<PAGE>
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:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PRUDENTIAL GNMA FUND, INC.
________________________________________________________________________________
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PRUDENTIAL GNMA FUND, INC.
________________________________________________________________________________
(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 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
<PAGE>
PRELIMINARY COPY
PRUDENTIAL GNMA FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, N.Y. 10292
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
--------------------------
To our Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of Prudential
GNMA Fund, Inc. (the Fund), will be held at 9:00 A.M. on August 18, 1995, at 199
Water Street, New York, N.Y. 10292, for the following purposes:
1. To elect Directors.
2. To approve a change in the Fund's investment policies to expand the
Fund's ability to purchase mortgage instruments issued by agency issuers
other than GNMA and non-agency private issuers.
3. To ratify the selection by the Board of Directors of Price
Waterhouse LLP as independent accountants for the year ending December 31,
1995.
4. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Only shares of Common Stock of the Fund of record at the close of business
on June 9, 1995 are entitled to notice of and to vote at this Meeting or any
adjournment thereof.
S. JANE ROSE
SECRETARY
Dated: July , 1995
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY RETURN
THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. IN ORDER TO AVOID
THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
<PAGE>
PRUDENTIAL GNMA FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, N.Y. 10292
------------------------
PROXY STATEMENT
------------------------
This statement is furnished by the Board of Directors of Prudential GNMA
Fund, Inc. (the Fund), in connection with its solicitation of proxies for use at
the Special Meeting of Shareholders (the Meeting) to be held at 9:00 A.M. on
August 18, 1995 at 199 Water Street, New York, New York 10292, the Fund's
principal executive office. The purpose of the Meeting and the matters to be
acted upon are set forth in the accompanying Notice of Special Meeting.
The Fund's most recent Annual Report has been sent to shareholders and may
be obtained by calling (800) 225-1852 or by writing to the Fund at One Seaport
Plaza, New York, New York 10292.
If the accompanying form of Proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the Proxy. However, if no instructions are specified, shares
will be voted for the election of Directors and for each of 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 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 those shares present at the 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.
Any questions as to an adjournment of the Meeting will be voted on by the
persons named in the enclosed proxy in the same manner that the Proxies are
instructed to be voted. 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
1
<PAGE>
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 June 9, 1995 has been fixed as the record date for
the determination of shareholders entitled to notice of, and to vote at, the
Meeting. On that date, the Fund had 16,679,798 shares of Common Stock
outstanding and entitled to vote, consisting of 6,974,789 Class A shares,
9,666,029 Class B shares and 38,980 Class C shares. Each share will be entitled
to one vote at the Meeting. It is expected that the Notice of Special Meeting,
Proxy Statement and form of Proxy will first be mailed to shareholders on or
about July , 1995.
As of June 9, 1995, the following shareholders owned beneficially 5% or more
of the Fund's outstanding Class A, Class B or Class C shares:
Patricia A. Vogel, 1660 Oliver Springs Hwy, Clinton, TN 37716-5246, who held
5,052 Class C shares of the Fund (13.0%); EDW J. Carland, Annette S. Cohen, TEES
for Barneth Satuloff UA 072337, FBO Annette Cohen, 2600 Main Place Tower,
Buffalo, NY 14202-3785, who held 3,429 Class C shares of the Fund (8.8%);
Katherine S. Dalton, 24 Chapel Woods, Williamsville, NY 14221-1813, who held
2,216 Class C shares of the Fund (5.7%); and Delaware Charter T/F, Kenneth R.
Kahn, IRA DTD 03/26/82, P.O. Box 8963, Wilmington, DE 19899-8999, who held 7,362
Class C shares of the Fund (18.9%).
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 this Meeting. The fees and expenses of
Shareholder Communications Corporation are not expected to exceed $54,000,
excluding mailing and printing costs, 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) and its affiliates.
2
<PAGE>
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 management
agreement dated as of April 28, 1988. 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. As of May 31, 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 $49
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.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the Special Meeting, eight 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 (which is being phased in for Directors who were age
68 or older as of December 31, 1993) 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 as proxies
to vote for the election of Edward D. Beach, Eugene C. Dorsey, Delayne Dedrick
Gold, Harry A. Jacobs, Jr., Thomas T. Mooney, Thomas H. O'Brien, Richard A.
