impossible to forecast with absolute precision the market value of a
particular portfolio security at the expiration of the forward contract.
Accordingly, if a decision is made to sell the security and make delivery of the
foreign currency and if the market value of the security is less than the amount
of foreign currency that the Fund is obligated to deliver, then it would be
necessary for the Fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase).
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. Should forward contract prices decline
during the period between the Fund's entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Fund will realize a gain to the
extent that the price of the currency it has agreed to sell exceeds the price of
the currency it has agreed to purchase. Should forward contract prices increase,
the Fund will suffer a loss to the extent that the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
The Fund's dealing in forward foreign currency exchange contracts will
generally be limited to the transactions described above. Of course, the Fund is
not required to enter into such transactions with regard to its foreign
currency-denominated securities. It also should be recognized that this method
of protecting the value of the Fund's portfolio securities against a decline in
the value of a currency does not eliminate fluctuations in the underlying prices
of the securities which are unrelated to exchange rates. Additionally, although
such contracts tend to minimize the risk of loss due to a decline in the value
of the hedged currency, at the same time they tend to limit any potential gain
which might result should the value of such currency increase.
Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend physically to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. It will do so from time to time, and investors should
be aware of the costs of currency conversion. Although foreign exchange dealers
do not charge a fee for conversion, they do realize a profit based on the
difference (the spread) between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
FUTURES CONTRACTS
As a purchaser of a futures contract, the Fund incurs an obligation to take
delivery of a specified amount of the obligation underlying the futures contract
at a specified time in the future for a specified price. As a seller of a
futures contract, the Fund incurs an obligation to deliver the specified amount
of the underlying obligation at a specified time in return for an agreed upon
price. The Fund may purchase futures contracts on debt securities, including
U.S. Government securities, aggregates of debt securities, stock indices and
foreign currencies. The Fund may purchase futures contracts on stock indices and
foreign currencies.
The Fund will purchase or sell futures contracts for the purpose of hedging
its portfolio (or anticipated portfolio) securities against changes in
prevailing interest rates. If the investment adviser anticipates that interest
rates may rise and, concomitantly, the price of the Fund's portfolio securities
may fall, the Fund may sell a futures contract. If declining interest rates are
anticipated, the Fund may purchase a futures contract to protect against a
potential increase in the price of securities the Fund intends to purchase.
Subsequently, appropriate securities may be purchased by the Fund in an orderly
fashion; as securities are purchased, corresponding futures positions would be
terminated by offsetting sales of contracts. In addition, futures contracts will
be bought or sold in order to close out a short or long position in a
corresponding futures contract.
Although most futures contracts call for actual delivery or acceptance of
securities or cash, the contracts usually are closed out before the settlement
date without the making or taking of delivery. A futures contract sale is closed
out by effecting a futures contract purchase for the same aggregate amount of
the specific type of security and the same delivery date. If the sale price
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exceeds the offsetting purchase price, the seller would be paid the difference
and would realize a gain. If the offsetting purchase price exceeds the sale
price, the seller would pay the difference and would realize a loss. Similarly,
a futures contract purchase is closed out by effecting a futures contract sale
for the same aggregate amount of the specific type of security (or currency) and
the same delivery date. If the offsetting sale price exceeds the purchase price,
the purchaser would realize a gain, whereas if the purchase price exceeds the
offsetting sale price, the purchaser would realize a loss. There is no assurance
that the Fund will be able to enter into a closing transaction.
When the Fund enters into a futures contract it is initially required to
deposit with its Custodian, in a segregated account in the name of the broker
performing the transaction, an "initial margin" of cash or liquid securities
equal to approximately 2-3% of the contract amount. Initial margin requirements
are established by the Exchanges on which futures contracts trade and may, from
time to time, change. In addition, brokers may establish margin deposit
requirements in excess of those required by the Exchanges.
Initial margin in futures transactions is different from margin in
securities transactions in that initial margin does not involve the borrowing of
funds by a brokers' client but is, rather, a good faith deposit on a futures
contract which will be returned to the Fund upon the proper termination of the
futures contract. The margin deposits made are marked-to-market daily and the
Fund may be required to make subsequent deposits into the segregated account,
maintained at its Custodian for that purpose, of cash or liquid securities,
called "variation margin", in the name of the broker, which are reflective of
price fluctuations in the futures contract.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS
There are several risks in connection with the use of futures contracts as a
hedging device. In the case of futures contracts on securities indices, the
correlation between the price of the futures contract and the movements in the
index may not be perfect. Therefore, a correct forecast of market trends by the
investment adviser may still not result in a successful hedging transaction, and
the Fund may lose money.
Although the Fund will purchase or sell futures contracts only on exchanges
where there appears to be an adequate secondary market, there is no assurance
that a liquid secondary market on an exchange will exist for any particular
contract or at any particular time. Accordingly, there can be no assurance that
it will be possible, at any particular time, to close a futures position. In the
event the Fund could not close a futures position and the value of such position
declined, the Fund would be required to continue to make daily cash payments of
variation margin. Currently, index futures contracts are available on various
U.S. and foreign securities indices.
Successful use of futures contracts by the Fund is also subject to the
ability of the Fund's investment adviser to predict correctly movements in the
direction of markets and other factors affecting the securities market
generally. If the Fund has insufficient cash to meet daily variation margin
requirements, it may need to sell securities to meet such requirements. Such
sales of securities may be at a time when it is advantageous or disadvantageous
to do so.
The hours of trading of futures contracts may not conform to the hours
during which the Fund may trade the underlying securities. To the extent that
the futures markets close before the securities markets, significant price and
rate movements can take place in the securities markets that cannot be reflected
in the futures markets.
OPTIONS ON FUTURES CONTRACTS
An option on a futures contract gives the purchaser the right, but not the
obligation, to assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the option exercise period. The writer of the
option is required upon exercise to assume an offsetting futures position (a
short position if the option is a call and a long position if the option is a
put). Upon exercise of the option, the assumption of offsetting futures
positions by the writer and holder of the option will be accompanied by delivery
of the accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the option on the futures contract. With respect to stock
indices, options are traded on futures contracts for various U.S. and foreign
stock indices including the S&P 500 Stock Index and the NYSE Composite Index.
The holder or writer of an option may terminate its position by selling or
purchasing an option of the same series. There is no guarantee that such closing
transactions can be effected.
B-9
<PAGE>
LIMITATIONS ON PURCHASE AND SALE OF STOCK OPTIONS, OPTIONS ON STOCK INDICES AND
FOREIGN CURRENCIES AND FUTURES CONTRACTS AND RELATED OPTIONS
The Fund may write put and call options on stocks only if they are covered
as described above, and such options must remain covered so long as the Fund is
obligated as a writer. The Fund will write put options on stock indices and
foreign currencies only if there is segregated with the Fund's Custodian an
amount of cash or liquid securities equal to or greater than the aggregate
exercise price of the puts. The aggregate value of the securities underlying
call options and the obligations underlying put options (as of the date the
options are sold) will not exceed 25% of the Fund's net assets. In addition, the
Fund will not enter into futures contracts or related options if the aggregate
initial margin and premiums exceed 5% of the liquidation value of the Fund's
total assets, taking into account unrealized profits and losses on such
contracts, provided, however, that in the case of an option that is
in-the-money, the in-the-money amount may be excluded in computing such 5%. The
above restriction does not apply to the purchase or sale of futures contracts
and related options for bona fide hedging purposes, within the meaning of
regulations of the Commodity Futures Trading Commission. The Fund does not
intend to purchase options on equity securities or securities indices if the
aggregate premiums paid for such outstanding options would exceed 10% of the
Fund's total assets.
Except as described below, the Fund will write call options on indices only
if on such date it holds a portfolio of stocks at least equal to the value of
the index times the multiplier times the number of contracts. When the Fund
writes a call option on a broadly-based stock market index, the Fund will
segregate or put into escrow with its Custodian, or pledge to a broker as
collateral for the option, cash or liquid securities, or a portfolio of stocks
substantially replicating the movement of the index, in the judgment of the
Fund's investment adviser, with a market value at the time the option is written
of not less than 100% of the current index value times the multiplier times the
number of contracts.
If the Fund has written an option on an industry or market segment index, it
will segregate or put into escrow with its Custodian, or pledge to a broker as
collateral for the option, at least ten "qualified securities," all of which are
stocks of issuers in such industry or market segment, and that, in the judgment
of the investment adviser, substantially replicate the movement of the index
with a market value at the time the option is written of not less than 100% of
the current index value times the multiplier times the number of contracts. Such
stocks will include stocks which represent at least 50% of the weighting of the
industry or market segment index and will represent at least 50% of the Fund's
holdings in that industry or market segment. No individual security will
represent more than 15% of the amount so segregated, pledged or escrowed in the
case of broadly-based stock market index options or 25% of such amount in the
case of industry or market segment index options. If at the close of business on
any day the market value of such qualified securities so segregated, escrowed or
pledged falls below 100% of the current index value times the multiplier times
the number of contracts, the Fund will so segregate, escrow or pledge an amount
in cash or liquid securities equal in value to the difference. In addition, when
the Fund writes a call on an index which is in-the-money at the time the call is
written, the Fund will segregate with its Custodian or pledge to the broker as
collateral cash or liquid securities equal in value to the amount by which the
call is in-the-money times the multiplier times the number of contracts. Any
amount segregated pursuant to the foregoing sentence may be applied to the
Fund's obligation to segregate additional amounts in the event that the market
value of the qualified securities falls below 100% of the current index value
times the multiplier times the number of contracts. A "qualified security" is an
equity security which is listed on a national securities exchange or listed on
NASDAQ against which the Fund has not written a stock call option and which has
not been hedged by the Fund by the sale of stock index futures. However, if the
Fund holds a call on the same index as the call written where the exercise price
of the call held is equal to or less than the exercise price of the call written
or greater than the exercise price of the call written if the difference is
maintained by the Fund in cash or liquid securities in a segregated account with
its Custodian, it will not be subject to the requirements described in this
paragraph.
POSITION LIMITS. Transactions by the Fund in futures contracts and options
will be subject to limitations, if any, established by each of the exchanges,
boards of trade or other trading facilities (including NASDAQ) governing the
maximum number of options in each class which may be written or purchased by a
single investor or group of investors acting in concert, regardless of whether
the options are written on the same or different exchanges, boards of trade or
other trading facilities or are held or written in one or more accounts or
through one or more brokers. Thus, the number of futures contracts and options
which the
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Fund may write or purchase may be affected by the futures contracts and options
written or purchased by other investment advisory clients of the investment
adviser. An exchange, board of trade or other trading facility may order the
liquidations of positions found to be in excess of these limits, and it may
impose certain other sanctions.
DEFENSIVE STRATEGY AND SHORT-TERM INVESTMENTS
When conditions dictate a defensive strategy, the Fund may temporarily
invest without limit in money market instruments, including commercial paper of
corporations, certificates of deposit, bankers' acceptances and other
obligations of domestic and foreign banks, non-convertible debt securities
(corporate and government), obligations issued or guaranteed by the U.S.
Government, its agencies or its instrumentalities, repurchase agreements
(described more fully below) and cash (foreign currencies or United States
dollars). Such investments may be subject to certain risks, including future
political and economic developments, the possible imposition of withholding
taxes on interest income, the seizure or nationalization of foreign deposits and
foreign exchange controls or other restrictions. See "How the Fund Invests --
Other Investments and Policies" in the Prospectus.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
From time to time, in the ordinary course of business, the Fund may purchase
or sell securities on a when-issued or delayed delivery basis, that is, delivery
and payment can take place a month or more after the date of the transaction.
The Fund will make commitments for such when-issued transactions only with the
intention of actually acquiring the securities. The Fund's Custodian will
maintain, in a separate account of the Fund, cash or liquid securities having a
value equal to or greater than such commitments. If a Fund chooses to dispose of
the right to acquire a when-issued security prior to its acquisition, it could,
as with the disposition of any other portfolio security, incur a gain or loss
due to market fluctuations.
SHORT SALES AGAINST-THE-BOX
The Fund may make short sales of securities or maintain a short position,
provided that at all times when a short position is open the Fund owns an equal
amount of such securities or securities convertible into or exchangeable for,
without payment of any further consideration, an equal amount of the securities
of the same issuer as the securities sold short (a short sale against-the-box).
Short sales will be made primarily to defer realization of gain or loss for
federal tax purposes. As a non-fundamental investment restriction, not more than
25% of the Fund's net assets (determined at the time of the short sale) may be
subject to short sales other than short sales against-the-box. However, as a
matter of current operating policy, the Fund does not intend to engage in short
sales other than short sales against-the-box. "How the Fund Invests--Other
Investments and Policies--Short Sales Against-the-Box" in the Prospectus and
"Investment Restrictions".
REPURCHASE AGREEMENTS
The Fund's repurchase agreements will be collateralized by cash and liquid
securities. The Fund will enter into repurchase transactions only with parties
meeting creditworthiness standards approved by the Fund's Board of Directors.
The investment adviser will monitor the creditworthiness of such parties, under
the general supervision of the Board of Directors. In the event of a default or
bankruptcy by a seller, the Fund will promptly seek to liquidate the collateral.
To the extent that the proceeds from any sale of such collateral upon a default
in the obligation to repurchase are less than the repurchase price, the Fund
will suffer a loss.
The Fund participates in a joint repurchase account with other investment
companies managed by Prudential Mutual Fund Management, Inc (PMF) pursuant to an
order of the SEC. On a daily basis, any uninvested cash balances of the Fund may
be aggregated with those of such investment companies and invested in one or
more repurchase agreements. Each fund participates in the income earned or
accrued in the joint account based on the percentage of its investment.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements, the Fund may lend its
portfolio securities to brokers, dealers and financial institutions, provided
that outstanding loans do not exceed in the aggregate 33 1/3% of the value of
the Fund's total assets and provided that such loans are callable at any time by
the Fund and are at all times secured by cash or equivalent collateral
(including a letter of credit) that is equal to at least the market value,
determined daily, of the loaned securities. The advantage of
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such loans is that the Fund continues to receive payments in lieu of the
interest and dividends of the loaned securities, while at the same time earning
interest either directly from the borrower or on the collateral which will be
invested in short-term obligations.
A loan may be terminated by the Fund at any time. If the borrower fails to
maintain the requisite amount of collateral, the loan automatically terminates,
and the Fund could use the collateral to replace the securities while holding
the borrower liable for any excess of replacement cost over collateral. As with
any extensions of credit, there are risks of delay in recovery and in some cases
loss of rights in the collateral should the borrower of the securities fail
financially. However, these loans of portfolio securities will only be made to
firms determined to be creditworthy pursuant to procedures approved by the Board
of Directors of the Fund. On termination of the loan, the borrower is required
to return the securities to the Fund, and any gain or loss in the market price
during the loan would inure to the Fund.
Since voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loan, in whole or in
part as may be appropriate, to permit the exercise of such rights if the matters
involved would have a material effect on the Fund's investment in the securities
which are the subject of the loan. The Fund will pay reasonable finders',
administrative and custodial fees in connection with a loan of its securities or
may share the interest earned on collateral with the borrower.
BORROWING
The Fund may borrow an amount equal to no more than 20% of the value of its
total assets (calculated at the time of the borrowing) from banks for temporary,
extraordinary or emergency purposes or for the clearance of transactions. The
Fund may pledge up to 20% of its total assets to secure these borrowings. If the
Fund's asset coverage for borrowings falls below 300%, the Fund will take prompt
action to reduce its borrowings. If the 300% 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. Such liquidations could cause the Fund to realize gains
on securities held for less than three months. Because no more than 30% of the
Fund's gross income may be derived from the sale or disposition of securities
held for less than three months to maintain the Fund's status as a regulated
investment company under the Internal Revenue Code, such gains would limit the
ability of the Fund to sell other securities held for less than three months
that the Fund might wish to sell. See "Taxes." The Fund will not purchase
portfolio securities when borrowings exceed 5% of the value of its total assets.
ILLIQUID SECURITIES
The Fund may not hold more than 15% of its net assets in repurchase
agreements which have a maturity of longer than seven days or in other illiquid
securities, including securities that are illiquid by virtue of the absence of a
readily available market (either within or outside of the United States) or
legal or contractual restrictions on resale. Historically, illiquid securities
have included securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act of 1933, as
amended (Securities Act), securities which are otherwise not readily marketable
and repurchase agreements having a maturity of longer than seven days.
Securities which have not been registered under the Securities Act are referred
to as private placements or restricted securities and are purchased directly
from the issuer or in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted or other illiquid securities because of
the potential for delays on resale and uncertainty in valuation. Limitations on
resale may have an adverse effect on the marketability of portfolio securities
and a mutual fund might be unable to dispose of restricted or other illiquid
securities promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions within seven days. A mutual fund might also
have to register such restricted securities in order to dispose of them
resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.
In recent years, however, a large institutional market has developed for
certain securities that are not registered under the Securities Act including
repurchase agreements, commercial paper, foreign securities, municipal
securities, convertible securities and corporate bonds and notes. Institutional
investors depend on an efficient institutional market in which the unregistered
security can be readily resold or on an issuer's ability to honor a demand for
repayment. The fact that there are contractual or legal restrictions on resale
to the general public or to certain institutions may not be indicative of the
liquidity of such investments.
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Rule 144A under the Securities Act allows for a broader institutional
trading market for securities otherwise subject to restriction on resale to the
general public. Rule 144A establishes a "safe harbor" from the registration
requirements of the Securities Act for resales of certain securities to
qualified institutional buyers. The investment adviser anticipates that the
market for certain restricted securities such as institutional commercial paper
and foreign securities will expand further as a result of this regulation and
the development of automated systems for the trading, clearance and settlement
of unregistered securities of domestic and foreign issuers, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc. (NASD).
Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act and commercial paper for which there is a readily available
market will not be deemed to be illiquid. The investment adviser will monitor
the liquidity of such restricted securities subject to the supervision of the
Board of Directors. In reaching liquidity decisions, the investment adviser will
consider, inter alia, the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers wishing to purchase or sell
the security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security and (4) the nature of the security
and the nature of the marketplace trades (e.g., the time needed to dispose of
the security, the method of soliciting offers and the mechanics of the
transfer). In addition, in order for commercial paper that is issued in reliance
on Section 4(2) of the Securities Act to be considered liquid, (i) it must be
rated in one of the two highest rating categories by at least two nationally
recognized statistical rating organizations (NRSRO), or if only one NRSRO rates
the securities, by that NRSRO, or, if unrated, be of comparable quality in the
view of the investment adviser; and (ii) it must not be "traded flat" (i.e.,
without accrued interest) or in default as to principal or interest. Repurchase
agreements subject to demand are deemed to have a maturity equal to the notice
period.
SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund may invest up to 10% of its total assets in securities of other
non-affiliated investment companies. Generally, the Fund does not intend to
invest in such securities. If a Fund does invest in securities of other
investment companies, shareholders of the Fund may be subject to duplicate
management and advisory fees. See "Investment Restrictions."
PORTFOLIO TURNOVER
As a result of the investment policies described above, the Fund may engage
in a substantial number of portfolio transactions, but the Fund's portfolio
turnover rate is not expected to exceed 100%. The portfolio turnover rate is
generally the percentage computed by dividing the lesser of portfolio purchases
or sales (excluding all securities, including options, whose maturities or
expiration date at acquisition were one year or less) by the monthly average
value of the portfolio. High portfolio turnover (over 100%) involves
correspondingly greater brokerage commissions and other transaction costs, which
are borne directly by the Fund. In addition, high portfolio turnover may also
mean that a proportionately greater amount of distributions to shareholders will
be taxed as ordinary income rather than long-term capital gains compared to
investment companies with lower portfolio turnover. See "Portfolio Transactions
and Brokerage" and "Taxes."
INVESTMENT RESTRICTIONS
The following restrictions are fundamental policies. Fundamental policies
are those which cannot be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities. A "majority of the Fund's
outstanding voting securities," when used in this Statement of Additional
Information, means with respect to the Fund, the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding voting shares
are present in person or represented by proxy or (ii) more than 50% of the
outstanding voting shares.
The Fund may not:
1. 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 futures or options is not considered the purchase of a security
on margin.
2. Make short sales of securities or maintain a short position if, when
added together, more than 25% of the value of the Fund's net assets would be (i)
deposited as collateral for the obligation to replace securities borrowed to
effect short sales and (ii) allocated to segregated accounts in connection with
short sales. Short sales "against-the-box" are not subject to this limitation.
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3. Issue senior securities, borrow money or pledge its assets, except that
the Fund may borrow from banks up to 20% of the value of its total assets
(calculated when the loan is made) for temporary, extraordinary or emergency
purposes or for the clearance of transactions. The Fund may pledge up to 20% of
the value of its total assets to secure such borrowings. For purposes of this
restriction, the purchase or sale of securities on a when-issued or delayed
delivery basis, forward foreign currency exchange contracts and collateral
arrangements relating thereto, and collateral arrangements with respect to
futures contracts and options thereon and with respect to the writing of options
and obligations of the Fund to Directors pursuant to deferred compensation
arrangements are not deemed to be a pledge of assets subject to this
restriction.
4. Purchase any security (other than obligations of the U.S. Government,
its agencies or instrumentalities) if as a result: (i) with respect to 75% of
the Fund's total assets, more than 5% of the Fund's total assets (determined at
the time of investment) would then be invested in securities of a single issuer,
or (ii) 25% or more of the Fund's total assets (determined at the time of the
investment) would be invested in a single industry.
5. Buy or sell real estate or interests in real estate, except that the
Fund may purchase and sell securities which are secured by real estate,
securities of companies which invest or deal in real estate and publicly traded
securities of real estate investment trusts. The Fund may not purchase interests
in real estate limited partnerships which are not readily marketable.
6. Buy or sell commodities or commodity contracts, except that the Fund may
purchase and sell financial futures contracts and options thereon, and forward
foreign currency exchange contracts.
7. 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.
8. Make investments for the purpose of exercising control or management.
9. Invest in securities of 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.
10. Make loans, except through (i) repurchase agreements and (ii) loans of
portfolio securities limited to 33 1/3% of the Fund's total assets.
11. Purchase more than 10% of all outstanding voting securities of any one
issuer.
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 or net asset values will not be
considered a violation of such policy. However, in the event that the Fund's
asset coverage for borrowings falls below 300%, the Fund will take prompt action
to reduce its borrowings, as required by applicable law.
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DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
POSITION PRINCIPAL OCCUPATIONS
NAME AND ADDRESS** (AGE) WITH FUND DURING PAST 5 YEARS
- ------------------------------ ------------------------------ -----------------------------------------------------------------
<S> <C> <C>
Edward D. Beach (71) Director President and Director of BMC Fund, Inc., a closed-end investment
company; prior thereto, Vice Chairman of Broyhill Furniture
Industries, Inc.; Certified Public Accountant; Secretary and
Treasurer of Broyhill Family Foundation, Inc.; Member of the
Board of Trustees of Mars Hill College; President and Director
of First Financial Fund, Inc. and The High Yield Plus Inc.;
President and Director of Global Utility Fund, Inc.
Delayne Dedrick Gold (58) Director Marketing and Management Consultant.
*Robert F. Gunia (49) Director Director (since January 1989), Chief Administrative Officer
(since July 1990) and Executive Vice President, Treasurer and
Chief Financial Officer (since June 1987) of Prudential Mutual
Fund Management LLC (PMF); Comptroller of Prudential Investments
(since 1996); Senior Vice President (since March 1987) of
Prudential Securities Incorporated (Prudential Securities); Vice
President and Director of Nicholas-Applegate Fund, Inc., and The
Asia Pacific Fund, Inc. (since May 1989).
Donald D. Lennox (77) Director Chairman (since February 1990) and Director (since April 1989) of
International Imaging Materials, Inc. (thermal transfer ribbon
manufacturer); Retired Chairman, Chief Executive Officer and
Director of Schlegel Corporation (industrial manufacturing)
(March 1987-February 1989); Director of Gleason Corporation,
Personal Sound Technologies, Inc. and The High Yield Income
Fund, Inc.
Douglas H. McCorkindale (57) Director Vice Chairman, Gannett Co. Inc. (publishing and media)(since
March 1984); Director of Gannett Co. Inc., Frontier Corporation
and Continental Airlines, Inc.
*Mendel A. Melzer (35) Director Chief Investment Officer (since November 1995) of Prudential
Investments, a business group of Prudential; formerly Chief
Financial Officer of Prudential Investments (November 1995 --
September 1996); formerly Senior Vice President and Chief
Financial Officer of Prudential Preferred Financial Services
(April 1993 - November 1995); Managing Director of Prudential
Investment Advisors (April 1991 - April 1993); Senior Vice
President of Prudential Capital Corporation (July 1989 - April
1991); Chairman and Director of Prudential Series Fund, Inc.
Thomas T. Mooney (54) Director President of the Greater Rochester Metro Chamber of Commerce;
formerly Rochester City Manager; Trustee of Center for
Governmental Research, Inc.; Director of Blue Cross of
Rochester, Monroe County Water Authority, Rochester Jobs, Inc.,
Executive Service Corps of Rochester, Monroe County Industrial
Development Corporation, Northeast Midwest Institute, The
Business Council of New York State, First Financial Fund, Inc.
and The High Yield Plus Fund, Inc.
Stephen P. Munn (54) Director Chairman (since January 1994), Director and President (since
1988) and Chief Executive Officer (1988 - December 1993) of
Carlisle Companies Incorporated (manufacturer of industrial
products).
</TABLE>
B-15
<PAGE>
<TABLE>
<CAPTION>
POSITION PRINCIPAL OCCUPATIONS
NAME AND ADDRESS** (AGE) WITH FUND DURING PAST 5 YEARS
- ------------------------------ ------------------------------ -----------------------------------------------------------------
<S> <C> <C>
*+Richard A. Redeker (53) President and Director Executive Vice President, Director and Member of the Operating
Committee (since October 1993) of Prudential Securities;
Director (since October 1993) of Prudential Securities Group,
Inc; formerly President, Chief Executive Officer and Director
(October 1993 - September 1996) of PMF; formerly Senior
Executive Vice President and Director of Kemper Financial
Services, Inc. (September 1978 - September 1993); Director, The
High Yield Income Fund, Inc. and The Target Portfolio Trust.
Robin B. Smith (57) Director Chairman (since August 1996), Chief Executive Officer (since
January 1988) and formerly President (1981-1996) of Publishers
Clearing House; Director of BellSouth Corporation, The Omnicom
Group, Inc., Texaco Inc., Spring Industries Inc., First
Financial Fund, Inc., The High Yield Income Fund, Inc., The High
Yield Plus Fund, Inc., Trustee of The Target Portfolio Trust.
Louis A. Weil, III (55) Director President and Chief Executive Officer (since January 1996) and
Director (since September 1991) of Central Newspapers, Inc.;
Chairman of the Board (since January 1996), Publisher and Chief
Executive Officer (August 1991 - December 1995) of Phoenix
Newspapers, Inc.; formerly Publisher of Time Magazine (May 1989
- March 1991); formerly President, Publisher & CEO of The
Detroit News (February 1986 - August 1989); formerly member of
the Advisory Board, Chase Manhattan Bank-Westchester.
