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/ Definitve proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Prudential Tax-Free Money Fund
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Prudential Tax-Free Money Fund
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or Rule
14a-6(i)(2).
/ / $500 per each party per Exchange Act Rule 14a-6(i)(3), or Rule
14a-6(i)(2).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
ONE SEAPORT PLAZA
NEW YORK, N.Y. 10292
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
-------------
To our Shareholders:
Notice is hereby given that an Annual Meeting of Shareholders of the
Prudential-Bache Tax-Free Money Fund, Inc., doing business as Prudential
Tax-Free Money Fund (the Fund), will be held at 9:00 A.M. on June 27, 1995, at
199 Water Street, New York, New York 10292, for the following purposes:
1. To elect Directors.
2. To ratify the selection by the Board of Directors of Price
Waterhouse LLP as independent accountants for the fiscal year ending December
31, 1995.
3. To consider and act upon any other business as may properly come
before the Annual Meeting or any adjournment thereof.
Notice is also hereby given that a Special Meeting of Shareholders of
the Fund will be held at 9:00 A.M. on July 19, 1995, at 199 Water Street, New
York, New York 10292, for the following purposes:
1. To approve the elimination of the Fund's investment restriction that
limits the Fund to investing in only those securities described in the Fund's
Prospectus under the caption "Investment Objective and Policies."
2. To approve the elimination of the Fund's investment restriction
regarding the purchase and sale of puts, calls or combinations thereof.
3. To approve the elimination of the Fund's investment restriction
limiting the Fund's ability to invest in the securities of any issuer in which
officers and Directors of the Fund or its investment adviser own more than a
specified interest.
4. To approve an amended and restated Distribution and Service Plan.
5. To approve an amendment to the Articles of Incorporation to permit
the Board of Directors to classify and reclassify the unissued capital stock of
the Fund.
<PAGE>
6. To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.
Only shares of Common Stock of the Fund of record at the close of
business on May 26, 1995 are entitled to notice of and to vote at either the
Annual or Special Meetings or any adjournment thereof.
Dated: June 8, 1995
S. JANE ROSE
Secretary
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TWO PROXIES ARE ENCLOSED (ONE FOR EACH OF THE MEETINGS). WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETINGS, PLEASE SIGN AND PROMPTLY RETURN BOTH OF THE
ENCLOSED PROXIES 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 BOTH OF YOUR PROXIES PROMPTLY.
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<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
ONE SEAPORT PLAZA
NEW YORK, N.Y. 10292
(800) 225-1852
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PROXY STATEMENT
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This proxy statement is furnished by the Board of Directors of
Prudential-Bache Tax-Free Money Fund, Inc., doing business as Prudential
Tax-Free Money Fund (the Fund), in connection with its solicitation of proxies
for use at an Annual Meeting of Shareholders (the Annual Meeting) of the Fund to
be held at 9:00 A.M. on June 27, 1995, at 199 Water Street, New York, New York
10292, the Fund's principal executive office. This proxy statement is also being
furnished by the Board of Directors of the Fund in connection with its
solicitation of proxies for use at a Special Meeting of Shareholders (the
Special Meeting), of the Fund to be held at 9:00 A.M. on July 19, 1995 at 199
Water Street, New York, New York 10292. The purposes of the Annual and Special
Meetings (collectively, the Meetings) and the matters to be acted upon are set
forth in the accompanying Notices of Annual Meeting and Special Meeting.
The Fund's most recent Annual Report has previously been sent to
shareholders and may be obtained without charge by calling (800) 225-1852 or by
writing to the Fund at One Seaport Plaza, New York, New York 10292.
The Annual Meeting is being held because of the resignation of Lawrence C.
McQuade on April 28, 1995 after which fewer than a majority of the Directors
currently in office have been previously elected by shareholders. Under these
circumstances, the Investment Company Act of 1940 (the Investment Company Act)
requires that a meeting of shareholders be held within 60 days for the purpose
of electing Directors.
The Special Meeting is being held to consider matters affecting the Fund's
investment objective and investment restrictions, changes to the Fund's
plan of distribution and to permit classification and reclassification of the
Fund's unissued shares.
If the accompanying forms of Proxy are properly executed and returned,
shares represented by them will be voted at the Meetings, 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
Directors and for the other proposals. 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 a 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
1
<PAGE>
more adjournments of a Meeting to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those shares
present at such Meeting or represented by proxy. 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 each item, unless
directed to disapprove the item, in which case such shares will be voted against
the proposed adjournment. In the event that a 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 with respect to which the
broker or nominee does not have discretionary power), the shares represented
thereby, with respect to matters to be determined by a majority of the votes
cast on such matters, will be considered present for purposes of determining the
existence of a quorum for the transaction of business but, not being cast, will
have no effect on the outcome of such matters. With respect to matters requiring
the affirmative vote of a majority of the total shares outstanding, an
abstention or broker non-vote will be considered present for purposes of
determining the existence of a quorum but will have the effect of a vote against
such matters.
The close of business on May 26, 1995 has been fixed as the record date for
the determination of shareholders entitled to notice of, and to vote at, each
Meeting. On that date, the Fund had 442,018,672 shares of Common Stock
outstanding and entitled to vote. Each share will be entitled to one vote at
each Meeting. It is expected that the Notices of Annual Meeting and Special
Meeting, Proxy Statement and forms of Proxy will first be mailed to shareholders
on or about June 12, 1995.
As of May 26, 1995, management of the Fund does not know of any person or
group who owned beneficially 5% or more of the Fund's outstanding shares.
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. The Board of Directors of the Fund has authorized management to
retain Shareholder Communications Corporation, a proxy solicitation firm, to
assist in the solicitation of proxies for the Meetings. This cost, including
specified expenses, is not expected to exceed $44,000 and will be borne by the
Fund. In addition, solicitation may include, without cost to the Fund,
telephonic, telegraphic or oral communication by regular employees of Prudential
Securities Incorporated (Prudential Securities).
Prudential Mutual Fund Management, Inc. (PMF or the Manager), One Seaport
Plaza, New York, New York 10292, serves as the Fund's Manager under a
2
<PAGE>
management agreement dated as of May 2, 1988 (the Management Agreement).
Investment advisory services are provided to the Fund by PMF through its
affiliate, The Prudential Investment Corporation (PIC or the Subadviser),
Prudential Plaza, Newark, New Jersey 07102, under a Subadvisory Agreement. Both
PMF and PIC are indirect subsidiaries of The Prudential Insurance Company of
America. Prudential Mutual Fund Distributors, Inc., One Seaport Plaza, New York,
New York 10292 (PMFD) serves as the distributor of the Fund's shares. The Fund's
transfer agent is Prudential Mutual Fund Services, Inc. (PMFS), Raritan Plaza
One, Edison, New Jersey 08837. As of April 30, 1995, PMF served as the manager
to 39 open-end investment companies, and as manager or administrator to 30
closed-end investment companies with aggregate assets of more than $46 billion.
The Fund has a Board of Directors which, in addition to overseeing the actions
of the Fund's Manager and Subadviser, decides upon matters of general policy.
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ANNUAL MEETING PROPOSALS
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ELECTION OF DIRECTORS
(Annual Meeting Proposal No. 1)
At the Annual Meeting, five Directors will be elected to hold office until
the earlier to occur of the next meeting of shareholders at which Directors are
elected or until their terms expire in accordance with the Fund's retirement
policy and until their successors are elected and qualify. The Fund's recently
adopted retirement policy, generally calls for the retirement of Directors on
December 31 of the year in which they reach the age of 72. It is the intention
of the persons named in the accompanying form of Proxy for the Annual Meeting to
vote for the election of Delayne Dedrick Gold, Arthur Hauspurg, Stephen P. Munn,
Richard A. Redeker and Louis A. Weil, III, all of whom except Mr. Redeker are
currently Directors. Each of the nominees has consented to be named in this
Proxy Statement and to serve as a Director if elected. Only Mr. Hauspurg and
Mrs. Gold have previously been elected by shareholders.
Mr. Hauspurg was first elected as a Director in 1980. Mrs. Gold was elected
as a Director in 1983. Messrs. Munn and Weil were elected as Directors on
February 5 and April 30, 1991, respectively. Mr. Redeker is currently not a
Director.
