SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Prudential Diversified Funds
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(Name of Registrant as Specified in Its Charter)
Not Applicable
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-(i)(4)
and 0-11
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
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PRUDENTIAL DIVERSIFIED FUNDS
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
October 8, 1999
Dear Shareholder:
Enclosed is a proxy statement asking you to vote for (1) the nominees for
the Board of Trustees of Prudential Diversified Funds (the "Fund"), (2) the
independent accountants for the Fund and (3) changes to certain of the Fund's
investment restrictions.
A shareholder meeting is being held on November 8, 1999 to consider these
nominees, the independent accountants and the proposed changes to the Fund's
investment restrictions and to transact any other business that may properly
come before the meeting. This proxy statement contains detailed information
about each of the nominees, information on the independent accountants, and an
explanation of the proposed changes to the Fund's investment restrictions and we
recommend that you read it carefully.
Thank you for your attention to this matter and for your continuing
investment in the Fund.
Very truly yours,
JOHN R. STRANGFELD, JR.
President
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A PROXY card is enclosed along with the proxy statement. Please vote your
shares today by signing and returning the enclosed proxy card in the
postage prepaid envelope provided. The Board of your Fund recommends that
you vote "FOR" each of the nominees for Board Member, "FOR" ratification
of the selection of the independent accountants and "FOR" all proposed
changes to the fundamental investment restrictions of your Fund.
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Enclosed you will find one or more proxy cards relating to the Fund
(depending on the number of portfolios in which you own shares). Please
indicate your voting instructions on each of the enclosed proxy cards, date
and sign them, and return them in the envelope provided. IF YOU SIGN, DATE
AND RETURN A PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL
BE VOTED "FOR" THE NOMINEES FOR TRUSTEE NAMED IN THE ATTACHED PROXY
STATEMENT, "FOR" RATIFICATION OF THE SELECTION OF THE INDEPENDENT
ACCOUNTANTS INDICATED ON THE CARD AND "FOR" ALL PROPOSED CHANGES TO THE
FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND. In order to avoid the
additional expense to the Fund of further solicitation, we ask your
cooperation in mailing in your proxy cards promptly. Unless proxy cards are
signed by the appropriate persons as indicated in the instructions below,
they will not be voted.
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INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense to the Fund involved in validating your
vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration on
the proxy card.
3. All Other Accounts: The capacity of the individual signing the
proxy card should be indicated unless it is reflected in the form of
registration. For example:
REGISTRATION VALID SIGNATURE
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Corporate Accounts
(1) XYZ Corp. ............................. XYZ Corp.
Jane L. Doe, Treasurer
(2) XYZ Corp. ............................. Jane L. Doe, Treasurer
(3) XYZ Corp. c/o Jane Doe, Treasurer...... Jane L. Doe
(4) XYZ Corp. Profit Sharing Plan.......... Jane L. Doe, Treasurer
Partnership Accounts
(1) The ABC Partnership.................... Robert Fogg, Partner
(2) Fogg and Hale, Limited Partnership..... Robert Fogg, General
Partner
Trust Accounts
(1) ABC Trust Account William X. Smith, Trustee
(2) Ron F. Anderson, Trustee u/t/d 12/28/78 Ron F. Anderson
Custodial or Estate Accounts
(1) Katherine T. John, Cust.
F/b/o Albert T. John, Jr. UGMA/UTMA... Katherine T. John
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REGISTRATION VALID SIGNATURE
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(2) Estate of Katherine T. John............ Albert T. John, Executor
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PRUDENTIAL DIVERSIFIED FUNDS
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
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To Our Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of
Prudential Diversified Funds (the "Fund") will be held at 10:00 a.m. Eastern
time on November 8, 1999 at Prudential Plaza, 751 Broad Street, 24th Floor,
Newark, New Jersey 07102, for the following purposes:
1. To elect nine Trustees.
2. To ratify the selection by the Board of Trustees of
PricewaterhouseCoopers LLP as independent accountants for the fiscal year
ending July 31, 2000.
3. To approve changes to certain fundamental investment
restrictions.
4. To consider and act upon any other business as may properly come
before the Meeting and any adjournments thereof.
Only holders of shares of beneficial interest of the Fund of record at the
close of business on October 1, 1999 are entitled to notice of and to vote at
the Meeting and any adjournments thereof.
DAVID F. CONNOR
Secretary
Dated: October 8, 1999
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WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED, STAMPED ENVELOPE. IN
ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE
ASK YOUR COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
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PRUDENTIAL DIVERSIFIED FUNDS
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
(800) 225-1852
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PROXY STATEMENT
This proxy statement is furnished by the Board of Trustees of Prudential
Diversified Funds (the "Fund") in connection with its solicitation of proxies
for use at the Special Meeting of Shareholders (the "Meeting") of the Fund to be
held at 10:00 a.m. Eastern time on November 8, 1999 at Prudential Plaza, 751
Broad Street, 24th Floor, Newark, New Jersey 07102. The purpose of the Meeting
and the matters to be acted upon are set forth in the accompanying Notice of
Special Meeting of Shareholders.
The close of business on October 1, 1999, has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the Meeting. As of October 1, 1999, the Fund had the following shares of
beneficial interest outstanding and entitled to vote:
Shares of Beneficial Interest
Portfolio Outstanding on October 1, 1999
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Prudential Diversified Conservative
Growth Fund 7,208,590
Prudential Diversified Moderate Growth
Fund 11,136,004
Prudential Diversified High Growth Fund 10,684,600
Each share will be entitled to one vote for each proposal at the Meeting. It is
expected that the Notice of Special Meeting of Shareholders, Proxy Statement and
form of Proxy will first be mailed to shareholders on or about October 13, 1999.
The Fund's most recent Annual Report has previously been sent to
shareholders and may be obtained without charge by calling (800) 225-1852 (toll
free) or by writing to the Fund at Gateway Center Three, 100 Mulberry Street,
Newark, New Jersey 07102-4077.
If the accompanying form of Proxy is properly executed and returned,
shares represented by it will be voted at the Meeting, or any adjournments
thereof, in accordance with the instructions on the Proxy. However, if no
instructions are specified, shares will be voted for the election of the
nominees for Trustee, for ratification of the selection of the independent
accountants and for the changes to the fundamental investment restrictions. A
Proxy may be revoked at any time prior to the time it is voted by written notice
to the Secretary of the Fund, by execution of a subsequent Proxy or by
attendance at the Meeting. If sufficient votes to approve one or more of the
proposed items are not received, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of Proxies. Any
such adjournment will require the affirmative vote of a majority of the votes
cast, provided a quorum is present. When voting on a proposed adjournment, the
persons named as proxies will vote for the proposed adjournment all shares that
they are entitled to vote with respect to the item, unless directed to
disapprove the item, in which case such shares will be voted against the
proposed adjournment. A shareholder vote may be taken on one or more items in
this Proxy Statement prior to any such adjournment if sufficient votes have been
received and it is otherwise appropriate. In the event that the Meeting is
adjourned, the same procedures will apply at a later Meeting date.
If a Proxy that is properly executed and returned is accompanied by
instructions to withhold authority to vote (an abstention) or represents a
broker "non-vote" (that is, a Proxy from a broker or nominee indicating that
such person has not received instructions from the beneficial owner or other
person entitled to vote shares on a particular matter for which the broker or
nominee does not have discretionary power), the shares represented thereby, with
respect to matters to be determined by a majority or a plurality of the votes
cast on such matters, will be considered present for purposes of determining the
existence of a quorum for the transaction of business but, not being cast, will
have no effect on the outcome of such matters. Accordingly, abstentions and
broker non-votes will have no effect on Proposals No. 1 and 2, for which the
required vote is a plurality or a majority number of the votes cast, but
effectively will be a vote against Proposal No. 3, which requires approval of a
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majority of the outstanding voting securities under the Investment Company Act
of 1940, as amended ("1940 Act").
Information about persons who owned beneficially more than 5% of any
portflio's outstanding shares as of the record date is set forth in Appendix C.
To the knowledge of management, the executive officers and Trustees of the Fund,
as a group, owned less than 1% of the outstanding shares of each portfolio as of
October 1, 1999.