Clay T. Whitehead (57) Director President, National Exchange Inc. (new business development firm)
(since May 1983)
Robert A. Nisi (34) Assistant Secretary Vice President and Associate General Counsel (since April 1995)
of PMF; Associate with the law firms White & Case (April 1994 --
April 1995) and Reid & Priest (May 1991 -- April 1994).
S. Jane Rose (50) Secretary Senior Vice President (since January 1991) and Senior Counsel
(since June 1987) of PMF; Senior Vice President and Senior
Counsel of Prudential Securities (since July 1992); formerly
Vice President and Associate General Counsel of Prudential
Securities.
Grace C. Torres (37) Treasurer and Principal First Vice President (since March 1994) of PMF; First Vice
Financial and Accounting President (since March 1994) of Prudential Securities; formerly
Officer Vice President of Bankers Trust Corporation (July 1989-March
1994).
</TABLE>
- ------------
* "Interested" Director, as defined in the Investment Company Act, by reason of
his or her affiliation with Prudential Securities or PMF.
** Unless otherwise indicated, the address of the Directors and Officers is c/o
Prudential Mutual Funds, Gateway Center Three, Newark, New Jersey 07102.
+ Mr. Redeker has resigned as President and Chief Executive Officer and
Director of PMF. Although he will no longer oversee the operations of the
Manager on a day-to-day basis, it is anticipated that Mr. Redeker will remain
associated with PMF and Prudential and will continue to serve as
Director/Trustee of the Funds.
B-16
<PAGE>
Directors and officers of the Fund are also trustees, directors and officers
of some or all of the other investment companies distributed by Prudential
Securities.
The officers conduct and supervise the daily business operations of the
Fund, while the Directors, in addition to their functions set forth under
"Manager" and "Distributor," oversee such actions and decide on general policy.
Pursuant to the Management Agreement with the Fund, the Manager pays all
compensation of officers and employees of the Fund as well as the fees and
expenses of all Directors of the Fund who are affiliated persons of the Manager.
The Fund pays each of its Directors who is not an affiliated person of PMF
or The Prudential Investment Corporation (PIC or the Subadviser) annual
compensation of $4,500, in addition to certain out-of-pocket expenses.
Directors may receive their Directors' fees pursuant to a deferred fee
agreement with the Fund. Under the terms of the agreement, the Fund accrues
daily the amount of Directors' fees in installments which accrue interest at a
rate equivalent to the prevailing rate applicable to 90-day U.S. Treasury bills
at the beginning of each calendar quarter or, pursuant to an SEC exemptive
order, at the daily rate of return of the Fund (the Fund rate). Payment of the
interest so accrued is also deferred and accruals become payable at the option
of the Director. The Fund's obligation to make payments of deferred Directors'
fees, together with interest thereon, is a general obligation of the Fund.
The Directors have adopted a retirement policy which calls for the
retirement of Directors on December 31 of the year in which they reach the age
of 72.
The following table sets forth the estimated aggregate compensation
estimated to be paid by the Fund for the fiscal year ending October 31, 1997 to
the Directors who are not affiliated with the Manager and the aggregate
compensation paid to such Directors for service on the boards of all other funds
managed by Prudential Mutual Fund Management LLC (Fund Complex) for the calendar
year ended December 31, 1995.
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT COMPENSATION
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL FROM FUND
COMPENSATION AS PART OF FUND BENEFITS UPON COMPLEX PAID
NAME AND POSITION FROM FUND EXPENSES RETIREMENT TO TRUSTEES
- ---------------------------------------------------- ------------- ----------------- ------------------- ------------------
<S> <C> <C> <C> <C> <C>
Edward D. Beach Director $ 4,500 None N/A $ 183,500(23/43)*
Delayne Dedrick Gold Director $ 4,500 None N/A $ 183,250(24/45)*
Donald D. Lennox Director $ 4,500 None N/A $ 86,250(10/22)*
Douglas H. McCorkindale Director $ 4,500 None N/A $ 63,750(7/10)*
Thomas T. Mooney Director $ 4,500 None N/A $ 125,625(14/19)*
Stephen P. Munn Director $ 4,500 None N/A $ 39,375(6/18)*
Robin B. Smith Director $ 4,500 None N/A $ 100,741(10/19)*
Louis A. Weil, III Director $ 4,500 None N/A $ 93,750(11/16)*
Clay T. Whitehead Director $ 4,500 None N/A $ 35,500(4/5)*
</TABLE>
- ------------
* Indicates number of funds/portfolios in Fund Complex to which aggregate
compensation relates.
As of October 31, 1996, the Directors and officers of the Fund, as a group,
owned less than 1% of the outstanding shares of the Fund. As of such date, PMF
owned all of the Fund's outstanding shares and controlled the Fund.
MANAGER
The manager of the Fund is Prudential Mutual Fund Management LLC (PMF or the
Manager), Gateway Center Three, Newark, New Jersey 07102. PMF serves as manager
to all of the other investment companies that, together with the Funds, comprise
the Prudential Mutual Funds. See "How the Fund is Managed--Manager" in the
Prospectus of the Fund. As of September 30, 1996, PMF managed and/or
administered open-end and closed-end management investment companies with assets
of approximately $52 billion. According to the Investment Company Institute, as
of August 31, 1996, Prudential Mutual Funds was the 17th largest family of
mutual funds in the United States.
B-17
<PAGE>
PMF is a subsidiary of Prudential Securities Incorporated and The Prudential
Insurance Company of America (Prudential). PMF has two wholly-owned
subsidiaries: Prudential Mutual Fund Distributors, Inc. and Prudential Mutual
Fund Services, Inc. (PMFS or the Transfer Agent). PMFS serves as the transfer
agent for the Prudential Mutual Funds and, in addition, provides customer
service, recordkeeping and management and administration services to qualified
plans.
Pursuant to the Management Agreement with the Fund (the Management
Agreement), PMF, subject to the supervision of the Fund's Board of Directors and
in conformity with the stated policies of the Fund, manages both the investment
operations of the Fund and the composition of the Fund's portfolio, including
the purchase, retention, disposition and loan of securities and other assets. In
connection therewith, PMF is obligated to keep certain books and records of the
Fund. PMF also administers the Fund's corporate affairs and, in connection
therewith, furnishes the Fund with office facilities, together with those
ordinary clerical and bookkeeping services which are not being furnished by
State Street Bank and Trust Company, the Fund's custodian (the Custodian), and
Prudential Mutual Fund Services, Inc., the Fund's transfer and dividend
disbursing agent. The management services of PMF for the Fund are not exclusive
under the terms of the Management Agreement and PMF is free to, and does, render
management services to others.
For its services, PMF receives, pursuant to the Management Agreement, a fee
at an annual rate of .60 of 1% of the Fund's average daily net assets. The fee
is computed daily and payable monthly. The Management Agreement also provides
that, in the event the expenses of a Fund (including the fees of PMF, but
excluding interest, taxes, brokerage commissions, distribution fees and
litigation and indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of the Fund's business) for any fiscal year
exceed the lowest applicable annual expense limitation established and enforced
pursuant to the statutes or regulations of any jurisdiction in which the Fund's
shares are qualified for offer and sale, the compensation due to PMF will be
reduced by the amount of such excess. Reductions in excess of the total
compensation payable to PMF will be paid by PMF to the Fund.
In connection with its management of the corporate affairs of the Fund, PMF
bears the following expenses:
(a) the salaries and expenses of all personnel of the Fund and the Manager,
except the fees and expenses of Directors who are not affiliated persons of PMF
or the Fund's investment adviser;
(b) all expenses incurred by PMF or by the Fund in connection with managing
the ordinary course of a Fund's business, other than those assumed by a Fund as
described below; and
(c) the fees payable to the Subadviser pursuant to the Subadvisory Agreement
between PMF and PIC (the Subadvisory Agreement).
Under the terms of the Management Agreement, the Fund is responsible for the
payment of the following expenses: (a) the fees payable to the Manager, (b) the
fees and expenses of Directors who are not affiliated persons of the Manager or
the Fund's investment adviser, (c) the fees and certain expenses of the
Custodian and Transfer and Dividend Disbursing Agent, including the cost of
providing records to the Manager in connection with its obligation of
maintaining required records of the Fund and of pricing the Fund's shares, (d)
the charges and expenses of legal counsel and independent accountants for the
Fund, (e) brokerage commissions and any issue or transfer taxes chargeable to
the Fund in connection with its securities transactions, (f) all taxes and
corporate fees payable by the Fund to governmental agencies, (g) the fees of any
trade associations of which the Fund may be a member, (h) the cost of stock
certificates representing shares of the Fund, (i) the cost of fidelity and
liability insurance, (j) certain organization expenses of the Fund and the fees
and expenses involved in registering and maintaining registration of the Fund
and of its shares with the SEC, registering the Fund as a broker or dealer and
qualifying its shares under state securities laws, including the preparation and
printing of the Fund's registration statements and prospectuses for such
purposes, (k) allocable communications expenses with respect to investor
services and all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing reports, proxy statements and prospectuses to
shareholders in the amount necessary for distribution to the shareholders, (l)
litigation and indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of the Fund's business and (m) distribution
fees.
The Management Agreement provides that PMF will not be liable for any error
of judgment or for any loss suffered by the Fund in connection with the matters
to which the Management Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard of duty. The
Management Agreement provides that it will terminate automatically if assigned,
and that it may be terminated without penalty by either party upon not more than
60 days' nor less than 30 days' written notice. The Management Agreement will
continue in effect for a period of more than two years
B-18
<PAGE>
from the date of execution only so long as such continuance is specifically
approved at least annually in conformity with the Investment Company Act. The
Fund's Management Agreement was approved by the Board of Directors of the Fund,
including all of the Directors who are not parties to the contract or interested
persons of any such party on October 12th, 1996, and by the initial shareholder
of the Fund on October 25, 1996.
PMF has entered into the Subadvisory Agreement with PIC, a wholly-owned
subsidiary of Prudential. The Subadvisory Agreement provides that PIC will
furnish investment advisory services in connection with the management of the
Fund. In connection therewith, PIC is obligated to keep certain books and
records of the Fund. Under the Subadvisory Agreement, PIC, subject to the
supervision of PMF, is responsible for managing the assets of the Fund in
accordance with its investment objectives, investment program and policies. PIC
determines what securities and other instruments are purchased and sold for the
Fund and is responsible for obtaining and evaluating financial data relevant to
the Fund. PMF continues to have responsibility for all investment advisory
services pursuant to the Management Agreement. Under the Subadvisory Agreement,
PMF compensates PIC for its services at an annual rate of .30 of 1% of the
Fund's average daily net assets up to and including $300 million and .25 of 1%
of the Fund's average daily net assets in excess of $300 million.
The Subadvisory Agreement was approved by the Board of Directors of the
Fund, including all of the Directors who are not parties to the contract or
interested persons of any such party on October 12, 1996, and by the initial
shareholder of that Fund on October 25, 1996.
The Subadvisory Agreement provides that it will terminate in the event of
its assignment (as defined in the Investment Company Act) or upon the
termination of the Management Agreement. The Subadvisory Agreement may be
terminated by the Fund, PMF or PIC upon not more than 60 days', nor less than 30
days', written notice. The Subadvisory Agreement provides that it will continue
in effect for a period of more than two years from its execution only so long as
such continuance is specifically approved at least annually in accordance with
the requirements of the Investment Company Act.
DISTRIBUTOR
Prudential Securities Incorporated (Prudential Securities or PSI), One
Seaport Plaza, New York, New York 10292, acts as the distributor of the Class A,
Class B, Class C and Class Z shares of the Fund.
Pursuant to separate Distribution and Service Plans (the Class A Plan, the
Class B Plan and the Class C Plan, collectively, the Plans) adopted by the Fund
under Rule 12b-1 under the Investment Company Act and a distribution agreement
(the Distribution Agreement), Prudential Securities (also the Distributor)
incurs the expenses of distributing the Fund's Class A, Class B and Class C
shares. See "How the Fund is Managed--Distributor" in the Prospectus of the
Fund. Prudential Securities serves as the Distributor of Class Z shares and
incurs the expenses of distributing the Class Z shares under a Distribution
Agreement with the Fund, none of which are reimbursed by or paid for by the
Fund.
The Class A Plan provides that (i) .25 of 1% of the average daily net assets
of the Class A shares may be used to pay for personal service and the
maintenance of shareholder accounts (service fee) and (ii) total distribution
fees (including the service fee of .25 of 1%) may not exceed .30 of 1%. The
Class B and Class C Plans provide that (i) .25 of 1% of the average daily net
assets of the Class B and Class C shares, respectively, may be paid as a service
fee and (ii) .75 of 1% (not including the service fee) may be paid for
distribution-related expenses with respect to the Class B and Class C shares,
respectively (asset-based sales charge).
The Class A, Class B and Class C Plans will continue in effect from year to
year, provided that each such continuance is approved at least annually by a
vote of the Board of Directors, including a majority vote of the Rule 12b-1
Directors, cast in person at a meeting called for the purpose of voting on such
continuance. The Plans may each be terminated at any time, without penalty, by
the vote of a majority of the Rule 12b-1 Directors or by the vote of the holders
of a majority of the outstanding shares of the applicable class on not more than
60 days', nor less than 30 days' written notice to any other party to the Plans.
The Plans may not be amended to increase materially the amounts to be spent for
the services described therein without approval by the shareholders of the
applicable class, and all material amendments are required to be approved by the
Board of Directors in the manner described above. Each Plan will automatically
terminate in the event of its assignment. A Fund will not be obligated to pay
expenses incurred under any Plan if it is terminated or not continued.
B-19
<PAGE>
Pursuant to each Plan, the Board of Directors will review at least quarterly
a written report of the distribution expenses incurred on behalf of each class
of shares of a Fund by the Distributor. The report will include an itemization
of the distribution expenses and the purposes of such expenditures. In addition,
as long as the Plans remain in effect, the selection and nomination of Rule
12b-1 Directors shall be committed to the Rule 12b-1 Directors.
Pursuant to the Distribution Agreement, the Fund has agreed to indemnify
Prudential Securities to the extent permitted by applicable law against certain
liabilities under the Securities Act.
On October 21, 1993, PSI entered into an omnibus settlement with the SEC,
state securities regulators in 51 jurisdictions and the NASD to resolve
allegations that PSI sold interests in more than 700 limited partnerships (and a
limited number of other types of securities) from January 1, 1980 through
December 31, 1990, in violation of securities laws to persons for whom such
securities were not suitable in light of the individuals' financial condition or
investment objectives. It was also alleged that the safety, potential returns
and liquidity of the investments had been misrepresented. The limited
partnerships principally involved real estate, oil and gas producing properties
and aircraft leasing ventures. The SEC Order (i) included findings that PSI's
conduct violated the federal securities laws and that an order issued by the SEC
in 1986 requiring PSI to adopt, implement and maintain certain supervisory
procedures had not been complied with; (ii) directed PSI to cease and desist
from violating the federal securities laws and imposed a $10 million civil
penalty; and (iii) required PSI to adopt certain remedial measures including the
establishment of a Compliance Committee of its Board of Directors. Pursuant to
the terms of the SEC settlement, PSI established a settlement fund in the amount
of $330,000,000 and procedures, overseen by a court approved Claims
Administrator, to resolve legitimate claims for compensatory damages by
purchasers of the partnership interests. PSI has agreed to provide additional
funds, if necessary, for that purpose. PSI's settlement with the state
securities regulators included an agreement to pay a penalty of $500,000 per
jurisdiction. PSI consented to a censure and to the payment of a $5,000,000 fine
in settling the NASD action. In settling the above referenced matters, PSI
neither admitted nor denied the allegations asserted against it.
On January 18, 1994, PSI agreed to the entry of a Final Consent Order and a
Parallel Consent Order by the Texas Securities Commissioner. The firm also
entered into a related agreement with the Texas Securities Commissioner. The
allegations were that the firm had engaged in improper sales practices and other
improper conduct resulting in pecuniary losses and other harm to investors
residing in Texas with respect to purchases and sales of limited partnership
interests during the period of January 1, 1980 through December 31, 1990.
Without admitting or denying the allegations, PSI consented to a reprimand,
agreed to cease and desist from future violations, and to provide voluntary
donations to the State of Texas in the aggregate amount of $1,500,000. The firm
agreed to suspend solicitation of new customer accounts, the general
solicitation of new accounts, and the offer for sale of securities in or from
PSI's North Texas office to new customers during a period of twenty consecutive
business days, and agreed that its other Texas offices would be subject to the
same restrictions for a period of five consecutive business days. PSI also
agreed to institute training programs for its securities salesmen in Texas.
On October 27, 1994, Prudential Securities Group, Inc. and PSI entered into
agreements with the United States Attorney deferring prosecution (provided PSI
complies with the terms of the agreement for three years) for any alleged
criminal activity related to the sale of certain limited partnership programs
from 1983 to 1990. In connection with these agreements, PSI agreed to add the
sum of $330,000,000 to the Fund established by the SEC and executed a
stipulation providing for a reversion of such funds to the United States Postal
Inspection Service. PSI further agreed to obtain a mutually acceptable outside
director to sit on the Board of Directors of PSG and the Compliance Committee of
PSI. The new director will also serve as an independent "ombudsman" whom PSI
employees can call anonymously with complaints about ethics and compliance.
Prudential Securities shall report any allegations or instances of criminal
conduct and material improprieties to the new director. The new director will
submit compliance reports which shall identify all such allegations or instances
of criminal conduct and material improprieties every three months for a
three-year period.
NASD MAXIMUM SALES CHARGE RULE
Pursuant to rules of the NASD, the Distributor is required to limit
aggregate initial sales charges, deferred sales charges and asset-based sales
charges to 6.25% of total gross sales of each class of shares. In the case of
Class B shares, interest charges equal to the prime rate plus one percent per
annum may be added to the 6.25% limitation. Sales from the reinvestment of
dividends and distributions are not required to be included in the calculation
of the 6.25% limitation. The annual asset-based sales charge with respect to
Class B and Class C shares of the Fund may not exceed .75 of 1%. The 6.25%
limitation applies to a Fund rather than on a per shareholder basis. If
aggregate sales charges were to exceed 6.25% of total gross sales of any class,
all sales charges on shares of that class would be suspended.
B-20
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Manager is responsible for decisions to buy and sell securities, futures
and options on securities and futures for the Fund, the selection of brokers,
dealers and futures commission merchants to effect the transactions and the
negotiation of brokerage commissions, if any. The term "Manager" as used in this
section includes the Subadviser. Broker-dealers may receive negotiated brokerage
commissions on Fund portfolio transactions, including options and the purchase
and sale of underlying securities upon the exercise of options. On foreign
securities exchanges, commissions may be fixed. Orders may be directed to any
broker or futures commission merchant including, to the extent and in the manner
permitted by applicable law, Prudential Securities and its affiliates.
Equity securities traded in the over-the-counter market and bonds, including
convertible bonds, are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain money market instruments and U.S.
Government agency securities may be purchased directly from the issuer, in which
case no commissions or discounts are paid. A Fund will not deal with Prudential
Securities or any affiliate in any transaction in which Prudential Securities or
any affiliate acts as principal, except in accordance with rules of the SEC.
Thus, it will not deal with Prudential Securities acting as market maker, and it
will not execute a negotiated trade with Prudential Securities if execution
involves Prudential Securities' acting as principal with respect to any part of
a Fund's order.
Portfolio securities may not be purchased from any underwriting or selling
syndicate of which Prudential Securities, or an affiliate, during the existence
of the syndicate, is a principal underwriter (as defined in the Investment
Company Act), except in accordance with rules of the SEC. This limitation, in
the opinion of the Fund, will not significantly affect a Fund's ability to
pursue its present investment objective. However, in the future in other
circumstances, a Fund may be at a disadvantage because of this limitation in
comparison to other funds with similar objectives but not subject to such
limitations.
In placing orders for portfolio securities of a Fund, the Manager is
required to give primary consideration to obtaining the most favorable price and
efficient execution. Within the framework of this policy, the Manager will
consider the research and investment services provided by brokers, dealers or
futures commission merchants who effect or are parties to portfolio transactions
of a Fund, the Manager or the Manager's other clients. Such research and
investment services are those which brokerage houses customarily provide to
institutional investors and include statistical and economic data and research
reports on particular companies and industries. Such services are used by the
Manager in connection with all of its investment activities, and some of such
services obtained in connection with the execution of transactions for a Fund
may be used in managing other investment accounts. Conversely, brokers, dealers
or futures commission merchants furnishing such services may be selected for the
execution of transactions of such other accounts, whose aggregate assets are far
larger than a Fund's, and the services furnished by such brokers, dealers or
futures commission merchants may be used by the Manager in providing investment
management for a Fund. Commission rates are established pursuant to negotiations
with the broker, dealer or futures commission merchant based on the quality and
quantity of execution services provided by the broker in the light of generally
prevailing rates. The Manager's policy is to pay higher commissions to brokers,
other than Prudential Securities, for particular transactions than might be
charged if a different broker had been selected, on occasions when, in the
Manager's opinion, this policy furthers the objective of obtaining best price
and execution. In addition, the Manager is authorized to pay higher commissions
on brokerage transactions for a Fund to brokers other than Prudential Securities
(or any affiliate) in order to secure research and investment services described
above, subject to review by the Fund's Board of Directors from time to time as
to the extent and continuation of this practice. The allocation or orders among
brokers and the commission rates paid are reviewed periodically by the Fund's
Board of Directors. The Fund will not pay up for research in principal
transactions.
Subject to the above considerations, Prudential Securities (or any
affiliate) may act as a securities broker or futures commission merchant for the
Fund. In order for Prudential Securities (or any affiliate) to effect any
portfolio transactions for a Fund, the commissions, fees or other remuneration
received by Prudential Securities (or any affiliate) must be reasonable and fair
compared to the commissions, fees or other remuneration paid to other brokers or
futures commission merchants in connection with comparable transactions
involving similar securities or futures being purchased or sold on an exchange
during a comparable period of time. This standard would allow Prudential
Securities (or any affiliate) to receive no more than the remuneration which
would be expected to be received by an unaffiliated broker or futures commission
merchant in a commensurate arm's-length transaction. Furthermore, the Board of
Directors of the Fund, including a majority of the Directors who are not
"interested" persons, has adopted procedures which are reasonably designed to
provide that any commissions,
B-21
<PAGE>
fees or other remuneration paid to Prudential Securities (or any affiliate) are
consistent with the foregoing standard. In accordance with Section 11(a) of the
Securities Exchange Act of 1934, Prudential Securities may not retain
compensation for effecting transactions on a national securities exchange for a
Fund unless the Fund has expressly authorized the retention of such
compensation. Prudential Securities must furnish to a Fund at least annually a
statement setting forth the total amount of all compensation retained by
Prudential Securities from transactions effected for the Fund during the
applicable period. Brokerage and futures transactions with Prudential Securities
are also subject to such fiduciary standards as may be imposed by applicable
law.
PURCHASE AND REDEMPTION OF FUND SHARES
Shares of a Fund may be purchased at a price equal to the next determined
net asset value per share plus a sales charge which, at the election of the
investor, may be imposed either (i) at the time of purchase (Class A shares) or
(ii) on a deferred basis (Class B or Class C shares). Class Z shares of the Fund
are offered to a limited group of investors at net asset value without any sales
charges. See "Shareholder Guide--How to Buy Shares of the Fund" in the
Prospectus of the Fund.
Each class represents an interest in the same assets of a Fund and is
identical in all respects except that (i) each class (with the exception of
Class Z shares) is subject to different sales charges and distribution and/or
service fees, which may affect performance, (ii) each class has exclusive voting
rights on any matter submitted to shareholders that relates solely to its
distribution arrangement and has separate voting rights on any matter submitted
to shareholders in which the interests of one class differ from the interests of
any other class, (iii) each class has a different exchange privilege, (iv) only
Class B shares have a conversion feature and (v) Class Z shares are offered
exclusively for sale to a limited group of investors. See "Distributor."
SPECIMEN PRICE MAKE-UP
Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold with a maximum sales charge of 5% and Class
B*, Class C* and Class Z shares are sold at net asset value. Using the net asset
value of the Fund at October 21, 1996, the maximum offering price of the Fund's
shares is as follows:
<TABLE>
<CAPTION>
PRUDENTIAL
EMERGING
GROWTH FUND, INC.
-----------------
<S> <C>
CLASS A
Net asset value and redemption price per Class A share........................... $ 10.00
Maximum sales charge (5% of offering price)...................................... .53
------
Offering price to public......................................................... $ 10.53
------
------
CLASS B
Net asset value, redemption price and offering price per Class B share*.......... $ 10.00
------
------
CLASS C
Net asset value, redemption price and offering price per Class C share*.......... $ 10.00
------
------
CLASS Z
Net asset value, offering price and redemption price per Class Z share........... $ 10.00
------
------
<FN>
--------------------
* Class B and Class C shares are subject to a contingent deferred sales
charge on certain redemptions. See "Shareholder Guide--How to Sell Your
Shares--Contingent Deferred Sales Charges" in the Prospectus.
</TABLE>
REDUCTION AND WAIVER OF INITIAL SALES CHARGES--CLASS A SHARES
COMBINED PURCHASE AND CUMULATIVE PURCHASE PRIVILEGE. If an investor or
eligible group of related investors purchases Class A shares of a Fund
concurrently with Class A shares of other Prudential Mutual Funds, the purchases
may be combined to take advantage of the reduced sales charges applicable to
larger purchases. See the table of breakpoints under "Shareholder
Guide--Alternative Purchase Plan" in the Prospectus of the Fund.
An eligible group of related Fund investors includes any combination of the
following:
(a) an individual;
B-22
<PAGE>
(b) the individual's spouse, their children and their parents;
(c) the individual's and spouse's Individual Retirement Account (IRA);
(d) any company controlled by the individual (a person, entity or group that
holds 25% or more of the outstanding voting securities of a company will be
deemed to control the company, and a partnership will be deemed to be controlled
by each of its general partners);
(e) a trust created by the individual, the beneficiaries of which are the
individual, his or her spouse, parents or children;
(f) a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act account
created by the individual or the individual's spouse; and
(g) one or more employee benefit plans of a company controlled by an
individual.
In addition, an eligible group of related Fund investors may include an
employer (or group of related employers) and one or more qualified retirement
plans of such employer or employers (an employer controlling, controlled by or
under common control with another employer is deemed related to that employer).
The Distributor must be notified at the time of purchase that the investor
is entitled to a reduced sales charge. The reduced sales charge will be granted
subject to confirmation of the investor's holdings. The Combined Purchase and
Cumulative Purchase Privilege does not apply to individual participants in
pension, profit-sharing or other employee benefit plans qualified under Section
401 of the Internal Revenue Code and deferred compensation and annuity plans
under Sections 457 and 403(b)(7) of the Internal Revenue Code.
RIGHTS OF ACCUMULATION. Reduced sales charges are also available through
Rights of Accumulation, under which an investor or an eligible group of related
investors, as described above under "Combined Purchase and Cumulative Purchase
Privilege," may aggregate the value of their existing holdings of shares of a
Fund and shares of other Prudential Mutual Funds (excluding money market funds
other than those acquired pursuant to the exchange privilege) to determine the
reduced sales charge. The value of shares held directly with the Transfer Agent
and through Prudential Securities will not be aggregated to determine the
reduced sales charge. All shares must be held either directly with the Transfer
Agent or through Prudential Securities. The value of existing holdings for
purposes of determining the reduced sales charge is calculated using the maximum
offering or price (net asset value plus maximum sales charge) as of the previous
business day. See "How the Fund Values Its Shares" in the Prospectus of each
Fund. The Distributor must be notified at the time of purchase that the investor
is entitled to a reduced sales charge. The reduced sales charges will be granted
subject to confirmation of the investor's holdings. Rights of Accumulation are
not available to individual participants in any retirement or group plans.