The Directors have no reason to believe that any of the nominees named
above will become unavailable for election as a Director, but if that should
occur before the Annual Meeting, proxies will be voted for such persons as the
Directors may recommend.
The Fund's By-laws provide that the Fund will not be required to hold
annual meetings of shareholders if the election of Directors is not required
under the Investment Company Act. It is the present intention of the Board of
Directors of the Fund not to hold annual meetings of shareholders unless such
shareholder action is required.
3
<PAGE>
INFORMATION REGARDING DIRECTORS
<TABLE>
<CAPTION>
Shares of Common Stock
Name, age, business experience during Position Owned at
the past five years and other directorships With Fund May 26, 1995
------------------------------------------- --------- ------------
<S> <C> <C>
Delayne Dedrick Gold (56), Marketing Director -0-
and Management Consultant; Director/Trustee of 24
investment companies managed by Prudential Mutual
Fund Management, Inc.(PMF).
Arthur Hauspurg (69), Trustee and Director 156,107
former President, Chief Executive Officer and Chairman of the
Board of Consolidated Edison Company of New York, Inc.;
Director of COMSAT Corp.; Director/Trustee of 5 investment
companies managed by PMF.
Stephen P. Munn (52), Chairman Director 7,093
(since January 1994), Director and President (since 1988) and
Chief Executive Officer (1988 - December 1993) of Carlisle
Companies Incorporated; Director/Trustee of 5 investment
companies managed by PMF.
*Richard A. Redeker (51), President, President -0-
Chief Executive Officer and Director (since October 1993),
PMF; Director and Member of the Operating Committee (since
October 1993), Prudential Securities Incorporated; Director
(since October 1993) of Prudential Securities Group, Inc.;
Executive Vice President, The Prudential Investment
Corporation (since January 1994); Director (since January
1994), Prudential Mutual Fund Distributors, Inc. and
Prudential Mutual Fund Services, Inc.; formerly Senior
Executive Vice President and Director of Kemper
Financial Services, Inc. (September 1978 - September
1993); President and Director/Trustee of 38 investment
companies managed by PMF.
-------
*Indicates "interested" Director, as defined by the Investment Company Act, by
reason of his affiliation with Prudential Securities or PMF.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Shares of Common Stock
Name, age, business experience during Position Owned at
the past five years and other directorships With Fund May 26, 1995
------------------------------------------- --------- ------------
<S> <C> <C>
Louis A. Weil, III (54), Publisher and Director 2,657
Chief Executive Officer, Phoenix Newspapers, Inc. (since
August 1991); Director of Central Newspapers, Inc. (since
September 1991); prior thereto, 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; Director/Trustee of 12 investment companies
managed by PMF.
</TABLE>
The Directors and officers of the Fund, as a group, owned beneficially
165,859 shares, representing less than 1% of the outstanding common stock of the
Fund as of May 26, 1995.
The Fund pays annual compensation of $6,000 plus actual out-of-pocket
expenses to each of the Directors not affiliated with PMF or PIC. The Chairman
of the Audit Committee receives an additional $200 per year. During the fiscal
year ended December 31, 1994, the Fund paid Directors' fees of $30,200 and
travel and incidental expenses of approximately $603.
Directors may receive their Director's fee pursuant to a deferred fee
agreement with the Fund. Under the terms of the agreement, the Fund accrues
daily the amount of such Director'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 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.
Pursuant to the terms of the Management Agreement with the Fund, the
Manager pays all compensation of officers of the Fund as well as the fees and
expenses of all Directors of the Fund who are affiliated persons of the Manager.
The following table sets forth the aggregate compensation paid by the Fund
for the fiscal year ended December 31, 1994 to the Directors who are not
affiliated with the Manager and the aggregate compensation paid to such
Directors for service on the Fund's board and that of all other funds managed by
PMF (Fund Complex) for the calendar year ended December 31, 1994.
5
<PAGE>
Compensation Table
<TABLE>
<CAPTION>
Pension or
Retirement
Benefits Total Compensation
Aggregate Accrued As Estimated From Fund and Fund
Compensation From Part of Fund Annual Benefits Complex Paid to
Name and Position Fund Expenses Upon Retirement Directors
----------------- ---- -------- --------------- ---------
<S> <C> <C> <C> <C>
Delayne Dedrick Gold--Director $6,200 None N/A $185,000(24)*
Arthur Hauspurg--Director $6,000 None N/A $ 37,500(5)*
Stephen P. Munn--Director $6,000 None N/A $ 40,000(6)*
Louis A. Weil, III--Director $6,000 None N/A $ 97,500(12)*
</TABLE>
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* Indicates number of funds in Fund Complex (including the Fund) to which
aggregate compensation relates.
There were four meetings of the Fund's Board of Directors held during the
fiscal year ended December 31, 1994. The Board of Directors presently has an
Audit Committee and a Nominating Committee. The members of the Audit and
Nominating Committees are Mrs. Gold and Messrs. Hauspurg, Munn and Weil. The
Audit Committee met once during the fiscal year ended December 31, 1994. The
Nominating Committee met once during the fiscal year ended December 31, 1994. No
Director attended fewer than 75% of the aggregate of the total number of
meetings of the Directors, the Audit Committee and Nominating Committee held
during the fiscal year for which each such Director has been a member. The Audit
Committee makes recommendations to the Directors 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 Directors with respect to candidates for election as Directors of the
Fund. The Nominating Committee does not consider nominees recommended by
shareholders to fill vacancies on the Board.
The executive officers of the Fund, other than as shown above, are David W.
Drasnin, Vice President, having held office since July 19, 1985; Robert F.
Gunia, Vice President, having held such office since April 30, 1987; Grace
Torres, Treasurer and Principal Financial and Accounting Officer, having held
such office since February 7, 1995; Stephen M. Ungerman, Assistant Treasurer,
having held office since May 2, 1995; S. Jane Rose, Secretary, having held
office since October 18, 1984; and Ronald Amblard, Assistant Secretary, having
held such office since September 9, 1988. Mr. Drasnin is 58 years old and is a
Vice President and Branch Manager of Prudential Securities. Mr. Gunia is 48
years old and is currently Chief Administrative Officer (since July 1990),
Director, Executive Vice President, Treasurer and Chief Financial Officer of PMF
and a Senior Vice President of Prudential Securities. He is also Executive Vice
President, Treasurer and Comptroller (since March 1991) of PMFD and Director of
PMFS. Ms. Torres is 35 years old and is First Vice President (since March 1994)
of PMF and First Vice President (since March 1994) of Prudential Securities.
Prior thereto, she was a Vice President of Bankers Trust Company. Mr.
6
<PAGE>
Ungerman is 42 years old and is First Vice President of PMF (since February
1993). Prior thereto, he was Senior Tax Manager at Price Waterhouse (since
1981). Ms. Rose is 49 years old and is currently a Senior Vice President (since
January 1991) and Senior Counsel of PMF and a Senior Vice President and Senior
Counsel of Prudential Securities (since July 1992). Prior thereto, she was First
Vice President of PMF (June 1987 - December 1990) and Vice President and
Associate General Counsel of Prudential Securities. Mr. Amblard is 36 years old
and is currently First Vice President (since January 1994) and Associate General
Counsel (since January 1992) of PMF and Vice President and Associate General
Counsel of Prudential Securities (since January 1992). Prior thereto, he was
Assistant General Counsel (August 1988 - December 1991), and an Associate Vice
President (January 1989 - December 1990) and Vice President (January 1991
- -December 1993) of PMF. The executive officers of the Fund are elected annually
by the Directors.
Required Vote
Directors must be elected by a vote of a majority of the votes cast at the
Annual Meeting in person or by proxy and entitled to vote thereupon, provided
that a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS ANNUAL MEETING
PROPOSAL NO. 1.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(Annual Meeting Proposal No. 2)
The Board of Directors, including Directors who are not interested persons
of the Fund, has selected Price Waterhouse LLP as independent accountants of the
Fund for the fiscal year ending December 31, 1995. The ratification of the
selection of independent public accountants is to be voted upon at the Annual
Meeting and it is intended that the persons named as proxies in the accompanying
Annual Meeting Proxy will vote for Price Waterhouse LLP. No representative of
Price Waterhouse LLP is expected to be present at the Annual Meeting of
Shareholders.