The expense of solicitation will be borne by the Fund and will include
reimbursement of brokerage firms and others for expenses in forwarding proxy
solicitation material to beneficial owners. The solicitation of Proxies will be
largely by mail. Supplementary solicitations may include, without cost to the
Fund, telephonic, telegraphic or oral communication by regular employees of
Prudential Investment Management Services LLC ("PIMS"), the Fund's distributor.
In addition, Shareholder Communications Corporation, a proxy solicitation firm,
may be retained at a cost of approximately $7,500 to solicit shareholders on
behalf of the Fund.
Prudential Investments Fund Management LLC ("PIFM" or the "Manager"),
Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077, serves
as the Fund's Manager under a management agreement dated as of November 12,
1998. Investment advisory services are provided to the Fund's three portfolios
("Portfolios") by investment advisory firms with which PIFM has entered into
subadvisory agreements ("Subadvisers") as listed in Appendix A. As noted above,
PIMS, Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077,
serves as the distributor of the Fund's shares. The Fund's transfer agent is
Prudential Mutual Fund Services LLC ("PMFS"), Raritan Plaza One, Edison, New
Jersey 08837. As of July 31, 1999, PIFM served as the manager to forty-six
open-end investment companies, and as manager or administrator to twenty-two
closed-end investment companies, with aggregate assets of more than $70 billion.
The Fund's Board of Trustees oversees the actions of the Fund's Manager and
Subadvisers and decides upon matters of general policy.
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ELECTION OF TRUSTEES
(PROPOSAL NO. 1)
The Board of Trustees has acted to expand its membership and has nominated
the nine individuals identified below for election to the Fund's Board of
Trustees at the Meeting. Under Proposal No. 1, shareholders of the Fund are
being asked to vote for those nominees. Pertinent information about each nominee
is set forth in the listing below. Each nominee has indicated a willingness to
serve if elected. The Fund does not intend to hold annual meetings of
shareholders unless the election of Trustees is required under the 1940 Act.
Accordingly, if elected each nominee will serve for a term of unlimited duration
until his term expires in accordance with the Fund's retirement policy or until
the next meeting of shareholders at which Trustees are elected, whichever is
earlier. The Fund's amended retirement policy calls for the retirement of
Trustees on December 31 of the year in which they reach the age of 75.
The increase in the size of the Board and the nomination of these nominees
to serve as the Board Members for the Fund reflects an overall plan to
coordinate and enhance the efficiency of the governance of the Fund. The Fund's
Board believes that the Fund will benefit from the diversity and experience of
the nominees that would comprise the expanded Board. These nominees have had
distinguished careers in business, finance, government and other areas and will
bring a wide range of expertise to the Board. Six of the nine nominees have no
affiliation with PIFM or The Prudential Insurance Company of America
("Prudential") and would be independent Board Members. Independent Board Members
are charged with special responsibilities, among other things, to approve
advisory, distribution and similar agreements between the Fund and management.
They also constitute the members of the Board's Audit and Nominating Committees.
In the course of their duties, Board Members must review and understand large
amounts of financial and technical material and must be willing to devote
substantial amounts of time to their duties. Due to the demands of service on
the Boards, independent nominees may need to reject other attractive
opportunities. Each of the independent nominees already serves as an independent
Board Member for other funds within the Prudential Mutual Fund Complex and
understands the operations of the complex. The three nominees for Trustee who
are affiliated with the Fund's Manager or Prudential currently serve on the
Board of most of the other funds in the Prudential Mutual Fund Complex. It is
proposed that they join the Fund's Board to provide continuity and consistency.
Effective October 1, 1999, the fee paid to each independent Trustee of the
funds in the cluster of the Prudential Mutual Funds of which the Fund is a part
is $55,000 per year. The Fund's proportionate annual share of this aggregate fee
is approximately $9,000. Board Members affiliated with PIFM or Prudential will
continue to receive no compensation from the Fund (or any other fund in the
Prudential Mutual Fund Complex). Board Members will continue to be reimbursed
for any expenses incurred in attending meetings and for other incidental
expenses. Effective October 1, 1999, independent Board Members serving as chair
of the Audit Committee and Nominating Committee within the Fund's cluster
receive an additional $2,000 per year per Committee (for which the Fund's
proportionate share is about $300). Mr. Dorsey has been elected Chair of the
Fund's Audit Committee and Nominating Committee for the forthcoming year. Mr.
Mooney, the cluster's representative on the Executive Committee, which serves as
liaison between the Prudential Mutual Funds and Fund management, receives an
additional $8,000 per year from the funds within the Fund's cluster (the Fund's
proportionate share is about $1,200). The annual Board fees per fund and per
cluster in the Prudential Mutual Fund Complex may be reviewed periodically and
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changed by each fund's Board. The other funds in the Fund's cluster are First
Financial Fund, Inc., The High Yield Plus Fund, Inc., Global Utility Fund, Inc.,
The Target Portfolio Trust and Target Funds.
The following table sets forth information relating to the compensation
paid to Board Members and Board nominees during the past fiscal year:
COMPENSATION TABLE
Total Compensation
Aggregate paid to Board
Compensation Members From Fund
Board Members and Nominees(1) From Fund and Fund Complex(2)
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Dorsey, Eugene C.* $3,750 $ 70,000(17/46)+
Gunia, Robert F. $ 0 $ 0
LaBlanc, Robert E. $ 0 $ 45,000(14/17)+
McCorkindale, Douglas H.* $3,750 $ 70,000(23/40)+
Mooney, Thomas T.* $3,750 $115,000(35/70)+
Odenath, Jr., David R. $ 0 $ 0
Stoneburn, Stephen $ 0 $ 45,000(14/17)+
Strangfeld, Jr., John R. $ 0 $ 0
Whitehead, Clay T. $ 0 $ 45,000(18/24)+
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* Total compensation from all funds in the Fund Complex for the calendar year
ended December 31, 1998 includes amounts deferred at the election of
Trustees under the funds' deferred compensation plan. Including accrued
interest, total compensation amounted to approximately $85,445 for Mr.
Dorsey, $71,145 for Mr. McCorkindale and $119,740 for Mr. Mooney. During
the calendar year ended December 31, 1998, Messrs. Dorsey and McCorkindale
elected to defer all compensation from the Fund. Including accrued
interest, aggregate compensation with respect to the Fund amounted to
$3,791 and $3,991 for Messrs. Dorsey and McCorkindale, respectively.
+ Indicates number of funds/portfolios in Fund Complex (including the Fund)
to which aggregate compensation relates.
(1) Board members who are "interested," as defined in the 1940 Act, did not
receive compensation from the Fund or Fund Complex.
(2) No fund within the Fund Complex has a bonus, pension, profit sharing or
retirement plan.
Board Members may elect to receive their Trustees' fees pursuant to a
deferred fee agreement with the Fund. Under the terms of the agreement, the Fund
accrues daily the amount of such Board Member's fee 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
exemptive order of the Securities and Exchange Commission ("SEC"), at the daily
rate of return of a Portfolio. Payment of the interest so accrued is also
deferred and accruals become payable at the option of the Board Member. The
Fund's obligation to make payments of deferred Trustees' fees, together with
interest thereon, is a general obligation of the Fund.
It is the intention of the persons named in the accompanying form of proxy
to vote for the election of Eugene C. Dorsey, Robert F. Gunia, Robert E.
LaBlanc, Douglas H. McCorkindale, Thomas T. Mooney, David Odenath, Stephen
Stoneburn, John R. Strangfeld, Jr. and Clay T. Whitehead. Messrs. Dorsey,
McCorkindale, Mooney and Strangfeld are currently Trustees. The nominees for
independent Trustees were selected by the Nominating Committee in August 1999
and the full Board approved all nominees for Board membership on the same date.
Each of the nominees has consented to be named in this proxy statement and to
serve as a Trustee if elected. Only Messrs. Dorsey, McCorkindale and Mooney have
previously been elected by shareholders (in October 1998). Mr. Strangfeld was
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elected by the Board of Trustees in May 1999. Messrs. Gunia, LaBlanc, Odenath,
Stoneburn and Whitehead were each nominated to serve as a Trustee in August
1999.