LETTERS OF INTENT. Reduced sales charges are available to investors (or an
eligible group of related investors), including retirement and group plans, who
enter into a written Letter of Intent providing for the purchase, within a
thirteen-month period, of shares of a Fund and shares of other Prudential Mutual
Funds. All shares of a Fund and shares of other Prudential Mutual Funds
(excluding money market funds other than those acquired pursuant to the exchange
privilege) which were previously purchased and are still owned are also included
in determining the applicable reduction. However, the value of shares held
directly with the Transfer Agent and through Prudential Securities will not be
aggregated to determine the reduced sales charge. All shares must be held either
directly with the Transfer Agent or through Prudential Securities. The
Distributor must be notified at the time of purchase that the investor is
entitled to a reduced sales charge. The reduced sales charges will be granted
subject to confirmation of the investor's holdings. Letters of Intent are not
available to individual participants in any retirement or group plans.
A Letter of Intent permits a purchaser to establish a total investment goal
to be achieved by any number of investments over a thirteen-month period. Each
investment made during the period will receive the reduced sales charge
applicable to the amount represented by the goal, as if it were a single
investment, except in the case of retirement and group plans where the employer
or plan sponsor will be responsible for paying any applicable sales charge.
Escrowed Class A shares totaling 5% of the dollar amount of the Letter of Intent
will be held by the Transfer Agent in the name of the purchaser. The effective
date of a Letter of Intent may be back-dated up to 90 days, in order that any
investments made during this 90-day period, valued at the purchaser's cost, can
be applied to the fulfillment of the Letter of Intent goal, except in the case
of retirement and group plans.
The Letter of Intent does not obligate the investor to purchase, nor the
Fund to sell, the indicated amount. In the event the Letter of Intent goal is
not achieved within the thirteen-month period, the purchaser (or the employer or
plan sponsor in the case
B-23
<PAGE>
of any retirement or group plan) is required to pay the difference between the
sales charge otherwise applicable to the purchases made during this period and
sales charges actually paid. Such payment may be made directly to the
Distributor or, if not paid, the Distributor will liquidate sufficient escrowed
shares to obtain such difference. Investors electing to purchase Class A shares
of the Fund pursuant to a Letter of Intent should carefully read such Letter of
Intent.
WAIVER OF THE CONTINGENT DEFERRED SALES CHARGE--CLASS B SHARES
The contingent deferred sales charge is waived under circumstances described
in the Prospectus. See "Shareholder Guide--How to Sell Your Shares--Waiver of
Contingent Deferred Sales Charges--Class B Shares" in the Prospectus. In
connection with these waivers, the Transfer Agent will require you to submit the
supporting documentation set forth below.
<TABLE>
<CAPTION>
CATEGORY OF WAIVER REQUIRED DOCUMENTATION
<S> <C>
Death A copy of the shareholder's death certificate or,
in the case of a trust, a copy of the grantor's
death certificate, plus a copy of the trust
agreement identifying the grantor.
Disability - An individual will be A copy of the Social Security Administration award
considered disabled if he or she is letter or a letter from a physician on the
unable to engage in any substantial physician's letterhead stating that the shareholder
gainful activity by reason of any (or, in the case of a trust, the grantor) is
medically determinable physical or permanently disabled. The letter must also indicate
mental impairment which can be expected the date of disability.
to result in death or to be of
long-continued and indefinite duration.
Distribution from an IRA or 403(b) A copy of the distribution form from the custodial
Custodial Account firm indicating (i) the date of birth of the
shareholder and (ii) that the shareholder is over
age 59 and is taking a normal distribution--signed
by the shareholder.
Distribution from Retirement Plan A letter signed by the plan administrator/trustee
indicating the reason for the distribution.
Excess Contributions A letter from the shareholder (for an IRA) or the
plan administrator/ trustee on company letterhead
indicating the amount of the excess and whether or
not taxes have been paid.
</TABLE>
The Transfer Agent reserves the right to request such additional documents
as it may deem appropriate.
SHAREHOLDER INVESTMENT ACCOUNT
Upon the initial purchase of Fund shares, a Shareholder Investment Account
is established for each investor under which a record of the shares held is
maintained by the Transfer Agent. If a stock certificate is desired, it must be
requested in writing for each transaction. Certificates are issued only for full
shares and may be redeposited in the Account at any time. There is no charge to
the investor for issuance of a certificate. The Fund makes available to its
shareholders the following privileges and plans.
AUTOMATIC REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. For the convenience
of investors, all dividends and distributions are automatically reinvested in
full and fractional shares of the applicable Fund. An investor may direct the
Transfer Agent in writing not less than five full business days prior to the
record date to have subsequent dividends or distributions sent in cash rather
than reinvested. In the case of recently purchased shares for which registration
instructions have not been received on the record date, cash payment will be
made directly to the dealer. Any shareholder who receives a cash payment
representing a dividend or distribution may reinvest such dividend or
distribution at net asset value by returning the check or the proceeds to the
Transfer Agent within 30 days after the payment date. Such investment will be
made at the net asset value per share next determined after receipt of the check
or proceeds by the Transfer Agent. Such shareholder will receive credit for any
contingent deferred sales charge paid in connection with the amount of proceeds
being reinvested.
EXCHANGE PRIVILEGE. The Fund makes available to its shareholders the
Exchange Privilege. The Fund makes available to its shareholders the privilege
of exchanging their shares of a Fund for shares of certain other Prudential
Mutual Funds, including one
B-24
<PAGE>
or more specified money market funds, subject in each case to the minimum
investment requirements of such funds. Shares of such other Prudential Mutual
Funds may also be exchanged for shares of a Fund. All exchanges are made on the
basis of relative net asset value next determined after receipt of an order in
proper form. An exchange will be treated as a redemption and purchase for tax
purposes. Shares may be exchanged for shares of another fund only if shares of
such fund may legally be sold under applicable state laws. For retirement and
group plans having a limited menu of Prudential Mutual Funds, the Exchange
Privilege is available for those funds eligible for investment in the particular
program.
It is contemplated that the Exchange Privilege may be applicable to new
mutual funds whose shares may be distributed by the Distributor.
CLASS A. Shareholders of a Fund may exchange their Class A shares for shares
of certain other Prudential Mutual Funds, shares of Prudential Government
Securities Trust (Short-Intermediate Term Series) and shares of the money market
funds specified below. No fee or sales load will be imposed upon the exchange.
Shareholders of money market funds who acquired such shares upon exchange of
Class A shares may use the Exchange Privilege only to acquire Class A shares of
the Prudential Mutual Funds participating in the Exchange Privilege.
The following money market funds participate in the Class A Exchange
Privilege:
Prudential California Municipal Fund
(California Money Market Series)
Prudential Government Securities Trust
(Money Market Series)
(U.S. Treasury Money Market Series)
Prudential Municipal Series Fund
(Connecticut Money Market Series)
(Massachusetts Money Market Series)
(New York Money Market Series)
(New Jersey Money Market Series)
Prudential MoneyMart Assets, Inc. (Class A shares)
Prudential Tax-Free Money Fund, Inc.
CLASS B AND CLASS C. Shareholders of a Fund may exchange their Class B and
Class C shares for Class B and Class C shares, respectively, of certain other
Prudential Mutual Funds and shares of Prudential Special Money Market Fund, a
money market fund. No CDSC will be payable upon such exchange, but a CDSC may be
payable upon the redemption of the Class B and Class C shares acquired as a
result of the exchange. The applicable sales charge will be that imposed by the
fund in which shares were initially purchased and the purchase date will be
deemed to be the date of the initial purchase, rather than the date of the
exchange.
Class B and Class C shares of a Fund may also be exchanged for Class B and
Class C shares, respectively, of an eligible money market fund without
imposition of any CDSC at the time of exchange. Upon subsequent redemption from
such money market fund or after re-exchange into a Fund, such shares will be
subject to the CDSC calculated without regard to the time such shares were held
in the money market fund. In order to minimize the period of time in which
shares are subject to a CDSC, shares exchanged out of the money market fund will
be exchanged on the basis of their remaining holding periods, with the longest
remaining holding periods being transferred first. In measuring the time period
shares are held in a money market fund and "tolled" for purposes of calculating
the CDSC holding period, exchanges are deemed to have been made on the last day
of the month. Thus, if shares are exchanged into a Fund from a money market fund
during the month (and are held in the Fund at the end of the month), the entire
month will be included in the CDSC holding period. Conversely, if shares are
exchanged into a money market fund prior to the last day of the month (and are
held in the money market fund on the last day of the month), the entire month
will be excluded from the CDSC holding period.
At any time after acquiring shares of other funds participating in the Class
B or Class C exchange privilege, a shareholder may again exchange those shares
(and any reinvested dividends and distributions) for Class B or Class C shares
of the Fund, respectively, without subjecting such shares to any CDSC. Shares of
any fund participating in the Class B or Class C exchange privilege that were
acquired through reinvestment of dividends or distributions may be exchanged for
Class B or Class C shares of other funds, respectively, without being subject to
any CDSC.
B-25
<PAGE>
CLASS Z. Class Z shares may be exchanged for Class Z shares of other
Prudential Mutual Funds.
Additional details about the Exchange Privilege and prospectuses for each of
the Prudential Mutual Funds are available from the Fund's Transfer Agent,
Prudential Securities or Prusec.
The Exchange Privilege may be modified, terminated or suspended on 60 days'
notice, and any fund, including the Fund, or the Distributor, has the right to
reject any exchange application relating to such fund's shares.
DOLLAR COST AVERAGING
Dollar cost averaging is a method of accumulating shares by investing a
fixed amount of dollars in shares at set intervals. An investor buys more shares
when the price is low and fewer shares when the price is high. The average cost
per share is lower than it would be if a constant number of shares were bought
at set intervals.
Dollar cost averaging may be used, for example, to plan for retirement, to
save for a major expenditure, such as the purchase of a home, or to finance a
college education. The cost of a year's education at a four-year college today
averages around $14,000 at a private college and around $6,000 at a public
university. Assuming these costs increase at a rate of 7% a year, as has been
projected, for the freshman class of 2011, the cost of four years at a private
college could reach $210,000 and over $90,000 at a public university.(1)
The following chart shows how much you would need in monthly investments to
achieve specified lump sums to finance your investment goals.(2)
<TABLE>
<CAPTION>
PERIOD OF
MONTHLY INVESTMENTS: $100,000 $150,000 $200,000 $250,000
- ------------------------------------------------------------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
25 Years.......................................................... $ 110 $ 165 $ 220 $ 275
20 Years.......................................................... 176 264 352 440
15 Years.......................................................... 296 444 592 740
10 Years.......................................................... 555 833 1,110 1,388
5 Years.......................................................... 1,371 2,057 2,742 3,428
<FN>
- ------------
(1)Source information concerning the costs of education at public and
private universities is available from The College Board Annual Survey of
Colleges, 1993. Average costs for private institutions include tuition, fees,
room and board for the 1993-1994 academic year.
(2)The chart assumes an effective rate of return of 8% (assuming monthly
compounding). This example is for illustrative purposes only and is not intended
to reflect the performance of an investment in shares of a Fund. The investment
return and principal value of an investment will fluctuate so that an investor's
shares when redeemed may be worth more or less than their original cost.
See "Automatic Savings Accumulation Plan."
</TABLE>
AUTOMATIC SAVINGS ACCUMULATION PLAN (ASAP). Under ASAP, an investor may
arrange to have a fixed amount automatically invested in shares of a Fund
monthly by authorizing his or her bank account or Prudential Securities Account
(including a Command Account) to be debited to invest specified dollar amounts
in shares of a Fund. The investor's bank must be a member of the Automatic
Clearing House System. Stock certificates are not issued to ASAP participants.
Further information about this program and an application form can be
obtained from the Transfer Agent, Prudential Securities or Prusec.
SYSTEMATIC WITHDRAWAL PLAN. A systematic withdrawal plan is available to
shareholders through Prudential Securities or the Transfer Agent. Such
withdrawal plan provides for monthly or quarterly checks in any amount, except
as provided below, up to the value of the shares in the shareholder's account.
Withdrawals of Class B or Class C shares may be subject to a CDSC. See
"Shareholder Guide--How to Sell Your Shares--Contingent Deferred Sales Charges"
in the Prospectus of the Fund.
In the case of shares held through the Transfer Agent (i) a $10,000 minimum
account value applies, (ii) withdrawals may not be for less than $100 and (iii)
the shareholder must elect to have all dividends and/or distributions
automatically reinvested in additional full and fractional shares at net asset
value on shares held under this plan. See "Shareholder Investment Account--
Automatic Reinvestment of Dividends and/or Distributions."
B-26
<PAGE>
Prudential Securities and the Transfer Agent act as agents for the
shareholder in redeeming sufficient full and fractional shares to provide the
amount of the periodic withdrawal payment. The systematic withdrawal plan may be
terminated at any time, and the Distributor reserves the right to initiate a fee
of up to $5 per withdrawal, upon 30 days' written notice to the shareholder.
Withdrawal payments should not be considered as dividends, yield or income.
If periodic withdrawals continuously exceed reinvested dividends and
distributions, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted.
Furthermore, each withdrawal constitutes a redemption of shares, and any
gain or loss realized must be recognized for federal income tax purposes. In
addition, withdrawals made concurrently with purchases of additional shares are
inadvisable because of the sales charges applicable to (i) the purchase of Class
A shares and (ii) the withdrawal of Class B and Class C shares. Each shareholder
should consult his or her own tax adviser with regard to the tax consequences of
the plan, particularly if used in connection with a retirement plan.
TAX-DEFERRED RETIREMENT PLANS. Various qualified retirement plans, including
a 401(k) plan, self-directed individual retirement accounts and "tax-deferred
accounts" under Section 403(b)(7) of the Internal Revenue Code of 1986, as
amended (the Internal Revenue Code) are available through the Distributor. These
plans are for use by both self-employed individuals and corporate employers.
These plans permit either self-direction of accounts by participants, or a
pooled account arrangement. Information regarding the establishment of these
plans, and the administration, custodial fees an other details are available
from Prudential Securities or the Transfer Agent.
Investors who are considering the adoption of such a plan should consult
with their own legal counsel or tax adviser with respect to the establishment
and maintenance of any such plan.
TAX-DEFERRED RETIREMENT ACCOUNTS
INDIVIDUAL RETIREMENT ACCOUNTS. An individual retirement account (IRA)
permits the deferral of federal income tax on income earned in the account until
the earnings are withdrawn. The following chart represents a comparison of the
earnings in a personal savings account with those in an IRA, assuming a $2,000
annual contribution, an 8% rate of return and a 39.6% federal income tax bracket
and shows how much more retirement income can accumulate within an IRA as
opposed to a taxable individual savings account.
TAX-DEFERRED COMPOUNDING(1)
<TABLE>
<CAPTION>
CONTRIBUTIONS PERSONAL
MADE OVER: SAVINGS IRA
- ------------------------ ---------- ----------
<S> <C> <C>
10 years................ $ 26,165 $ 31,291
15 years................ 44,676 58,649
20 years................ 68,109 98,846
25 years................ 97,780 157,909
30 years................ 135,346 244,692
- ------------
(1)The chart is for illustrative purposes only and does not represent the
performance of a Fund or any specific investment. It shows taxable versus
tax-deferred compounding for the periods and on the terms indicated. Earnings in
the IRA account will be subject to tax when withdrawn from the account.
</TABLE>
MUTUAL FUND PROGRAMS
From time to time, the Fund may be included in a mutual fund program with
other Prudential Mutual Funds. Under such a program, a group of portfolios will
be selected and thereafter promoted collectively. Typically, these programs are
created with an investment theme, e.g., to seek greater diversification,
protection from interest rate movements or access to different management
styles. In the event such a program is instituted, there may be a minimum
investment requirement for the program as a whole. A Fund may waive or reduce
the minimum initial investment requirements in connection with such a program.
The mutual funds in the program may be purchased individually or as a part
of the program. Since the allocation of portfolios included in the program may
not be appropriate for all investors, investors should consult their Prudential
Securities
B-27
<PAGE>
Financial Advisor or Prudential/Pruco Securities Representative concerning the
appropriate blend of portfolios for them. If investors elect to purchase the
individual mutual funds that constitute the program in an investment ratio
different from that offered by the program, the standard minimum investment
requirements for the individual mutual funds will apply.
NET ASSET VALUE
Under the Investment Company Act, the Board of Directors is responsible for
determining in good faith the fair value of securities of the Fund. In
accordance with procedures adopted by the Board of Directors, the value of
investments listed on a securities exchange and NASDAQ National Market System
securities (other than options on stock and stock indices) are valued at the
last sales price on the day of valuation, or, if there was no sale on such day,
the mean between the last bid and asked prices on such day, as provided by a
pricing service. Corporate bonds (other than convertible debt securities) and
U.S. Government securities that are actively traded in the over-the-counter
market, including listed securities for which the primary market is believed to
be over-the-counter, are valued on the basis of valuations provided by a pricing
service which uses information with respect to transactions in bonds, quotations
from bond dealers, agency ratings, market transactions in comparable securities
and various relationships between securities in determining value. Convertible
debt securities that are actively traded in the over-the-counter market,
including listed securities for which the primary market is believed to be
over-the-counter, are valued at the mean between the last reported bid and asked
prices provided by principal market makers or independent pricing agents.
Options on stock and stock indices traded on an exchange are valued at the mean
between the most recently quoted bid and asked prices on the respective exchange
and futures contracts and options thereon are valued at their last sales prices
as of the close of the commodities exchange or board of trade. Should an
extraordinary event, which is likely to affect the value of the security, occur
after the close of an exchange on which a portfolio security is traded, such
security will be valued at fair value considering factors determined in good
faith by the investment adviser under procedures established by and under the
general supervision of the Fund's Board of Directors.
Securities or other assets for which market quotations are not readily
available are valued at their fair value as determined in good faith by the
Board of Directors. Short-term debt securities are valued at cost, with interest
accrued or discount amortized to the date of maturity, if their original
maturity was 60 days or less, unless this is determined by the Board of
Directors not to represent fair value. Short-term securities with remaining
maturities of 60 days or more, for which market quotations are readily
available, are valued at their current market quotations as supplied by an
independent pricing agent or principal market maker. The Fund will compute its
net asset value at 4:15 P.M., New York time, on each day the New York Stock
Exchange is open for trading except on days on which no orders to purchase, sell
or redeem Fund shares have been received or days on which changes in the value
of a Fund's portfolio securities do not affect net asset value. In the event the
New York Stock Exchange closes early on any business day, the net asset value of
a Fund's shares shall be determined at a time between such closing and 4:15
P.M., New York time.
Net asset value is calculated separately for each class. The net asset value
of Class B and Class C shares will generally be lower than the net asset value
of Class A or Class Z shares as a result of the larger distribution-related fee
to which Class B and Class C shares are subject and the net asset value of Class
A shares will generally be lower than that of Class Z shares because Class Z
shares are not subject to any distribution or service fee. It is expected,
however, that the net asset value per share of each class will tend to converge
immediately after the recording of dividends which will differ by approximately
the amount of the distribution and/or service fee expense accrual differential
among the classes.
TAXES
The Fund has elected to qualify (or intends to elect to qualify) and intends
to remain qualified as a regulated investment company under Subchapter M of the
Internal Revenue Code. This relieves the Fund (but not its shareholders) from
paying federal income tax on income which is distributed to shareholders and
permits net long-term capital gains of the Fund (i.e., the excess of net
long-term capital gains over net short-term capital losses) to be treated as
long-term capital gains of the shareholders, regardless of how long shareholders
have held their shares in the Fund.
Qualification as a regulated investment company requires, among other
things, that (a) at least 90% of the Fund's annual gross income (without
reduction for losses from the sale or other disposition of securities) be
derived from interest, dividends, payments with respect to securities loans, and
gains from the sale or other disposition of securities or options thereon or
foreign currencies, or other income (including but not limited to gains from
options, futures or forward contracts) derived with respect to its business of
investing in such securities or currencies; (b) the Fund derive less than 30% of
its annual gross income from
B-28
<PAGE>
gains (without reduction for losses) from the sale or other disposition of
securities, options thereon, futures contracts, options thereon, forward
contracts and foreign currencies held for less than three months (except for
foreign currencies directly related to the Fund's business of investing in
foreign securities) (the short-short rule); (c) the Fund diversify its holdings
so that, at the end of each quarter of the taxable year (i) at least 50% of the
value of the Fund's assets is represented by cash, U.S. Government securities
and other securities limited in respect of any one issuer to an amount not
greater than 5% of the value of the Fund's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities); and (d) the Fund distribute to its shareholders at least
90% of its net investment income (including net short-term capital gains) other
than long-term capital gains in each year.
Gains or losses on sales of securities by the Fund will be treated as
long-term capital gains or losses if the securities have been held by it for
more than one year except in certain cases where the Fund acquires a put or
writes a call thereon or makes a short sale against-the-box. Other gains or
losses on the sale of securities will be short-term capital gains or losses.
Gains and losses on the sale, lapse or other termination of options on
securities will generally be treated as gains and losses from the sale of
securities (assuming they do not qualify as Section 1256 contracts). If an
option written by the Fund on securities lapses or is terminated through a
closing transaction, such as a repurchase by the Fund of the option from its
holder, the Fund will generally realize short-term capital gain or loss. If
securities are sold by the Fund pursuant to the exercise of a call option
written by it, the Fund will include the premium received in the sale proceeds
of the securities delivered in determining the amount of gain or loss on the
sale. Certain of the Fund's transactions may be subject to wash sale, short
sale, conversion transaction and straddle provisions of the Internal Revenue
Code. In addition, debt securities acquired by the Fund may be subject to
original issue discount and market discount rules.
Special rules apply to most options on stock indices, futures contracts and
options thereon, and forward foreign currency exchange contracts in which the
Fund may invest. See "Investment Objective and Policies." These investments will
generally constitute Section 1256 contracts and will be required to be "marked
to market" for federal income tax purposes at the end of the Fund's taxable
year; that is, treated as having been sold at market value. Except with respect
to forward foreign currency exchange contracts, 60% of any gain or loss
recognized on such deemed sales and on actual dispositions will be treated as
long-term capital gain or loss, and the remainder will be treated as short-term
capital gain or loss.
Gain or loss on the sale, lapse or other termination of options on stock and
on narrowly-based stock indices will be capital gain or loss and will be
long-term or short-term depending upon the holding period of the option. In
addition, positions which are part of a straddle will be subject to certain wash
sale and short sale provisions of the Internal Revenue Code. In the case of a
straddle, the Fund may be required to defer the recognition of losses on
positions it holds to the extent of any unrecognized gain on offsetting
positions held by the Fund. The conversion transaction rules may apply to
certain transactions to treat all or a portion of the gain thereon as ordinary
income rather than as capital gain.
The Fund's ability to hold foreign currencies or engage in hedging
activities may be limited by the 30% short-short rule discussed above.
A "passive foreign investment company" (PFIC) is a foreign corporation that,
in general, meets either of the following tests: (a) at least 75% of its gross
income is passive or (b) an average of at least 50% of its assets produce, or
are held for the production of, passive income. If the Fund acquires and holds
stock in a PFIC beyond the end of the year of its acquisition, the Fund will be
subject to federal income tax on a portion of any "excess distribution" received
on the stock or of any gain from disposition of the stock (collectively, PFIC
income), plus interest thereon, even if the Fund distributes the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Fund's investment company taxable income and, accordingly, will
not be taxable to it to the extent that income is distributed to its
shareholders. Proposed Treasury regulations provide that the Fund may make a
"mark-to-market" election with respect to any stock it holds of a PFIC. If the
election is in effect, at the end of the Fund's taxable year, the Fund will
recognize the amount of gains, if any, with respect to PFIC stock. No loss will
be recognized on PFIC stock. Alternatively, the Fund may elect to treat any PFIC
in which it invests as a "qualified electing fund," in which case, in lieu of
the foregoing tax and interest obligation, the Fund will be required to include
in income each year its pro rata share of the qualified electing fund's annual
ordinary earnings and net capital gain, even if they are not distributed to the
Fund; those amounts would be subject to the distribution requirements applicable
to the Fund described above. It may be very difficult, if not impossible, to
make this election because of certain requirements thereof.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time the Fund accrues
interest or other receivables or accrues expenses or other liabilities
denominated in a foreign currency and
B-29
<PAGE>
the time the Fund actually collects such receivables or pays such liabilities
are treated as ordinary income or ordinary loss. Similarly, gains or losses on
forward foreign currency exchange contracts or dispositions of debt securities
denominated in a foreign currency attributable to fluctuations in the value of
the foreign currency between the date of acquisition of the security and the
date of disposition also may be treated as ordinary gain or loss. These gains,
referred to under the Internal Revenue Code as "Section 988" gains or losses,
increase or decrease the amount of the Fund's investment company taxable income
available to be distributed to its shareholders as ordinary income, rather than
increasing or decreasing the amount of the Fund's net capital gain. If Section
988 losses exceed other investment company taxable income during a taxable year,
the Fund would not be able to make any ordinary dividend distributions, or
distributions made before the losses were realized would be recharacterized as a
return of capital to shareholders, rather than as an ordinary dividend, reducing
each shareholder's basis in his or her Fund shares.
The Fund is required to distribute 98% of its ordinary income in the same
calendar year in which it is earned. The Fund is also required to distribute
during the calendar year 98% of the capital gain net income it earned during the
12 months ending on October 31 of such calendar year, as well as all
undistributed ordinary income and undistributed capital gain net income from the
prior year or the twelve-month period ending on October 31 of such prior year,
respectively. To the extent it does not meet these distribution requirements,
the Fund will be subject to a nondeductible 4% excise tax on the undistributed
amount. For purposes of this excise tax, income on which the Fund pays income
tax is treated as distributed.
Any dividends paid shortly after a purchase by an investor may have the
effect of reducing the per share net asset value of the investor's shares by the
per share amount of the dividends. Furthermore, such dividends, although in
effect a return of capital, are subject to federal income taxes. Therefore,
prior to purchasing shares of the Fund, the investor should carefully consider
the impact of dividends, including capital gains distributions, which are
expected to be or have been announced.
Any loss realized on a sale, redemption or exchange of shares of the Fund by
a shareholder will be disallowed to the extent the shares are replaced within a
61-day period (beginning 30 days before the disposition of shares). Shares
purchased pursuant to the reinvestment of a dividend will constitute a
replacement of shares.
A shareholder who acquires shares of the Fund and sells or otherwise
disposes of such shares within 90 days of acquisition may not be allowed to
include certain sales charges incurred in acquiring such shares for purposes of
calculating gain or loss realized upon a sale or exchange of shares of the Fund.
Dividends of net investment income and distributions of net short-term
capital gains paid to a shareholder (including a shareholder acting as a nominee
or fiduciary) who is a nonresident alien individual, a foreign corporation or a
foreign partnership (foreign shareholder) are subject to a 30% (or lower treaty
rate) withholding tax upon the gross amount of the dividends unless the
dividends are effectively connected with a U.S. trade or business conducted by
the foreign shareholder. Capital gain dividends paid to a foreign shareholder
are generally not subject to withholding tax. A foreign shareholder will,
however, be required to pay U.S. income tax on any dividends and capital gain
distributions which are effectively connected with a U.S. trade or business of
the foreign shareholder.