The policy of the Board of Directors 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 Directors 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.
7
<PAGE>
Required Vote
The affirmative vote of a majority of the votes cast and entitled to vote
thereupon, provided a quorum is present, at the Annual Meeting in person or by
proxy, is required for ratification.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS ANNUAL MEETING
PROPOSAL NO. 2.
OTHER MATTERS
(Annual Meeting)
No business other than as set forth herein is expected to come before the
Annual Meeting, but should any other matter requiring a vote of stockholders
arise, including any question as to an adjournment of the Annual Meeting, the
persons named as proxies in the enclosed Annual Meeting proxy will vote thereon
according to their best judgment in the interests of the Fund.
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SPECIAL MEETING PROPOSALS
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APPROVAL OF ELIMINATION OF THE FUND'S INVESTMENT
RESTRICTION PROHIBITING INVESTMENT IN SECURITIES
OTHER THAN CERTAIN MUNICIPAL BONDS AND NOTES
(Special Meeting Proposal No. 1)
On May 2, 1995, at the request of the Fund's Subadviser, the Board of
Directors considered and recommends for shareholder approval elimination of the
Fund's Investment Restriction No. 1, which provides that the Fund may not:
Invest in securities other than Municipal Bonds and Notes as described
under "Investment Objective and Policies."
The effect of this restriction is to characterize all of the policies
described in the Fund's Prospectus as fundamental. As a result, any modification
of those policies would require the affirmative vote of a majority of the
outstanding shares at significant cost to the Fund.
More specifically, this restriction limits the Fund to investing in
securities with maturities of one year or less as described under "Investment
Objective and Policies" in the Fund's Prospectus, as previously required by Rule
2a-7 of the Investment Company Act. Although Rule 2a-7 was amended several years
ago to permit money market funds to purchase securities with maturities of up to
13 months (or 397 days) and change the quality standards for portfolio
securities, the Fund's limitations have thus far not been modified as permitted
by Rule 2a-7 due to the need to obtain the approval of a majority of the
outstanding shares.
In addition, subject to approval of this Special Meeting Proposal No. 1,
the
8
<PAGE>
Board of Directors approved a change in the Fund's investment policies to
permit it to invest in repurchase agreements whereby the seller of a security
agrees to repurchase that security from the Fund at a mutually agreed-upon time
and price, the income from which will be taxable to the Fund. However, the
Directors have adopted a non-fundamental policy to limit the Fund's investments
in repurchase agreements to not more than 5% of its total assets.
The period of maturity of repurchase agreements is usually quite short,
possibly overnight or a few days, although it may extend over a number of
months. The resale price is in excess of the purchase price, reflecting an
agreed-upon rate of return effective for the period of time the Fund's money is
invested in the security. The Fund's repurchase agreements will at all times be
fully collateralized in an amount at least equal to the purchase price,
including accrued interest earned on the underlying securities. The instruments
held as collateral will be valued daily, and if the value of these instruments
declines, the Fund will require additional collateral. If the seller defaults
and the value of the collateral securing the repurchase agreement declines, the
Fund may incur a loss. The Fund expects to participate in a joint repurchase
account with other investment companies managed by PMF pursuant to an order of
the SEC.
Approval of this Special Meeting Proposal will permit the Board of
Directors to approve further investments not presently described in this Proxy
Statement or the Fund's current Prospectus which are consistent with the Fund's
investment objective, which may entail additional risks.
Eliminating Investment Restriction No. 1 will afford the Fund greater
investment flexibility and permit the Fund to take advantage of the benefits
resulting from any further amendment(s) to Rule 2a-7 and other laws and
regulations affecting investment companies generally and market developments by
permitting it to amend its investment policies without incurring the cost of
holding a shareholder meeting. If this proposal is approved, all of the Fund's
investment policies other than its investment objective and restrictions and the
requirement that under normal market conditions it either (1) invest at least
80% of its net assets in tax-exempt securities or (2) invest its assets so that
at least 80% of its income will be tax-exempt) would be considered
non-fundamental and subject to change by the Directors without shareholder
approval. Policy changes approved by the Directors in the future that do not
require shareholder approval will be described in the Fund's prospectus.
The Board of Directors believes that approval of Special Meeting Proposal
No. 1 is in the best interests of the Fund and its shareholders.
Required Vote
Approval of Special Meeting Proposal No. 1 requires the affirmative vote of
the holders of a majority of the Fund's outstanding voting securities. Under the
Investment Company Act, a majority of the Fund's outstanding voting securities
is defined as the lesser of (i) 67% of the Fund's outstanding voting shares
represented
9
<PAGE>
at a meeting at which more than 50% of the Fund's outstanding voting shares
are present in person or represented by proxy, or (ii) more than 50% of
the Fund's outstanding voting shares. If the proposed change in investment
policy is not approved, the current limitations would remain a fundamental
policy which could not be changed without the approval of a majority of the
outstanding voting securities of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS SPECIAL MEETING
PROPOSAL NO. 1.
APPROVAL OF ELIMINATION OF THE FUND'S INVESTMENT
RESTRICTION REGARDING OPTIONS TRANSACTIONS
(Special Meeting Proposal No. 2)
On May 2, 1995, at the request of the Fund's Subadviser, the Board of
Directors considered and recommends for shareholder approval elimination of the
Fund's Investment Restriction No. 12, which provides that the Fund may not:
Write, purchase or sell puts, calls, or combinations thereof, except
that it may obtain rights to resell Municipal Bonds and Notes as set forth
under "Investment Objective and Policies."
This restriction currently prohibits the Fund from purchasing or selling
puts, calls or combinations thereof, except that it permits the Fund to purchase
municipal bonds or notes together with the rights to resell such bonds and notes
at an agreed upon price or yield within a specified period prior to maturity,
commonly known as a "put" or a "tender option", as currently described in the
Fund's Prospectus. The Subadviser has expressed the concern that other
securities which the Fund is otherwise eligible to purchase may be deemed to be
prohibited although they are only subject to a put or call feature because they
are not specifically exempted from Investment Restriction No. 12. Removing this
restriction will alleviate such concern and afford the Fund greater investment
flexibility to invest in securities with put or call features that are otherwise
suitable for the Fund in addition to those currently described in its
Prospectus.
The Board of Directors believes that approval of Special Meeting Proposal
No. 2 is in the best interests of shareholders and the Fund. Because the Fund is
not required to hold annual meetings of shareholders and does not intend to hold
such meetings unless shareholder action is required by the Investment Company
Act or the Fund's By-laws, future shareholder consideration to eliminating
Investment Restriction No. 12 will require a special meeting of shareholders at
considerable cost to the Fund. If such consideration is postponed, the Fund may
be deprived of beneficial investment opportunities.
In addition to securities only subject to put or call features, although
the investment adviser has no present intention of doing so, elimination of
10
<PAGE>
Investment Restriction No. 12 would permit the Fund to purchase and sell put and
call options and combinations thereof. If elimination of Investment Restriction
No. 12 is approved by shareholders, before the Subadviser effects any such
options transactions, the Board of Directors will adopt a non-fundamental policy
(i.e., a policy which may be changed by the Board of Directors without
shareholder approval) relating to such use, including whatever limitations may
be appropriate. This policy will be described in the Fund's Prospectus.
A call option gives the purchaser, in exchange for a premium paid, the
right for a specified period of time to purchase the securities subject to the
option at a specified price (exercise 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 to the purchaser upon receipt of the exercise price.
A put option gives the purchaser, in return for a premium, the right, for a
specified period of time, to sell the securities 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 underlying the option at the exercise price.
Participation in the options market involves investment risks and
transaction costs to which the Fund would not be subject absent the use of this
strategy. If the Subadviser's prediction of movements in the direction of the
securities markets is inaccurate, the adverse consequences to the Fund may leave
the Fund in a worse position than if such a strategy was not used. Risks
inherent in the use of options include (1) dependence on the Subadviser's
ability to predict correctly movements in the direction of specific securities
being hedged; (2) the fact that skills needed to use these strategies are
different from those needed to select portfolio securities; (3) the possible
absence of a liquid secondary market for any particular security at any given
time; and (4) the possible need to defer closing out certain hedged positions to
avoid adverse tax consequences.