Redeker and Nancy Hays Teeters, all of whom are currently members of the Board
of Directors. Each of the nominees has consented to be named in this Proxy
Statement and to serve as a Director if elected.
All of the current members of the Board of Directors have previously been
elected by the shareholders. Mr. Redeker has served as President since May 5,
1995 and a Director since November 11, 1993. Mr. Beach has served as a Director
since June 29, 1986. Mr. Dorsey has served as a Director since February 12,
1987. Mrs. Gold has served as a Director since January 4, 1981. Mr. Jacobs has
served as a Director since February 14, 1985. Mr. Mooney has served as a
Director since January 22, 1986. Mr. O'Brien has served as a Director since
January 25, 1982 and Mrs. Teeters has served as a Director since August 4, 1992.
3
<PAGE>
The Board of Directors has 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 Meeting, proxies will be voted for such persons as the
Board of 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 of 1940, as amended (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.
INFORMATION REGARDING DIRECTORS
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION WITH OWNED AT
PAST FIVE YEARS AND DIRECTORSHIPS FUND JUNE 9, 1995
- --------------------------------------------------------------- ------------- -------------------
<S> <C> <C>
Edward D. Beach (70), President and Director of BMC Fund, Director -0-
Inc., a closed-end investment company; prior thereto, Vice
Chairman of Broyhill Furniture Industries, Inc.; Certified
Public Accountant; Secretary and Treasurer of Broyhill Fami-
ly Foundation Inc.; President, Treasurer and Director of
First Financial Fund, Inc. and The High Yield Plus Fund,
Inc.; President and Director of Global Utility Fund, Inc.;
Director/Trustee of 19 other Prudential Mutual Funds.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION WITH OWNED AT
PAST FIVE YEARS AND DIRECTORSHIPS FUND JUNE 9, 1995
- --------------------------------------------------------------- ------------- -------------------
<S> <C> <C>
Eugene C. Dorsey (68), Retired President, Chief Executive Director -0-
Officer and Trustee of the Gannett Foundation (now Freedom
Forum); former Publisher of four Gannett newspapers and Vice
President of Gannett Company; past Chairman, Independent
Sector (national coalition of philanthropic organizations);
former Chairman of the American Council for the Arts;
Director of the Advisory Board of Chase Manhattan Bank of
Rochester; Director/Trustee of 6 other Prudential Mutual
Funds.
Delayne Dedrick Gold (56), Marketing and Management Director 2,400
Consultant; Director/Trustee of 23 other Prudential Mutual
Funds.
*Harry A. Jacobs, Jr. (73), Senior Director (since January Director -0-
1986) of Prudential Securities; formerly Interim Chairman and
Chief Executive Officer of PMF (June-September 1993),
Chairman of the Board of Prudential Securities (1982-
1985) and Chairman of the Board and Chief Executive Officer
of Bache Group Inc. (1977-1982); Director of the Center for
National Policy; Trustee of the Trudeau Institute;
Director/Trustee of 25 other Prudential Mutual Funds.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION WITH OWNED AT
PAST FIVE YEARS AND DIRECTORSHIPS FUND JUNE 9, 1995
- --------------------------------------------------------------- ------------- -------------------
<S> <C> <C>
Thomas T. Mooney (53), President of the Greater Rochester Director -0-
Metro Chamber of Commerce; former Rochester City Manager;
Trustee of Center for Governmental Research, Inc.; Director
of Blue Cross of Rochester and Monroe County Water Authority,
Rochester Jobs, Inc., Northeast Midwest Institute, Executive
Service Corps of Rochester and Monroe County Industrial
Development Corporation; Director/Trustee of 14 other
Prudential Mutual Funds.
Thomas H. O'Brien (70), President, O'Brien Associates Director 3,365
(financial and management consultants) (since April 1984);
formerly President of Jamaica Water Securities Corp.