The following table sets forth certain information concerning each of the
nominees and each Trustee of the Fund standing for reelection.
INFORMATION REGARDING TRUSTEES AND NOMINEES
Shares of
Beneficial
Name, age, business experience during the Position Interest Owned at
past five years and other directorships With Fund October 1, 1999
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EUGENE C. DORSEY (72), Retired President, Trustee --------
Chief Executive Officer and Trustee, Gannett
Foundation (now Freedom Forum) (1981-1989);
former publisher, four Gannett newspapers and
Vice President of Gannett Co. Inc.
(1978-1981); past Chairman, Independent
Sector, Washington, D.C. (national coalition
of philanthropic organizations) (1989-1992);
former Chairman of the American Council for
the Arts; former Director, Advisory Board of
Chase Manhattan Bank of Rochester; Director
of Global Utility Fund, Inc., The High Yield
Plus Fund, Inc., First Financial Fund, Inc.,
Prudential Diversified Bond Fund, Inc.,
Prudential Government Income Fund, Inc.,
Prudential High Yield Fund, Inc., Prudential
High Yield Total Return Fund, Inc.,
Prudential National Municipals Fund, Inc.,
Prudential Structured Maturity Fund, Inc.;
Trustee, The Target Portfolio Trust, Target
Funds, Prudential Municipal Bond Fund,
Prudential Government Securities Trust,
Prudential Municipal Series Fund and
Prudential California Municipal Fund.
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Shares of
Beneficial
Name, age, business experience during the Position Interest Owned at
past five years and other directorships With Fund October 1, 1999
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*ROBERT F. GUNIA (52), Chief Administrative Nominee --------
Officer (since March 1999) of Prudential for Trustee
Investments; Vice President of Prudential
(since September 1997); Executive Vice
President and Treasurer of PIFM (since
December 1996); formerly Senior Vice
President of Prudential Securities
Incorporated (from March 1997 to May 1999);
formerly Chief Administrative Officer (July
1990-September 1996), Director (January
1989-September 1996) and Executive Vice
President, Treasurer and Chief Financial
Officer (June 1987-September 1996) of
Prudential Mutual Fund Management, Inc.;
Vice President and Director (since May 1989)
of The Asia Pacific Fund, Inc.; Director of
The High Yield Income Fund, Inc., Prudential
Distressed Securities Fund, Inc., Prudential
Diversified Bond Fund, Inc., Prudential
Emerging Growth Fund, Inc., Prudential
Equity Fund, Inc., Prudential Europe Growth
Fund, Inc., Prudential Global Genesis Fund,
Inc., Prudential Global Limited Maturity
Fund, Inc., Prudential Global Total Return
Fund, Inc., Prudential Government Income
Fund, Inc., Prudential High Yield Fund,
Inc., Prudential High Yield Total Return
Fund, Inc., Prudential Institutional
Liquidity Portfolio, Inc., Prudential
Intermediate Global Income Fund, Inc.,
Prudential International Bond Fund, Inc.,
Prudential MoneyMart Assets, Inc.,
Prudential National Municipals Fund, Inc.,
Prudential Natural Resources Fund, Inc.,
Prudential Pacific Growth Fund, Inc.,
Prudential Sector Funds, Inc., Prudential
Small-Cap Quantum Fund, Inc., Prudential
Small Company Value Fund, Inc., Prudential
Special Money Market Fund, Inc., Prudential
Structured Maturity Fund, Inc., Prudential
Tax-Free Money Fund, Inc., Prudential World
Fund, Inc. and The Prudential Investment
Portfolios, Inc.; Trustee of Cash
Accumulation Trust, Command Government Fund,
Command Money Fund, Command Tax-Free Fund,
Prudential Balanced Fund, Prudential
California Municipal Fund, Prudential
Developing Markets Fund, Prudential Equity
Income Fund, Prudential Government
Securities Trust, Prudential Index Series
Fund, Prudential Mid-Cap Value Fund,
Prudential Municipal Bond Fund, Prudential
Municipal Series Fund, Prudential Real
Estate Securities Fund, Prudential
Tax-Managed Equity Fund, Prudential 20/20
Focus Fund and Target Funds.
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* Indicates "interested" Trustee, as defined by the 1940 Act, by reason of
his affiliation with Prudential or PIFM.
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Shares of
Beneficial
Name, age, business experience during the Position Interest Owned at
past five years and other directorships With Fund October 1, 1999
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ROBERT E. LABLANC (65), President of Robert Nominee --------
E. LaBlanc Associates, Inc. for Trustee
(telecommunications) since 1981; formerly
General Partner at Salomon Brothers;
formerly Vice Chairman of Continental
Telecom; Director of Salient 3
Communications, Storage Technology
Corporation, Titan Corporation,
TIE/communications, Inc., The Tribune
Company, Chartered Semiconductor
Manufacturing, Ltd., Prudential Europe
Growth Fund, Inc., Prudential Global Genesis
Fund, Inc., Prudential Institutional
Liquidity Portfolio, Inc., Prudential
MoneyMart Assets, Inc., Prudential Natural
Resources Fund, Inc., Prudential Pacific
Growth Fund, Inc., Prudential Special Money
Market Fund, Inc., Prudential Tax-Free Money
Fund, Inc. and Prudential World Fund, Inc.;
Trustee of Cash Accumulation Trust, Command
Government Fund, Command Money Fund, Command
Tax-Free Fund, Prudential Developing Markets
Fund, Target Funds and Manhattan College.
DOUGLAS H. MCCORKINDALE (60), Vice Chairman Trustee --------
(since March 1984) and President (since
September 1997) of Gannett Co., Inc.;
Director of Continental Airlines, Inc.,
Gannett Co., Inc., Frontier Corporation, The
High Yield Plus Fund, Inc., First Financial
Fund, Inc., Global Utility Fund, Inc.,
Prudential Distressed Securities Fund, Inc.,
Prudential Emerging Growth Fund, Inc.,
Prudential Equity Fund, Inc., Prudential
Global Limited Maturity Fund, Inc.,
Prudential Intermediate Global Income Fund,
Inc., Prudential International Bond Fund,
Inc., The Prudential Investment Portfolios,
Inc., Prudential Sector Funds, Inc.,
Prudential Small-Cap Quantum Fund, Inc.,
Prudential Small Company Value Fund, Inc.,
Prudential Global Total Return Fund, Inc.;
Trustee of Prudential 20/20 Focus Fund,
Prudential Balanced Fund, Prudential
Diversified Funds, Prudential Equity Income
Fund, Prudential Index Series Fund,
Prudential Mid-Cap Value Fund, Prudential
Real Estate Securities Fund, Prudential
Tax-Managed Equity Fund, Target Funds and
The Target Portfolio Trust.
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Shares of
Beneficial
Name, age, business experience during the Position Interest Owned at
past five years and other directorships With Fund October 1, 1999
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THOMAS T. MOONEY (58), President of the Trustee --------
Greater Rochester Metro Chamber of Commerce
(since 1976); former Rochester City Manager
(during 1973); Trustee of Center for
Governmental Research, Inc.; Director of Blue
Cross of Rochester, Executive Service Corps
of Rochester, Monroe County Water Authority,
Monroe County Industrial Development
Corporation, Northeast Midwest Institute,
Rochester Jobs, Inc., Global Utility Fund,
Inc., Prudential Distressed Securities Fund,
Inc., Prudential Diversified Bond Fund, Inc.,
Prudential Emerging Growth Fund, Inc.,
Prudential Equity Fund, Inc., Prudential
Global Limited Maturity Fund, Inc.,
Prudential Government Income Fund, Inc.,
Prudential High Yield Fund, Inc., Prudential
High Yield Total Return Fund, Inc.,
Prudential Intermediate Global Income Fund,
Inc., Prudential International Bond Fund,
Inc., The Prudential Investment Portfolios,
Inc., Prudential National Municipals Fund,
Inc., Prudential Sector Funds, Inc.,
Prudential Small-Cap Quantum Fund, Inc.,
Prudential Small Company Value Fund, Inc.,
Prudential Structured Maturity Fund, Inc.,
Prudential Global Total Return Fund, Inc.,
The High Yield Income Fund, Inc.; President,
Director and Treasurer of First Financial
Fund, Inc. and The High Yield Plus Fund,
Inc.; Trustee of Prudential 20/20 Focus Fund,
Prudential Balanced Fund, Prudential
California Municipal Fund, Prudential Equity
Income Fund, Prudential Government Securities
Trust, Prudential Index Series Fund,
Prudential Mid-Cap Value Fund, Prudential
Municipal Bond Fund, Prudential Municipal
Series Fund, Prudential Real Estate
Securities Fund, Prudential Tax-Managed
Equity Fund, Target Funds and The Target
Portfolio Trust.