Required Vote
Approval of Special Meeting Proposal No. 2 requires the affirmative vote of
the holders of a majority of the Fund's outstanding voting securities, as
defined in the Investment Company Act and described under Special Meeting
Proposal No. 1 above. If the proposed change in investment policy is not
approved, the current limitations would remain a fundamental policy which could
not be changed without the approval of a majority of the outstanding voting
securities of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS SPECIAL MEETING
PROPOSAL NO. 2.
11
<PAGE>
APPROVAL OF ELIMINATION OF THE FUND'S INVESTMENT
RESTRICTION PROHIBITING INVESTMENT IN THE SECURITIES OF ANY
ISSUER IN WHICH THE OFFICERS AND DIRECTORS OF THE FUND OR ITS INVESTMENT
ADVISER OWN MORE THAN A SPECIFIED INTEREST
(Special Meeting Proposal No. 3)
On May 2, 1995, at the request of the Fund's Manager, the Board of
Directors considered and recommends for shareholder approval elimination of the
Fund's Investment Restriction No. 14 which provides that the Fund may not:
Purchase or retain the securities of any issuer if officers or
directors of the Fund or officers or directors of the Manager responsible
for investment decisions concerning the Fund beneficially owning
individually more than 1/2 of 1% of securities of such issuer together
beneficially own more than 5% of the securities of such issuer.
The Manager has advised the Board of Directors that the restriction upon
the Fund's investing in companies in which officers and directors of the Fund or
the Manager own more than 1/2 of 1% of the outstanding securities of such
company was initially adopted to comply with a restriction imposed in connection
with the sale of the Fund's shares in Ohio. If the proposal is approved, the
Fund would continue to comply with the restriction as a non-fundamental
operating policy so long as the Fund sells its shares in Ohio. However, if Ohio
were to eliminate the requirement or the Fund stopped offering its shares for
sale in Ohio, the Board of Directors could eliminate the operating policy
without the necessity of shareholder approval. The Fund does not currently
intend to stop offering its shares in Ohio, nor is the Fund or the Fund's
Manager aware of any proposal to change the Ohio law.
The Board of Directors believes that the adoption of Special Meeting
Proposal No. 3 is in the best interests of the Fund and its shareholders.
Required Vote
Approval of Special Meeting Proposal No. 3 requires the affirmative vote of
the holders of a majority of the Fund's outstanding voting securities, as
defined in the Investment Company Act and described under Special Meeting
Proposal No. 1 above. If the proposed change in investment policy is not
approved, the current limitations would remain a fundamental policy which could
not be changed without the approval of a majority of the outstanding voting
securities of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS SPECIAL MEETING
PROPOSAL NO. 3.
12
<PAGE>
APPROVAL OF AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN
(Special Meeting Proposal No. 4)
On May 2, 1995, the Fund's Board of Directors approved an amended and
restated Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act and an amended and restated Distribution Agreement with
PMFD for the Fund (the Proposed Plan and the Proposed PMFD, respectively) and
recommends submission of the Proposed Plan to the Fund's shareholders for
approval or disapproval at this Special Meeting of Shareholders. The Proposed
Distribution Agreement does not require, and is not being submitted for,
shareholder approval.
The Board of Directors previously adopted a plan of distribution for the
Fund's shares pursuant to Rule 12b-1 under the Investment Company Act which was
last approved by the Board of Directors on May 2, 1995 and was approved by
shareholders on April 28, 1988 (the Existing Plan). Shareholders of the Fund are
being asked to approve amendments to the Existing Plan that would change it from
a reimbursement type plan to a compensation type plan. The amendments do not
change the maximum annual fee that may be paid to PMFD under the Existing Plan,
although the possibility exists that expenses incurred by PMFD and for which it
is entitled to be reimbursed under the Existing Plan may be less than the fee
PMFD will receive under the Proposed Plan. The amendments are being proposed to
facilitate administration and accounting. The Board of Directors believes that
the Proposed Plan is in the best interest of the Fund and is reasonably likely
to benefit the Fund's shareholders. A copy of the Proposed Plan is attached
hereto as Exhibit A.
The Existing Plan
The purpose of the Existing Plan is to reimburse PMFD, the distributor of
the Fund's shares, for providing distribution assistance to broker-dealers,
including Pruco Securities Corporation (Prusec), an affiliated broker-dealer,
and other qualified broker-dealers, if any, whose customers invest in shares of
the Fund and to defray the costs and expenses, including the payment of account
servicing fees, of the services provided and activities undertaken to distribute
shares (Distribution Activities).
Under the Existing Plan, the Fund reimburses PMFD for expenses incurred for
Distribution Activities at an annual rate of up to .125 of 1% of the average
daily net assets of the Fund, computed daily and payable monthly.
Pursuant to the Existing Plan, the Directors are provided with, and review,
at least quarterly, a written report of the distribution expenses incurred on
behalf of the Fund by PMFD. The reports include an itemization of the
distribution expenses and the purpose of such expenditures. In addition, as long
as the Existing Plan remains in effect, the selection and nomination of
Directors who are not interested persons of the Fund shall be committed to the
Directors who are not interested persons of the Fund or a committee thereof.
13
<PAGE>
The Existing Plan may not be amended to increase materially the amount to
be spent for the services described therein without approval by a majority of
the holders of shares of the Fund. In addition, all material amendments thereof
must be approved by vote of a majority of the Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Existing Plan or in any
agreement related thereto (the Rule 12b-1 Directors), cast in person at a
meeting called for the purpose of voting on the Plan. So long as the Existing
Plan is in effect, the selection and nomination of the Rule 12b-1 Directors will
be committed to the discretion of the Rule 12b-1 Directors.
The Existing Plan provides that it shall continue from year to year,
provided that such continuance is approved annually by a majority vote of the
Board of Directors, including a majority of the Rule 12b-1 Directors. The
Existing Plan may be terminated at any time without payment of any penalty by
the vote of a majority of the Rule 12b-1 Directors or by the vote of a majority
of the outstanding shares of the Fund (as defined in the Investment Company Act)
on written notice to any other party to such Plan and will automatically
terminate in the event of its assignment (as defined in the Investment Company
Act). The Fund will not be obligated to pay expenses incurred under the Existing
Plan if it is terminated or not continued.
The Proposed Plan
The Proposed Plan amends the Existing Plan in one material respect. Under
the Existing Plan, the Fund reimburses PMFD for expenses actually incurred for
Distribution Activities up to a maximum of .125 of 1% per annum of the average
daily net assets of the Fund. The Proposed Plan authorizes the Fund to pay PMFD
the same maximum annual fee as compensation for its Distribution Activities
regardless of the expenses incurred by PMFD for Distribution Activities. In
contrast to the Existing Plan, the amounts payable by the Fund under the
Proposed Plan would not be directly related to the expenses actually incurred by
PMFD for its Distribution Activities. Consequently, if PMFD's expenses are less
than its fees, it will retain its full fees and realize a profit. However, if
PMFD's expenses exceed the fees received under the Proposed Plan, the Fund will
not be obligated to pay any additional amounts.
Since inception of the Existing Plan, the amount of reimbursable expenses
incurred thereunder by PMFD have equalled the amounts reimbursed by the Fund.
For the fiscal years ended December 31, 1992, 1993 and 1994 PMFD received
$836,985, $908,214 and $805,601, respectively, from the Fund under the Existing
Plan, representing .125 of 1% of the average daily net assets of the shares, and
spent the same amounts for Distribution Activities. Since the maximum annual fee
under the Existing Plan is the same as under the Proposed Plan, PMFD would have
received the same annual fee under the Proposed Plan as it did under the
Existing Plan for the fiscal years ended December 31, 1992, 1993 and 1994.
14
<PAGE>
Among the major perceived benefits of a compensation type plan, such as the
Proposed Plan, over a reimbursement type plan, such as the Existing Plan, is the
facilitation of administration and accounting. Under reimbursement plans, all
expenses must be specifically accounted for by the distributor and attributed to
the specific class of shares of a fund in order to qualify for reimbursement.
Although the Proposed Plan will continue to require quarterly reporting to the
Board of Directors of the amounts accrued and paid under the Plan and of the
expenses actually borne by the Distributor, there will be no need to match
specific expenses to reimbursements, as under the Existing Plan. Thus, the
accounting for the Proposed Plan would be simplified and the timing of when
expenditures are to be made by the Distributor would not be an issue. These
considerations, combined with the reasonable likelihood, although there is no
assurance, that the per annum payment rate under the Proposed Plan will not
exceed the expenses incurred by PMFD for Distribution Activities, suggest that
the costs and efforts associated with a reimbursement plan are unwarranted.