(February 1989-August 1990); Chairman and Chief Executive Of-
ficer (September 1987-February 1989) and Director (September
1987-April 1991) of Jamaica Water Supply Company; formerly
Director of TransCanada Pipelines U.S.A. Ltd. (1984-June
1989); Director of Ridgewood Savings Bank and Yankee Energy
System, Inc.; Trustee of Hofstra University; Director/Trustee
of 5 other Prudential Mutual Funds.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION WITH OWNED AT
PAST FIVE YEARS AND DIRECTORSHIPS FUND JUNE 9, 1995
- --------------------------------------------------------------- ------------- -------------------
<S> <C> <C>
*Richard A. Redeker (51), President, Chief Executive Officer President and -0-
and Director (since October 1993), PMF; Executive Vice Director
President, Director and Member of the Operating Committee
(since October 1993), Prudential Securities; Director (since
October 1993) of Prudential Securities Group, Inc (PSG);
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);
Director/Trustee and President of 35 other Prudential Mutual
Funds.
Nancy Hays Teeters (64), Economist; formerly Vice President Director 780
and Chief Economist (March 1986-June 1990) of International
Business Machines Corporation; Member of the Board of
Governors of the Horace H. Rackham School of Graduate Stud-
ies of the University of Michigan; Director of Inland Steel
Industries (since July 1991); Director/Trustee of 11 other
Prudential Mutual Funds.
<FN>
- ------------------------
* Indicates "interested" Director, as defined in the Investment Company Act, by reason of his affiliation with
PMF or Prudential Securities.
</TABLE>
The Directors and officers of the Fund as a group owned beneficially 6,545
shares of the Fund at June 9, 1995, representing less than 1% of the outstanding
shares of the Fund.
7
<PAGE>
The Fund pays annual compensation of $7,500, plus travel and incidental
expenses, to each of the six Directors not affiliated with PMF or Prudential
Securities. The Directors have the option to receive the 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, which accrues 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 rate of return of
the Fund. 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. During the fiscal year ended December 31, 1994,
the Fund paid Directors' fees of approximately $46,000 and travel and incidental
expenses of approximately $371.
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
to the Directors who are not affiliated with the Manager for the fiscal year
ended December 31, 1994 and the aggregate compensation paid to such Directors
for service on the Fund's Board and the Board of any other funds managed by PMF
(Fund Complex) for the fiscal year ended December 31, 1994.
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT ESTIMATED COMPENSATION
BENEFITS ANNUAL FROM FUND
AGGREGATE ACCRUED BENEFITS AND FUND
COMPENSATION AS PART OF FUND UPON COMPLEX PAID
NAME AND POSITION FROM FUND EXPENSES RETIREMENT TO DIRECTORS
- -------------------------------- --------------- --------------- ---------- --------------
<S> <C> <C> <C> <C>
Edward D. Beach--Director $ 7,500 None N/A $ 159,000(20/39)*
Eugene C. Dorsey--Director $ 7,500 None N/A $ 61,000(7/34)*
Delayne Dedrick Gold--Director $ 7,500 None N/A $ 185,000(24/43)*
Thomas T. Mooney--Director $ 7,500 None N/A $ 126,000(15/36)*
Thomas H. O'Brien--Director $ 7,500 None N/A $ 44,000(6/24)*
Nancy Hays Teeters--Director $ 7,500 None N/A $ 95,000(12/28)*
<FN>
- ------------------------------
* Indicates number of funds/portfolios in Fund Complex to which aggregate compensation
relates.
</TABLE>
8
<PAGE>
There were four regular 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, the members of which are Mrs. Gold and Mrs. Teeters and
Messrs. Beach, Dorsey, Mooney and O'Brien, the Fund's non-interested Directors.
The Audit Committee met twice during the fiscal year ended December 31, 1994.
The Audit Committee makes recommendations to the full 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 Board also has a
Nominating Committee, comprised of the Fund's non-interested Directors, which
selects and proposes candidates for election to the Board of Directors. The
Nominating Committee met once during the fiscal year ended December 31, 1994.
The Nominating Committee does not consider nominees recommended by shareholders
to fill vacancies on the Board.