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Shares of
Beneficial
Name, age, business experience during the Position Interest Owned at
past five years and other directorships With Fund October 1, 1999
--------------------------------------- --------- ---------------
*DAVID R. ODENATH, Jr. (42), Officer in Nominee --------
Charge, President, Chief Operating Officer for
(since June 1999), PIFM; Senior Vice Trustee
President (since June 1999), The Prudential
Insurance Company of America; Senior Vice
President (August 1993-May 1999),
PaineWebber Group, Inc.; Director of The
High Yield Income Fund, Inc., Prudential
Distressed Securities Fund, Inc., Prudential
Diversified Bond Fund, Inc., Prudential
Emerging Growth Fund, Inc., Prudential
Equity Fund, Inc., Prudential Europe Growth
Fund, Inc., Prudential Global Genesis Fund,
Inc., Prudential Global Limited Maturity
Fund, Inc., Prudential Global Total Return
Fund, Inc., Prudential Government Income
Fund, Inc., Prudential High Yield Fund,
Inc., Prudential High Yield Total Return
Fund, Inc., Prudential Institutional
Liquidity Portfolio, Inc., Prudential
Intermediate Global Income Fund, Inc.,
Prudential International Bond Fund, Inc.,
Prudential MoneyMart Assets, Inc.,
Prudential National Municipals Fund, Inc.,
Prudential Natural Resources Fund, Inc.,
Prudential Pacific Growth Fund, Inc.,
Prudential Sector Funds, Inc., Prudential
Small-Cap Quantum Fund, Inc., Prudential
Small Company Value Fund, Inc., Prudential
Special Money Market Fund, Inc., Prudential
Structured Maturity Fund, Inc., Prudential
Tax-Free Money Fund, Inc., Prudential World
Fund, Inc. and The Prudential Investment
Portfolios, Inc.; Trustee of Cash
Accumulation Trust, Command Government Fund,
Command Money Fund, Command Tax-Free Fund,
Prudential Balanced Fund, Prudential
California Municipal Fund, Prudential
Developing Markets Fund, Prudential Equity
Income Fund, Prudential Government
Securities Trust, Prudential Index Series
Fund, Prudential Mid-Cap Value Fund,
Prudential Municipal Bond Fund, Prudential
Municipal Series Fund, Prudential Real
Estate Securities Fund, Prudential
Tax-Managed Equity Fund, Prudential 20/20
Focus Fund and Target Funds.
- --------------------------
* Indicates "interested" Trustee, as defined by the 1940 Act, by reason of
his affiliation with Prudential or PIFM.
-9-
<PAGE>
Shares of
Beneficial
Name, age, business experience during the Position Interest Owned at
past five years and other directorships With Fund October 1, 1999
--------------------------------------- --------- ---------------
STEPHEN STONEBURN (56), President and Chief Nominee --------
Executive Officer, Quadrant Media Corp. for
(publishing) (since June 1996); formerly Trustee
President, Argus Integrated Media, Inc.
(June 1995-June 1996); formerly Senior Vice
President and Managing Director, Cowles
Business Media (January 1993-1995); prior
thereto, Senior Vice President (January
1991-1992) and Publishing Vice President
(May 1989 - December 1990) of Gralla
Publications (a division of United
Newspapers, U.K.); formerly Senior Vice
President of Fairchild Publications, Inc.;
Director of Prudential Europe Growth Fund,
Inc., Prudential Global Genesis Fund, Inc.,
Prudential Institutional Liquidity
Portfolio, Inc., Prudential MoneyMart
Assets, Inc., Prudential Natural Resources
Fund, Inc., Prudential Pacific Growth Fund,
Inc., Prudential Special Money Market Fund,
Inc., Prudential Tax-Free Money Fund, Inc.
and Prudential World Fund, Inc.; Trustee of
Cash Accumulation Trust, Command Government
Fund, Command Money Fund, Command Tax-Free
Fund, Prudential Developing Markets Fund and
Target Funds.
-10-
<PAGE>
Shares of
Beneficial
Name, age, business experience during the Position Interest Owned at
past five years and other directorships With Fund October 1, 1999
--------------------------------------- --------- ---------------
*JOHN R. STRANGFELD, JR. (45), Chief President --------
Executive Officer, Chairman, President and and
Director of The Prudential Investment Trustee
Corporation (since January 1990), Executive
Vice President of Prudential Global Asset
Management Group of Prudential (since
February 1998) and Chairman of Pricoa
Capital Group (since August 1989); formerly
Chief Executive Officer of the Private Asset
Management Group of Prudential (November
1994 - December 1998); President and
Director of Global Utility Fund, Inc.,
Prudential Distressed Securities Fund, Inc.,
Prudential Diversified Bond Fund, Inc.,
Prudential Emerging Growth Fund, Inc.,
Prudential Equity Fund, Inc., Prudential
Europe Growth Fund, Inc., Prudential Global
Genesis Fund, Inc., Prudential Global
Limited Maturity Fund, Inc., Prudential
Global Total Return Fund, Inc., Prudential
Government Income Fund, Inc., Prudential
High Yield Fund, Inc., Prudential High Yield
Total Return Fund, Inc., Prudential
Institutional Liquidity Portfolio, Inc.,
Prudential Intermediate Global Income Fund,
Inc., Prudential International Bond Fund,
Inc., Prudential MoneyMart Assets, Inc.,
Prudential National Municipals Fund, Inc.,
Prudential Natural Resources Fund, Inc.,
Prudential Pacific Growth Fund, Inc.,
Prudential Sector Funds, Inc., Prudential
Small-Cap Quantum Fund, Inc., Prudential
Small Company Value Fund, Inc., Prudential
Special Money Market Fund, Inc., Prudential
Structured Maturity Fund, Inc., Prudential
Tax-Free Money Fund, Inc., Prudential World
Fund, Inc., The High Yield Income Fund, Inc.
and The Prudential Investment Portfolios,
Inc.; President and Trustee of Cash
Accumulation Trust, Command Government Fund,
Command Money Fund, Command Tax-Free Fund,
Prudential Balanced Fund, Prudential
California Municipal Fund, Prudential
Developing Markets Fund, Prudential Equity
Income Fund, Prudential Government
Securities Trust, Prudential Index Series
Fund, Prudential Mid-Cap Value Fund,
Prudential Municipal Bond Fund, Prudential
Municipal Series Fund, Prudential Real
Estate Securities Fund, Prudential
Tax-Managed Equity Fund, Prudential 20/20
Focus Fund, Target Funds and The Target
Portfolio Trust.
- ----------------------------
* Indicates "interested" Trustee, as defined by the 1940 Act, by reason of
his affiliation with Prudential or PIFM.