In addition to the foregoing factors, in considering whether to approve the
Proposed Plan, the Directors reviewed, among other things, the nature and scope
of the services to be provided by PMFD, the amount of expenditures under the
Existing Plan, the relationship of such expenditures to the overall cost
structure of the Fund and comparative data with respect to distribution
arrangements adopted by other investment companies. Based upon such review, the
Directors, including a majority of the Rule 12b-1 Directors, determined that
there is a reasonable likelihood that the Proposed Plan will benefit the Fund
and its shareholders.
If approved by shareholders, the Proposed Plan will continue in effect from
year to year, provided such continuance is approved at least annually by vote of
a majority of the Board of Directors, including a majority of the Rule 12b-1
Directors.
Required Vote
Approval of Special Meeting Proposal No. 4 requires the affirmative vote of
the holders of a majority of the Fund's outstanding shares as defined in the
Investment Company Act and as described under Special Meeting Proposal No. 1. If
the Proposed Plan is not approved, the Existing Plan will continue in its
present form.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS SPECIAL MEETING
PROPOSAL NO. 4.
15
<PAGE>
APPROVAL OF AMENDMENT TO
ARTICLES OF INCORPORATION TO PERMIT THE BOARD OF DIRECTORS TO
CLASSIFY AND RECLASSIFY ANY UNISSUED CAPITAL STOCK
(Special Meeting Proposal No. 5)
On May 2, 1995, the Board of Directors approved a resolution setting forth
a proposed amendment (the Proposed Amendment) to the Articles of Incorporation
of the Fund to grant it the power to classify and reclassify any unissued shares
of the capital stock of the Fund into one or more additional or other classes or
series and to designate the rights and preferences thereof, declared that the
Proposed Amendment was advisable, and directed that the Proposed Amendment be
submitted for consideration and approval by shareholders. A copy of the Proposed
Amendment is attached hereto as Exhibit B.
The purpose of the Proposed Amendment is to permit the Board of Directors
to classify and reclassify unissued shares of the Fund into additional classes
of Common Stock and to designate the rights and preferences thereof at a future
date without further shareholder approval. Currently, the Fund's Articles of
Incorporation authorize only one class of Common Stock.
A number of investment companies currently offer multiple classes of shares
with, among other things, different sales charges, service fees, exchange
privileges and conversion features to cater to the preferences of different
investors. In fact, most of the Prudential Mutual Funds currently offer three
classes of shares.
Although the Fund has no present intention of offering additional classes
of shares, unless the Proposed Amendment is approved by shareholders, if and
when the Board of Directors should conclude that the issuance of additional
classes of shares would be in the best interests of the Fund and its
shareholders, a special meeting of shareholders will have to be held at
significant cost to seek such approval.
The creation of additional classes of shares would offer investors a
broader choice of investment alternatives but would not alter the rights and
privileges of the shareholders of the existing class. Additional classes of
shares would represent identical interests in the Fund's investment portfolio
and have the same rights, except that each class (i) would have different
arrangements for shareholder services or distribution activities and different
expenses related to such arrangements, (ii) would have exclusive voting rights
on any matter submitted to shareholders that relates solely to its arrangements
and (iii) would have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the interests of
any other class.
The Board of Directors believes that the adoption of Special Meeting
Proposal No. 5 is in the best interests of the Fund and its shareholders.
16
<PAGE>
Required Vote
Under Maryland law and the Fund's Articles of Incorporation, an amendment
to the Articles of Incorporation requires the affirmative vote of a majority of
the Fund's outstanding shares entitled to vote. In the event that shareholders
do not approve the Proposed Amendment, the current Articles of Incorporation
will continue in its present form.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS SPECIAL MEETING
PROPOSAL NO. 5.
OTHER MATTERS
(Special Meeting)
No business other than as set forth herein is expected to come before the
Special Meeting, but should any other matter requiring a vote of stockholders
arise, including any question as to an adjournment of the Special Meeting, the
persons named as proxies in the enclosed Special Meeting proxy will vote thereon
according to their best judgment in the interests of the Fund.
STOCKHOLDER PROPOSALS
A stockholder's proposal intended to be presented at any subsequent meeting
of stockholders of the Fund must be received by the Fund at a reasonable time
before the Board of Directors 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.
S. JANE ROSE
Secretary
Dated: June 8, 1995
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETINGS AND WHO WISH
TO HAVE THEIR SHARES VOTED ARE REQUESTED TO MARK, DATE AND SIGN BOTH OF THE
ENCLOSED PROXIES AND RETURN THEM IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
17
<PAGE>
EXHIBIT A
PRUDENTIAL TAX-FREE MONEY FUND
Distribution and Service Plan
Introduction
------------
The Distribution and Service Plan (the Plan) set forth below which is
designed to conform to the requirements of Rule 12b-1 under the Investment
Company Act of 1940 (the Investment Company Act) and Article III, Section 26 of
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. (NASD) has been adopted by Prudential Tax-Free Money Fund, Inc. (the Fund),
and by Prudential Mutual Fund Distributors, Inc., the Fund's distributor (the
Distributor).
The Fund has entered into a distribution agreement (the Distribution
Agreement) pursuant to which the Fund will employ the Distributor to distribute
shares issued by the Fund. Under the Plan, the Fund intends to pay to the
Distributor as compensation for its services, a distribution and service fee.
A majority of the Board of Directors or Trustees of the Fund, including
a majority of those Directors or Trustees 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 this Plan or any agreements
related to it (the Rule 12b-1 Directors or Trustees), have determined by votes
cast in person at a meeting called for the purpose of voting on this Plan that
there is a reasonable likelihood that adoption of this Plan will benefit the
Fund and its shareholders. Expenditures under this Plan by the Fund for
Distribution Activities (defined below) are primarily intended to result in the
sale of shares of the Fund within the meaning of paragraph (a)(2) of Rule 12b-1
promulgated under the Investment Company Act.
The purpose of the Plan is to create incentives for the Distributor
and/or other qualified broker-dealers and their account executives to provide
distribution assistance to their customers who are investors in the Fund, to
defray the costs and expenses associated with the preparation, printing and
distribution of prospectuses and sales literature and other promotional and
distribution activities and to provide for the servicing and maintenance of
shareholder accounts.
The Plan
--------
The material aspects of the Plan are as follows:
1. Distribution Activities
-----------------------
The Fund shall engage the Distributor to distribute shares of the Fund
and to service shareholder accounts using all of the facilities of the
distribution networks of Prudential Securities Incorporated (Prudential
Securities) and Pruco Securities Corporation (Prusec), including sales personnel
and branch office and central sup-
A-1
<PAGE>
port systems, and also using such other qualified broker-dealers and financial
institutions as the Distributor may select. Services provided and activities
undertaken to distribute shares of the Fund are referred to herein as
"Distribution Activities."
2. Payment of Service Fee
----------------------
The Fund shall pay to the Distributor as compensation for providing
personal service and/or maintaining shareholder accounts a service fee not to
exceed .125 of 1% per annum of the average daily net assets of the shares of the
Fund (service fee). The Fund shall calculate and accrue daily amounts payable by
the shares of the Fund hereunder and shall pay such amounts monthly or at such
other intervals as the Board of Directors or Trustees may determine.
3. Payment for Distribution Activities
-----------------------------------
The Fund shall pay to the Distributor as compensation for its services
a distribution fee which, together with the service fee (described in Section 2
hereof), shall not exceed .125 of 1% per annum of the average daily net assets
of the shares of the Fund. The Fund shall calculate and accrue daily amounts
payable by the shares of the Fund hereunder and shall pay such amounts monthly
or at such other intervals as the Board of Directors or Trustees may determine.