During the fiscal year ended December 31, 1994, no Director other than
Richard A. Redeker attended fewer than 75% of the aggregate of the total number
of meetings of the Board of Directors and any committees thereof of which such
Director was a member.
The executive officers of the Fund, other than as shown above, are: David W.
Drasnin, Vice President, having held office since March 21, 1985; Robert F.
Gunia, Vice President, having held office since May 14, 1987; Grace Torres,
Treasurer and Principal Financial and Accounting Officer, having held office
since February 8, 1995; Stephen M. Ungerman, Assistant Treasurer, having held
office since May 5, 1995; S. Jane Rose, Secretary, having held office since
November 8, 1984; and Deborah A. Docs, Assistant Secretary, having held office
since August 3, 1989. Mr. Drasnin is 57 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 (since
January 1989), Executive Vice President, Treasurer and Chief Financial Officer
(since June 1987) of PMF and a Senior Vice President of Prudential Securities
(since March 1987). He is also Vice President and Director (since May 1989) of
The Asia Pacific Fund, Inc. Ms. Torres is 35 years old and is a First Vice
President (since March 1994) of PMF and a First Vice President of Prudential
Securities (since March 1994). Prior thereto, she was a Vice President of
Bankers Trust Company. Mr. 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 LLP (since 1981). Ms. Rose is 49 years old and is 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 (June 1987 - December 1990) of PMF and
9
<PAGE>
a Vice President and Associate General Counsel of Prudential Securities. Ms.
Docs is 37 years old and is a Vice President and Associate General Counsel
(since January 1993) of PMF, and a Vice President and Associate General Counsel
(since January 1993) of Prudential Securities. She was formerly Associate Vice
President (January 1990 - December 1992), Assistant Vice President (January 1989
- -December 1989) and Assistant General Counsel (November 1991 - December 1992) of
PMF. The executive officers of the Fund are elected annually by the Board of
Directors.
REQUIRED VOTE
Directors must be elected by a vote of a majority of the shares present at
the Meeting in person or by proxy and entitled to vote thereupon, provided that
a quorum is present.
APPROVAL OF A PROPOSAL TO CHANGE
THE FUND'S INVESTMENT POLICIES TO INCREASE
THE FUND'S ABILITY TO INVEST IN NON-AGENCY
MORTGAGE INSTRUMENTS
(PROPOSAL NO. 2)
At the request of the Fund's Manager, the Board of Directors has considered
and recommends for shareholder approval a change in the Fund's investment
policies to expand the Fund's ability to invest in mortgage instruments issued
by agency issuers other than GNMA and non-agency private issuers. Subject to
shareholder approval of this change, the Fund's Board of Directors has approved
a change in the Fund's name from Prudential GNMA Fund, Inc. to Prudential
Mortgage Income Fund, Inc. The Fund will then be required to invest at least 65%
of its assets in mortgage-related instruments, including GNMA securities, other
mortgage-backed securities issued or guaranteed by agencies or instrumentalities
of the U.S. Government and non-agency mortgage instruments, along with
obligations using mortgages as collateral. Although the Fund may currently
invest up to 35% of its assets in non-agency mortgage instruments, the
Subadviser believes that investment opportunities in these instruments have
increased. In addition, potential changes at the Department of Housing and Urban
Development (HUD) that are currently being evaluated by Congressional
subcommittees could, if enacted, reduce new GNMA issuances, which would leave
the Fund with very limited investment alternatives if the proposed change in the
Fund's investment policies is not implemented. Accordingly, this proposed change
would permit the Fund to invest an unlimited portion of its assets in non-agency
mortgage instruments issued by other agency issuers such as FNMA and Freddie Mac
10
<PAGE>
and non-agency issuers. The mortgage-backed securities issued by FNMA, Freddie
Mac and private issuers are not guaranteed by the full faith and credit of the
United States. Moreover, some mortgage-backed securities issued by non-agency
private issuers may be supported by a pool of mortgages not acceptable to the
agency issuers and thus may carry greater risks. The Fund may invest in these
mortgage-backed securities issued by FNMA, Freddie Mac or non-agency private
issuers if they are rated at least A by Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group. The change is designed to give the Fund greater
investment flexibility and to enhance return and thereby enable the Fund to
compete more effectively with funds in its competitive universe.