Dividends received by corporate shareholders are eligible for a
dividends-received deduction of 70% to the extent the Fund's income is derived
from qualified dividends received by the Fund from domestic corporations.
Interest income, capital gain net income, gain or loss from Section 1256
contracts (described above), dividend income from foreign corporations and
income from other sources will not constitute qualified dividends. Individual
shareholders are not eligible for the dividends-received deduction.
Income received by the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Income tax
treaties between certain countries and the United States may reduce or eliminate
such taxes. It is impossible to determine in advance the effective rate of
foreign tax to which the Fund will be subject, since the amount of the Fund's
assets to be invested in various countries will vary. The Fund does not expect
to meet the requirements of the Internal Revenue Code for "passing-through" to
its shareholders any foreign income taxes paid.
Foreign shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund.
B-30
<PAGE>
PERFORMANCE INFORMATION
AVERAGE ANNUAL TOTAL RETURN. The Fund may from time to time advertise its
average annual total return. Average annual total return is determined
separately for Class A, Class B, Class C and Class Z shares. See "How the Fund
Calculates Performance" in the Prospectus of the Fund.
Average annual total return is computed according to the following formula:
P(1+T)to the power of n = ERV
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10 year periods at the end of the 1, 5
or 10 year periods (or fractional portion thereof).
Average annual total return takes into account any applicable initial or
deferred sales charges but does not take into account any federal or state
income taxes that may be payable upon redemption.
AGGREGATE TOTAL RETURN. The Fund may also advertise its aggregate total
return. Aggregate total return is determined separately for Class A, Class B,
Class C and Class Z shares. See "How the Fund Calculates Performance" in the
Prospectus of the Fund.
Aggregate total return represents the cumulative change in the value of an
investment in the Fund and is computed according to the following formula:
ERV - P
-------
P
Where: P = a hypothetical initial payment of $1,000.
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10 year periods at the end of the 1, 5
or 10 year periods (or fractional portion thereof).
Aggregate total return does not take into account any federal or state
income taxes that may be payable upon redemption or any applicable initial or
contingent deferred sales charges.
B-31
<PAGE>
From time to time, the performance of the Fund may be measured against
various indices. Set forth below is a chart which compares the performance of
different types of investments over the long term and the rate of inflation.(1)
[CHART]
- ------------
(1)Source: Ibbotson Associates STOCKS, BONDS, BILLS AND INFLATION--1995
YEARBOOK (annually updates the work of Roger G. Ibbotson and Rex A.
Sinquefield). Used with permission. All rights reserved. Common stock returns
are based on the Standard and Poor's 500 Stock Index, a market-weighted,
unmanaged index of 500 common stocks in a variety of industry sectors. It is a
commonly used indicator of broad stock price movements. This chart is for
illustrative purposes only and is not intended to represent the performance of
any particular investment or fund. Investors cannot invest directly in an index.
Past performance is not a guarantee of future results.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
AND INDEPENDENT ACCOUNTANTS
State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for the portfolio securities of the
Fund and cash and in that capacity maintains certain financial and accounting
books and records pursuant to an agreement with the Fund. Subcustodians provide
custodial services for the Fund's foreign assets held outside the United States.
See "How the Fund is Managed--Custodian and Transfer and Dividend Disbursing
Agent" in the Prospectus.
Prudential Mutual Fund Services, Inc. (PMFS), Raritan Plaza One, Edison, New
Jersey 08837, serves as the Transfer and Dividend Disbursing Agent of the Fund.
PMFS is a wholly-owned subsidiary of PMF. PMFS provides customary transfer
agency services to the Fund, including the handling of shareholder
communications, the processing of shareholder transactions, the maintenance of
shareholder account records, payment of dividends and distributions and related
functions. For these services, PMFS receives an annual fee per shareholder
account of $9.00, a new account set-up fee for each manually established account
of $2.00 and a monthly inactive zero balance account fee per shareholder account
of $.20. PMFS is also reimbursed for its out-of-pocket expenses, including but
not limited to postage, stationery, printing, allocable communication expenses
and other costs.
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036,
serves as the Fund's independent accountants, and in that capacity audits the
annual reports of the Fund.
B-32
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Shareholder and Board of Directors of
Prudential Emerging Growth Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of Prudential
Emerging Growth Fund, Inc. (the "Fund") at October 21, 1996. This financial
statement is the responsibility of the Fund's management; our responsibility is
to express an opinion on this financial statement based on our audit. We
conducted our audit of this financial statement in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
October 25, 1996
B-33
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
OCTOBER 21,
1996
-----------
<S> <C>
ASSETS
Cash........................................................................................................ $ 100,000
Deferred organization costs (Note 1)........................................................................ 250,000
-----------
Total assets............................................................................................ 350,000
-----------
LIABILITIES
Deferred organization costs payable (Note 1)................................................................ 250,000
-----------
Net Assets (Note 1)
Applicable to 10,000 shares of common stock............................................................... $ 100,000
-----------
-----------
Calculation of Offering Price
Class A:
Net asset value and redemption price per Class A share.................................................... $ 10.00
Maximum sales charge (5.0% of offering price)............................................................. .53
-----------
Offering price to public.................................................................................. $ 10.53
-----------
-----------
Class B:
Net asset value, offering price and redemption price per Class B share.................................... $ 10.00
-----------
-----------
Class C:
Net asset value, offering price and redemption price per Class C share.................................... $ 10.00
-----------
-----------
Class Z:
Net asset value, offering price and redemption price per Class Z share.................................... $ 10.00
-----------
-----------
</TABLE>
See Notes to Financial Statement.
B-34
<PAGE>
PRUDENTIAL EMERGING GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENT
NOTE 1. Prudential Emerging Growth Fund, Inc. ("the Fund"), which was
incorporated in Maryland on August 23, 1996, is an open-end, diversified
management investment company. The Fund has had no significant operation other
than the issuance of 2,500 shares each of Class A, Class B, Class C and Class Z
common stock for $100,000 on October 21, 1996 to Prudential Mutual Fund
Management LLC (PMF). There are 2 billion shares of $.001 par value common stock
authorized divided into four classes, designated Class A, Class B, Class C and
Class Z, each of which consists of 1 billion, 500 million, 300 million and 200
million authorized shares, respectively.
Costs incurred and expected to be incurred in connection with the
organization and offering of the Fund will be paid initially by PMF and will be
repaid to PMF upon commencement of investment operations. Offering costs will be
deferred and amortized over a period not to exceed 12 months. Organizational
costs will be deferred and amortized over the period of benefit not to exceed 60
months from the date the Fund commences investment operations. If any of the
initial shares of the Fund are redeemed by any holder thereof during the period
of amortization of organization expenses, the redemption proceeds will be
reduced by the pro-rata amount of unamortized organization expenses based on the
number of initial shares being redeemed to the number of the initial shares
outstanding.
NOTE 2. AGREEMENTS The Fund has entered into a management agreement with
PMF. PMF is an indirect wholly-owned subsidiary of The Prudential Insurance
Company of America (Prudential).
The management fee paid PMF will be computed daily and payable monthly, at
an annual rate of .60 to 1% of the average daily net assets of the Fund.
Pursuant to a subadvisory agreement between PMF and The Prudential
Investment Corporation (PIC), a wholly-owned subsidiary of Prudential, PIC
furnishes investment advisory services pursuant to the management agreement and
supervises PIC's performance of such services. PMF pays for the services of PIC,
the cost of compensation of officers and employees of the Fund, occupancy and
certain clerical and accounting costs of the Fund. The Fund bears all other
costs and expenses.
PFM has agreed that, in any fiscal year, it will reimburse the Fund for
expenses (including the fees of PMF but excluding interest, taxes, brokerage
commissions, distribution fees, litigation and indemnification expenses and
other extraordinary expenses) in excess of the most restrictive expense
limitation imposed by state securities commissions. Such expense reimbursement,
if any, will be estimated and accrued daily and payable monthly.
The Fund has entered into a distribution agreement with Prudential
Securities Incorporated (PSI) for distribution of the Fund's shares.
Pursuant to separate Plans of Distribution (the Class A Plan, the Class B
Plan and the Class C Plan, collectively the "Plans") adopted by the Fund under
Rule 12b-1 of the Investment Company Act of 1940, PSI (also the "Distributor")
incurs the expenses of distributing the Fund's Class A, Class B and Class C
shares. These expenses include commissions and account servicing fees paid to,
or on account of financial advisers of PSI and Pruco Securities Corporation
(Prusec), an affiliated broker-dealer, commissions paid to, or on account of,
other broker-dealers or certain financial institutions which have entered into
agreements with the Distributor, advertising expenses, the cost of printing and
mailing prospectuses to potential investors and indirect and overhead costs of
PSI and Prusec associated with the sale of Fund shares, including lease,
utility, communications and sales promotion expenses.
Pursuant to the Class A Plan, the Fund will compensate PSI for its expenses
with respect to Class A shares at an annual rate of up to .30 of 1% of the
average daily net asset value of the Class A shares. PSI has agreed to limit its
distribution-related fees payable under the Class A Plan to .25 of 1% of the
average daily net asset value of the Class A shares for the fiscal year ending
October 31, 1997.
Pursuant to the Class B and Class C Plans, the Fund compensates PSI for its
distribution-related expenses with respect to the Class B and C shares at an
annual rate of 1% of the average daily net assets of the Class B and C shares.
PSI incurs the expense of distributing the Fund's Class Z shares under a
Distribution Agreement with the Fund, none of which is paid for or reimbursed by
the Fund.
B-35
<PAGE>
APPENDIX--HISTORICAL PERFORMANCE DATA
The historical performance data contained in this Appendix relies on data
obtained from statistical services, reports and other services believed by the
Manager to be reliable. The information has not been independently verified by
the Manager.
This chart shows the long-term performance of various asset classes and the
rate of inflation.
Value of $1000.00 Invested on 1/1/26 through 6/30/96
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SMALL-SIZED MID-SIZED LARGE SIZE TREASURY
STOCKS STOCKS STOCKS LONG-TERM BONDS BILLS INFLATION
<S> <C> <C> <C> <C> <C> <C>
Index Index Index Index Index Value
Dec-25 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Jan-26 $1,069.86 $1,004.11 $1,000.00 $1,013.76 $1,003.38 $1,000.00
Feb-26 $1,001.49 $951.38 $961.54 $1,020.16 $1,006.07 $996.28
Mar-26 $894.01 $868.88 $906.28 $1,024.37 $1,009.09 $990.69
Apr-26 $910.02 $901.74 $929.21 $1,032.14 $1,012.54 $1,000.00
May-26 $904.00 $911.61 $945.86 $1,033.60 $1,012.67 $994.41
Jun-26 $938.16 $958.70 $989.11 $1,037.54 $1,016.18 $986.96
Jul-26 $948.66 $975.36 $1,036.48 $1,037.99 $1,018.46 $977.65
Aug-26 $972.96 $992.95 $1,062.23 $1,038.00 $1,021.04 $972.07
Sep-26 $972.91 $992.70 $1,088.99 $1,041.90 $1,023.36 $977.65
Oct-26 $950.83 $958.20 $1,058.11 $1,052.50 $1,026.63 $981.38
Nov-26 $970.56 $993.80 $1,094.79 $1,069.34 $1,029.80 $985.10
Dec-26 $1,002.77 $1,021.68 $1,116.24 $1,077.69 $1,032.66 $985.10
Jan-27 $1,032.42 $1,031.79 $1,094.73 $1,085.75 $1,035.21 $977.65
Feb-27 $1,088.92 $1,084.22 $1,153.56 $1,095.28 $1,037.87 $970.21
Mar-27 $1,029.28 $1,069.51 $1,163.57 $1,123.02 $1,040.94 $964.62
Apr-27 $1,088.30 $1,072.34 $1,186.95 $1,122.47 $1,043.59 $964.62
May-27 $1,168.16 $1,145.53 $1,258.99 $1,134.66 $1,046.73 $972.07
Jun-27 $1,132.77 $1,126.85 $1,250.55 $1,126.84 $1,049.43 $981.38
Jul-27 $1,191.20 $1,200.10 $1,334.37 $1,132.44 $1,052.57 $962.76
Aug-27 $1,169.96 $1,207.15 $1,403.08 $1,141.05 $1,055.47 $957.17
Sep-27 $1,175.52 $1,270.63 $1,466.28 $1,143.10 $1,057.69 $962.76
Oct-27 $1,098.05 $1,229.85 $1,392.71 $1,154.37 $1,060.35 $968.34
Nov-27 $1,186.80 $1,329.15 $1,493.11 $1,165.57 $1,062.56 $966.48
Dec-27 $1,224.35 $1,376.35 $1,534.70 $1,173.91 $1,064.93 $964.62
Jan-28 $1,283.32 $1,388.37 $1,528.62 $1,169.68 $1,067.63 $962.76
Feb-28 $1,253.01 $1,348.14 $1,509.48 $1,176.84 $1,071.15 $953.45
Mar-28 $1,319.48 $1,454.99 $1,675.64 $1,182.19 $1,074.30 $953.45
Apr-28 $1,439.54 $1,544.56 $1,733.45 $1,181.76 $1,076.70 $955.31
May-28 $1,502.57 $1,576.15 $1,767.68 $1,172.65 $1,080.18 $960.90
Jun-28 $1,376.02 $1,490.25 $1,699.63 $1,177.50 $1,083.56 $953.45
Jul-28 $1,384.08 $1,502.63 $1,723.54 $1,151.90 $1,087.05 $953.45
Aug-28 $1,445.23 $1,619.08 $1,861.92 $1,160.71 $1,090.55 $955.31
Sep-28 $1,573.85 $1,706.73 $1,910.10 $1,156.00 $1,093.47 $962.76
Oct-28 $1,617.34 $1,716.54 $1,942.28 $1,174.22 $1,097.93 $960.90
Nov-28 $1,802.87 $1,917.92 $2,193.12 $1,174.61 $1,102.16 $959.03
Dec-28 $1,710.34 $1,940.60 $2,203.96 $1,175.13 $1,102.82 $955.31
Jan-29 $1,716.28 $2,007.86 $2,332.49 $1,164.56 $1,106.61 $953.45
Feb-29 $1,711.77 $2,020.81 $2,327.95 $1,146.29 $1,110.57 $951.58
Mar-29 $1,677.49 $1,952.04 $2,325.23 $1,129.82 $1,114.38 $947.86
Apr-29 $1,728.82 $1,972.60 $2,366.21 $1,160.90 $1,118.35 $944.14
May-29 $1,497.77 $1,816.92 $2,280.47 $1,142.13 $1,123.26 $949.72
Jun-29 $1,577.63 $1,981.21 $2,540.38 $1,154.68 $1,129.09 $953.45
Jul-29 $1,595.54 $2,028.63 $2,659.95 $1,154.65 $1,132.87 $962.76
Aug-29 $1,569.44 $2,110.64 $2,933.50 $1,150.71 $1,137.44 $966.48
Sep-29 $1,424.75 $2,047.13 $2,793.81 $1,153.87 $1,141.44 $964.62
Oct-29 $1,030.36 $1,620.02 $2,242.64 $1,197.95 $1,146.67 $964.62
Nov-29 $875.78 $1,427.38 $1,963.12 $1,226.27 $1,150.97 $962.76
Dec-29 $831.92 $1,413.97 $2,018.49 $1,215.33 $1,155.18 $957.17
Jan-30 $939.50 $1,507.32 $2,147.41 $1,208.42 $1,156.79 $953.45
Feb-30 $999.90 $1,537.67 $2,203.00 $1,223.99 $1,160.22 $949.72
Mar-30 $1,100.57 $1,676.08 $2,381.86 $1,234.19 $1,164.25 $944.14
Apr-30 $1,023.75 $1,605.29 $2,362.91 $1,232.23 $1,166.70 $949.72
May-30 $968.22 $1,552.53 $2,340.13 $1,249.42 $1,169.71 $944.14
Jun-30 $758.30 $1,283.05 $1,959.83 $1,255.77 $1,172.86 $938.55
Jul-30 $781.15 $1,335.97 $2,035.50 $1,260.09 $1,175.19 $925.52
Aug-30 $768.15 $1,325.32 $2,064.29 $1,261.74 $1,176.23 $919.93
Sep-30 $656.08 $1,139.77 $1,799.61 $1,271.03 $1,178.81 $925.52
Oct-30 $584.13 $1,042.35 $1,645.69 $1,275.53 $1,179.83 $919.93
Nov-30 $582.51 $1,024.30 $1,631.12 $1,280.93 $1,181.38 $912.48
Dec-30 $514.57 $922.48 $1,515.95 $1,271.95 $1,183.03 $899.44
Jan-31 $622.80 $1,001.04 $1,592.04 $1,256.51 $1,184.74 $886.41
Feb-31 $782.61 $1,123.38 $1,782.02 $1,267.22 $1,185.23 $873.37
Mar-31 $727.22 $1,045.32 $1,661.76 $1,280.45 $1,186.76 $867.79
Apr-31 $569.88 $906.02 $1,506.44 $1,291.42 $1,187.66 $862.20
May-31 $491.31 $770.91 $1,313.76 $1,310.16 $1,188.70 $852.89
Jun-31 $580.70 $898.07 $1,500.43 $1,310.66 $1,189.60 $843.58
Jul-31 $548.34 $839.20 $1,392.18 $1,305.11 $1,190.30 $841.72
Aug-31 $506.52 $836.83 $1,417.53 $1,306.73 $1,190.71 $839.85
Sep-31 $342.10 $577.49 $996.15 $1,270.05 $1,191.02 $836.13
Oct-31 $368.42 $636.03 $1,085.41 $1,228.13 $1,192.24 $830.54
Nov-31 $331.27 $579.44 $998.82 $1,231.47 $1,194.23 $821.23
Dec-31 $258.55 $494.68 $858.99 $1,204.42 $1,195.72 $813.78
Jan-32 $284.90 $509.01 $835.71 $1,208.49 $1,198.49 $797.02
Feb-32 $293.18 $516.03 $883.38 $1,258.44 $1,201.24 $785.85
Mar-32 $254.74 $457.40 $781.08 $1,256.13 $1,203.20 $782.12
Apr-32 $198.20 $373.85 $625.08 $1,331.97 $1,204.58 $776.54
May-32 $174.55 $276.12 $487.84 $1,306.93 $1,205.31 $765.36
Jun-32 $175.12 $291.66 $486.75 $1,315.43 $1,205.58 $759.78
Jul-32 $236.81 $408.13 $672.44 $1,378.73 $1,205.88 $759.78
Aug-32 $410.77 $622.27 $932.60 $1,379.11 $1,206.28 $750.47
Sep-32 $356.55 $585.06 $900.36 $1,386.98 $1,206.65 $746.74
Oct-32 $293.26 $486.85 $778.90 $1,384.62 $1,206.87 $741.16
Nov-32 $257.27 $458.47 $746.45 $1,389.07 $1,207.09 $737.43
Dec-32 $244.62 $462.38 $788.61 $1,407.27 $1,207.22 $729.98
Jan-33 $242.60 $474.99 $795.48 $1,428.15 $1,207.35 $718.81
Feb-33 $211.60 $412.75 $654.49 $1,391.24 $1,207.03 $707.64
Mar-33 $235.25 $435.84 $677.62 $1,404.72 $1,207.54 $702.05
Apr-33 $353.76 $672.24 $966.05 $1,400.21 $1,208.72 $700.19
May-33 $578.02 $911.85 $1,128.60 $1,442.58 $1,209.24 $702.05