The Distributor shall spend such amounts as it deems appropriate on
Distribution Activities which include, among others:
(a) amounts paid to Prudential Securities for performing services
under a selected dealer agreement between Prudential
Securities and the Distributor for sale of shares of the Fund,
including sales commissions and account servicing fees paid
to, or on account of, account executives and indirect and
overhead costs associated with Distribution Activities,
including central office and branch expenses;
(b) amounts paid to Prusec for performing services under a
selected dealer agreement between Prusec and the Distributor
for sale of shares of the Fund, including sales commissions
and account servicing fees paid to, or on account of, agents
and indirect and overhead costs associated with Distribution
Activities;
(c) advertising for the Fund in various forms through any
available medium, including the cost of printing and mailing
Fund prospectuses, statements of additional information and
periodic financial reports and sales literature to persons
other than current shareholders of the Fund; and
(d) sales commissions (including account servicing fees) paid to,
or on account of, broker-dealers and financial institutions
(other than Prudential Securities and Prusec) which have
entered into selected dealer agreements with the Distributor
with respect to shares of the Fund.
A-2
<PAGE>
4. Quarterly Reports; Additional Information
-----------------------------------------
An appropriate officer of the Fund will provide to the Board of
Directors or Trustees of the Fund for review, at least quarterly, a written
report specifying in reasonable detail the amounts expended for Distribution
Activities (including payment of the service fee) and the purposes for which
such expenditures were made in compliance with the requirements of Rule 12b-1.
The Distributor will provide to the Board of Directors or Trustees of the Fund
such additional information as the Board or Trustees shall from time to time
reasonably request, including information about Distribution Activities
undertaken or to be undertaken by the Distributor.
The Distributor will inform the Board of Directors or Trustees of the
Fund of the commissions and account servicing fees to be paid by the Distributor
to broker-dealers and financial institutions which have selected dealer
agreements with the Distributor.
5. Effectiveness; Continuation
---------------------------
The Plan shall not take effect until it has been approved by a vote of
a majority of the outstanding voting securities (as defined in the Investment
Company Act) of the Fund.
If approved by a vote of a majority of the outstanding voting
securities of the Fund, the Plan shall, unless earlier terminated in accordance
with its terms, continue in full force and effect thereafter for so long as such
continuance is specifically approved at least annually by a majority of the
Board of Directors or Trustees of the Fund and a majority of the Rule 12b-1
Directors or Trustees by votes cast in person at a meeting called for the
purpose of voting on the continuation of the Plan.
6. Termination
-----------
This Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors or Trustees, or by vote of a majority of the outstanding
voting securities (as defined in the Investment Company Act) of the Fund.
7. Amendments
----------
The Plan may not be amended to change the service and distribution fee to
be paid as provided for in Sections 2 and 3 hereof so as to increase materially
the amounts payable under this Plan unless such amendment shall be approved by
the vote of a majority of the outstanding voting securities (as defined in the
Investment Company Act) of the Fund. All material amendments of the Plan shall
be approved by a majority of the Board of Directors or the Trustees of the Fund,
including a majority of the Rule 12b-1 Directors or Trustees, by votes cast in
person at a meeting called for the purpose of voting on the Plan.
A-3
<PAGE>
8. Rule 12b-1 Directors or Trustees
--------------------------------
While the Plan is in effect, the selection and nomination of the Rule
12b-1 Directors or Trustees who are not "interested persons" of the Fund
(non-interested Directors or Trustees) shall be committed to the discretion of
the Rule 12b-1 Directors or Trustees.
9. Records
-------
The Fund shall preserve copies of the Plan and any related agreements
and all reports made pursuant to Section 4 hereof, for a period of not less than
six years from the date of effectiveness of the Plan, such agreements or
reports, and for at least the first two years in an easily accessible place.
Dated: _________, 19__
A-4
<PAGE>
EXHIBIT B
AMENDMENT TO
ARTICLES OF INCORPORATION
The Articles of Incorporation of the Corporation are hereby amended by
amending Articles V and VII to read, respectively, as follows:
ARTICLE V
COMMON STOCK
SECTION 1. The total number of shares of capital stock which the
Corporation shall have authority to issue is 3,000,000,000 shares of Common
Stock of the par value of $.01 per share, all of one class, having an aggregate
par value of $30,000,000.
SECTION 2. The Board of Directors may, in its discretion, classify and
reclassify any unissued shares of the capital stock of the Corporation into one
or more additional or other classes or series by setting or changing in any one
or more respects the designations, conversion or other rights, restrictions,
limitations as to dividends, qualifications or terms or conditions of redemption
of such shares and pursuant to such classification or reclassification to
increase or decrease the number of authorized shares of any existing class or
series. If designated by the Board of Directors, particular classes or series of
capital stock may relate to separate portfolios of investments.
SECTION 3. Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, the holders of each class and series of capital stock of the
Corporation shall be entitled to dividends and distributions in such amounts and
at such times as may be determined by the Board of Directors, and the dividends
and distributions paid with respect to the various classes or series of capital
stock may vary among such classes or series. Expenses related to the
distribution of, and other identified expenses that should properly be allocated
to, the shares of a particular class or series of capital stock may be charged
to and borne solely by such class or series and the bearing of expenses solely
by a class or series may be appropriately reflected (in a manner determined by
the Board of Directors) and cause differences in the net asset value
attributable to, and the dividend, redemption and liquidation rights of, the
shares of each such class or series of capital stock.
SECTION 4. Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, on each matter submitted to a vote of stockholders, each
holder of a share of capital stock of the Corporation shall be entitled to one
vote for each share outstanding in such holder's name on the books of the
Corporation, irrespective of the class or series thereof, and all shares of all
classes and series shall vote together as a single class; provided, however,
that (a) as to any matter with respect to which
B-1
<PAGE>
a separate vote of any class or series is required by the Investment Company Act
of 1940, as amended (the "Investment Company Act") and in effect from time to
time, or any rules, regulations or orders issued thereunder, or by the Maryland
General Corporation Law, such requirement as to a separate vote by that class or
series shall apply in lieu of a general vote of all classes and series as
described above; (b) in the event that the separate vote requirements referred
to in (a) above apply with respect to one or more classes or series, then
subject to paragraph (c) below, the shares of all other classes and series not
entitled to a separate vote shall vote together as a single class; and (c) as to
any matter which in the judgment of the Board of Directors (which shall be
conclusive) does not affect the interest of a particular class or series, such
class or series shall not be entitled to any vote and only the holders of shares
of the one or more affected classes or series shall be entitled to vote.
SECTION 5. Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, in the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, holders of shares of capital
stock of the Corporation shall be entitled, after payment or provision for
payment of the debts and other liabilities of the Corporation (as such
liabilities may affect one or more of the classes of shares of capital stock of
the Corporation), to share ratably in the remaining net assets of the
Corporation; provided, however, that in the event the capital stock of the
Corporation shall be classified or reclassified into series, holders of any
shares of capital stock within such series shall be entitled to share ratably
out of assets belonging to such series pursuant to the provisions of Section
7(c) of this Article IV.
SECTION 6. Each share of any class of the capital stock of the
Corporation, and in the event the capital stock of the Corporation shall be
classified or reclassified into series, each share of any class of capital stock
of the Corporation within such series shall be subject to the following
provisions:
(a) The net asset value of each outstanding share of capital
stock of the Corporation (or of a class or series, in the event the
capital stock of the Corporation shall be so classified or reclassified
into series), subject to subsection (b) of this Section 6, shall be the
quotient obtained by dividing the value of the net assets of the
Corporation (or the net assets of the Corporation attributable or
belonging to that class or series as designated by the Board of
Directors pursuant to Articles Supplementary) by the total number of
outstanding shares of capital stock of the Corporation (or of such
class or series, in the event the capital stock of the Corporation
shall be classified or reclassified into series). Subject to subsection
(b) of this Section 6, the value of the net assets of the Corporation
(or of such class or series, in the event the capital stock of the
Corporation shall be classified or reclassified into series) shall be
determined pursuant to the procedures or methods (which procedures or
methods, in the event the capital stock of the Corporation shall be
classified or
B-2
<PAGE>
reclassified into series, may differ from class to class or from series
to series) prescribed or approved by the Board of Directors in its
discretion, and shall be determined at the time or times (which time or
times may, in the event the capital stock of the Corporation shall be
classified into classes or series, differ from series to series)
prescribed or approved by the Board of Directors in its discretion. In
addition, subject to subsection (b) of this Section 6, the Board of
Directors, in its discretion, may suspend the daily determination of
net asset value of any share of any series or class of capital stock of
the Corporation.