-11-
<PAGE>
Shares of
Beneficial
Name, age, business experience during the Position Interest Owned at
past five years and other directorships With Fund October 1, 1999
--------------------------------------- --------- ---------------
CLAY T. WHITEHEAD (60), President of Nominee --------
National Exchange Inc. (new business for
development firm) (since May 1983); Trustee
Director of Prudential Distressed Securities
Fund, Inc., Prudential Emerging Growth Fund,
Inc., Prudential Equity Fund, Inc.,
Prudential Europe Growth Fund, Inc.,
Prudential Global Genesis Fund, Inc.,
Prudential Global Limited Maturity Fund,
Inc., Prudential Global Total Return Fund,
Inc., Prudential Institutional Liquidity
Portfolio, Inc., Prudential Intermediate
Global Income Fund, Inc., Prudential
International Bond Fund, Inc., Prudential
MoneyMart Assets, Inc., Prudential Natural
Resources Fund, Inc., Prudential Pacific
Growth Fund, Inc., Prudential Sector Funds,
Inc., Prudential Small-Cap Quantum Fund,
Inc., Prudential Small Company Value Fund,
Inc., Prudential Special Money Market Fund,
Inc., Prudential Tax-Free Money Fund, Inc.,
Prudential World Fund, Inc. and The
Prudential Investment Portfolios, Inc.;
Trustee of Cash Accumulation Trust, Command
Government Fund, Command Money Fund, Command
Tax-Free Fund, Prudential Balanced Fund,
Prudential Developing Markets Fund,
Prudential Equity Income Fund, Prudential
Index Series Fund, Prudential Mid-Cap Value
Fund, Prudential Real Estate Securities
Fund, Prudential Tax-Managed Equity Fund,
Prudential 20/20 Focus Fund and Target
Funds.
The Fund has a Nominating Committee and an Audit Committee, the members of
both of which are the independent Board Members. The Audit Committee makes
recommendations to the Board with respect to the engagement of independent
accountants and reviews with the independent accountants the plan and results of
the audit engagement and matters having a material effect upon the Fund's
financial operations. The Nominating Committee makes recommendations to the
Board with respect to candidates for election as Board Members. The Nominating
Committee does not consider nominees recommended by shareholders to fill
vacancies on the Board.
There were four meetings of the Fund's Board of Trustees held during the
fiscal year ended July 31, 1999. The members of the Audit and Nominating
Committees are Messrs. Dorsey, McCorkindale and Mooney. The Audit Committee met
two times during the fiscal year ended July 31, 1999. The Nominating Committee
met once during the fiscal year ended July 31, 1999, and met once thereafter. No
Trustee attended fewer than 75% of the aggregate of the total number of meetings
of the Board of Trustees, the Audit Committee and the Nominating Committee held
during the 1999 fiscal year.
The executive officers of the Fund are listed in Appendix B. They are
elected annually by the Board of Trustees.
-12-
<PAGE>
REQUIRED VOTE
The nominees receiving the affirmative vote of a plurality of the votes
cast will be elected Trustees, provided a quorum is present. Forty percent (40%)
of the shares entitled to vote constitutes a quorum for the transaction of
business.
THE BOARD OF TRUSTEES, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES UNDER PROPOSAL NO. 1.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 2)
The Board of Trustees, including Trustees who are not interested persons
of the Fund, has selected PricewaterhouseCoopers LLP as independent accountants
of the Fund for the fiscal year ending July 31, 2000. The ratification of the
selection of independent public accountants is to be voted upon at the Meeting
and it is intended that the persons named as proxies in the accompanying Proxy
will vote for PricewaterhouseCoopers LLP. No representative of
PricewaterhouseCoopers LLP is expected to be present at the Meeting but a
representative will be available to answer any questions or make any statements
should any matter arise requiring their presence. PricewaterhouseCoopers LLP has
informed the Fund that they have no material direct or indirect financial
interest in the Fund.
The policy of the Board of Trustees regarding engaging independent
accountants' services is that management may engage the Fund's principal
independent public accountants to perform any service(s) normally provided by
independent accounting firms provided that such service(s) meet(s) any and all
of the independence requirements of the American Institute of Certified Public
Accountants and the SEC. In accordance with this policy, the Audit Committee
reviews and approves all services provided by the independent public accountants
prior to their being rendered. The Board of Trustees of the Fund receives a
report from its Audit Committee relating to all services after they have been
performed by the Fund's independent accountants.
REQUIRED VOTE
Approval of Proposal No. 2 requires a vote of a majority of the votes cast
with respect to Proposal No. 2 at the Meeting, provided a quorum is present.
THE BOARD OF TRUSTEES, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" THIS PROPOSAL NO. 2.
-13-
<PAGE>
APPROVAL OF CHANGES TO CERTAIN FUNDAMENTAL INVESTMENT
RESTRICTIONS OF THE PORTFOLIOS
(PROPOSAL NO. 3)
Changes are proposed to the fundamental investment restrictions
("fundamental restrictions") of the Portfolios. Pursuant to the 1940 Act, each
Portfolio has adopted certain fundamental restrictions, which may be changed
only with shareholder approval. Investment policies and other restrictions that
each Portfolio has not specifically designated as being fundamental are
considered to be "non-fundamental" and may be changed by the Board of Trustees
without shareholder approval. Thus, fundamental restrictions that become
non-fundamental can thereafter be amended by the Board without a vote of
shareholders.
Several of the current fundamental restrictions of the Portfolios reflect
regulatory, business or industry conditions, practices or requirements that are
no longer in effect. Accordingly, the Board now has approved revisions to each
Portfolio's fundamental restrictions in order to simplify, modernize and make
more uniform those restrictions that are required to be fundamental.
The Board believes that by reducing to a minimum those restrictions that
can be changed only by shareholder vote, the Portfolios will be able to avoid
the costs and delays associated with a shareholder meeting if the Board decides
to make future changes to its investment policies. Although the proposed changes
in fundamental restrictions will allow each Portfolio greater investment
flexibility to respond to future investment opportunities, the Board does not
anticipate that the changes, individually or in the aggregate, will result at
this time in a material change in the level of investment risk associated with
an investment in the Portfolios or the manner in which the Portfolios are
managed. Most importantly, the Portfolios' respective investment objectives and
policies will be unchanged.
PROPOSED CHANGES. The following is the text of the proposed restrictions,
marked to show changes to the current restrictions, and a summary description of
the proposed changes to each Portfolio's fundamental restrictions, together with
the text of those non-fundamental restrictions that would be adopted in
connection with the elimination of certain of the Portfolios' current
fundamental restrictions. The text below also includes those fundamental
restrictions that are being eliminated for which no corresponding
non-fundamental restrictions are being proposed. Proposed deletions are
stricken; proposed new text is bold and underlined. The fundamental restrictions
of each of the Portfolios are identical to one another, and the proposed changes
are proposed with respect to the investment restrictions of each Portfolio.
Shareholders should note that certain of the fundamental restrictions that are
treated separately below currently are combined within a single existing
fundamental restriction.
A. MODIFICATION OF FUNDAMENTAL RESTRICTION ON PORTFOLIO DIVERSIFICATION
PROPOSED CHANGE: Upon approval of Proposal 3A, the existing fundamental
restriction on portfolio diversification would be modified as follows:
"Each Portfolio is a "diversified company" as defined in the 1940 Act. Each
Portfolio will not purchase the securities of any issuer if, as a result, the
Portfolio would fail to be a diversified company within the meaning of the 1940
Act, and the rules and regulations promulgated thereunder, as such statute,
rules and regulations are amended from time to time or are interpreted from time
-14-
<PAGE>
to time by the SEC Staff (collectively, the "1940 Act Laws and Interpretations")
or to the extent that the Portfolio may be permitted to do so by exemptive order
or similar relief (collectively, with the 1940 Act Laws and Interpretations, the
"1940 Act Laws, Interpretations and Exemptions")."
DISCUSSION: In order to qualify as a diversified investment company under the
1940 Act, each Portfolio may not purchase securities of any one issuer if, as a
result, more than 5% of the Portfolio's total assets would be invested in
securities of that issuer or the Portfolio would own or hold more than 10% of
the outstanding voting securities of that issuer, except that up to 25% of the
Portfolio's total assets may be invested without regard to this limitation. This
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to securities issued by other
investment companies. The proposed restriction adopts the same 1940 Act
standards. However, by not listing the percentage limitations, the proposed
restriction would change automatically if the 1940 Act Laws, Interpretations and
Exemptions change.
B. MODIFICATION AND RECLASSIFICATION OF FUNDAMENTAL RESTRICTION ON MARGIN
TRANSACTIONS
PROPOSED CHANGE: Upon approval of Proposal 3B, the existing fundamental
restriction on engaging in margin transactions would be eliminated and each
Portfolio would become subject to the following non-fundamental restriction:
"A Portfolio may not purchase securities on margin, provided that the Portfolio
may obtain short-term credits as may be necessary for the clearance of purchases
and sales of securities, and further provided that the Portfolio may make margin
deposits in connection with its use of financial options and futures, forward
and spot currency contracts, swap transactions and other financial contracts or
derivative instruments."