Jun-33 $729.27 $1,055.34 $1,279.63 $1,449.76 $1,209.53 $709.50
Jul-33 $689.13 $937.86 $1,169.38 $1,447.31 $1,209.76 $729.98
Aug-33 $752.83 $1,085.67 $1,310.41 $1,453.70 $1,210.06 $737.43
Sep-33 $632.78 $945.40 $1,163.89 $1,457.05 $1,210.25 $737.43
Oct-33 $554.57 $845.33 $1,064.43 $1,443.79 $1,210.35 $737.43
Nov-33 $590.84 $914.73 $1,184.42 $1,422.24 $1,210.57 $737.43
Dec-33 $594.10 $943.96 $1,214.39 $1,406.22 $1,210.81 $733.71
Jan-34 $825.25 $1,141.21 $1,344.24 $1,442.39 $1,211.38 $737.43
Feb-34 $838.95 $1,125.43 $1,300.92 $1,454.10 $1,211.68 $743.02
Mar-34 $837.96 $1,139.23 $1,300.92 $1,482.74 $1,211.94 $743.02
Apr-34 $858.04 $1,120.16 $1,268.24 $1,501.36 $1,212.01 $741.16
May-34 $748.61 $1,019.94 $1,174.88 $1,521.05 $1,212.09 $743.02
Jun-34 $746.79 $1,047.37 $1,201.78 $1,531.26 $1,212.17 $744.88
Jul-34 $578.09 $880.11 $1,065.80 $1,537.38 $1,212.25 $744.88
Aug-34 $667.46 $947.33 $1,130.88 $1,519.19 $1,212.33 $746.74
Sep-34 $656.33 $943.77 $1,127.17 $1,497.04 $1,212.40 $757.92
Oct-34 $662.68 $927.71 $1,094.96 $1,524.34 $1,212.54 $752.33
Nov-34 $725.51 $1,035.54 $1,198.12 $1,530.01 $1,212.64 $750.47
Dec-34 $738.00 $1,051.25 $1,196.87 $1,547.21 $1,212.78 $748.61
Jan-35 $713.80 $999.67 $1,147.73 $1,575.33 $1,212.94 $759.78
Feb-35 $671.53 $968.33 $1,108.63 $1,589.78 $1,213.15 $765.37
Mar-35 $591.72 $916.92 $1,076.92 $1,596.38 $1,213.30 $763.50
Apr-35 $638.53 $988.91 $1,182.45 $1,608.94 $1,213.46 $770.95
May-35 $636.98 $1,011.22 $1,230.87 $1,599.84 $1,213.61 $767.23
Jun-35 $656.40 $1,078.84 $1,316.95 $1,614.56 $1,213.76 $765.37
Jul-35 $712.53 $1,163.72 $1,428.95 $1,621.95 $1,213.92 $761.64
Aug-35 $751.33 $1,197.17 $1,468.93 $1,600.33 $1,214.08 $761.64
Sep-35 $778.12 $1,227.20 $1,506.56 $1,601.71 $1,214.23 $765.37
Oct-35 $855.43 $1,303.50 $1,623.55 $1,611.45 $1,214.38 $765.37
Nov-35 $976.21 $1,383.13 $1,700.43 $1,613.00 $1,214.67 $769.09
Dec-35 $1,034.63 $1,488.92 $1,767.40 $1,624.33 $1,214.83 $770.95
Jan-36 $1,345.97 $1,601.93 $1,885.84 $1,633.30 $1,214.99 $770.95
Feb-36 $1,427.01 $1,649.04 $1,928.01 $1,646.55 $1,215.13 $767.23
Mar-36 $1,436.40 $1,655.55 $1,979.69 $1,664.06 $1,215.34 $763.50
Apr-36 $1,178.63 $1,493.48 $1,831.08 $1,669.93 $1,215.54 $763.50
May-36 $1,210.71 $1,561.43 $1,930.81 $1,676.69 $1,215.74 $763.50
Jun-36 $1,182.71 $1,556.60 $1,995.17 $1,680.26 $1,216.11 $770.95
Jul-36 $1,285.91 $1,691.43 $2,134.99 $1,690.34 $1,216.27 $774.68
Aug-36 $1,312.97 $1,735.39 $2,167.32 $1,709.09 $1,216.48 $780.26
Sep-36 $1,384.08 $1,775.44 $2,174.10 $1,703.77 $1,216.61 $782.13
Oct-36 $1,472.02 $1,877.39 $2,342.49 $1,704.75 $1,216.85 $780.26
Nov-36 $1,678.15 $1,991.19 $2,373.79 $1,739.74 $1,216.95 $780.26
Dec-36 $1,705.07 $2,031.04 $2,366.92 $1,746.40 $1,216.98 $780.26
Jan-37 $1,921.01 $2,131.18 $2,459.23 $1,744.15 $1,217.12 $785.85
Feb-37 $2,047.32 $2,189.11 $2,506.12 $1,759.21 $1,217.33 $787.71
Mar-37 $2,071.81 $2,197.54 $2,486.73 $1,686.82 $1,217.50 $793.30
Apr-37 $1,723.91 $2,007.84 $2,285.52 $1,693.38 $1,217.92 $797.02
May-37 $1,653.55 $1,967.76 $2,279.95 $1,702.30 $1,218.69 $800.75
Jun-37 $1,457.96 $1,853.17 $2,164.97 $1,699.29 $1,219.09 $802.61
Jul-37 $1,638.04 $2,016.16 $2,391.31 $1,722.77 $1,219.48 $806.33
Aug-37 $1,517.45 $1,918.33 $2,275.83 $1,704.81 $1,219.78 $808.20
Sep-37 $1,132.24 $1,575.54 $1,956.59 $1,712.45 $1,220.23 $815.65
Oct-37 $1,008.49 $1,417.30 $1,764.63 $1,719.70 $1,220.43 $811.92
Nov-37 $861.98 $1,271.11 $1,611.86 $1,736.14 $1,220.68 $806.33
Dec-37 $716.00 $1,176.66 $1,537.87 $1,750.45 $1,220.73 $804.47
Jan-38 $754.25 $1,199.89 $1,561.19 $1,760.50 $1,220.77 $793.30
Feb-38 $780.10 $1,275.59 $1,666.35 $1,769.61 $1,220.83 $785.85
Mar-38 $499.26 $926.87 $1,251.96 $1,763.13 $1,220.75 $785.85
Apr-38 $637.87 $1,102.88 $1,433.13 $1,800.11 $1,220.90 $789.57
May-38 $583.68 $1,030.97 $1,385.85 $1,808.08 $1,220.92 $785.85
Jun-38 $787.83 $1,324.78 $1,732.69 $1,808.89 $1,220.93 $785.85
Jul-38 $905.93 $1,478.37 $1,861.59 $1,816.71 $1,220.87 $787.71
Aug-38 $815.22 $1,411.60 $1,819.55 $1,816.71 $1,220.92 $785.85
Sep-38 $802.41 $1,395.86 $1,849.73 $1,820.80 $1,221.14 $785.85
Oct-38 $973.76 $1,585.76 $1,993.29 $1,836.60 $1,221.27 $782.13
Nov-38 $906.72 $1,548.89 $1,938.81 $1,832.58 $1,220.51 $780.26
Dec-38 $950.83 $1,620.68 $2,016.48 $1,847.29 $1,220.53 $782.13
Jan-39 $870.16 $1,492.03 $1,880.63 $1,858.17 $1,220.47 $778.40
Feb-39 $879.43 $1,563.57 $1,954.01 $1,873.01 $1,220.58 $774.68
Mar-39 $662.57 $1,298.19 $1,692.45 $1,896.44 $1,220.46 $772.82
Apr-39 $671.95 $1,298.44 $1,687.83 $1,918.77 $1,220.42 $770.95
May-39 $745.03 $1,417.67 $1,811.48 $1,951.49 $1,220.49 $770.95
Jun-39 $667.38 $1,316.06 $1,700.61 $1,946.22 $1,220.64 $770.95
Jul-39 $836.57 $1,494.57 $1,888.52 $1,968.27 $1,220.65 $770.95
Aug-39 $703.56 $1,335.06 $1,766.17 $1,928.77 $1,220.59 $770.95
Sep-39 $1,065.52 $1,655.55 $2,061.59 $1,823.69 $1,220.71 $785.85
Oct-39 $1,023.24 $1,663.91 $2,036.25 $1,898.42 $1,220.73 $782.13
Nov-39 $915.48 $1,552.63 $1,955.31 $1,929.12 $1,220.76 $782.13
Dec-39 $954.13 $1,606.86 $2,008.20 $1,957.02 $1,220.78 $778.40
Jan-40 $955.02 $1,572.21 $1,940.67 $1,953.71 $1,220.81 $776.54
Feb-40 $1,033.41 $1,609.62 $1,966.44 $1,958.96 $1,220.83 $782.13
Mar-40 $1,098.70 $1,652.84 $1,990.75 $1,993.58 $1,220.83 $780.26
Apr-40 $1,170.59 $1,668.63 $1,985.88 $1,986.60 $1,220.84 $780.26
May-40 $740.55 $1,224.37 $1,531.36 $1,927.18 $1,220.65 $782.13
Jun-40 $818.35 $1,310.25 $1,655.25 $1,976.91 $1,220.70 $783.99
Jul-40 $837.28 $1,367.01 $1,711.65 $1,987.17 $1,220.84 $782.13
Aug-40 $858.63 $1,397.02 $1,771.53 $1,992.73 $1,220.77 $780.26
Sep-40 $876.89 $1,439.34 $1,793.34 $2,014.71 $1,220.79 $782.13
Oct-40 $924.65 $1,533.39 $1,869.04 $2,020.99 $1,220.81 $782.13
Nov-40 $947.28 $1,520.61 $1,810.00 $2,062.35 $1,220.83 $782.13
Dec-40 $904.94 $1,514.61 $1,811.71 $2,076.14 $1,220.84 $785.85
Jan-41 $907.19 $1,447.98 $1,727.80 $2,034.49 $1,220.76 $785.85
Feb-41 $881.02 $1,425.43 $1,717.51 $2,038.60 $1,220.67 $785.85
Mar-41 $909.16 $1,434.28 $1,729.63 $2,058.13 $1,220.81 $789.58
Apr-41 $848.29 $1,350.23 $1,623.69 $2,084.74 $1,220.72 $797.02
May-41 $852.07 $1,373.34 $1,653.34 $2,090.45 $1,220.78 $802.61
Jun-41 $916.24 $1,455.31 $1,748.83 $2,104.20 $1,220.83 $817.51
Jul-41 $1,114.63 $1,597.06 $1,850.03 $2,108.73 $1,221.18 $821.23
Aug-41 $1,107.91 $1,599.49 $1,851.81 $2,112.53 $1,221.26 $828.68
Sep-41 $1,055.92 $1,582.88 $1,839.23 $2,110.08 $1,221.37 $843.58
Oct-41 $984.96 $1,492.20 $1,718.42 $2,139.64 $1,221.42 $852.89
Nov-41 $936.23 $1,466.01 $1,669.58 $2,133.35 $1,221.48 $860.34
Dec-41 $823.50 $1,386.79 $1,601.69 $2,095.50 $1,221.57 $862.20
Jan-42 $979.47 $1,442.65 $1,627.50 $2,110.03 $1,221.79 $873.38
Feb-42 $972.34 $1,419.37 $1,601.63 $2,112.43 $1,221.92 $880.83
Mar-42 $903.37 $1,350.22 $1,497.22 $2,131.79 $1,222.06 $892.00
Apr-42 $871.51 $1,277.73 $1,437.41 $2,125.56 $1,222.14 $897.58
May-42 $868.75 $1,322.89 $1,551.87 $2,141.55 $1,222.45 $906.90
Jun-42 $897.92 $1,350.12 $1,586.15 $2,142.18 $1,222.76 $908.76
Jul-42 $964.05 $1,409.67 $1,639.66 $2,145.95 $1,223.06 $912.48
Aug-42 $995.40 $1,443.18 $1,666.47 $2,154.01 $1,223.42 $918.07
Sep-42 $1,086.22 $1,486.91 $1,714.80 $2,154.71 $1,223.76 $919.93
Oct-42 $1,204.28 $1,614.53 $1,831.06 $2,159.94 $1,224.15 $929.24
Nov-42 $1,142.78 $1,590.13 $1,827.17 $2,152.38 $1,224.50 $934.83
Dec-42 $1,190.01 $1,667.32 $1,927.48 $2,162.94 $1,224.85 $942.28
Jan-43 $1,443.72 $1,822.18 $2,069.53 $2,170.02 $1,225.21 $942.28
Feb-43 $1,722.51 $1,971.77 $2,190.10 $2,168.83 $1,225.53 $944.14
Mar-43 $1,971.34 $2,161.08 $2,309.56 $2,170.84 $1,225.92 $959.03
Apr-43 $2,155.27 $2,203.45 $2,317.54 $2,181.30 $1,226.28 $970.21
May-43 $2,404.41 $2,339.50 $2,445.51 $2,192.29 $1,226.58 $977.66
Jun-43 $2,384.44 $2,373.03 $2,500.04 $2,196.31 $1,226.96 $975.79
Jul-43 $2,126.21 $2,224.56 $2,368.46 $2,196.14 $1,227.31 $968.35
Aug-43 $2,125.68 $2,257.23 $2,409.01 $2,200.68 $1,227.67 $964.62
Sep-43 $2,216.62 $2,320.33 $2,472.30 $2,203.08 $1,228.02 $968.35
Oct-43 $2,243.89 $2,302.65 $2,445.69 $2,204.17 $1,228.37 $972.07
Nov-43 $1,994.21 $2,123.66 $2,285.66 $2,204.06 $1,228.73 $970.21
Dec-43 $2,241.67 $2,312.41 $2,426.69 $2,208.02 $1,229.10 $972.07
Jan-44 $2,385.26 $2,377.54 $2,468.28 $2,212.67 $1,229.46 $970.21
Feb-44 $2,455.60 $2,402.51 $2,478.70 $2,219.75 $1,229.80 $968.34
Mar-44 $2,639.58 $2,478.52 $2,526.93 $2,224.38 $1,230.11 $968.34
Apr-44 $2,499.03 $2,404.83 $2,501.70 $2,227.35 $1,230.45 $973.93
May-44 $2,683.84 $2,549.56 $2,628.16 $2,233.54 $1,230.76 $977.66
Jun-44 $3,055.40 $2,752.95 $2,770.74 $2,235.29 $1,231.11 $979.52
Jul-44 $2,964.18 $2,715.81 $2,717.38 $2,243.40 $1,231.47 $985.10
Aug-44 $3,058.58 $2,780.75 $2,760.14 $2,249.44 $1,231.84 $988.83
Sep-44 $3,052.52 $2,778.43 $2,757.98 $2,252.60 $1,232.13 $988.83
Oct-44 $3,019.54 $2,773.27 $2,764.46 $2,255.30 $1,232.51 $988.83
Nov-44 $3,170.31 $2,833.12 $2,801.23 $2,260.63 $1,232.86 $988.83
Dec-44 $3,445.94 $3,000.86 $2,906.03 $2,270.17 $1,233.16 $992.55
Jan-45 $3,612.14 $3,097.63 $2,951.98 $2,298.91 $1,233.48 $992.55
Feb-45 $3,976.63 $3,344.41 $3,153.60 $2,316.53 $1,233.75 $990.69
Mar-45 $3,634.21 $3,180.96 $3,014.67 $2,321.29 $1,234.06 $990.69
Apr-45 $4,054.78 $3,469.09 $3,286.52 $2,358.49 $1,234.41 $992.55
May-45 $4,257.44 $3,546.04 $3,350.74 $2,371.76 $1,234.78 $1,000.00
Jun-45 $4,621.49 $3,632.16 $3,348.51 $2,411.79 $1,235.08 $1,009.31
Jul-45 $4,364.40 $3,513.68 $3,288.08 $2,391.07 $1,235.45 $1,011.18
Aug-45 $4,607.31 $3,745.37 $3,498.91 $2,397.26 $1,235.82 $1,011.18
Sep-45 $4,920.18 $3,986.30 $3,652.31 $2,410.26 $1,236.17 $1,007.45
Oct-45 $5,264.92 $4,198.49 $3,769.84 $2,435.40 $1,236.55 $1,007.45
Nov-45 $5,882.19 $4,627.31 $3,919.27 $2,465.95 $1,236.85 $1,011.18
Dec-45 $5,982.52 $4,704.74 $3,964.87 $2,513.86 $1,237.22 $1,014.90
Jan-46 $6,916.84 $5,047.31 $4,248.08 $2,520.20 $1,237.60 $1,014.90
Feb-46 $6,476.45 $4,700.01 $3,975.85 $2,528.22 $1,237.93 $1,011.18
Mar-46 $6,653.45 $5,042.66 $4,166.82 $2,530.79 $1,238.29 $1,018.62
Apr-46 $7,116.59 $5,262.53 $4,330.45 $2,496.54 $1,238.66 $1,024.21
May-46 $7,537.28 $5,558.22 $4,455.11 $2,493.47 $1,239.03 $1,029.80
Jun-46 $7,188.73 $5,254.09 $4,290.19 $2,510.94 $1,239.36 $1,040.97
Jul-46 $6,808.07 $5,041.08 $4,187.76 $2,500.92 $1,239.76 $1,102.42
Aug-46 $6,230.35 $4,678.93 $3,905.62 $2,473.03 $1,240.12 $1,126.63
Sep-46 $5,231.83 $4,077.61 $3,516.23 $2,470.71 $1,240.49 $1,139.67
Oct-46 $5,170.06 $4,023.43 $3,495.08 $2,488.94 $1,240.86 $1,162.01
Nov-46 $5,097.11 $4,026.05 $3,485.66 $2,475.47 $1,241.22 $1,189.95
Dec-46 $5,287.04 $4,246.17 $3,644.85 $2,511.30 $1,241.59 $1,199.26
Jan-47 $5,509.44 $4,311.84 $3,737.76 $2,509.75 $1,241.96 $1,199.26
Feb-47 $5,486.94 $4,280.18 $3,709.12 $2,515.02 $1,242.30 $1,197.39
Mar-47 $5,302.59 $4,190.09 $3,653.83 $2,520.00 $1,242.67 $1,223.46
Apr-47 $4,755.84 $3,878.37 $3,521.36 $2,510.75 $1,243.03 $1,223.46
May-47 $4,502.03 $3,758.94 $3,526.19 $2,519.14 $1,243.38 $1,219.74
Jun-47 $4,750.37 $3,993.12 $3,721.41 $2,521.71 $1,243.76 $1,229.05
Jul-47 $5,125.25 $4,235.82 $3,863.32 $2,537.47 $1,244.13 $1,240.23
Aug-47 $5,106.30 $4,177.01 $3,784.87 $2,558.11 $1,244.47 $1,253.26
Sep-47 $5,165.08 $4,196.73 $3,742.87 $2,546.98 $1,245.28 $1,283.06
Oct-47 $5,310.95 $4,302.58 $3,832.05 $2,537.45 $1,246.08 $1,283.06
Nov-47 $5,150.28 $4,185.73 $3,764.99 $2,493.28 $1,246.86 $1,290.51
Dec-47 $5,335.41 $4,300.31 $3,852.90 $2,445.43 $1,247.84 $1,307.27
Jan-48 $5,253.50 $4,206.60 $3,706.85 $2,450.38 $1,248.75 $1,322.16
Feb-48 $4,842.33 $3,984.74 $3,563.01 $2,461.76 $1,249.65 $1,310.99
Mar-48 $5,319.64 $4,365.28 $3,845.51 $2,470.18 $1,250.76 $1,307.27
Apr-48 $5,515.15 $4,568.31 $3,957.72 $2,481.22 $1,251.78 $1,325.89
May-48 $6,099.32 $4,928.66 $4,305.42 $2,516.26 $1,252.73 $1,335.20
Jun-48 $6,128.48 $4,852.33 $4,328.64 $2,495.12 $1,253.87 $1,344.51
Jul-48 $5,774.14 $4,614.14 $4,108.84 $2,489.83 $1,254.89 $1,361.27
Aug-48 $5,777.66 $4,637.96 $4,173.65 $2,490.18 $1,255.97 $1,366.86
Sep-48 $5,473.89 $4,436.77 $4,058.66 $2,493.66 $1,256.42 $1,366.86
Oct-48 $5,828.11 $4,680.25 $4,346.88 $2,495.51 $1,256.92 $1,361.27
Nov-48 $5,177.41 $4,197.64 $3,929.01 $2,514.42 $1,257.41 $1,351.96
Dec-48 $5,222.73 $4,303.69 $4,064.86 $2,528.54 $1,257.97 $1,342.65
Jan-49 $5,317.90 $4,363.02 $4,080.90 $2,549.21 $1,259.17 $1,340.78
Feb-49 $5,062.01 $4,234.22 $3,960.25 $2,561.66 $1,260.28 $1,325.89
Mar-49 $5,380.23 $4,459.50 $4,090.27 $2,580.74 $1,261.51 $1,329.61
Apr-49 $5,199.36 $4,316.72 $4,016.94 $2,583.71 $1,262.67 $1,331.47
May-49 $4,906.05 $4,195.58 $3,913.38 $2,588.73 $1,263.95 $1,329.61
Jun-49 $4,858.85 $4,172.30 $3,918.90 $2,631.98 $1,265.16 $1,331.47
Jul-49 $5,184.79 $4,435.85 $4,173.51 $2,640.78 $1,266.26 $1,322.16
Aug-49 $5,317.75 $4,534.47 $4,265.08 $2,670.12 $1,267.41 $1,325.89
Sep-49 $5,577.93 $4,736.17 $4,377.18 $2,667.08 $1,268.50 $1,331.47
Oct-49 $5,841.35 $4,871.87 $4,526.08 $2,672.09 $1,269.64 $1,324.03
Nov-49 $5,850.62 $4,966.59 $4,605.09 $2,677.71 $1,270.70 $1,325.89
Dec-49 $6,254.13 $5,281.43 $4,828.75 $2,691.60 $1,271.84 $1,318.44
Jan-50 $6,561.56 $5,432.96 $4,923.82 $2,675.13 $1,273.02 $1,312.85
Feb-50 $6,706.48 $5,522.59 $5,022.01 $2,680.79 $1,274.10 $1,309.13
Mar-50 $6,681.57 $5,523.15 $5,057.01 $2,682.99 $1,275.32 $1,314.71
Apr-50 $6,956.41 $5,747.29 $5,302.69 $2,691.04 $1,276.41 $1,316.58
May-50 $7,133.70 $5,902.94 $5,572.67 $2,699.95 $1,277.73 $1,322.16
Jun-50 $6,579.50 $5,475.03 $5,267.03 $2,693.20 $1,278.97 $1,329.61
Jul-50 $6,968.59 $5,665.12 $5,329.55 $2,708.14 $1,280.23 $1,342.65
Aug-50 $7,337.80 $5,913.12 $5,565.56 $2,711.92 $1,281.47 $1,353.82
Sep-50 $7,720.24 $6,278.31 $5,894.90 $2,692.29 $1,282.77 $1,363.13
Oct-50 $7,674.87 $6,203.99 $5,949.46 $2,679.44 $1,284.26 $1,370.58
Nov-50 $7,922.34 $6,425.10 $6,049.99 $2,688.83 $1,285.62 $1,376.17
Dec-50 $8,677.42 $6,879.51 $6,360.08 $2,693.19 $1,287.04 $1,394.79
Jan-51 $9,398.03 $7,391.97 $6,765.18 $2,708.76 $1,288.66 $1,417.13
Feb-51 $9,455.16 $7,472.68 $6,871.38 $2,688.75 $1,290.01 $1,433.89
Mar-51 $9,003.91 $7,227.83 $6,764.21 $2,646.45 $1,291.39 $1,439.48
Apr-51 $9,334.12 $7,553.25 $7,108.74 $2,629.91 $1,293.05 $1,441.34
May-51 $9,025.61 $7,398.51 $6,896.40 $2,611.74 $1,294.66 $1,446.93
Jun-51 $8,548.47 $7,070.06 $6,739.37 $2,595.65 $1,296.16 $1,445.07
Jul-51 $8,867.34 $7,574.71 $7,218.46 $2,631.56 $1,297.91 $1,446.93
Aug-51 $9,403.43 $7,869.24 $7,563.27 $2,657.50 $1,299.64 $1,446.93
Sep-51 $9,605.66 $8,050.96 $7,573.02 $2,636.37 $1,301.22 $1,456.24
Oct-51 $9,392.15 $7,863.88 $7,494.88 $2,639.06 $1,303.25 $1,463.69
Nov-51 $9,314.04 $8,018.98 $7,566.75 $2,603.17 $1,304.65 $1,471.14
Dec-51 $9,354.57 $8,166.06 $7,887.55 $2,587.32 $1,306.26 $1,476.72
Jan-52 $9,533.32 $8,293.08 $8,030.23 $2,594.61 $1,308.28 $1,476.72
Feb-52 $9,247.79 $8,140.34 $7,804.03 $2,598.23 $1,309.78 $1,467.41
Mar-52 $9,410.00 $8,437.24 $8,196.58 $2,626.99 $1,311.19 $1,467.41
Apr-52 $8,921.53 $8,032.54 $7,866.97 $2,671.84 $1,312.72 $1,473.00
May-52 $8,949.87 $8,253.96 $8,136.85 $2,662.89 $1,314.44 $1,474.86
Jun-52 $9,193.01 $8,535.68 $8,535.84 $2,663.69 $1,316.39 $1,478.59
Jul-52 $9,296.25 $8,657.79 $8,703.41 $2,658.47 $1,318.38 $1,489.76
Aug-52 $9,291.10 $8,635.01 $8,641.73 $2,639.88 $1,320.31 $1,491.62
Sep-52 $9,141.68 $8,480.39 $8,489.82 $2,605.57 $1,322.47 $1,489.76
Oct-52 $9,047.49 $8,412.38 $8,507.11 $2,644.06 $1,324.31 $1,491.62
Nov-52 $9,485.88 $8,879.80 $8,992.83 $2,639.99 $1,325.70 $1,491.62
Dec-52 $9,637.73 $9,128.97 $9,336.29 $2,617.33 $1,327.89 $1,489.76
Jan-53 $10,031.94 $9,251.10 $9,290.61 $2,620.42 $1,330.04 $1,486.04
Feb-53 $10,301.71 $9,314.08 $9,192.00 $2,597.67 $1,331.90 $1,478.59
Mar-53 $10,232.76 $9,222.82 $8,996.79 $2,574.78 $1,334.35 $1,482.31
Apr-53 $9,938.64 $8,993.10 $8,783.34 $2,547.72 $1,336.52 $1,484.17
May-53 $10,079.26 $9,025.92 $8,851.13 $2,510.14 $1,338.82 $1,487.90
Jun-53 $9,589.21 $8,783.14 $8,732.10 $2,566.02 $1,341.28 $1,493.48
Jul-53 $9,734.91 $8,926.88 $8,970.85 $2,576.11 $1,343.23 $1,497.21
Aug-53 $9,123.38 $8,492.99 $8,521.40 $2,574.18 $1,345.47 $1,500.93
Sep-53 $8,884.04 $8,454.98 $8,550.64 $2,651.23 $1,347.65 $1,502.80
Oct-53 $9,143.04 $8,818.08 $9,012.04 $2,670.95 $1,349.34 $1,506.52
Nov-53 $9,258.36 $9,055.16 $9,195.66 $2,657.75 $1,350.38 $1,500.93
Dec-53 $9,012.51 $9,031.92 $9,243.94 $2,712.53 $1,352.10 $1,499.07
Jan-54 $9,694.17 $9,614.79 $9,739.48 $2,736.75 $1,353.58 $1,502.80
Feb-54 $9,785.62 $9,808.39 $9,847.78 $2,802.33 $1,354.54 $1,500.93
Mar-54 $9,964.71 $10,152.14 $10,167.88 $2,818.67 $1,355.59 $1,499.07
Apr-54 $10,104.46 $10,387.65 $10,692.50 $2,847.92 $1,356.80 $1,495.35
May-54 $10,560.58 $10,843.02 $11,138.97 $2,823.14 $1,357.49 $1,500.93
Jun-54 $10,651.22 $11,023.48 $11,173.31 $2,869.05 $1,358.29 $1,502.80
Jul-54 $11,511.62 $11,728.34 $11,831.24 $2,907.62 $1,358.98 $1,502.80
Aug-54 $11,528.22 $11,545.73 $11,505.57 $2,897.16 $1,359.66 $1,500.93
Sep-54 $12,000.47 $12,081.24 $12,485.26 $2,894.35 $1,360.84 $1,497.21
Oct-54 $12,082.27 $12,036.58 $12,276.59 $2,896.16 $1,361.79 $1,493.49
Nov-54 $13,023.69 $13,216.38 $13,392.65 $2,888.95 $1,362.65 $1,495.35
Dec-54 $14,472.54 $14,096.06 $14,108.43 $2,907.48 $1,363.78 $1,491.62
Jan-55 $14,763.65 $14,230.58 $14,386.83 $2,837.38 $1,364.89 $1,491.62
Feb-55 $15,471.44 $14,784.93 $14,528.23 $2,815.17 $1,366.05 $1,491.62
Mar-55 $15,602.39 $14,723.67 $14,484.76 $2,839.75 $1,367.40 $1,491.62
Apr-55 $15,836.67 $15,077.00 $15,058.92 $2,839.99 $1,368.83 $1,491.62
May-55 $15,959.95 $15,192.07 $15,142.22 $2,860.69 $1,370.73 $1,491.62
Jun-55 $16,428.16 $15,765.27 $16,416.40 $2,838.92 $1,372.13 $1,491.62
Jul-55 $16,532.97 $15,811.24 $17,436.68 $2,809.88 $1,373.50 $1,497.21
Aug-55 $16,487.00 $15,967.76 $17,392.60 $2,811.03 $1,375.67 $1,493.48
Sep-55 $16,667.25 $15,726.37 $17,618.16 $2,831.54 $1,377.90 $1,499.07
Oct-55 $16,384.45 $15,424.13 $17,117.89 $2,872.35 $1,380.40 $1,499.07
Nov-55 $17,151.90 $16,408.97 $18,532.93 $2,859.43 $1,382.75 $1,500.93
Dec-55 $17,430.84 $16,747.90 $18,561.43 $2,869.90 $1,385.25 $1,497.21
Jan-56 $17,348.40 $16,232.48 $17,916.59 $2,893.75 $1,388.30 $1,495.35
Feb-56 $17,830.35 $16,832.65 $18,656.63 $2,893.11 $1,390.95 $1,495.35
Mar-56 $18,598.07 $17,749.00 $19,981.61 $2,850.03 $1,393.06 $1,497.21
Apr-56 $18,685.06 $17,812.91 $19,973.36 $2,817.86 $1,395.64 $1,499.07
May-56 $17,941.88 $17,171.26 $18,788.50 $2,881.37 $1,398.85 $1,506.52
Jun-56 $18,041.87 $17,685.33 $19,557.49 $2,889.22 $1,401.62 $1,515.83
Jul-56 $18,552.33 $18,497.56 $20,594.29 $2,828.95 $1,404.65 $1,527.00
Aug-56 $18,303.24 $18,046.94 $19,918.80 $2,776.19 $1,406.98 $1,525.14