REQUIRED VOTE
The proposed change in the Fund's investment policies requires the
affirmative vote of a majority of the Fund's outstanding shares. Under the
Investment Company Act, a majority of the Fund's outstanding voting shares is
defined as the lesser of (i) 67% of the Fund's outstanding voting shares
represented at a meeting at which more than 50% of the outstanding voting shares
of the Fund are present in person or represented by proxy, or (ii) more than 50%
of the Fund's outstanding voting shares. If the Proposal is not approved as
described above, the current limitations on the Fund's ability to invest in
non-agency mortgage instruments will continue and the Board of Directors may
consider other alternatives including a determination not to change the Fund's
name from Prudential GNMA Fund, Inc. to Prudential Mortgage Income Fund, Inc.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 2.
RATIFICATION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 3)
The Board of Directors of the Fund, including all of the Directors who are
not interested persons of the Fund, has selected Price Waterhouse LLP as
independent accountants for the Fund for the fiscal year ending December 31,
1995. The ratification of the selection of independent accountants is to be
voted upon at the Meeting and it is intended that the persons named in the
accompanying Proxy will vote for Price Waterhouse LLP. No representative of
Price Waterhouse LLP is expected to be present at the Special 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 accountants to perform any service(s) normally provided by
independent accounting firms, provided that such service(s) meet(s) any and all
of
11
<PAGE>
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.
REQUIRED VOTE
The affirmative vote of a majority of the shares present, in person or by
proxy, at the Meeting is required for ratification.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 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 in
the enclosed Proxy will vote thereon according to their best judgment in the
interests of the Fund.
SHAREHOLDER PROPOSALS
The Fund is not required to hold annual meetings of shareholders and the
Board of Directors currently does not intend to hold such meetings unless
shareholder action is required in accordance with the Investment Company Act or
the Fund's By-laws. A shareholder proposal intended to be presented at any
meeting of shareholders of the Fund hereinafter called must be received by the
Fund at a reasonable time before the Board of Directors' solicitation relating
thereto is made in order to be included in the Fund's Proxy Statement and form
of Proxy relating to that meeting and presented at the meeting. The mere
submission of a proposal by a shareholder does not guarantee that such proposal
will be included in a future Proxy Statement because certain rules under the
Federal securities laws must be complied with before inclusion of the proposal
is required.
S. JANE ROSE
SECRETARY
Dated: July , 1995
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
12
<PAGE>
PRUDENTIAL GNMA PROXY
FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints S. Jane Rose, Deborah A. Docs and Grace Torres
as Proxies, each with the power of substitution, and hereby authorizes each
of them to represent and to vote, as designated below, all the shares of
common stock of the Prudential GNMA Fund, Inc. held of record by the
undersigned on June 9, 1995 at the Special Meeting of Shareholders to be held
on August 18, 1995, or any adjournment thereof.
(OVER)
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.)
Edward D. Beach, Eugene C. Dorsey, Delayne Dedrick Gold,
Harry A. Jacobs Jr., Thomas T. Mooney, Thomas H. O'Brien,
Richard A. Redeker and Nancy Hays Teeters.
2. To approve a change in the Fund's
investment policies to expand the
Fund's ability to purchase non-agency FOR AGAINST ABSTAIN
mortgage instruments. / / / / / /
3. To ratify the selection by the Board
of Directors of Price Waterhouse LLP
as independent accountants for the
fiscal year ending December 31, 1995. / / / / / /
4. In their discretion, the Proxies are
authorized to transact such other
business as may properly come before
the meeting or any adjournment
thereof. / / / / / /
<PAGE>
(CONTINUED FROM OTHER SIDE)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING
THE ENCLOSED ENVELOPE.
THIS PROXY WHEN EXECUTED WILL BE VOTED IN THE MANNER DESCRIBED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF EXECUTED AND NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1,2, AND 3.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated___________________________, 1995
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Signature
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Signature if held jointly