DISCUSSION: The Portfolios are not required to have a fundamental restriction
with respect to margin transactions. To maximize each Portfolio's flexibility in
this area, the Board believes that the existing fundamental restriction on
margin transactions should be replaced with a non-fundamental restriction. The
proposed non-fundamental restriction eliminates any possible confusion over each
Portfolio's ability to use forward and spot currency contracts, swap
transactions and other financial contracts or derivative instruments, as each
Portfolio intends to do from time to time.
C. MODIFICATION OF FUNDAMENTAL RESTRICTION ON ISSUING SENIOR SECURITIES AND
BORROWING MONEY
PROPOSED CHANGE: Upon approval of Proposal 3C, the existing fundamental
restriction on issuing senior securities and borrowing money would be modified
as follows:
-15-
<PAGE>
"A Portfolio may not issue senior securities or borrow money or pledge its
assets, except as permitted by the 1940 Act Laws, Interpretations and
Exemptions."
DISCUSSION: The proposed changes would make each Portfolio's fundamental
restriction on issuing senior securities or borrowing money no more limiting
than required by the 1940 Act. Generally, under the 1940 Act, funds may borrow
money in an amount not exceeding 33-1/3% of fund total assets (including the
amounts borrowed). The Board believes that changing the Portfolios' fundamental
restrictions in this manner will provide flexibility for future contingencies.
However, the Board does not currently intend to change the Portfolios'
operations, under which the Portfolios do not borrow or use leverage for
investment purposes.
D. MODIFICATION OF FUNDAMENTAL RESTRICTION ON REAL ESTATE INVESTMENTS
PROPOSED CHANGE: Upon approval of Proposal 3D, the existing fundamental
restriction on real estate investments would be modified to read as follows:
"A Portfolio may not buy or sell real estate, except that investments in
securities of issuers that invest in real estate and investments in
mortgage-backed securities, mortgage participations or other instruments
supported by interests in real estate are not subject to this limitation, and
except that the Portfolio may exercise rights under agreements relating to such
securities, including the right to enforce security interests and to hold real
estate acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner."
DISCUSSION: The proposed changes to this fundamental restriction would provide
more detail regarding the types of real estate related-securities that are
permissible investments for the Portfolios, such as mortgage participations, and
would permit the Portfolios to exercise rights under agreements relating to real
estate-related securities. In addition, the proposed restriction includes an
exception that permits each Portfolio to hold real estate acquired as a result
of ownership of securities or other interests. Acquisition of real estate would
subject each Portfolio to risks associated with real estate, such as liquidity
risks, environmental risks and changes in tax and regulatory requirements. It is
expected that the proposed changed policy would not materially affect the
Portfolios' operations.
-16-
<PAGE>
E. MODIFICATION AND RECLASSIFICATION OF FUNDAMENTAL RESTRICTION ON PLEDGING
ASSETS
PROPOSED CHANGE: If Proposal 3C is approved, the existing fundamental
restriction on pledging assets would be eliminated in conjunction with the
modification of the Portfolios' fundamental restriction on issuing senior
securities and borrowing money, as discussed above. The existing fundamental
restriction provides that no Portfolio may:
pledge its assets, except that [a Portfolio] ... may pledge its assets to
secure ... 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 Trust to Trustees pursuant to deferred compensation arrangements are
not deemed to be a pledge of assets ... subject to this restriction.
Upon approval of Proposal 3C, each Portfolio would become subject to the
following non-fundamental restriction:
"A Portfolio will not mortgage, pledge, or hypothecate any of its assets,
provided that this shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection with
permissible activities."
DISCUSSION: The Portfolios are not required to have a fundamental restriction
with respect to the pledging of assets. To maximize each Portfolio's flexibility
in this area, the Board believes that each Portfolio's restriction on pledging
assets should be made non-fundamental. The non-fundamental restriction would be
similar to the fundamental restriction proposed to be eliminated. The Board does
not expect this change to have any impact on the Portfolios' operations, except
that it would permit each Portfolio to pledge its assets in connection with any
permissible borrowing, rather than only in connection with borrowing for
temporary, extraordinary or emergency purposes, to take advantage of investment
opportunities, or for the clearance of transactions. It is expected that the
proposed changed policy would not materially affect the Portfolios' operations.
F. MODIFICATION OF FUNDAMENTAL RESTRICTION ON MAKING LOANS
PROPOSED CHANGE: Upon approval of Proposal 3F, each Portfolio's existing
fundamental restriction on making loans would be modified as follows:
"A Portfolio may not make loans, except through loans of assets of the Portfolio
or through repurchase agreements, provided that for purposes of this limitation,
the acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances or
similar instruments will not be considered the making of a loan."
DISCUSSION: The proposed changes to this fundamental restriction would more
completely describe various debt instruments each Portfolio may purchase that do
not constitute the making of a loan and would permit each Portfolio to lend
Portfolio assets. However, it is expected that the proposed changed policy would
not materially affect the Portfolios' operations.
G. MODIFICATION OF FUNDAMENTAL RESTRICTION ON CONCENTRATION
PROPOSED CHANGE: Upon approval of Proposal 3G, the existing fundamental
restriction on concentration would be modified as follows:
"A Portfolio may not purchase any security if as a result 25% or more of the
Portfolio's total assets would be invested in the securities of issuers having
their principal business activities in the same industry, except for temporary
-17-
<PAGE>
defensive purposes, and except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities."
DISCUSSION: The proposed changes to each Portfolio's fundamental restriction on
concentration would make minor changes in wording from the existing fundamental
restriction. It is expected that the proposed changed policy would not
materially affect the Portfolios' operations.
H. ELIMINATION OF FUNDAMENTAL RESTRICTION ON SELLING SECURITIES SHORT
PROPOSED CHANGE: Upon approval of Proposal 3H, each Portfolio's existing
fundamental restriction on selling securities short would be eliminated.
DISCUSSION: The Portfolios are not required to have a fundamental restriction
with respect to short sales of securities. A short sale of a security is a
transaction in which a fund sells a security it does not own in anticipation of
a decline in the market value of that security. To maximize each Portfolio's
flexibility in this area, the Board believes that the restriction on short sales
of securities, except short sales "against-the-box," should be eliminated.
Although the Portfolios will not become subject to a comparable non-fundamental
restriction, the Portfolios do not currently intend to engage in short sales of
securities.
I. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING FOR THE PURPOSE OF
EXERCISING CONTROL
PROPOSED CHANGE: Upon approval of Proposal 3I, each Portfolio's existing
fundamental restriction on investing for the purpose of exercising control would
be eliminated.
DISCUSSION: The Board proposes to eliminate this fundamental restriction, which
prohibits the Portfolios from investing in companies for the purpose of
exercising control or management. Elimination of this restriction would clarify
each Portfolio's ability to exercise freely its normal rights as a shareholder
of the companies in which it invests. Although the Portfolios will not become
subject to a comparable non-fundamental restriction, the Portfolios do not
currently intend to become involved in directing or administering the day-to-day
operations of any company.
* * * *
REQUIRED VOTE: Approval of each of the changes contemplated by Proposal 3
requires the affirmative vote of a "majority of the outstanding voting
securities" of each Portfolio, which for this purpose means the affirmative vote
of the lesser of (1) more than 50% of the outstanding voting shares of each
Portfolio or (2) 67% or more of the voting shares of each Portfolio present at
the Meeting if more than 50% of the outstanding voting shares of each Portfolio
are represented at the Meeting in person or by proxy.
Any proposed changes that are approved by the shareholders of a Portfolio
at the Meeting will be effective on that Portfolio's next business day.
IF ONE OR MORE OF THE CHANGES CONTEMPLATED BY PROPOSAL 3 ARE NOT APPROVED
BY A PORTFOLIO'S SHAREHOLDERS, THE RELATED EXISTING FUNDAMENTAL RESTRICTION(S)
WILL CONTINUE IN EFFECT AS TO THAT PORTFOLIO.
-18-
<PAGE>
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE
"FOR" EACH PORTION OF PROPOSAL 3.