Sep-56 $17,826.52 $17,334.29 $19,042.55 $2,789.95 $1,409.57 $1,527.00
Oct-56 $18,012.73 $17,472.01 $19,168.52 $2,774.77 $1,413.06 $1,536.31
Nov-56 $18,108.43 $17,699.20 $19,071.79 $2,758.84 $1,415.95 $1,536.31
Dec-56 $18,177.39 $18,117.87 $19,778.31 $2,709.57 $1,419.31 $1,540.04
Jan-57 $18,606.52 $17,948.81 $18,985.81 $2,803.25 $1,423.10 $1,541.90
Feb-57 $18,234.26 $17,605.52 $18,484.85 $2,810.27 $1,426.50 $1,547.49
Mar-57 $18,539.52 $17,988.55 $18,882.24 $2,803.52 $1,429.79 $1,551.21
Apr-57 $18,999.99 $18,558.99 $19,614.25 $2,741.42 $1,433.39 $1,556.80
May-57 $19,143.25 $19,011.64 $20,471.88 $2,735.17 $1,437.06 $1,560.52
Jun-57 $19,283.36 $18,759.35 $20,480.52 $2,685.83 $1,440.52 $1,569.83
Jul-57 $19,166.90 $18,824.43 $20,748.57 $2,674.85 $1,444.78 $1,577.28
Aug-57 $18,427.37 $17,718.59 $19,700.54 $2,675.32 $1,448.42 $1,579.14
Sep-57 $17,594.67 $16,833.21 $18,515.55 $2,695.66 $1,452.14 $1,581.01
Oct-57 $16,130.60 $15,935.43 $17,956.86 $2,682.13 $1,456.34 $1,581.01
Nov-57 $16,313.52 $16,436.53 $18,372.33 $2,825.04 $1,460.37 $1,586.59
Dec-57 $15,528.92 $15,797.84 $17,645.72 $2,911.66 $1,463.87 $1,586.59
Jan-58 $17,244.89 $17,232.73 $18,431.15 $2,887.09 $1,467.92 $1,595.91
Feb-58 $16,951.71 $17,072.29 $18,170.37 $2,916.09 $1,469.69 $1,597.77
Mar-58 $17,750.17 $17,748.51 $18,766.56 $2,945.87 $1,471.08 $1,608.94
Apr-58 $18,417.61 $18,230.88 $19,399.53 $3,000.77 $1,472.27 $1,612.67
May-58 $19,131.20 $18,883.14 $19,810.40 $3,001.03 $1,473.88 $1,612.67
Jun-58 $19,751.58 $19,466.06 $20,363.05 $2,953.10 $1,474.32 $1,614.53
Jul-58 $20,722.39 $20,452.56 $21,276.78 $2,870.98 $1,475.30 $1,616.39
Aug-58 $21,610.12 $21,045.51 $21,650.99 $2,745.94 $1,475.97 $1,614.53
Sep-58 $22,729.50 $22,049.97 $22,734.67 $2,713.82 $1,478.78 $1,614.53
Oct-58 $23,654.71 $22,740.22 $23,347.78 $2,751.40 $1,481.50 $1,614.53
Nov-58 $24,828.29 $23,702.15 $24,011.86 $2,784.52 $1,483.11 $1,616.39
Dec-58 $25,605.12 $24,646.97 $25,297.55 $2,734.23 $1,486.43 $1,614.53
Jan-59 $27,076.41 $25,315.15 $25,430.44 $2,712.28 $1,489.48 $1,616.39
Feb-59 $27,875.19 $26,097.69 $25,554.33 $2,744.12 $1,492.28 $1,614.53
Mar-59 $27,950.57 $26,298.43 $25,605.06 $2,748.69 $1,495.53 $1,614.53
Apr-59 $28,276.78 $27,158.99 $26,635.00 $2,716.58 $1,498.51 $1,616.39
May-59 $28,315.32 $27,464.48 $27,273.23 $2,715.09 $1,501.79 $1,618.25
Jun-59 $28,196.14 $27,631.22 $27,212.81 $2,717.93 $1,505.47 $1,625.70
Jul-59 $29,118.49 $28,420.42 $28,199.50 $2,734.22 $1,509.27 $1,629.42
Aug-59 $28,862.77 $27,987.43 $27,910.57 $2,722.96 $1,512.08 $1,627.56
Sep-59 $27,618.88 $26,650.95 $26,674.27 $2,707.57 $1,516.74 $1,633.15
Oct-59 $28,245.19 $27,355.76 $27,016.60 $2,748.29 $1,521.31 $1,638.73
Nov-59 $28,873.02 $27,996.95 $27,519.17 $2,715.67 $1,525.20 $1,638.73
Dec-59 $29,803.92 $28,267.43 $28,321.90 $2,672.51 $1,530.31 $1,638.73
Jan-60 $28,890.64 $26,746.13 $26,340.44 $2,702.40 $1,535.39 $1,636.87
Feb-60 $29,034.11 $27,007.66 $26,728.86 $2,757.50 $1,539.78 $1,638.74
Mar-60 $28,119.65 $26,463.78 $26,400.23 $2,835.27 $1,545.12 $1,638.74
Apr-60 $27,594.12 $26,124.25 $25,975.66 $2,787.13 $1,548.13 $1,648.05
May-60 $28,158.42 $26,938.70 $26,821.30 $2,829.42 $1,552.37 $1,648.05
Jun-60 $29,115.98 $27,607.05 $27,388.19 $2,878.25 $1,556.07 $1,651.77
Jul-60 $28,564.61 $27,199.04 $26,748.24 $2,984.04 $1,558.14 $1,651.77
Aug-60 $30,063.51 $28,019.96 $27,596.32 $2,963.96 $1,560.72 $1,651.77
Sep-60 $27,844.01 $26,488.59 $25,968.44 $2,986.26 $1,563.18 $1,653.63
Oct-60 $26,728.13 $25,998.05 $25,949.04 $2,977.87 $1,566.56 $1,661.08
Nov-60 $27,896.26 $27,593.75 $27,154.40 $2,958.21 $1,568.62 $1,662.94
Dec-60 $28,822.97 $28,858.35 $28,454.91 $3,040.75 $1,571.06 $1,662.94
Jan-61 $31,460.21 $31,170.31 $30,291.19 $3,008.21 $1,574.00 $1,662.94
Feb-61 $33,313.91 $32,876.41 $31,257.08 $3,068.39 $1,576.26 $1,662.94
Mar-61 $35,375.95 $34,440.64 $32,099.62 $3,056.89 $1,579.47 $1,662.94
Apr-61 $35,825.15 $34,448.39 $32,262.43 $3,092.08 $1,582.23 $1,662.94
May-61 $37,355.42 $35,742.20 $33,033.05 $3,077.89 $1,585.04 $1,662.94
Jun-61 $35,325.75 $34,344.89 $32,124.84 $3,054.89 $1,588.23 $1,664.81
Jul-61 $35,436.32 $34,885.07 $33,223.15 $3,065.47 $1,591.12 $1,672.25
Aug-61 $35,898.16 $36,051.52 $34,029.35 $3,053.91 $1,593.37 $1,670.39
Sep-61 $34,682.36 $35,143.06 $33,404.46 $3,093.35 $1,596.05 $1,674.12
Oct-61 $35,589.90 $36,202.80 $34,400.65 $3,115.35 $1,599.01 $1,674.12
Nov-61 $37,771.88 $37,603.31 $35,939.70 $3,109.06 $1,601.48 $1,674.12
Dec-61 $38,071.63 $37,242.24 $36,106.00 $3,070.35 $1,604.47 $1,674.12
Jan-62 $38,590.93 $36,434.94 $34,783.87 $3,066.02 $1,608.33 $1,674.12
Feb-62 $39,314.32 $36,985.43 $35,511.48 $3,097.60 $1,611.58 $1,677.84
Mar-62 $39,537.39 $36,644.98 $35,349.05 $3,176.06 $1,614.86 $1,681.57
Apr-62 $36,463.91 $34,305.05 $33,204.21 $3,202.11 $1,618.49 $1,685.29
May-62 $32,785.54 $30,881.79 $30,511.84 $3,216.76 $1,622.38 $1,685.29
Jun-62 $30,212.73 $28,212.06 $28,060.86 $3,192.48 $1,625.55 $1,685.29
Jul-62 $32,517.57 $29,842.49 $29,890.57 $3,157.71 $1,629.88 $1,689.01
Aug-62 $33,457.94 $30,590.13 $30,511.69 $3,216.80 $1,633.70 $1,689.01
Sep-62 $31,253.77 $28,948.54 $29,092.41 $3,236.36 $1,637.07 $1,698.33
Oct-62 $30,087.19 $28,641.60 $29,278.54 $3,263.46 $1,641.25 $1,696.46
Nov-62 $33,841.80 $32,374.78 $32,459.19 $3,270.37 $1,644.53 $1,696.46
Dec-62 $33,540.10 $32,500.33 $32,954.48 $3,281.79 $1,648.33 $1,694.60
Jan-63 $36,579.94 $34,507.58 $34,620.50 $3,281.46 $1,652.46 $1,696.46
Feb-63 $36,705.11 $33,900.56 $33,794.21 $3,283.94 $1,656.21 $1,698.33
Mar-63 $37,251.07 $34,648.33 $35,045.27 $3,286.78 $1,660.00 $1,700.19
Apr-63 $38,412.18 $36,161.39 $36,798.34 $3,282.90 $1,664.21 $1,700.19
May-63 $40,088.18 $37,086.69 $37,510.06 $3,290.30 $1,668.25 $1,700.19
Jun-63 $39,613.50 $36,408.30 $36,805.43 $3,296.66 $1,672.02 $1,707.64
Jul-63 $39,743.63 $35,854.68 $36,725.86 $3,306.87 $1,676.50 $1,715.09
Aug-63 $41,799.21 $37,855.33 $38,691.50 $3,313.97 $1,680.66 $1,715.09
Sep-63 $41,118.30 $37,082.70 $38,317.93 $3,315.43 $1,685.25 $1,715.09
Oct-63 $42,090.09 $37,490.58 $39,616.57 $3,306.87 $1,690.17 $1,716.95
Nov-63 $41,642.25 $37,310.51 $39,434.57 $3,323.67 $1,694.74 $1,718.81
Dec-63 $41,443.95 $37,867.48 $40,468.50 $3,321.61 $1,699.70 $1,722.54
Jan-64 $42,580.55 $38,348.97 $41,612.10 $3,317.09 $1,704.72 $1,724.40
Feb-64 $44,134.02 $39,386.84 $42,222.47 $3,313.47 $1,709.20 $1,722.54
Mar-64 $45,099.18 $40,628.51 $42,917.11 $3,325.70 $1,714.54 $1,724.40
Apr-64 $45,520.14 $40,487.61 $43,237.70 $3,341.24 $1,719.57 $1,726.26
May-64 $46,233.80 $41,130.43 $43,939.67 $3,358.02 $1,723.96 $1,726.26
Jun-64 $46,985.47 $41,895.01 $44,721.49 $3,381.19 $1,729.22 $1,729.99
Jul-64 $48,856.86 $42,858.47 $45,591.95 $3,383.75 $1,734.35 $1,733.71
Aug-64 $48,715.32 $42,740.73 $45,054.78 $3,390.49 $1,739.27 $1,731.85
Sep-64 $50,675.87 $44,257.99 $46,409.22 $3,407.28 $1,744.15 $1,735.57
Oct-64 $51,716.09 $45,139.92 $46,855.77 $3,421.99 $1,749.26 $1,737.44
Nov-64 $51,772.05 $45,238.19 $46,877.84 $3,427.78 $1,754.33 $1,741.16
Dec-64 $51,192.67 $45,060.85 $47,138.81 $3,438.07 $1,759.79 $1,743.02
Jan-65 $53,901.63 $47,461.24 $48,762.93 $3,451.81 $1,764.77 $1,743.02
Feb-65 $56,003.09 $48,870.75 $48,913.31 $3,456.63 $1,770.03 $1,743.02
Mar-65 $57,335.46 $48,899.73 $48,264.33 $3,475.18 $1,776.38 $1,744.89
Apr-65 $60,252.06 $50,534.30 $49,984.04 $3,487.86 $1,781.81 $1,750.47
May-65 $59,781.61 $50,269.96 $49,832.58 $3,494.06 $1,787.35 $1,754.20
Jun-65 $54,397.50 $46,496.99 $47,476.80 $3,510.60 $1,793.67 $1,763.51
Jul-65 $56,837.34 $47,958.95 $48,176.65 $3,518.31 $1,799.23 $1,765.37
Aug-65 $60,219.61 $50,062.14 $49,487.73 $3,513.77 $1,805.17 $1,761.65
Sep-65 $62,310.38 $51,631.49 $51,139.78 $3,501.90 $1,810.81 $1,765.37
Oct-65 $65,875.96 $53,814.37 $52,617.82 $3,511.39 $1,816.51 $1,767.23
Nov-65 $68,319.04 $55,647.99 $52,452.71 $3,489.55 $1,822.87 $1,770.96
Dec-65 $72,567.39 $56,688.71 $53,008.08 $3,462.47 $1,828.90 $1,776.54
Jan-66 $78,050.58 $58,355.59 $53,334.98 $3,426.53 $1,835.83 $1,776.54
Feb-66 $80,479.36 $58,637.39 $52,634.43 $3,340.86 $1,842.21 $1,787.72
Mar-66 $78,934.80 $57,188.63 $51,555.42 $3,439.89 $1,849.30 $1,793.30
Apr-66 $81,644.63 $59,145.23 $52,687.89 $3,418.32 $1,855.62 $1,800.75
May-66 $73,797.11 $55,298.54 $50,095.75 $3,398.02 $1,863.28 $1,802.61
Jun-66 $73,708.56 $55,090.01 $49,362.90 $3,392.68 $1,870.28 $1,808.20
Jul-66 $73,617.01 $54,321.40 $48,768.72 $3,380.16 $1,876.90 $1,813.79
Aug-66 $65,669.10 $49,741.56 $45,233.57 $3,310.46 $1,884.60 $1,823.10
Sep-66 $64,594.88 $49,148.54 $44,993.02 $3,420.45 $1,892.15 $1,826.82
Oct-66 $63,901.91 $50,335.62 $47,214.46 $3,498.48 $1,900.72 $1,834.27
Nov-66 $67,041.28 $52,094.00 $47,661.86 $3,446.53 $1,908.28 $1,834.27
Dec-66 $67,479.13 $53,393.22 $47,673.73 $3,588.91 $1,915.95 $1,836.13
Jan-67 $79,884.02 $59,579.68 $51,477.90 $3,644.23 $1,924.21 $1,836.13
Feb-67 $83,474.81 $60,163.50 $51,846.43 $3,563.77 $1,931.08 $1,837.99
Mar-67 $88,606.34 $63,657.98 $53,967.37 $3,634.32 $1,938.61 $1,841.72
Apr-67 $91,003.40 $66,184.57 $56,324.71 $3,528.49 $1,944.90 $1,845.44
May-67 $90,232.33 $65,230.65 $53,640.62 $3,514.80 $1,951.39 $1,851.03
Jun-67 $99,410.67 $68,071.18 $54,658.29 $3,405.14 $1,956.58 $1,856.61
Jul-67 $108,862.34 $71,990.65 $57,215.09 $3,428.38 $1,962.74 $1,865.93
Aug-67 $109,084.97 $72,150.04 $56,816.53 $3,399.47 $1,968.85 $1,871.51
Sep-67 $115,244.34 $74,213.46 $58,758.12 $3,397.95 $1,975.16 $1,875.24
Oct-67 $111,661.86 $71,356.76 $57,135.93 $3,262.06 $1,982.94 $1,880.82
Nov-67 $112,964.50 $71,876.38 $57,507.08 $3,197.96 $1,989.98 $1,886.41
Dec-67 $123,870.43 $74,622.70 $59,103.82 $3,259.41 $1,996.61 $1,892.00
Jan-68 $125,779.40 $72,803.10 $56,591.91 $3,366.26 $2,004.68 $1,899.44
Feb-68 $116,860.64 $69,288.61 $55,113.34 $3,355.08 $2,012.45 $1,905.03
Mar-68 $115,586.15 $69,409.79 $55,717.76 $3,284.09 $2,020.10 $1,914.34
Apr-68 $132,468.44 $77,068.68 $60,362.95 $3,358.56 $2,028.77 $1,919.93
May-68 $145,697.66 $80,528.83 $61,334.07 $3,372.95 $2,037.82 $1,925.52
Jun-68 $146,136.79 $81,731.45 $61,980.47 $3,450.53 $2,046.48 $1,936.69
Jul-68 $141,088.06 $78,697.82 $60,916.14 $3,550.30 $2,056.24 $1,946.00
Aug-68 $146,266.41 $80,475.53 $61,913.34 $3,549.27 $2,064.92 $1,951.59
Sep-68 $155,033.92 $85,280.72 $64,387.09 $3,512.96 $2,073.71 $1,957.18
Oct-68 $155,505.37 $86,279.44 $64,945.26 $3,466.49 $2,082.76 $1,968.35
Nov-68 $167,387.54 $92,663.60 $68,393.20 $3,373.27 $2,091.61 $1,975.80
Dec-68 $168,428.52 $90,068.47 $65,641.54 $3,250.92 $2,100.55 $1,981.38
Jan-69 $165,633.62 $89,305.77 $65,192.81 $3,184.09 $2,111.61 $1,986.97
Feb-69 $149,238.05 $83,279.95 $62,414.49 $3,197.35 $2,121.35 $1,994.42
Mar-69 $155,141.90 $84,835.12 $64,653.36 $3,200.65 $2,131.19 $2,011.18
Apr-69 $161,264.89 $85,996.26 $66,131.02 $3,337.18 $2,142.55 $2,024.22
May-69 $164,062.67 $85,993.94 $66,303.22 $3,173.59 $2,152.91 $2,029.80
Jun-69 $144,953.97 $78,521.41 $62,707.99 $3,241.62 $2,163.93 $2,042.84
Jul-69 $129,448.82 $72,910.50 $59,024.21 $3,267.31 $2,175.43 $2,052.15
Aug-69 $138,925.38 $77,050.80 $61,704.50 $3,244.83 $2,186.41 $2,061.46
Sep-69 $135,301.37 $76,235.83 $60,250.87 $3,072.50 $2,200.00 $2,070.77
Oct-69 $143,552.05 $82,457.13 $63,013.67 $3,184.72 $2,213.12 $2,078.22
Nov-69 $135,552.18 $79,262.00 $61,140.91 $3,107.21 $2,224.53 $2,089.39
Dec-69 $126,233.24 $77,439.21 $60,059.02 $3,085.98 $2,238.85 $2,102.43
Jan-70 $118,554.47 $71,743.33 $55,593.75 $3,079.38 $2,252.38 $2,109.88
Feb-70 $123,144.90 $76,296.02 $58,850.10 $3,260.13 $2,266.30 $2,121.05
Mar-70 $119,640.94 $75,932.54 $59,027.65 $3,238.03 $2,279.23 $2,132.22
Apr-70 $98,969.62 $66,256.69 $53,778.85 $3,104.23 $2,290.72 $2,145.26
May-70 $88,762.28 $60,440.41 $50,836.61 $2,958.83 $2,302.79 $2,154.57
Jun-70 $80,518.58 $57,121.56 $48,386.08 $3,102.74 $2,316.17 $2,165.74
Jul-70 $84,975.44 $61,881.56 $52,025.68 $3,201.86 $2,328.29 $2,173.19
Aug-70 $93,037.06 $65,661.60 $54,671.97 $3,195.71 $2,340.72 $2,176.92
Sep-70 $103,140.05 $70,483.98 $56,569.91 $3,268.53 $2,353.29 $2,188.09
Oct-70 $95,856.19 $67,678.37 $56,019.03 $3,233.04 $2,364.11 $2,199.26
Nov-70 $97,170.38 $70,778.92 $59,020.19 $3,488.84 $2,374.88 $2,206.71
Dec-70 $104,225.92 $76,909.57 $62,465.32 $3,459.57 $2,384.93 $2,217.89
Jan-71 $120,819.94 $82,831.30 $65,081.87 $3,634.50 $2,394.05 $2,219.75
Feb-71 $124,647.15 $84,585.92 $65,998.22 $3,575.22 $2,401.99 $2,223.47
Mar-71 $131,675.51 $88,875.36 $68,522.19 $3,763.34 $2,409.14 $2,230.92
Apr-71 $134,922.76 $91,798.55 $71,104.31 $3,656.80 $2,415.79 $2,238.37
May-71 $126,760.20 $88,689.80 $68,491.37 $3,654.64 $2,422.88 $2,249.54
Jun-71 $122,710.47 $88,898.93 $68,635.75 $3,596.65 $2,431.93 $2,262.58
Jul-71 $115,802.24 $84,515.94 $65,895.81 $3,607.30 $2,441.70 $2,268.17
Aug-71 $122,555.36 $88,983.03 $68,612.17 $3,777.15 $2,453.12 $2,273.75
Sep-71 $119,780.46 $88,594.36 $68,231.09 $3,854.03 $2,462.13 $2,275.62
Oct-71 $113,179.72 $84,848.50 $65,476.61 $3,918.32 $2,471.18 $2,279.34
Nov-71 $108,954.49 $83,513.32 $65,650.31 $3,900.02 $2,480.39 $2,283.07
Dec-71 $121,422.81 $92,476.47 $71,405.81 $3,917.26 $2,489.54 $2,292.38
Jan-72 $135,141.77 $95,480.85 $72,790.73 $3,892.39 $2,496.71 $2,294.24
Feb-72 $139,140.61 $98,366.66 $74,968.70 $3,926.66 $2,502.90 $2,305.41
Mar-72 $137,144.08 $99,415.25 $75,510.35 $3,894.54 $2,509.72 $2,309.14
Apr-72 $138,911.87 $99,357.59 $75,940.00 $3,905.10 $2,516.95 $2,314.72
May-72 $136,257.40 $99,481.89 $77,604.53 $4,010.68 $2,524.53 $2,322.17
Jun-72 $132,099.51 $96,070.65 $76,010.38 $3,984.77 $2,531.94 $2,327.76
Jul-72 $126,644.59 $93,923.57 $76,287.06 $4,070.66 $2,539.85 $2,337.07
Aug-72 $129,005.25 $97,029.43 $79,270.64 $4,082.27 $2,547.11 $2,340.79
Sep-72 $124,506.32 $94,999.19 $78,985.19 $4,048.56 $2,555.81 $2,350.11
Oct-72 $122,328.58 $94,994.91 $79,828.28 $4,143.44 $2,565.97 $2,357.56
Nov-72 $129,576.42 $101,508.05 $83,856.17 $4,237.15 $2,575.48 $2,363.14
Dec-72 $126,806.86 $100,224.18 $84,955.86 $4,140.00 $2,585.13 $2,370.59
Jan-73 $121,328.67 $94,000.36 $83,602.94 $4,007.10 $2,596.43 $2,378.04
Feb-73 $111,635.00 $88,167.26 $80,821.72 $4,012.70 $2,607.20 $2,394.80
Mar-73 $109,318.35 $85,821.57 $80,807.26 $4,045.60 $2,619.09 $2,417.15
Apr-73 $102,526.51 $80,438.92 $77,619.00 $4,064.01 $2,632.74 $2,433.91
May-73 $94,210.58 $75,668.65 $76,537.85 $4,021.50 $2,646.10 $2,448.80
Jun-73 $91,476.50 $73,060.81 $76,144.06 $4,013.01 $2,659.71 $2,465.56
Jul-73 $102,397.51 $80,435.28 $79,145.74 $3,839.17 $2,676.72 $2,471.15
Aug-73 $97,836.73 $78,395.76 $76,629.93 $3,989.46 $2,695.45 $2,515.84
Sep-73 $108,242.05 $87,304.97 $79,812.76 $4,116.29 $2,713.83 $2,523.29
Oct-73 $109,155.18 $86,536.25 $79,834.86 $4,204.89 $2,731.53 $2,543.78
Nov-73 $87,736.64 $72,273.34 $71,194.50 $4,128.11 $2,746.77 $2,562.40
Dec-73 $87,617.94 $74,096.58 $72,500.28 $4,094.17 $2,764.29 $2,579.16
Jan-74 $99,238.35 $77,597.20 $71,883.44 $4,060.27 $2,781.61 $2,601.51
Feb-74 $98,393.04 $78,422.45 $72,017.43 $4,050.49 $2,797.77 $2,635.03
Mar-74 $97,661.29 $76,398.60 $70,453.14 $3,932.34 $2,813.37 $2,664.82
Apr-74 $93,129.42 $71,613.14 $67,821.86 $3,832.97 $2,834.59 $2,679.72
May-74 $85,745.19 $67,059.26 $65,974.46 $3,879.99 $2,855.95 $2,709.52
Jun-74 $84,485.16 $64,828.81 $65,126.69 $3,897.31 $2,873.15 $2,735.59
Jul-74 $82,636.96 $62,286.16 $60,182.73 $3,886.00 $2,893.40 $2,756.07
Aug-74 $77,008.81 $56,978.07 $55,197.25 $3,795.73 $2,910.63 $2,791.45
Sep-74 $71,978.13 $52,524.09 $48,740.33 $3,889.60 $2,934.11 $2,824.97
Oct-74 $79,628.61 $59,963.29 $56,817.67 $4,079.89 $2,948.94 $2,849.18
Nov-74 $76,143.03 $58,602.12 $54,272.81 $4,200.45 $2,964.84 $2,873.39
Dec-74 $70,142.43 $56,245.91 $53,310.99 $4,272.46 $2,985.52 $2,893.88
Jan-75 $89,551.12 $69,134.37 $59,982.65 $4,368.47 $3,002.91 $2,906.91
Feb-75 $92,105.21 $72,559.98 $64,026.68 $4,425.90 $3,015.96 $2,927.40
Mar-75 $97,799.15 $77,448.49 $65,541.23 $4,307.68 $3,028.43 $2,938.57
Apr-75 $102,990.23 $81,197.85 $68,772.67 $4,229.33 $3,041.69 $2,953.47
May-75 $109,821.37 $86,138.34 $72,270.38 $4,319.04 $3,054.94 $2,966.51
Jun-75 $118,052.59 $92,213.50 $75,608.40 $4,445.13 $3,067.43 $2,990.72
Jul-75 $115,055.82 $87,109.76 $70,628.23 $4,406.51 $3,082.29 $3,022.37
Aug-75 $108,456.45 $84,179.48 $69,609.56 $4,376.54 $3,097.10 $3,031.68
Sep-75 $106,487.86 $81,058.94 $67,326.09 $4,333.61 $3,113.42 $3,046.58
Oct-75 $105,954.46 $85,745.53 $71,612.74 $4,539.41 $3,130.71 $3,065.20
Nov-75 $109,341.19 $89,288.62 $73,856.65 $4,490.02 $3,143.54 $3,083.82
Dec-75 $107,188.70 $88,838.87 $73,144.31 $4,665.35 $3,158.79 $3,096.86
Jan-76 $135,959.75 $103,215.40 $81,916.14 $4,707.45 $3,173.57 $3,104.31
Feb-76 $154,853.81 $107,034.88 $81,441.02 $4,736.41 $3,184.28 $3,111.76
Mar-76 $154,625.71 $109,076.79 $84,094.70 $4,814.84 $3,197.07 $3,119.21
Apr-76 $149,081.45 $107,647.77 $83,262.50 $4,823.73 $3,210.48 $3,132.24
May-76 $143,698.12 $105,841.66 $82,653.85 $4,747.37 $3,222.50 $3,150.86
Jun-76 $150,298.46 $112,477.19 $86,185.07 $4,845.95 $3,236.51 $3,167.62
Jul-76 $150,975.85 $111,977.79 $85,595.82 $4,883.67 $3,251.58 $3,186.25
Aug-76 $146,591.97 $111,323.95 $85,716.60 $4,986.95 $3,265.26 $3,201.14
Sep-76 $148,123.27 $114,143.90 $87,829.77 $5,059.27 $3,279.52 $3,214.18
Oct-76 $145,028.38 $111,634.45 $86,024.60 $5,101.70 $3,292.92 $3,227.22
Nov-76 $150,881.15 $115,648.49 $85,945.98 $5,274.43 $3,305.96 $3,236.53
Dec-76 $168,690.85 $124,350.80 $90,584.22 $5,447.02 $3,319.33 $3,245.84
Jan-77 $176,275.19 $121,821.51 $86,151.12 $5,235.79 $3,331.26 $3,264.46
Feb-77 $175,587.37 $119,238.65 $84,849.12 $5,210.03 $3,342.97 $3,297.98
Mar-77 $177,879.66 $119,627.49 $83,841.03 $5,257.48 $3,355.55 $3,318.46
Apr-77 $181,941.19 $121,609.12 $83,956.06 $5,294.69 $3,368.15 $3,344.53
May-77 $181,433.94 $120,743.14 $82,698.90 $5,360.91 $3,380.66 $3,363.16
Jun-77 $195,444.81 $127,536.39 $86,625.61 $5,448.97 $3,394.13 $3,385.50
Jul-77 $196,028.21 $125,016.91 $85,316.95 $5,410.77 $3,408.29 $3,400.40
Aug-77 $193,924.44 $122,929.37 $84,185.65 $5,517.94 $3,423.34 $3,413.44
Sep-77 $195,714.55 $123,479.48 $84,187.00 $5,502.21 $3,438.17 $3,426.47
Oct-77 $189,249.12 $119,521.23 $80,690.12 $5,450.99 $3,455.11 $3,435.78
Nov-77 $209,804.23 $127,429.35 $83,675.17 $5,501.86 $3,472.39 $3,452.54
Dec-77 $211,499.66 $128,415.52 $84,076.65 $5,409.54 $3,489.29 $3,465.58
Jan-78 $207,501.68 $122,079.63 $79,062.15 $5,366.10 $3,506.36 $3,484.20
Feb-78 $214,706.55 $121,677.38 $77,785.61 $5,368.30 $3,522.49 $3,508.41
Mar-78 $236,867.70 $128,171.54 $79,933.11 $5,357.18 $3,541.11 $3,532.62