(b) The net asset value of each share of the capital stock of
the Corporation or any class or series thereof shall be determined in
accordance with any applicable provision of the Investment Company Act,
any applicable rule, regulation or order of the Securities and Exchange
Commission thereunder, and any applicable rule or regulation made or
adopted by any securities association registered under the Securities
Exchange Act of 1934.
(c) All shares now or hereafter authorized shall be subject to
redemption and redeemable at the option of the stockholder pursuant to
the applicable provisions of the Investment Company Act and laws of the
State of Maryland, including any applicable rules and regulations
thereunder. Each holder of a share of any class or series, upon request
to the Corporation (if such holder's shares are certificated, such
request being accompanied by surrender of the appropriate stock
certificate or certificates in proper form for transfer), shall be
entitled to require the Corporation to redeem all or any part of such
shares outstanding in the name of such holder on the books of the
Corporation (or as represented by share certificates surrendered to the
Corporation by such redeeming holder) at a redemption price per share
determined in accordance with subsection (a) of this Section 6.
(d) Notwithstanding subsection (c) of this Section 6, the
Board of Directors of the Corporation may suspend the right of the
holders of shares of any or all classes or series of capital stock to
require the Corporation to redeem such shares or may suspend any
purchase of such shares:
(i) for any period (A) during which the New York
Stock Exchange is closed, other than customary weekend and
holiday closings, or (B) during which trading on the New York
Stock Exchange is restricted;
(ii) for any period during which an emergency, as
defined by the rules of the Securities and Exchange Commission
or any successor thereto, exists as a result of which (A)
disposal by the Corporation of securities owned by it and
belonging to the affected series of capital stock (or the
Corporation, if the shares of capital stock of the Corporation
have not been classified or reclassified into series) is not
reasonably practicable, or (B) it is not reasonably
practicable for the Corporation fairly to determine the value
of the net assets of the affected series of capital stock, or
B-3
<PAGE>
(iii) for such other periods as the Securities and
Exchange Commission or any successor thereto may by order
permit for the protection of the holders of shares of capital
stock of the Corporation.
(e) All shares of the capital stock of the Corporation now or
hereafter authorized shall be subject to redemption and redeemable at
the option of the Corporation. The Board of Directors may by resolution
from time to time authorize the Corporation to require the redemption
of all or any part of the outstanding shares of any classes or series
upon the sending of written notice thereof to each holder whose shares
are to be redeemed and upon such terms and conditions as the Board of
Directors, in its discretion, shall deem advisable, out of funds
legally available therefor, at the net asset value per share of that
class or series determined in accordance with subsections (a) and (b)
of this Section 6 and take all other steps deemed necessary or
advisable in connection therewith.
(f) The Board of Directors may by resolution from time to time
authorize the purchase by the Corporation, either directly or through
an agent, of shares of any class or series of the capital stock of the
Corporation upon such terms and conditions and for such consideration
as the Board of Directors, in its discretion, shall deem advisable out
of funds legally available therefor at prices per share not in excess
of the net asset value per share of that class or series determined in
accordance with subsections (a) and (b) of this Section 6 and to take
all other steps deemed necessary or advisable in connection therewith.
(g) Except as otherwise permitted by the Investment Company
Act, payment of the redemption price for shares of any class or series
of the capital stock of the Corporation surrendered to the Corporation
for redemption pursuant to the provisions of subsection (c) of this
Section 6 or for purchase by the Corporation pursuant to the provisions
of subsection (e) or (f) of this Section 6 shall be made by the
Corporation within seven days after surrender of such shares to the
Corporation for such purpose. Any such payment may be made in whole or
in part in portfolio securities or in cash, as the Board of Directors,
in its discretion, shall deem advisable, and no stockholder shall have
the right, other than as determined by the Board of Directors, to have
his or her shares redeemed in portfolio securities.
(h) In the absence of any specification as to the purposes for
which shares are redeemed or repurchased by the Corporation, all shares
so redeemed or repurchased shall be deemed to be acquired for
retirement in the sense contemplated by the laws of the State of
Maryland. Shares of any class or series retired by repurchase or
redemption shall thereafter have the status of authorized but unissued
shares of such class or series.
SECTION 7. In the event the Board of Directors shall authorize the
classification or reclassification of shares into classes or series, the Board
of Directors may (but shall not be obligated to) provide that each class or
series shall have the fol-
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lowing powers, preferences and voting or other special rights, and the
qualifications, restrictions and limitations thereof shall be as follows:
(a) All consideration received by the Corporation for the
issue or sale of shares of capital stock of each series, together with
all income, earnings, profits, and proceeds received thereon, including
any proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to
the series with respect to which such assets, payments or funds were
received by the Corporation for all purposes, subject only to the
rights of creditors, and shall be so handled upon the books of account
of the Corporation. Such assets, payments and funds, including any
proceeds derived from the sale, exchange or liquidation thereof, and
any assets derived from any reinvestment of such proceeds in whatever
form the same may be, are herein referred to as "assets belonging to"
such series.
(b) The Board of Directors may from time to time declare and
pay dividends or distributions, in additional shares of capital stock
of such series or in cash, on any or all series of capital stock, the
amount of such dividends and the means of payment being wholly in the
discretion of the Board of Directors.
(i) Dividends or distributions on shares of any
series shall be paid only out of earned surplus or other
lawfully available assets belonging to such series.
(ii) Inasmuch as one goal of the Corporation is to
qualify as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended, or any successor or
comparable statute thereto, and Regulations promulgated
thereunder, and inasmuch as the computation of net income and
gains for federal income tax purposes may vary from the
computation thereof on the books of the Corporation, the Board
of Directors shall have the power, in its discretion, to
distribute in any fiscal year as dividends, including
dividends designated in whole or in part as capital gains
distributions, amounts sufficient, in the opinion of the Board
of Directors, to enable the Corporation to qualify as a
regulated investment company and to avoid liability for the
Corporation for federal income tax in respect of that year. In
furtherance, and not in limitation of the foregoing, in the
event that a series has a net capital loss for a fiscal year,
and to the extent that the net capital loss offsets net
capital gains from such series, the amount to be deemed
available for distribution to that series with the net capital
gain may be reduced by the amount offset.
(c) In the event of the liquidation or dissolution of the
Corporation, holders of shares of capital stock of each series shall be
entitled to receive, as a series, out of the assets of the Corporation
available for distribution to such holders, but other than general
assets not belonging to any particular series, the assets belonging to
such series; and the assets so distributable to the holders of shares
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of capital stock of any series shall be distributed, subject to the
provisions of subsection (d) of this Section 7, among such stockholders
in proportion to the number of shares of such series held by them and
recorded on the books of the Corporation. In the event that there are
any general assets not belonging to any particular series and available
for distribution, such distribution shall be made to the holders of all
series in proportion to the net asset value of the respective series
determined in accordance with the charter of the Corporation.
(d) The assets belonging to any series shall be charged with
the liabilities in respect of such series, and shall also be charged
with their share of the general liabilities of the Corporation, in
proportion to the asset value of the respective series determined in
accordance with the charter of the Corporation. The determination of
the Board of Directors shall be conclusive as to the amount of
liabilities, including accrued expenses and reserves, as to the
allocation of the same as to a given series, and as to whether the same
or general assets of the Corporation are allocable to one or more
classes.
SECTION 8. Any fractional share shall carry proportionately all the
rights of a whole share, excepting any right to receive a certificate evidencing
such fractional share, but including, without limitation, the right to vote and
the right to receive dividends.
SECTION 9. No holder of shares of Common Stock of the Corporation
shall, as such holder, have any preemptive right to purchase or subscribe for
any shares of the Common Stock of the Corporation of any class or series which
it may issue or sell (whether out of the number of shares authorized by the
Articles of Incorporation, or out of any shares of the Common Stock of the
Corporation acquired by it after the issue thereof, or otherwise).
SECTION 10. All persons who shall acquire any shares of capital stock
of the Corporation shall acquire the same subject to the provisions of the
charter and By-Laws of the Corporation.
SECTION 11. Notwithstanding any provision of law requiring action to be
taken or authorized by the affirmative vote of the holders of a designated
proportion greater than a majority of the shares of any class or series of
Common Stock, such action shall be valid and effective if taken or authorized by
the affirmative vote of the holders of a majority of the total number of shares
of such class or series of Common Stock outstanding and entitled to vote
thereupon pursuant to the provisions of these Articles of Incorporation.