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of shareholders arise,
including any question as to an adjournment of the Meeting, the persons named as
proxies in the enclosed Proxy will vote thereon according to their best judgment
in the interests of the Fund.
SHAREHOLDER PROPOSALS
A shareholder's proposal intended to be presented at any subsequent
meeting of shareholders of the Fund must be received by the Fund a reasonable
time before the Board of Trustees makes the solicitation relating to such
meeting, in order to be included in the Fund's Proxy Statement and form of proxy
relating to such meeting. Shareholder proposals that are submitted in a timely
manner will not necessarily be included in the Fund's proxy materials. Inclusion
of such proposals is subject to limitations under the federal securities laws.
The Fund is not required to hold annual meetings of shareholders if the
election of Board Members is not required under the 1940 Act. It is the present
intention of the Board not to hold annual meetings of shareholders unless such
shareholder action is required.
DAVID F. CONNOR
Secretary
Dated: October 8, 1999
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH
TO HAVE THEIR SHARES VOTED ARE REQUESTED TO MARK, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
-19-
<PAGE>
APPENDIX A
Subadvisers
-----------
The following firms provide investment advisory services to each Portfolio, with
the exception of Pacific Investment Management Company, which serves as
subadviser for all Portfolios except Prudential Diversified High Growth Fund,
and Lazard Asset Management, which serves as subadviser for all Portfolios
except Prudential Diversified Conservative Growth Fund.
Jennison Associates LLC
466 Lexington Avenue
New York, NY 10017
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Franklin Advisers, Inc.
777 Mariners Island Boulevard
San Mateo, CA 94404
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Lazard Asset Management
30 Rockefeller Plaza
New York, NY 10112
Pacific Investment Management Company
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
-20-
<PAGE>
APPENDIX B
OFFICER INFORMATION
NAME (AGE) OFFICE WITH THE TRUST PRINCIPAL OCCUPATIONS
---------- --------------------- ---------------------
John R. Strangfeld, Jr.(45) Trustee and See p. 11 of Proxy
President since May Statement
1999
Robert F. Gunia (52) Vice President since See p. 6 of Proxy
August 1998; Statement
nominee for Trustee
David F. Connor (35) Secretary since Assistant General Counsel
August 1998 (since March 1998) of
PIFM; Associate Attorney,
Drinker Biddle & Reath
LLP prior thereto.
Grace C. Torres (40) Treasurer and Principal First Vice President
Financial and (since December 1996) of
Accounting Officer PIFM; First Vice
since August 1998 President (since March
1993) of Prudential
Securities Incorporated;
formerly First Vice
President (March 1994-
September 1996) of
Prudential Mutual Fund
Management, Inc.
Stephen M. Ungerman (46) Assistant Treasurer Tax Director (since March
since August 1998 1996) of Prudential
Investments; formerly
First Vice President
(February 1993-September
1996) of Prudential
Mutual Fund Management,
Inc.
-21-
<PAGE>
APPENDIX C
5% Shareholders of Prudential Diversified Conservative Growth Fund
<TABLE>
<CAPTION>
Percent of
Name and Address of Shareholder Class of Shares Number of Shares Class
------------------------------- --------------- ---------------- -----
<S> <C> <C> <C>
Prudential Trust Company Class A 98, 132 10.28%
FBO Prudential Defined Contribution
ATTN: John Surdy
30 Scranton Office Park
Moosic, PA 18507
Conversion Holding Account Class A 56,320 5.90%
P.O. Box 15040
New Brunswick, NJ 08906-5040
R K Company Class C 72,115 5.43%
1000 Royce Boulevard
Oakbrook Ter, IL 60181-4809
PMG IIA Fund Class Z 1,734,978 95.50%
Prudential Insurance Company
of America - Equity Products
Three Gateway Center
10th Floor
100 Mulberry Street
Newark, NJ 07102
5% Shareholders of Prudential Diversified Moderate Growth Fund
Percent of
Name and Address of Shareholder Class of Shares Number of Shares Class
------------------------------- --------------- ---------------- -----
Prudential Trust Company Class A 308,112 13.78%
FBO Prudential Defined Contribution
ATTN: John Surdy
30 Scranton Office Park
Moosic, PA 18507
PMG IIA Fund Class Z 668,059 96.64%
Prudential Insurance Company
of America - Equity Products
Three Gateway Center
10th Floor
100 Mulberry Street
Newark, NJ 07102
<PAGE>
5% Shareholders of Prudential Diversified High Growth Fund
Percent of
Name and Address of Shareholder Class of Shares Number of Shares Class
------------------------------- --------------- ---------------- -----
New Moon Investment LTD. Class A 356,435 18.07%
P.O. Box 2003 Georgetown
Grand Pavilion Commercial CTR
802 West Bay Road
Grand Cayman
Cayman Islands, BWI
Francios Bitz Class A 176,991 8.97%
1640 Pleasant Hills Road
Baden, PA 15005-2518
PMG IIA Fund Class Z 2,861,815 99.06%
Prudential Insurance Company
of America - Equity Products
Three Gateway Center
10th Floor
100 Mulberry Street
Newark, NJ 07102
</TABLE>
<PAGE>
PRUDENTIAL DIVERSIFIED FUNDS
(Conservative Growth Fund)
PRUDENTIAL INVESTMENTS
GATEWAY CENTER THREE
100 MULBERRY STREET, 9TH FLOOR
NEWARK, NJ 07102-4077
PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) David F.
Connor, Grace C. Torres and Stephen M. Ungerman, or any one or more of them,
with full power of substitution, to vote all shares of the Fund which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Fund to be held at Prudential Plaza, 751 Broad Street, 24th Floor, Newark, New
Jersey 07102 on November 8, 1999 at 10:00 a.m. Eastern time and at any
adjournments thereof. All powers may be exercised by a majority of said proxy
holders or substitutes voting or acting or, if only one votes and acts, then by
that one. This Proxy shall be voted on the proposals described in the Proxy
Statement as specified below. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing in a
fiduciary capacity, such as executor, administrator, trustee, attorney,
guardian, etc., please indicate this. Corporate and partnership proxies should
be signed by an authorized person indicating the person's title.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
You may also vote your shares by touchtone phone by calling 1-800-690-6903 or
through the Internet at www.proxyvote.com
Please refer to the enclosed Proxy Statement for a complete discussion of this
matter.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR EACH OF THE PROPOSALS
As to any other matter, said proxy holders shall vote in accordance with their
best judgment.
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE THE EXPENSE OF ADDITIONAL MAILINGS.
SHARES
CONTROL NUMBER
ACCOUNT NUMBER
- --------------------------------------------------------------------------------
<PAGE>
(perforation)
- --------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
CONSERVATIVE GROWTH FUND
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
ELECTION OF TRUSTEES
1. Nominees: /_/ For /_/ Withhold /_/ For All
All All Except
01) Eugene C. Dorsey
02) Robert F. Gunia
03) Robert E. LaBlanc
04) Douglas H. McCorkindale
05) Thomas T. Mooney
06) David R. Odenath, Jr.
07) Stephen Stoneburn
08) John R. Strangfeld, Jr.
09) Clay T. Whitehead
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
__________________________
VOTE ON PROPOSALS
(PLACE "X" ONLY IN ONE BOX)
2. To ratify the selection of For Against Abstain
PricewaterhouseCoopers LLP /_/ /_/ /_/
as independent public
accountants for the fiscal
year ending July 31, 2000.
3(a). To modify the fundamental For Against Abstain
restriction on portfolio /_/ /_/ /_/
diversification.
3(b). To modify and reclassify For Against Abstain
the fundamental restriction /_/ /_/ /_/
on margin transactions.
<PAGE>
3(c). To modify the fundamental For Against Abstain
restriction on issuing /_/ /_/ /_/
senior securities and
borrowing money. A vote
"for" this proposed change to
the Fund's fundamental
restrictions would also have
the effect of a vote "for"
the proposed modification and
reclassification of the
fundamental restriction on
pledging assets.
3(d). To modify the fundamental For Against Abstain
restriction on real estate /_/ /_/ /_/
investments.