Apr-78 $255,527.90 $137,510.63 $86,887.94 $5,354.61 $3,560.08 $3,564.27
May-78 $276,484.00 $142,893.35 $88,072.39 $5,323.40 $3,578.20 $3,599.66
Jun-78 $271,253.75 $142,291.63 $86,730.08 $5,290.28 $3,597.41 $3,636.90
Jul-78 $289,806.97 $151,427.60 $91,582.71 $5,365.82 $3,617.52 $3,662.97
Aug-78 $317,009.70 $159,887.26 $94,696.44 $5,482.65 $3,637.60 $3,681.59
Sep-78 $316,002.24 $157,544.59 $94,239.90 $5,424.64 $3,660.11 $3,707.66
Oct-78 $239,303.44 $135,703.39 $85,847.09 $5,316.20 $3,685.02 $3,737.46
Nov-78 $256,810.88 $139,940.73 $88,078.25 $5,416.47 $3,710.81 $3,757.94
Dec-78 $261,119.91 $141,555.37 $89,592.23 $5,345.84 $3,739.85 $3,778.43
Jan-79 $295,623.25 $151,371.10 $93,367.65 $5,448.02 $3,768.70 $3,811.95
Feb-79 $287,278.69 $146,157.43 $90,716.94 $5,374.63 $3,796.36 $3,856.64
Mar-79 $319,447.59 $158,316.55 $95,934.07 $5,444.16 $3,827.23 $3,893.88
Apr-79 $331,805.10 $160,382.27 $96,280.39 $5,383.08 $3,857.69 $3,938.58
May-79 $332,955.47 $159,078.20 $94,660.96 $5,523.67 $3,889.17 $3,986.99
Jun-79 $348,676.29 $168,993.86 $98,541.11 $5,695.57 $3,920.68 $4,024.24
Jul-79 $354,641.80 $174,371.08 $99,620.13 $5,647.10 $3,950.71 $4,076.38
Aug-79 $381,457.32 $187,068.78 $105,702.94 $5,627.17 $3,981.01 $4,117.34
Sep-79 $368,351.21 $186,140.92 $105,970.37 $5,558.63 $4,014.02 $4,160.18
Oct-79 $325,826.91 $169,769.45 $99,021.89 $5,091.37 $4,049.04 $4,197.42
Nov-79 $353,795.89 $182,297.25 $104,112.61 $5,249.90 $4,089.01 $4,236.53
Dec-79 $374,613.95 $188,373.22 $106,112.61 $5,279.87 $4,127.90 $4,281.22
Jan-80 $405,926.05 $197,633.65 $112,588.66 $4,888.69 $4,160.79 $4,342.67
Feb-80 $394,410.74 $190,908.17 $112,934.31 $4,660.34 $4,197.65 $4,402.27
Mar-80 $324,303.05 $166,941.18 $101,792.21 $4,513.72 $4,248.25 $4,465.58
Apr-80 $346,794.76 $178,498.35 $106,162.15 $5,201.37 $4,301.59 $4,515.86
May-80 $372,813.73 $192,317.87 $112,129.52 $5,419.18 $4,336.41 $4,560.55
Jun-80 $389,666.41 $200,957.94 $115,445.19 $5,613.48 $4,362.91 $4,610.83
Jul-80 $441,223.56 $218,663.34 $123,249.29 $5,346.28 $4,385.96 $4,614.56
Aug-80 $467,894.20 $223,749.89 $124,865.09 $5,115.48 $4,413.97 $4,644.35
Sep-80 $487,473.23 $230,682.11 $128,368.80 $4,981.66 $4,447.23 $4,687.18
Oct-80 $503,724.61 $233,541.41 $130,762.88 $4,850.69 $4,489.50 $4,728.15
Nov-80 $542,326.04 $251,611.91 $145,085.34 $4,899.28 $4,532.46 $4,770.98
Dec-80 $523,992.16 $246,074.19 $140,513.70 $5,071.50 $4,591.69 $4,811.95
Jan-81 $534,838.80 $242,216.73 $134,359.20 $5,013.07 $4,639.31 $4,851.06
Feb-81 $539,866.29 $248,400.04 $137,153.87 $4,794.75 $4,688.91 $4,901.34
Mar-81 $590,775.68 $269,063.69 $142,365.72 $4,978.98 $4,745.54 $4,936.72
Apr-81 $629,589.64 $269,522.71 $139,333.33 $4,721.32 $4,796.58 $4,968.38
May-81 $656,158.32 $276,433.28 $140,197.19 $5,014.94 $4,851.95 $5,009.35
Jun-81 $661,145.13 $272,431.63 $139,075.62 $4,925.02 $4,917.33 $5,052.18
Jul-81 $640,252.94 $268,528.23 $139,172.97 $4,751.22 $4,978.30 $5,109.91
Aug-81 $596,459.64 $254,070.40 $131,462.79 $4,567.87 $5,042.04 $5,149.01
Sep-81 $552,739.15 $238,454.98 $124,863.36 $4,501.68 $5,104.77 $5,201.16
Oct-81 $593,752.39 $253,224.40 $131,456.14 $4,874.87 $5,166.30 $5,212.33
Nov-81 $610,139.96 $264,781.31 $137,253.36 $5,562.24 $5,221.45 $5,227.23
Dec-81 $596,716.88 $257,891.70 $133,616.14 $5,165.71 $5,267.08 $5,242.13
Jan-82 $585,021.23 $248,913.72 $131,438.20 $5,189.37 $5,308.99 $5,260.75
Feb-82 $567,704.60 $239,928.68 $124,708.56 $5,283.80 $5,358.04 $5,277.51
Mar-82 $562,822.34 $238,960.81 $123,960.31 $5,405.82 $5,410.56 $5,271.92
Apr-82 $584,378.44 $251,047.92 $129,092.27 $5,607.67 $5,471.65 $5,294.27
May-82 $569,885.85 $240,977.14 $125,374.41 $5,626.75 $5,529.58 $5,346.41
Jun-82 $560,824.67 $237,322.23 $123,192.90 $5,501.38 $5,582.51 $5,411.59
Jul-82 $559,983.43 $230,449.38 $120,544.25 $5,777.12 $5,641.17 $5,441.38
Aug-82 $599,070.27 $259,854.72 $135,817.21 $6,228.22 $5,684.17 $5,452.55
Sep-82 $618,659.87 $266,031.47 $137,311.20 $6,613.33 $5,713.26 $5,461.87
Oct-82 $699,394.98 $302,513.70 $152,772.44 $7,032.84 $5,746.98 $5,476.77
Nov-82 $753,877.85 $320,482.41 $159,463.87 $7,031.43 $5,783.42 $5,467.46
Dec-82 $763,829.04 $324,036.23 $162,222.59 $7,250.66 $5,822.39 $5,445.09
Jan-83 $811,792.92 $335,736.86 $167,867.94 $7,026.62 $5,862.36 $5,458.13
Feb-83 $869,616.93 $347,863.00 $172,232.51 $7,372.08 $5,898.62 $5,459.99
Mar-83 $915,267.47 $361,566.37 $178,518.99 $7,302.86 $5,935.94 $5,463.71
Apr-83 $985,448.35 $384,904.39 $192,050.73 $7,558.14 $5,978.32 $5,502.82
May-83 $1,071,149.83 $400,982.62 $191,052.07 $7,266.55 $6,019.61 $5,532.62
Jun-83 $1,108,462.27 $415,459.30 $198,350.26 $7,294.92 $6,059.71 $5,551.24
Jul-83 $1,098,662.35 $403,256.01 $192,141.89 $6,940.09 $6,104.56 $5,573.59
Aug-83 $1,077,053.86 $403,047.93 $195,408.31 $6,953.95 $6,151.05 $5,592.21
Sep-83 $1,091,418.53 $414,779.45 $198,065.86 $7,304.88 $6,197.84 $5,620.14
Oct-83 $1,029,455.43 $402,241.91 $195,411.78 $7,208.75 $6,245.02 $5,635.04
Nov-83 $1,082,532.09 $420,584.54 $199,964.87 $7,341.01 $6,288.95 $5,644.35
Dec-83 $1,066,827.80 $414,793.93 $198,745.09 $7,297.92 $6,334.66 $5,651.80
Jan-84 $1,065,974.33 $402,600.24 $197,453.24 $7,475.67 $6,382.74 $5,683.46
Feb-84 $997,218.99 $381,042.60 $190,976.78 $7,342.61 $6,428.29 $5,709.53
Mar-84 $1,014,570.60 $387,618.26 $194,242.48 $7,227.77 $6,475.09 $5,722.56
Apr-84 $1,005,946.75 $382,893.58 $195,582.75 $7,151.52 $6,527.79 $5,750.49
May-84 $953,536.93 $362,248.72 $185,138.63 $6,782.43 $6,578.95 $5,767.26
Jun-84 $982,143.04 $372,265.62 $189,230.20 $6,883.97 $6,628.51 $5,785.88
Jul-84 $940,893.03 $360,341.96 $186,524.21 $7,361.00 $6,682.77 $5,804.50
Aug-84 $1,034,794.15 $403,719.92 $207,508.18 $7,557.12 $6,738.28 $5,828.71
Sep-84 $1,037,588.10 $406,392.95 $207,549.68 $7,815.95 $6,796.15 $5,856.65
Oct-84 $1,015,072.43 $407,180.54 $208,089.31 $8,254.33 $6,863.82 $5,871.54
Nov-84 $980,966.00 $405,301.40 $205,987.61 $8,351.73 $6,914.16 $5,871.54
Dec-84 $995,680.49 $414,408.12 $211,199.09 $8,427.41 $6,958.59 $5,875.27
Jan-85 $1,101,123.05 $454,735.00 $227,419.19 $8,734.18 $7,003.64 $5,886.44
Feb-85 $1,131,073.60 $460,114.97 $230,534.83 $8,303.67 $7,044.13 $5,910.65
Mar-85 $1,106,868.62 $457,971.76 $230,949.79 $8,558.47 $7,087.52 $5,936.73
Apr-85 $1,087,609.11 $454,417.44 $230,210.75 $8,765.86 $7,138.28 $5,960.93
May-85 $1,117,627.12 $479,285.88 $244,368.71 $9,551.03 $7,185.64 $5,983.28
Jun-85 $1,129,473.97 $490,475.77 $248,254.18 $9,686.43 $7,225.49 $6,001.83
Jul-85 $1,158,840.29 $492,366.07 $247,608.71 $9,512.27 $7,270.62 $6,011.14
Aug-85 $1,150,496.64 $491,075.08 $246,098.30 $9,758.54 $7,310.62 $6,024.18
Sep-85 $1,087,909.62 $468,930.05 $238,198.55 $9,738.15 $7,354.84 $6,042.80
Oct-85 $1,116,304.06 $490,003.30 $248,846.02 $10,066.87 $7,402.56 $6,061.42
Nov-85 $1,185,514.91 $521,864.78 $266,663.40 $10,470.89 $7,447.58 $6,081.90
Dec-85 $1,241,234.11 $543,455.90 $279,116.58 $11,037.11 $7,496.02 $6,096.80
Jan-86 $1,255,135.94 $554,165.78 $280,344.69 $11,009.19 $7,537.93 $6,115.42
Feb-86 $1,345,380.21 $592,859.30 $301,678.92 $12,270.26 $7,577.85 $6,098.66
Mar-86 $1,409,554.85 $622,242.00 $318,391.93 $13,214.73 $7,622.96 $6,070.73
Apr-86 $1,418,576.00 $615,312.71 $314,443.87 $13,109.14 $7,662.67 $6,057.70
May-86 $1,469,644.73 $642,900.26 $331,706.84 $12,446.74 $7,700.47 $6,076.32
Jun-86 $1,473,465.81 $644,909.32 $337,213.18 $13,210.28 $7,740.87 $6,106.11
Jul-86 $1,368,849.73 $606,142.53 $318,025.75 $13,067.61 $7,781.12 $6,107.94
Aug-86 $1,398,690.66 $654,873.36 $341,814.07 $13,720.04 $7,816.92 $6,118.94
Sep-86 $1,320,503.85 $615,140.23 $313,716.96 $13,033.90 $7,852.09 $6,148.92
Oct-86 $1,366,193.28 $650,592.60 $331,159.62 $13,410.50 $7,888.56 $6,154.51
Nov-86 $1,361,958.08 $658,754.94 $339,637.30 $13,768.71 $7,919.36 $6,160.10
Dec-86 $1,326,274.78 $637,734.07 $330,670.88 $13,744.61 $7,957.96 $6,165.69
Jan-87 $1,451,342.50 $718,270.32 $375,079.98 $13,965.53 $7,990.99 $6,202.93
Feb-87 $1,568,756.10 $755,741.04 $390,570.78 $14,247.34 $8,025.47 $6,227.14
Mar-87 $1,605,308.12 $769,692.78 $401,194.30 $13,930.33 $8,063.23 $6,255.08
Apr-87 $1,555,061.97 $754,653.75 $397,663.79 $13,271.43 $8,099.04 $6,288.60
May-87 $1,548,997.23 $760,734.00 $401,759.73 $13,131.68 $8,129.50 $6,307.22
Jun-87 $1,590,200.56 $789,950.75 $421,807.54 $13,260.28 $8,168.67 $6,333.28
Jul-87 $1,648,083.86 $834,583.75 $442,813.56 $13,023.85 $8,206.03 $6,346.32
Aug-87 $1,695,383.87 $857,557.34 $459,861.88 $12,809.61 $8,244.69 $6,381.70
Sep-87 $1,681,651.26 $847,466.46 $449,744.92 $12,337.32 $8,281.96 $6,413.36
Oct-87 $1,190,777.24 $639,914.30 $352,959.81 $13,105.71 $8,331.43 $6,430.12
Nov-87 $1,143,503.38 $610,420.01 $324,052.40 $13,154.08 $8,360.19 $6,439.43
Dec-87 $1,202,965.56 $658,225.05 $347,967.47 $13,371.57 $8,392.91 $6,437.57
Jan-88 $1,269,850.44 $689,811.96 $362,825.68 $14,262.73 $8,417.60 $6,454.30
Feb-88 $1,366,359.07 $743,631.77 $379,878.48 $14,337.17 $8,455.95 $6,471.04
Mar-88 $1,422,106.52 $748,752.42 $368,406.15 $13,897.45 $8,493.22 $6,498.93
Apr-88 $1,451,828.55 $754,907.17 $372,384.94 $13,675.23 $8,532.42 $6,532.40
May-88 $1,425,840.82 $755,802.49 $375,289.54 $13,536.02 $8,575.54 $6,554.71
Jun-88 $1,513,102.28 $805,685.45 $392,702.98 $14,034.71 $8,617.15 $6,582.61
Jul-88 $1,509,319.52 $794,732.96 $391,132.16 $13,796.68 $8,660.86 $6,610.50
Aug-88 $1,472,190.26 $781,236.01 $378,185.69 $13,876.47 $8,712.29 $6,638.39
Sep-88 $1,505,608.98 $800,459.11 $394,220.76 $14,354.90 $8,766.02 $6,683.02
Oct-88 $1,487,089.99 $808,028.25 $404,982.99 $14,796.34 $8,819.50 $6,705.33
Nov-88 $1,422,104.16 $790,724.32 $399,232.23 $14,505.89 $8,869.43 $6,710.91
Dec-88 $1,478,135.07 $810,118.42 $406,458.33 $14,665.01 $8,925.68 $6,722.07
Jan-89 $1,537,851.72 $857,600.27 $435,845.27 $14,963.10 $8,974.89 $6,755.54
Feb-89 $1,550,615.89 $855,396.24 $424,992.72 $14,694.96 $9,029.92 $6,783.43
Mar-89 $1,606,127.94 $865,767.06 $435,022.55 $14,874.80 $9,090.47 $6,822.48
Apr-89 $1,650,938.91 $905,800.13 $457,469.72 $15,111.25 $9,151.81 $6,867.11
May-89 $1,710,702.90 $940,286.66 $475,860.00 $15,717.48 $9,223.87 $6,906.16
Jun-89 $1,676,317.77 $940,831.08 $473,290.36 $16,582.21 $9,289.29 $6,922.89
Jul-89 $1,744,543.90 $1,007,468.27 $515,791.83 $16,976.50 $9,353.90 $6,939.62
Aug-89 $1,765,827.34 $1,038,795.49 $525,746.61 $16,537.49 $9,423.04 $6,950.78
Sep-89 $1,765,827.34 $1,019,288.99 $523,696.20 $16,569.47 $9,484.72 $6,973.09
Oct-89 $1,659,171.37 $967,456.11 $511,494.08 $17,198.12 $9,548.88 $7,006.56
Nov-89 $1,650,709.59 $984,947.71 $522,133.16 $17,332.44 $9,614.44 $7,023.30
Dec-89 $1,628,590.08 $1,002,677.76 $534,455.50 $17,321.52 $9,672.79 $7,034.46
Jan-90 $1,504,165.81 $929,741.97 $498,593.53 $16,727.74 $9,727.64 $7,106.98
Feb-90 $1,532,293.71 $947,302.94 $505,025.39 $16,686.42 $9,782.88 $7,140.45
Mar-90 $1,588,682.12 $969,608.14 $518,307.56 $16,613.33 $9,845.89 $7,179.51
Apr-90 $1,546,423.17 $928,343.55 $505,505.36 $16,277.74 $9,913.56 $7,190.66
May-90 $1,633,177.51 $1,007,446.78 $554,792.13 $16,953.64 $9,980.69 $7,207.40
Jun-90 $1,656,695.27 $996,498.85 $550,908.59 $17,344.41 $10,043.08 $7,246.45
Jul-90 $1,593,409.51 $977,307.28 $549,145.68 $17,529.52 $10,111.08 $7,274.34
Aug-90 $1,386,903.63 $880,832.39 $499,557.82 $16,795.91 $10,177.53 $7,341.28
Sep-90 $1,271,929.32 $823,250.62 $474,979.58 $16,992.14 $10,238.43 $7,402.64
Oct-90 $1,199,174.96 $790,324.71 $473,222.16 $17,357.88 $10,308.24 $7,447.27
Nov-90 $1,253,137.84 $860,249.48 $503,697.66 $18,055.68 $10,366.49 $7,464.01
Dec-90 $1,277,448.71 $895,011.30 $517,498.98 $18,392.42 $10,428.57 $7,464.01
Jan-91 $1,384,882.15 $951,102.55 $540,372.43 $18,632.17 $10,482.56 $7,508.63
Feb-91 $1,539,019.53 $1,039,170.85 $579,063.10 $18,688.81 $10,532.53 $7,519.79
Mar-91 $1,643,672.86 $1,072,685.15 $592,844.80 $18,760.01 $10,578.78 $7,530.95
Apr-91 $1,649,261.35 $1,085,449.03 $594,504.77 $19,023.20 $10,635.22 $7,542.10
May-91 $1,704,346.68 $1,137,165.25 $619,949.57 $19,024.13 $10,685.43 $7,564.42
Jun-91 $1,621,685.86 $1,087,682.64 $591,617.88 $18,903.90 $10,730.00 $7,586.73
Jul-91 $1,687,688.48 $1,135,930.06 $619,305.59 $19,201.54 $10,782.41 $7,597.89
Aug-91 $1,731,737.15 $1,164,687.27 $633,859.27 $19,855.18 $10,832.11 $7,620.21
Sep-91 $1,737,278.71 $1,153,903.43 $623,463.98 $20,457.68 $10,881.49 $7,653.68
Oct-91 $1,792,350.44 $1,170,523.10 $631,818.40 $20,568.93 $10,927.69 $7,664.83
Nov-91 $1,742,881.57 $1,118,567.09 $606,292.94 $20,737.59 $10,970.48 $7,687.15
Dec-91 $1,847,628.75 $1,230,610.60 $675,592.22 $21,942.05 $11,012.08 $7,692.73
Jan-92 $2,056,041.28 $1,266,466.90 $663,026.20 $21,230.91 $11,049.42 $7,703.88
Feb-92 $2,148,974.35 $1,301,122.50 $671,512.94 $21,339.32 $11,080.67 $7,731.77
Mar-92 $2,095,464.89 $1,273,880.90 $658,351.28 $21,139.73 $11,118.07 $7,770.82
Apr-92 $2,011,017.65 $1,284,615.90 $677,509.31 $21,173.31 $11,154.19 $7,781.98
May-92 $2,008,202.23 $1,284,784.18 $681,167.86 $21,686.96 $11,184.96 $7,793.14
Jun-92 $1,903,976.53 $1,254,568.63 $671,290.92 $22,120.80 $11,220.77 $7,821.03
Jul-92 $1,974,423.67 $1,312,847.10 $698,343.95 $23,000.72 $11,255.30 $7,837.77
Aug-92 $1,929,406.80 $1,289,503.37 $684,237.40 $23,154.56 $11,284.62 $7,860.08
Sep-92 $1,954,682.03 $1,311,038.07 $692,106.13 $23,583.97 $11,313.65 $7,882.39
Oct-92 $2,005,308.30 $1,349,987.70 $694,597.71 $23,116.77 $11,339.51 $7,910.29
Nov-92 $2,182,778.09 $1,417,167.14 $718,005.66 $23,139.83 $11,366.11 $7,921.44
Dec-92 $2,279,038.60 $1,457,549.32 $727,411.53 $23,709.23 $11,398.20 $7,915.86
Jan-93 $2,402,790.40 $1,495,530.14 $732,721.63 $24,373.99 $11,424.81 $7,954.91
Feb-93 $2,359,540.17 $1,500,279.94 $742,613.38 $25,236.55 $11,450.05 $7,982.81
Mar-93 $2,427,730.88 $1,559,932.57 $758,579.57 $25,290.20 $11,479.11 $8,010.70
Apr-93 $2,353,442.32 $1,521,360.12 $739,994.37 $25,472.00 $11,506.33 $8,033.01
May-93 $2,433,930.05 $1,573,878.99 $759,974.21 $25,590.63 $11,531.28 $8,044.17
Jun-93 $2,424,681.11 $1,598,404.75 $762,482.13 $26,738.84 $11,560.54 $8,055.33
Jul-93 $2,464,930.82 $1,594,950.60 $758,898.46 $27,250.88 $11,588.31 $8,055.33
Aug-93 $2,548,491.97 $1,670,332.75 $787,812.50 $28,433.02 $11,617.33 $8,077.64
Sep-93 $2,629,024.31 $1,674,062.60 $781,982.68 $28,447.88 $11,647.10 $8,094.38
Oct-93 $2,752,851.36 $1,685,842.98 $797,856.93 $28,721.97 $11,672.83 $8,127.85
Nov-93 $2,704,676.46 $1,644,253.23 $790,357.08 $27,978.77 $11,701.91 $8,133.42
Dec-93 $2,757,147.19 $1,710,707.37 $800,078.47 $28,033.90 $11,728.40 $8,133.42
Jan-94 $2,927,538.88 $1,762,230.46 $826,881.10 $28,755.26 $11,757.76 $8,155.74
Feb-94 $2,920,805.54 $1,735,025.14 $804,555.31 $27,462.48 $11,782.68 $8,183.64
Mar-94 $2,790,537.62 $1,659,849.97 $769,557.15 $26,377.78 $11,814.43 $8,211.53
Apr-94 $2,807,280.84 $1,676,554.70 $779,561.40 $25,981.13 $11,846.46 $8,222.68
May-94 $2,803,912.10 $1,668,676.57 $792,268.25 $25,767.14 $11,883.78 $8,228.26
Jun-94 $2,730,449.61 $1,627,316.76 $772,699.22 $25,508.25 $11,920.83 $8,256.16
Jul-94 $2,780,689.88 $1,679,316.04 $798,275.56 $26,435.00 $11,953.63 $8,278.47
Aug-94 $2,874,399.13 $1,753,459.52 $830,765.38 $26,208.52 $11,997.71 $8,311.94
Sep-94 $2,904,580.32 $1,712,198.86 $810,743.93 $25,341.70 $12,041.61 $8,334.25
Oct-94 $2,937,982.99 $1,716,534.15 $829,309.97 $25,279.60 $12,087.85 $8,339.83
Nov-94 $2,842,204.75 $1,631,050.75 $798,874.29 $25,446.74 $12,132.47 $8,350.99
Dec-94 $2,842,773.19 $1,655,198.46 $810,537.86 $25,855.55 $12,186.21 $8,350.99
Jan-95 $2,923,223.67 $1,681,231.42 $831,611.84 $26,561.13 $12,236.85 $8,384.46
Feb-95 $2,996,888.91 $1,756,611.11 $863,878.38 $27,322.42 $12,285.59 $8,417.93
Mar-95 $3,040,343.80 $1,804,693.07 $889,449.18 $27,572.32 $12,342.34 $8,445.82
Apr-95 $3,147,363.90 $1,829,507.60 $915,332.15 $28,039.29 $12,397.26 $8,473.72
May-95 $3,241,155.34 $1,876,697.92 $951,487.77 $30,255.19 $12,463.65 $8,490.45
Jun-95 $3,425,252.96 $1,924,236.55 $973,847.74 $30,675.24 $12,522.41 $8,507.19
Jul-95 $3,646,181.78 $2,002,908.96 $1,006,276.87 $30,160.79 $12,579.04 $8,507.19
Aug-95 $3,776,715.09 $2,031,720.81 $1,008,993.81 $30,873.00 $12,637.71 $8,529.50
Sep-95 $3,850,361.03 $2,061,215.30 $1,051,270.66 $31,412.75 $12,692.16 $8,546.24
Oct-95 $3,662,848.45 $2,005,855.18 $1,047,591.21 $32,336.53 $12,751.99 $8,574.13
Nov-95 $3,733,175.14 $2,107,273.22 $1,093,685.22 $33,142.51 $12,805.56 $8,568.55
Dec-95 $3,822,398.03 $2,136,539.03 $1,113,918.40 $34,043.58 $12,868.08 $8,562.97
Jan-96 $3,833,100.74 $2,176,599.14 $1,152,237.19 $34,006.91 $12,923.13 $8,613.18
Feb-96 $3,974,542.16 $2,220,300.90 $1,163,298.67 $32,366.07 $12,973.64 $8,641.07
Mar-96 $4,065,161.72 $2,279,793.86 $1,174,466.33 $31,686.53 $13,024.79 $8,685.70
Apr-96 $4,409,887.43 $2,346,452.75 $1,191,730.99 $31,163.32 $13,084.43 $8,719.17
May-96 $4,740,188.00 $2,378,387.97 $1,222,477.65 $30,993.68 $13,139.81 $8,735.91
Jun-96 $4,464,309 $2,350,480 $1,227,490 $31,622 $13,192 $8,741
</TABLE>
Source: Ibbotson Associates' EnCORR Software, Chicago, Illinois. All rights
reserved. This example is for illustrative purposes only and is not intended to
represent the past, present, or future performance of the Prudential Emerging
Growth Fund. Small-sized stock performance for the period 1926-1980 is based on
a historical series composed of stocks making up the 5th quintile of the New
York Stock Exchange: thereafter, the index reflects the total return achieved by
Dimensional Fund Advisors (DFA) Small Company Fund. Source of mid-sized stock
performance: University of Chicago's Center for Research in Security Prices
(CRSP). Mid-sized stocks are comprised of an index of medium-sized companies
listed on the New York Stock Exchange (NYSE). All eligible comapanies listed on
the NYSE are ranked by market capitalization and then split into ten equally
populated groups, or deciles. The 3-5 decile represents mid-size companies in
this example. Large-sized stock total return is based on the Standard & Poor's
500 Index, a market-weighted index made up of 500 of the largest stocks in the
U.S. based upon their stock market value. Past performance is not indicative of
future results. Investors cannot buy or invest directly in market indices.
Long-term government bond returns are represented by a portfolio that contains
only one bond with a maturity of roughly 20 years. At the beginning of each year
a new bond with a then-current coupon replaces the old bond. Treasury bill
returns are for a one-month bill. Treasuries are guaranteed by the government as
to the timely payment of principal and interest; equities are not. Inflation is
measured by the consumer price index (CPI).