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ARTICLE VII
MISCELLANEOUS
The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for
creating, defining, limiting and regulating the powers of the Corporation, the
directors and the stockholders.
SECTION 1. The Board of Directors shall have the management and control
of the property, business and affairs of the Corporation and is hereby vested
with all the powers possessed by the Corporation itself so far as is not
inconsistent with law or these Articles of Incorporation. In furtherance and
without limitation of the foregoing provisions, it is expressly declared that,
subject to these Articles of Incorporation, the Board of Directors shall have
power:
(a) To make, alter, amend or repeal from time to time the
By-Laws of the Corporation except as such power may otherwise be
limited in the By-Laws.
(b) To issue shares of any class or series of the capital
stock of the Corporation.
(c) To authorize the purchase of shares of any class or series
in the open market or otherwise, at prices not in excess of their net
asset value for shares of that class, series or class within such
series determined in accordance with subsections (a) and (b) of Section
6 of Article IV hereof, provided that the Corporation has assets
legally available for such purpose, and to pay for such shares in cash,
securities or other assets then held or owned by the Corporation.
(d) To declare and pay dividends and distributions from funds
legally available therefor on shares of such class or series, in such
amounts, if any, and in such manner (including declaration by means of
a formula or other similar method of determination whether or not the
amount of the dividend or distribution so declared can be calculated at
the time of such declaration) and to the holders of record as of such
date, as the Board of Directors may determine.
(e) To take any and all action necessary or appropriate to
maintain a constant net asset value per share for shares of any class,
series or class within such series.
SECTION 2. The directors of the Corporation may receive compensation
for their services, subject, however, to such limitations with respect thereto
as may be determined from time to time by the holders of shares of capital stock
of the Corporation.
SECTION 3. Except as required by law, the holders of shares of capital
stock of the Corporation shall have only such right to inspect the records,
documents, accounts and books of the Corporation as may be granted by the Board
of Directors of the Corporation.
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SECTION 4. (a) The Corporation shall have as custodian or custodians
one or more trust companies or banks of good standing, each having a capital,
surplus and undivided profits aggregating not less than fifty million dollars
($50,000,000), and, to the extent required by the Investment Company Act of
1940, the funds and securities held by the Corporation shall be kept in the
custody of one or more such custodians, provided such custodian or custodians
can be found ready and willing to act, and further provided that the Corporation
may use as subcustodians, for the purpose of holding any foreign securities and
related funds of the Corporation, such foreign banks as the Board of Directors
may approve and as shall be permitted by law.
(b) The Corporation shall upon the resignation or inability to serve
of its custodian or upon change of the custodian:
(i) in case of such resignation or inability to serve, use its
best efforts to obtain a successor custodian;
(ii) require that the cash and securities owned by the
Corporation be delivered directly to the successor custodian; and
(iii) in the event that no successor custodian can be found,
submit to the stockholders before permitting delivery of the cash and
securities owned by the Corporation otherwise than to a successor
custodian, the question whether or not this Corporation shall be
liquidated or shall function without a custodian.
SECTION 5. Any vote of the holders of shares of capital stock of the
Corporation authorizing liquidation of the Corporation or proceedings for its
dissolution may authorize the Board of Directors to determine, as provided
herein, or if provision is not made herein, in accordance with generally
accepted accounting principles, which assets are the assets belonging to the
Corporation or any series thereof available for distribution to the holders of
shares of capital stock of the Corporation or any series thereof (pursuant to
the provisions of Section 7 of Article IV hereof) and may divide, or authorize
the Board of Directors to divide, such assets among the stockholders of the
shares of capital stock of the Corporation or any series thereof in such manner
as to ensure that each such holder receives an amount from the proceeds of such
liquidation or dissolution that such holder is entitled to, as determined
pursuant to the provisions of Sections 3 and 7 of Article IV hereof.
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<S> <C>
Prudential Tax-Free Money Fund PROXY This Proxy is Solicited on Behalf of the Board of Directors
One Seaport Plaza
New York, New York 10292 The undersigned hereby appoints S. Jane Rose, Ronald Amblard and Grace
Torres, each with the power of substitution, and hereby authorizes
each of them to represent and to vote, as designated below, all the
shares of Common Stock of Prudential Tax-Free Money Fund held of
record by the undersigned on May 26, 1995 at the Annual Meeting of
Shareholders to be held on June 27, 1995, or any adjournment thereof.
1. ELECTION OF DIRECTORS
|_| FOR all nominees listed below (except as marked to the contrary below)
|_| WITHHOLD AUTHORITY to vote for all nominees listed below (Instruction: To withhold authority for any individual
nominee strike a line through the nominee's name in the list below.)
Delayne D. Gold, Arthur Hauspurg, Stephen P. Munn, Richard A. Redeker and Louis A. Weil, III.
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(Continued from other side)
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<S> <C> <C> <C>
2. To ratify or reject the selection of Price Waterhouse LLP as independent accountants for |_| RATIFY |_| REJECT |_| ABSTAIN
the year ending December 31, 1995.
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
This Proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder.
If no direction is made, this Proxy will be voted for Proposals 1 and 2.
Please sign exactly as name appears below. When shares are held by joint tenants, both should sign.
When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Date: _________________________________________________________ , 1995
_________________________________________________________________________
Signature
_________________________________________________________________________
Signature if held jointly
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<S> <C>
Prudential Tax-Free Money Fund PROXY This Proxy is Solicited on Behalf of the Board of Directors
One Seaport Plaza
New York, New York 10292 The undersigned hereby appoints S. Jane Rose, Ronald Amblard and
Grace Torres, each with the power of substitution, and hereby
authorizes each of them to represent and to vote, as designated
below, all the shares of Common Stock of Prudential Tax-Free
Money Fund held of record by the undersigned on May 26, 1995 at
the Special Meeting of Shareholders to be held on July 19, 1995,
or any adjournment thereof.
1. To approve or disapprove the elimination of the Fund's investment restriction that limits |_| APPROVE |_| DISAPPROVE |_| ABSTAIN
the Fund to investing in only those securities described in the Fund's prospectus under
the caption "Investment Objectives and Policies."
2. To approve or disapprove the elimination of the Fund's investment restriction regarding |_| APPROVE |_| DISAPPROVE |_| ABSTAIN
the purchase and sale of puts, calls or combinations thereof.
3. To approve or disapprove the elimination of the Fund's investment restriction limiting |_| APPROVE |_| DISAPPROVE |_| ABSTAIN
the Fund's ability to invest in the securities of any issuer in which officers and
directors of the Fund or its investment adviser own more than a specified interest.
4. To approve or disapprove an amended and restated distribution and Service Plan. |_| APPROVE |_| DISAPPROVE |_| ABSTAIN
5. To approve or disapprove an amendment to the Articles of Incorporation to permit the |_| APPROVE |_| DISAPPROVE |_| ABSTAIN
Board of Directors to classify and reclassify the unissued capital stock of the Fund.
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<S> <C>
(Continued from other side)
6. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
This Proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder.
If no direction is made, this Proxy will be voted for Proposals 1, 2, 3, 4 and 5.
Please sign exactly as name appears below. When shares are held by joint tenants, both should sign.
When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Date: _________________________________________________________ , 1995
_________________________________________________________________________
Signature
_________________________________________________________________________
Signature if held jointly
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<TABLE>
<S> <C>
Prudential Tax-Free | Many stockholders think their votes are not important.
Money Fund | On the contrary, they are vital.
Needs | The Annual and Special Meetings on June 27 and July 19, 1995 will have to be adjourned without
Your Proxy Vote | conducting any business if less than a majority of the eligible shares are represented.
Before | And the Fund, at stockholders' expense, will have to continue to solicit votes until a
June 27, 1995 | quorum is obtained.
For the Annual | Your vote, then, could be critical in allowing the Fund to hold the meetings as
Meeting and Before | scheduled, SO PLEASE BE SURE TO RETURN YOUR PROXY CARDS AS SOON AS POSSIBLE.
July 19, 1995 | All stockholders will benefit from your cooperation.
For the | Thank you.
Special Meeting
PLEASE RETURN BOTH PROXY CARDS
====
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