3(f). To modify the fundamental For Against Abstain
restriction on making loans. /_/ /_/ /_/
3(g). To modify the fundamental For Against Abstain
restriction on /_/ /_/ /_/
concentration.
3(h). To eliminate the For Against Abstain
fundamental restriction on /_/ /_/ /_/
selling securities short.
3(i). To eliminate the For Against Abstain
fundamental restriction on /_/ /_/ /_/
investing for the purpose
of exercising control.
<PAGE>
4. To transact such other For Against Abstain
business as may properly /_/ /_/ /_/
come before the meeting and
any adjournments thereof.
- -------------------------------------- -----
Signature (PLEASE SIGN WITHIN BOX) Date
- -------------------------------------- -----
Signature (Joint Owners) Date
<PAGE>
PRUDENTIAL DIVERSIFIED FUNDS
(Moderate Growth Fund)
PRUDENTIAL INVESTMENTS
GATEWAY CENTER THREE
100 MULBERRY STREET, 9TH FLOOR
NEWARK, NJ 07102-4077
PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) David F.
Connor, Grace C. Torres and Stephen M. Ungerman, or any one or more of them,
with full power of substitution, to vote all shares of the Fund which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Fund to be held at Prudential Plaza, 751 Broad Street, 24th Floor, Newark, New
Jersey 07102 on November 8, 1999 at 10:00 a.m. Eastern time and at any
adjournments thereof. All powers may be exercised by a majority of said proxy
holders or substitutes voting or acting or, if only one votes and acts, then by
that one. This Proxy shall be voted on the proposals described in the Proxy
Statement as specified below. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing in a
fiduciary capacity, such as executor, administrator, trustee, attorney,
guardian, etc., please indicate this. Corporate and partnership proxies should
be signed by an authorized person indicating the person's title.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
You may also vote your shares by touchtone phone by calling 1-800-690-6903 or
through the Internet at www.proxyvote.com
Please refer to the enclosed Proxy Statement for a complete discussion of this
matter.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR EACH OF THE PROPOSALS
As to any other matter, said proxy holders shall vote in accordance with their
best judgment.
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE THE EXPENSE OF ADDITIONAL MAILINGS.
SHARES
CONTROL NUMBER
ACCOUNT NUMBER
- --------------------------------------------------------------------------------
<PAGE>
(perforation)
- --------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
MODERATE GROWTH FUND
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
ELECTION OF TRUSTEES
1. Nominees: /_/ For /_/ Withhold /_/ For All
All All Except
01) Eugene C. Dorsey
02) Robert F. Gunia
03) Robert E. LaBlanc
04) Douglas H. McCorkindale
05) Thomas T. Mooney
06) David R. Odenath, Jr.
07) Stephen Stoneburn
08) John R. Strangfeld, Jr.
09) Clay T. Whitehead
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
__________________________
VOTE ON PROPOSALS
(PLACE "X" ONLY IN ONE BOX)
2. To ratify the selection of For Against Abstain
PricewaterhouseCoopers LLP /_/ /_/ /_/
as independent public
accountants for the fiscal
year ending July 31, 2000.
3(a). To modify the fundamental For Against Abstain
restriction on portfolio /_/ /_/ /_/
diversification.
3(b). To modify and reclassify For Against Abstain
the fundamental restriction /_/ /_/ /_/
on margin transactions.
<PAGE>
3(c). To modify the fundamental For Against Abstain
restriction on issuing /_/ /_/ /_/
senior securities and
borrowing money. A vote
"for" this proposed change to
the Fund's fundamental
restrictions would also have
the effect of a vote "for"
the proposed modification and
reclassification of the
fundamental restriction on
pledging assets.
3(d). To modify the fundamental For Against Abstain
restriction on real estate /_/ /_/ /_/
investments.
3(f). To modify the fundamental For Against Abstain
restriction on making loans. /_/ /_/ /_/
3(g). To modify the fundamental For Against Abstain
restriction on /_/ /_/ /_/
concentration.
3(h). To eliminate the For Against Abstain
fundamental restriction on /_/ /_/ /_/
selling securities short.
3(i). To eliminate the For Against Abstain
fundamental restriction on /_/ /_/ /_/
investing for the purpose
of exercising control.
<PAGE>
4. To transact such other For Against Abstain
business as may properly /_/ /_/ /_/
come before the meeting and
any adjournments thereof.
- -------------------------------------- -----
Signature (PLEASE SIGN WITHIN BOX) Date
- -------------------------------------- -----
Signature (Joint Owners) Date
<PAGE>
PRUDENTIAL DIVERSIFIED FUNDS
(High Growth Fund)
PRUDENTIAL INVESTMENTS
GATEWAY CENTER THREE
100 MULBERRY STREET, 9TH FLOOR
NEWARK, NJ 07102-4077
PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) David F.
Connor, Grace C. Torres and Stephen M. Ungerman, or any one or more of them,
with full power of substitution, to vote all shares of the Fund which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Fund to be held at Prudential Plaza, 751 Broad Street, 24th Floor, Newark, New
Jersey 07102 on November 8, 1999 at 10:00 a.m. Eastern time and at any
adjournments thereof. All powers may be exercised by a majority of said proxy
holders or substitutes voting or acting or, if only one votes and acts, then by
that one. This Proxy shall be voted on the proposals described in the Proxy
Statement as specified below. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing in a
fiduciary capacity, such as executor, administrator, trustee, attorney,
guardian, etc., please indicate this. Corporate and partnership proxies should
be signed by an authorized person indicating the person's title.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
You may also vote your shares by touchtone phone by calling 1-800-690-6903 or
through the Internet at www.proxyvote.com
Please refer to the enclosed Proxy Statement for a complete discussion of this
matter.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR EACH OF THE PROPOSALS
As to any other matter, said proxy holders shall vote in accordance with their
best judgment.
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE THE EXPENSE OF ADDITIONAL MAILINGS.
SHARES
CONTROL NUMBER
ACCOUNT NUMBER
- --------------------------------------------------------------------------------
<PAGE>
(perforation)
- --------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
HIGH GROWTH FUND
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
ELECTION OF TRUSTEES
1. Nominees: /_/ For /_/ Withhold /_/ For All
All All Except
01) Eugene C. Dorsey
02) Robert F. Gunia
03) Robert E. LaBlanc
04) Douglas H. McCorkindale
05) Thomas T. Mooney
06) David R. Odenath, Jr.
07) Stephen Stoneburn
08) John R. Strangfeld, Jr.
09) Clay T. Whitehead
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
__________________________
VOTE ON PROPOSALS
(PLACE "X" ONLY IN ONE BOX)
2. To ratify the selection of For Against Abstain
PricewaterhouseCoopers LLP /_/ /_/ /_/
as Independent public
accountants for the fiscal
year ending July 31, 2000.
3(a). To modify the fundamental For Against Abstain
restriction on portfolio /_/ /_/ /_/
diversification.
3(b). To modify and reclassify For Against Abstain
the fundamental restriction /_/ /_/ /_/
on margin transactions.
<PAGE>
3(c). To modify the fundamental For Against Abstain
restriction on issuing /_/ /_/ /_/
senior securities and
borrowing money. A vote
"for" this proposed change to
the Fund's fundamental
restrictions would also have
the effect of a vote "for"
the proposed modification and
reclassification of the
fundamental restriction on
pledging assets.
3(d). To modify the fundamental For Against Abstain
restriction on real estate /_/ /_/ /_/
investments.
3(f). To modify the fundamental For Against Abstain
restriction on making loans. /_/ /_/ /_/
3(g). To modify the fundamental For Against Abstain
restriction on /_/ /_/ /_/
concentration.
3(h). To eliminate the For Against Abstain
fundamental restriction on /_/ /_/ /_/
selling securities short.
3(i). To eliminate the For Against Abstain
fundamental restriction on /_/ /_/ /_/
investing for the purpose
of exercising control.
<PAGE>
4. To transact such other For Against Abstain
business as may properly /_/ /_/ /_/
come before the meeting and
any adjournments thereof.
- -------------------------------------- -----
Signature (PLEASE SIGN WITHIN BOX) Date
- -------------------------------------- -----
Signature (Joint Owners) Date