IMPACT OF INFLATION. The "real" rate of investment return is that which exceeds
the rate of inflation, the percentage change in the value of consumer goods and
the general cost of living. A common goal of long-term investors is to outpace
the erosive impact of inflation on investment returns.
A-1
<PAGE>
The chart below shows the growth over 15 years of a $1,000 investment made
in the S&P MidCap 400 Index and the S&P 500 stock index on June 30, 1981 with an
ending value on June 30, 1996.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
S&P 500 S&P Midcap 400
06/30/81 $1,000.00 $1,000.00
$1,002.10 $994.10
$944.28 $949.96
$897.73 $890.21
$946.20 $956.35
$985.28 $1,007.42
$960.06 $979.62
$947.48 $939.45
$894.52 $914.46
$889.87 $906.78
$930.09 $950.13
$898.37 $934.26
$884.90 $909.50
$869.14 $878.30
$974.66 $970.00
$986.84 $1,001.43
$1,100.43 $1,105.28
$1,144.89 $1,170.93
$1,166.98 $1,201.96
$1,210.39 $1,262.18
$1,238.11 $1,303.32
$1,283.80 $1,357.54
$1,384.96 $1,440.62
$1,372.91 $1,497.82
$1,426.32 $1,547.69
$1,384.24 $1,523.86
$1,405.00 $1,499.78
$1,424.39 $1,552.12
$1,407.87 $1,483.99
$1,437.58 $1,534.00
$1,430.10 $1,515.43
$1,422.09 $1,472.09
$1,372.04 $1,401.43
$1,395.77 $1,423.44
$1,409.03 $1,405.64
$1,330.97 $1,346.18
06/30/84 $1,359.85 $1,396.94
$1,342.99 $1,342.18
$1,491.26 $1,499.34
$1,491.56 $1,497.09
$1,497.37 $1,487.36
$1,480.60 $1,482.16
$1,519.54 $1,533.14
$1,637.91 $1,663.92
$1,657.90 $1,678.23
$1,659.06 $1,691.82
$1,657.56 $1,707.22
$1,753.37 $1,791.90
$1,780.90 $1,867.16
$1,778.23 $1,868.65
$1,763.11 $1,855.20
$1,707.93 $1,766.52
$1,786.83 $1,864.38
$1,909.41 $1,980.35
$2,001.83 $2,078.38
$2,013.04 $2,113.09
$2,163.41 $2,268.61
$2,284.13 $2,378.18
$2,258.32 $2,395.78
$2,378.46 $2,490.17
$2,418.66 $2,556.66
$2,283.45 $2,430.36
$2,452.89 $2,563.06
$2,250.03 $2,360.58
$2,379.86 $2,459.72
$2,437.69 $2,458.74
$2,375.53 $2,415.47
$2,695.51 $2,726.09
$2,801.98 $2,853.13
$2,882.96 $2,920.46
$2,857.30 $2,823.51
$2,882.16 $2,794.42
06/30/87 $3,027.71 $2,895.58
$3,181.22 $2,976.95
$3,299.88 $3,085.01
$3,227.61 $3,025.16
$2,532.38 $2,310.32
$2,323.71 $2,196.42
$2,500.55 $2,366.20
$2,605.57 $2,474.81
$2,726.99 $2,631.96
$2,642.73 $2,674.60
$2,672.06 $2,688.24
$2,696.64 $2,632.05
$2,818.80 $2,821.82
$2,808.09 $2,745.92
$2,712.90 $2,681.94
$2,828.47 $2,784.39
$2,907.10 $2,803.60
$2,865.53 $2,748.93
$2,915.39 $2,859.99
$3,128.79 $3,055.04
$3,050.88 $3,064.81
$3,121.97 $3,132.85
$3,284.00 $3,302.34
$3,417.00 $3,461.84
$3,397.53 $3,446.26
$3,704.32 $3,651.32
$3,776.56 $3,780.94
$3,761.07 $3,822.91
$3,673.82 $3,661.96
$3,748.76 $3,742.89
$3,838.73 $3,876.51
$3,581.15 $3,548.56
$3,627.35 $3,675.95
$3,723.47 $3,755.35
$3,630.76 $3,609.27
$3,984.76 $3,961.90
06/30/90 $3,958.06 $3,978.14
$3,945.40 $3,887.04
$3,588.73 $3,484.34
$3,413.96 $3,271.10
$3,399.28 $3,171.33
$3,618.87 $3,476.41
$3,719.84 $3,678.05
$3,881.65 $3,968.61
$4,159.19 $4,324.99
$4,259.84 $4,522.65
$4,270.07 $4,521.29
$4,454.11 $4,729.72
$4,250.11 $4,489.45
$4,448.16 $4,759.72
$4,553.59 $4,932.97
$4,477.54 $4,917.18
$4,537.54 $5,184.19
$4,354.68 $4,937.42
$4,852.85 $5,521.02
$4,762.59 $5,618.75
$4,824.50 $5,708.08
$4,730.91 $5,492.89
$4,870.00 $5,427.52
$4,893.86 $5,479.08
$4,820.94 $5,322.38
$5,018.12 $5,586.37
$4,915.25 $5,452.86
$4,973.25 $5,529.20
$4,990.65 $5,661.35
$5,160.83 $5,977.82
$5,224.31 $6,178.07
$5,268.20 $6,255.30
$5,339.84 $6,167.72
$5,452.51 $6,380.51
$5,320.56 $6,213.34
$5,462.62 $6,496.67
06/30/93 $5,478.46 $6,529.15
$5,456.55 $6,516.75
$5,663.35 $6,785.89
$5,619.75 $6,857.82
$5,736.07 $6,880.45
$5,681.58 $6,728.39
$5,750.33 $7,040.59
$5,945.84 $7,204.64
$5,784.71 $7,102.33
$5,532.49 $6,773.49
$5,603.31 $6,823.62
$5,695.20 $6,758.79
$5,555.67 $6,526.29
$5,737.90 $6,746.88
$5,973.15 $7,100.41
$5,826.81 $6,967.64
$5,957.91 $7,043.58
$5,741.05 $6,725.92
$5,826.01 $6,787.80
$5,976.91 $6,858.39
$6,210.01 $7,218.45
$6,393.20 $7,336.84
$6,581.16 $7,490.91
$6,844.41 $7,671.44
$7,003.20 $7,983.67
$7,235.70 $8,398.82
$7,253.79 $8,555.88
$7,559.90 $8,762.93
$7,532.69 $8,537.72
$7,864.13 $8,910.82
$8,015.12 $8,888.54
$8,287.63 $9,017.43
$8,364.71 $9,323.12
$8,445.01 $9,435.00
$8,569.99 $9,722.76
$8,791.10 $9,854.02
06/30/96 $8,824.51 $9,706.21
<CAPTION>
QTLY
<S> <C>
Value
06/30/81
$890.21
$979.62
$906.78
$909.50
$1,001.43
$1,201.96
$1,357.54
$1,547.69
$1,552.12
$1,515.43
$1,423.44
06/30/84 $1,396.94
$1,497.09
$1,533.14
$1,691.82
$1,867.16
$1,766.52
$2,078.38
$2,378.18
$2,556.66
$2,360.58
$2,415.47
$2,920.46
06/30/87 $2,895.58
$3,025.16
$2,366.20
$2,674.60
$2,821.82
$2,784.39
$2,859.99
$3,132.85
$3,446.26
$3,822.91
$3,876.51
$3,755.35
06/30/90 $3,978.14
$3,271.10
$3,678.05
$4,522.65
$4,489.45
$4,917.18
$5,521.02
$5,492.89
$5,322.38
$5,529.20
$6,178.07
$6,380.51
06/30/93 $6,529.15
$6,857.82
$7,040.59
$6,773.49
$6,526.29
$6,967.64
$6,787.80
$7,336.84
$7,983.67
$8,762.93
$8,888.54
$9,435.00
06/30/96 $9,706.21
</TABLE>
Source: Lipper Analytical Services. Past performance is not indicative of future
returns. This chart is for illustrative purposes only and is not intended to
represent the past, present or future performance of any Prudential Mutual Fund.
The Standard & Poor's MidCap 400 Index consists of 400 domestic stocks chosen
for market size (median market capitalization of $676 million), liquidity and
industry group representation. It is a market-value-weighted index (stock price
times shares outstanding) and with each stock affecting the index in proportion
to its market value. The index is comprised of industrials, utilities,
financials and transportation in size order. The Standard & Poor's 500 Stock
Index, a market-value-weighted index made up of 500 of the largest stocks in the
U.S. based on their stock market value. Investors cannot invest directly in
indices.
A-2
<PAGE>
Set forth below is historical performance data relating to various sectors
of the fixed-income securities markets. The chart shows the historical total
returns of U.S. Treasury bonds, U.S. mortgage securities, U.S. corporate bonds,
U.S. high yield bonds and world government bonds on an annual basis from 1987
through 1995. The total returns of the indices include accrued interest, plus
the price changes (gains or losses) of the underlying securities during the
period mentioned. The data is provided to illustrate the varying historical
total returns and investors should not consider this performance data as an
indication of the future performance of the Fund or of any sector in which the
Fund invests.
All information relies on data obtained from statistical services, reports
and other services believed by the Manager to be reliable. Such information has
not been verified. The figures do not reflect the operating expenses and fees of
a mutual fund. See "Fund Expenses" in the prospectus. The net effect of the
deduction of the operating expenses of a mutual fund on these historical total
returns, including the compounded effect over time, could be substantial.
[CHART]
(1)LEHMAN BROTHERS TREASURY BOND INDEX is an unmanaged index made up of over 150
public issues of the U.S. Treasury having maturities of at least one year.
(2)LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX is an unmanaged index that
includes over 600 15-and 30-year fixed-rate mortgage-backed securities of the
Government National Mortgage Association (GNMA), Federal National Mortgage
Association (FNMA), and the Federal Home Loan Mortgage Corporation (FHLMC).
(3)LEHMAN BROTHERS CORPORATE BOND INDEX includes over 3,000 public fixed-rate,
nonconvertible investment-grade bonds. All bonds are U.S. dollar-denominated
issues and include debt issued or guaranteed by foreign sovereign governments,
municipalities, governmental agencies or international agencies. All bonds in
the index have maturities of at least one year.
(4)LEHMAN BROTHERS HIGH YIELD BOND INDEX is an unmanaged index comprising over
750 public, fixed-rate, nonconvertible bonds that are rated Ba1 or lower by
Moody's Investors Service (or rated BB+ or lower by Standard & Poor's or Fitch
Investors Service). All bonds in the index have maturities of at least one year.
(5)SALOMON BROTHERS WORLD GOVERNMENT INDEX (Non U.S.) includes over 800 bonds
issued by various foreign governments or agencies, excluding those in the U.S.,
but including those in Japan, Germany, France, the U.K., Canada, Italy,
Australia, Belgium, Denmark, the Netherlands, Spain, Sweden, and Austria. All
bonds in the index have maturities of at least one year.
A-3
<PAGE>
This chart illustrates the performance of major world stock markets for the
period from 1986 through 1995. It does not represent the performance of any
Prudential Mutual Fund.
[CHART]
Source: Morgan Stanley Capital International (MSCI) Used with permission. Morgan
Stanley Country indices are unmanaged indices which include those stocks making
up the largest two-thirds of each country's total stock market capitalization.
Returns reflect the reinvestment of all distributions. This chart is for
illustrative purposes only and is not indicative of the past, present or future
performance of any specific investment. Investors cannot invest directly in
stock indices.
This chart shows the growth of a hypothetical $10,000 investment made in the
stocks representing the S&P 500 stock index with and without reinvested
dividends.
[CHART]
Source: Stocks, Bonds, Bills, and Inflation 1995 Yearbook, Ibbotson Associates,
Chicago (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield).
Used with permission. All rights reserved. This chart is used for illustrative
purposes only and is not intended to represent the past, present or future
performance of any Prudential Mutual Fund. Common stock total return is based on
the Standard & Poor's 500 Stock Index, a market-value-weighted index made up of
500 of the largest stocks in the U.S. based upon their stock market value.
Investors cannot invest directly in indices.
A-4
<PAGE>
[CHART]
Source: Morgan Stanley Capital International, December 1995. Used with
permission. This chart represents the capitalization of major world stock
markets as measured by the Morgan Stanley Capital International (MSCI) World
Index. The total market capitalization is based on the value of 1579 companies
in 22 countries (representing approximately 60% of the aggregate market value of
the stock exchanges). This chart is for illustrative purposes only and does not
represent the allocation of any Prudential Mutual Fund.
This chart below shows the historical volatility of general interest rates
as measured by the long U.S. Treasury Bond.
[CHART]
Source: Stocks, Bonds, Bills, and Inflation 1995 Yearbook, Ibbotson Associates,
Chicago (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield).
Used with permission. All rights reserved. The chart illustrates the historical
yield of the long-term U.S. Treasury Bond from 1926-1994. Yields represent that
of an annually renewed one-bond portfolio with a remaining maturity of
approximately 20 years. This chart is for illustrative purposes and should not
be construed to represent the yields of any Prudential Mutual Fund.
The following chart, although not relevant to share ownership in the Fund,
may provide useful information about the effects of a hypothetical investment
diversified over different asset portfolios. The chart shows the range of annual
total returns for major stock and bond indices for the period from December 31,
1975 through December 31, 1995. The horizontal "Best Returns Zone" band shows
that a hypothetical blended portfolio constructed of one-third U.S. stocks (S&P
500), one-third foreign stocks (EAFE Index), and one-third U.S. bonds (Lehman
Index) would have eliminated the "highest highs" and "lowest lows" of any single
asset class.
[CHART]
* Source: Prudential Investment Corporation based on data from Lipper Analytical
New Application (LANA). Past performance is not indicative of future results.
The S&P 500 Index is a weighted, unmanaged index comprised of 500 stocks which
provides a broad indication of stock price movements. The Morgan Stanley EAFE
Index is an unmanaged index comprised of 20 overseas stock markets in Europe,
Australia, New Zealand and the Far East. The Lehman Aggregate Index includes all
publicly-issued investment grade debt with maturities over one year, including
U.S. government and agency issues, 15 and 30 year fixed-rate government agency
mortgage securities, dollar denominated SEC registered corporate and government
securities, as well as asset-backed securities. Investors cannot invest directly
in stock or bond market indices.
A-5
<PAGE>
APPENDIX--GENERAL INVESTMENT INFORMATION
The following terms are used in mutual fund investing.
ASSET ALLOCATION
Asset allocation is a technique for reducing risk, providing balance. Asset
allocation among different types of securities within an overall investment
portfolio helps to reduce risk and to potentially provide stable returns, while
enabling investors to work toward their financial goal(s). Asset allocation is
also a strategy to gain exposure to better performing asset classes while
maintaining investment in other asset classes.
DIVERSIFICATION
Diversification is a time-honored technique for reducing risk, providing
"balance" to an overall portfolio and potentially achieving more stable returns.
Owning a portfolio of securities mitigates the individual risks (and returns) of
any one security. Additionally, diversification among types of securities
reduces the risks and (general returns) of any one type of security.
DURATION
Debt securities have varying levels of sensitivity to interest rates. As
interest rates fluctuate, the value of a bond (or a bond portfolio) will
increase or decrease. Longer term bonds are generally more sensitive to changes
in interest rates. When interest rates fall, bond prices generally rise.
Conversely, when interest rates rise, bond prices generally fall.
Duration is an approximation of the price sensitivity of a bond (or a bond
portfolio) to interest rate changes. It measures the weighted average maturity
of a bond's (or a bond portfolio's) cash flows, i.e., principal and interest
rate payments. Duration is expressed as a measure of time in years--the longer
the duration of a bond (or a bond portfolio), the greater the impact of interest
rate changes on the bond's (or the bond portfolio's) price. Duration differs
from effective maturity in that duration takes into account call provisions,
coupon rates and other factors. Duration measures interest rate risk only and
not other risks, such as credit risk and, in the case of non-U.S. dollar
denominated securities, currency risk. Effective maturity measures the final
maturity dates of a bond (or a bond portfolio).
MARKET TIMING
Market timing--buying securities when prices are low and selling them when
prices are relatively higher--may not work for many investors because it is
impossible to predict with certainty how the price of a security will fluctuate.
However, owning a security for a long period of time may help investors offset
short-term price volatility and realize positive returns.
POWER OF COMPOUNDING
Over time, the compounding of returns can significantly impact investment
returns. Compounding is the effect of continuous investment on long-term
investment results, by which the proceeds of capital appreciation (and income
distributions, if elected) are reinvested to contribute to the overall growth of
assets. The long-term investment results of compounding may be greater than that
of an equivalent initial investment in which the proceeds of capital
appreciation and income distributions are taken in cash.
A-6
<PAGE>
APPENDIX--INFORMATION RELATING TO THE PRUDENTIAL
Set forth below is information relating to The Prudential Insurance Company
of America (Prudential) and its subsidiaries as well as information relating to
the Prudential Mutual Funds. See "Management of the Fund--Manager" in the
Prospectus. The data will be used in sales materials relating to the Prudential
Mutual Funds. Unless otherwise indicated, the information is as of December 31,
1995 and is subject to change thereafter. All information relies on data
provided by The Prudential Investment Corporation (PIC) or from other sources
believed by the Manager to be reliable. Such information has not been verified
by the Fund.
INFORMATION ABOUT PRUDENTIAL
The Manager and PIC are subsidiaries of Prudential, which is one of the
largest diversified financial services institutions in the world and, based on
total assets, the largest insurance company in North America as of December 31,
1995. Its primary business is to offer a full range of products and services in
three areas: insurance, investments and home ownership for individuals and
families; health-care management and other benefit programs for employees of
companies and members of groups; and asset management for institutional clients
and their associates. Prudential (together with its subsidiaries) employs more
than 92,000 persons worldwide, and maintains a sales force of approximately
13,000 agents and 5,600 financial advisors. Prudential is a major issuer of
annuities, including variable annuities. Prudential seeks to develop innovative
products and services to meet consumer needs in each of its business areas.
Prudential uses the Rock of Gibraltar as its symbol. The Prudential rock is a
recognized brand name throughout the world.
INSURANCE. Prudential has been engaged in the insurance business since 1875.
It insures or provides financial services to more than 50 million people
worldwide--one of every five people in the United States. Long one of the
largest issuers of individual life insurance, the Prudential has 19 million life
insurance policies in force today with a face value of $1 trillion. Prudential
has the largest capital base ($11.4 billion) of any life insurance company in
the United States. The Prudential provides auto insurance for more than 1.7
million cars and insures more than 1.4 million homes.
MONEY MANAGEMENT. The Prudential is one of the largest pension fund managers
in the country, providing pension services to 1 in 3 Fortune 500 firms. It
manages $36 billion of individual retirement plan assets, such as 401(k) plans.
In July 1995, Institutional Investor ranked Prudential the third largest
institutional money manager of the 300 largest money management organizations in
the United States as of December 31, 1994. As of December 31, 1995, Prudential
had more than $314 billion in assets under management. Prudential Investments
(of which Prudential Mutual Funds is a key part) manages over $190 billion in
assets of institutions and individuals.
REAL ESTATE. The Prudential Real Estate Affiliates, the fourth largest real
estate brokerage network in the United States, has more than 34,000 brokers and
agents and more than 1,100 offices in the United States.(2)
HEALTHCARE. Over two decades ago, the Prudential introduced the first
federally-funded, for-profit HMO in the country. Today, almost 5 million
Americans receive healthcare from a Prudential managed care membership.
FINANCIAL SERVICES. The Prudential Bank, a wholly-owned subsidiary of the
Prudential, has nearly $3 billion in assets and serves nearly 1.5 million
customers across 50 states.
INFORMATION ABOUT THE PRUDENTIAL MUTUAL FUNDS
Prudential Mutual Fund Management is one of the sixteenth largest mutual
fund companies in the country, with over 2.5 million shareholders invested in
more than 50 mutual fund portfolios and variable annuities with more than 3.7
million shareholder accounts.
The Prudential Mutual Funds have over 30 portfolio managers who manage over
$55 billion in mutual fund and variable annuity assets. Some of Prudential's
portfolio managers have over 20 years of experience managing investment
portfolios.
- ---------------
(1)Prudential Mutual Fund Investment Management, a unit of PIC, serves as the
Subadviser to substantially all of the Prudential Mutual Funds. Wellington
Management Company serves as the subadviser to Global Utility Fund, Inc.,
Nicholas-Applegate Capital Management as subadviser to Nicholas-Applegate Fund,
Inc., Jennison Associates Capital Corp. as the subadviser to Prudential Jennison
Fund, Inc. and BlackRock Financial Management, Inc. as subadviser to The
BlackRock Government Income Trust. There are multiple subadvisers for The Target
Portfolio Trust.
(2)As of December 31, 1994.
A-7
<PAGE>
From time to time, there may be media coverage of portfolio managers and
other investment professionals associated with the Manager and the Subadviser in
national and regional publications, on television and in other media.
Additionally, individual mutual fund portfolios are frequently cited in surveys
conducted by national and regional publications and media organizations such as
The Wall Street Journal, The New York Times, Barron's and USA Today.
EQUITY FUNDS. Forbes magazine listed Prudential Equity Fund among twenty
mutual funds on its Honor Roll in its mutual fund issue of August 28, 1995.
Honorees are chosen annually among mutual funds (excluding sector funds) which
are open to new investors and have had the same management for at least five
years. Forbes considers, among other criteria, the total return of a mutual fund
in both bull and bear markets as well as a fund's risk profile. Prudential
Equity Fund is managed with a "value" investment style by PIC. In 1995,
Prudential Securities introduced Prudential Jennison Fund, a growth-style equity
fund managed by Jennison Associates Capital Corp., a premier institutional
equity manager and a subsidiary of Prudential.
HIGH YIELD FUNDS. Investing in high yield bonds is a complex and research
intensive pursuit. A separate team of high yield bond analysts monitor the 167
issues held in the Prudential High Yield Fund (currently the largest fund of its
kind in the country) along with 100 or so other high yield bonds, which may be
considered for purchase.(3) Non-investment grade bonds, also known as junk bonds
or high yield bonds, are subject to a greater risk of loss of principal and
interest including default risk than higher-rated bonds. Prudential high yield
portfolio managers and analysts meet face-to-face with almost every bond issuer
in the High Yield Fund's portfolio annually, and have additional telephone
contact throughout the year.
Prudential's portfolio managers are supported by a large and sophisticated
research organization. Fourteen investment grade bond analysts monitor the
financial viability of approximately 1,750 different bond issuers in the
investment grade corporate and municipal bond markets--from IBM to small
municipalities, such as Rockaway Township, New Jersey. These analysts consider
among other things sinking fund provisions and interest coverage ratios.
Prudential's portfolio managers and analysts receive research services from
almost 200 brokers and market service vendors. They also receive nearly 100
trade publications and newspapers--from Pulp and Paper Forecaster to Women's
Wear Daily--to keep them informed of the industries they follow.
Prudential Mutual Funds' traders scan over 100 computer monitors to collect
detailed information on which to trade. From natural gas prices in the Rocky
Mountains to the results of local municipal elections, a Prudential portfolio
manager or trader is able to monitor it if it's important to a Prudential mutual
fund.
Prudential Mutual Funds trade approximately $31 billion in U.S. and foreign
government securities a year. PIC seeks information from government policy
makers. In 1995, Prudential's portfolio managers met with several senior U.S.
and foreign government officials, on issues ranging from economic conditions in
foreign countries to the viability of index-linked securities in the United
States.
Prudential Mutual Funds' portfolio managers and analysts met with over 1,200
companies in 1995, often with the Chief Executive Officer (CEO) or Chief
Financial Officer (CFO). They also attended over 250 industry conferences.
Prudential Mutual Fund global equity managers conducted many of their visits
overseas, often holding private meetings with a company in a foreign language
(our global equity managers speak 7 different languages, including Mandarin
Chinese).
TRADING DATA.(4) On an average day, Prudential Mutual Funds' U.S. and
foreign equity trading desks traded $77 million in securities representing over
3.8 million shares with nearly 200 different firms. Prudential Mutual Funds'
bond trading desks traded $157 million in government and corporate bonds on an
average day. That represents more in daily trading than most bond funds tracked
by Lipper even have in assets.(5) Prudential Mutual Funds' money market desk
traded $3.2 billion in money market securities on an average day, or over $800
billion a year. They made a trade every 3 minutes of every trading day. In 1994,
the Prudential Mutual Funds effected more than 40,000 trades in money market
securities and held on average $20 billion of money market securities.(6)
- ---------------
(3)As of December 31, 1995. The number of bonds and the size of the Fund are
subject to change.
(4)Trading data represents average daily transactions for portfolios of the
Prudential Mutual Funds for which PIC serves as the subadviser, portfolios of
the Prudential Series Fund and institutional and non-US accounts managed by
Prudential Mutual Fund Investment Management, a division of PIC, for the year
ended December 31, 1995.
(5)Based on 669 funds in Lipper Analytical Services categories of Short U.S.
Treasury, Short U.S. Government, Intermediate U.S. Treasury, Intermediate U.S.
Government, Short Investment Grade Debt, Intermediate Investment Grade Debt,
General U.S. Treasury, General U.S. Government and Mortgage funds.
(6)As of December 31, 1994.
A-8
<PAGE>
Based on complex-wide data, on an average day, over 7,250 shareholders
telephoned Prudential Mutual Fund Services, Inc., the Transfer Agent of the
Prudential Mutual Funds, on the Prudential Mutual Funds' toll-free number. On an
annual basis, that represents approximately 1.8 million telephone calls
answered.
INFORMATION ABOUT PRUDENTIAL SECURITIES
Prudential Securities is the fifth largest retail brokerage firm in the
United States with approximately 5,600 financial advisors. It offers to its
clients a wide range of products, including Prudential Mutual Funds and
annuities. As of December 31, 1995, assets held by Prudential Securities for its
clients approximated $168 billion. During 1994, over 28,000 new customer
accounts were opened each month at PSI.(7)
Prudential Securities has a two-year Financial Advisor training program plus
advanced education programs, including Prudential Securities "university," which
provides advanced education in a wide array of investment areas. In the December
1995 issue of Registered Rep, an industry publication, Prudential Securities'
Financial Advisor training programs received a grade of A-(compared to an
industry average of B+).
In 1995, Prudential Securities' equity research team ranked 8th in
Institutional Investor magazine's 1995 "All America Research Team" survey. Five
Prudential Securities' analysts were ranked as first-team finishers.(8)
In addition to training, Prudential Securities provides its financial
advisors with access to firm economists and market analysts. It has also
developed proprietary tools for use by financial advisors, including the
Financial Architect-SM-, a state-of-the-art asset allocation software program
which helps Financial Advisors to evaluate a client's objectives and overall
financial plan, and a comprehensive mutual fund information and analysis system
that compares different mutual funds.
For more complete information about any of the Prudential Mutual Funds,
including charges and expenses, call your Prudential Securities financial
adviser or Pruco/Prudential representative for a free prospectus. Read it
carefully before you invest or send money.
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(7)As of December 31, 1994.
(8)On an annual basis, Institutional Investor magazine surveys more than 700
institutional money managers, chief investment officers and research directors,
asking them to evaluate analysts in 76 industry sectors. Scores are produced by
taking the number of votes awarded to an individual analyst and weighting them
based on the size of the voting institution. In total, the magazine sends its
survey to approximately 2,000 institutions and a group of European and Asian
institutions.
A-9
