SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant X
Filed by a party other than the registrant
Check the appropriate box
_ Preliminary proxy statement
x Definitive proxy statement
_ Definitive additional materials
_ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
The Global Government Plus Fund, Inc.
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(Name of Registrant as Specified in Its Charter)
The Global Government Plus Fund, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
_ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
_ $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.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
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x Fee paid previously with preliminary materials.
_ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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THE GLOBAL GOVERNMENT PLUS FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, N.Y. 10292
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
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To Our Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of The Global
Government Plus Fund, Inc. (the Fund) will be held on December 6, 1995, at 10:00
A.M. at One Seaport Plaza, 199 Water Street, New York, New York 10292, for the
following purposes:
1. To approve a proposal to convert the Fund from a closed-end investment
company.
2. To approve changes to certain investment restrictions of the Fund as
follows:
a. To increase the Fund's borrowing capabilities.
b. To amend the Fund's restrictions regarding restricted securities.
c. To clarify the Fund's loan policies.
3. If Proposal No. 1 is approved, to approve a new Management Agreement
between the Fund and Prudential Mutual Fund Management, Inc. and a new
Subadvisory Agreement between Prudential Mutual Fund Management, Inc. and The
Prudential Investment Corporation.
4. If Proposal No. 1 is approved, to elect seven Directors.
5. If Proposal No. 1 is approved, to approve a Plan of Distribution pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended.
6. If Proposal No. 1 is approved, to approve an Alternative Purchase Plan
and an amendment to the Fund's Articles of Incorporation to permit the issuance
of multiple classes of shares.
7. To consider and act upon any other business as may properly come before
the Meeting or any adjournment thereof.
Only holders of Common Stock of record at the close of business on September
29, 1995 are entitled to notice of and to vote at this Meeting or any
adjournment thereof.
S. JANE ROSE
Secretary
Dated: October 24, 1995
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WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY RETURN
THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. IN ORDER TO AVOID
THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
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THE GLOBAL GOVERNMENT PLUS FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, N.Y. 10292
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PROXY STATEMENT
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This Proxy Statement is furnished by the Board of Directors of The Global
Government Plus Fund, Inc. (the Fund) in connection with its solicitation of
proxies for use at the Special Meeting of Shareholders (the Meeting) to be held
on December 6, 1995 at 10:00 A.M., at One Seaport Plaza, 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 Meeting.
The most recent annual and semi-annual report for the Fund has previously
been sent to shareholders and may be obtained without charge by writing the Fund
at One Seaport Plaza, New York, New York 10292 or by calling 1-800-451-6788.
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 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.
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 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 September 29, 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 45,642,508 shares of Common Stock
outstanding and entitled to vote. Each share will be entitled to one vote at the
Meeting. It is expected that the Notice of
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Special Meeting, Proxy Statement and form of proxy will first be mailed to
shareholders of record on or about October 27, 1995.
As of September 29, 1995, the holders of record of more than 5% of the
outstanding shares of the Fund were: Lowe, Brockenbrough & Tattersall, Inc.
(Lowe Brockenbrough), a registered investment adviser, 6620 West Broad Street,
Suite 300, Richmond, Virginia 23230-1720, held in the aggregate 6,981,000 shares
of the Fund's common stock representing approximately 15.2% of the Fund's total
outstanding common stock entitled to vote. Lowe Brockenbrough held such shares
on behalf of investment advisory clients with sole voting power and shared power
to sell. This information is based on information received by the Fund from Lowe
Brockenbrough. Management does not know of any other person or group who owned
benefically 5% or more of the Fund's outstanding Common Stock on the record
date.
The expenses 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 but may include, without additional cost to the Fund,
telephonic, telegraphic or oral communications by regular employees of
Prudential Securities Incorporated (Prudential Securities). In addition, the
Board of Directors of the Fund has authorized management to retain, at their
discretion, Shareholder Communications Corporation, a proxy solicitation firm,
to assist in the solicitation of proxies for this Meeting. The cost of
solicitation, including specified expenses, is not expected to exceed $125,000
and will be borne by the Fund.
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 (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 dated April 25, 1988.
Both PMF and PIC are indirect subsidiaries of The Prudential Insurance Company
of America (Prudential). As of September 30, 1995, PMF served as the manager to
37 open-end investment companies, and as manager or administrator to 27
closed-end investment companies with aggregate assets of more than $50 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.
CONVERSION OF THE FUND FROM A CLOSED-END INVESTMENT
COMPANY TO AN OPEN-END INVESTMENT COMPANY
(Proposal No. 1)
At meetings held on August 15, and September 13, 1995 the Board of
Directors, including those Directors who are not "interested persons" of the
Fund as defined in the Investment Company Act of 1940, as amended (1940 Act)
(Independent Directors), considered and approved the submission to Fund
shareholders of a proposal to convert the
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Fund from a closed-end investment company to an open-end investment company. In
connection therewith, the Board of Directors, including the Independent
Directors, also considered and approved the amendment of the Fund's
subclassification under the 1940 Act from a closed-end investment company to an
open-end investment company and the amendment and restatement of the Fund's
Articles of Incorporation to provide for such conversion. If approved, this will
permit the continued operation of the Fund in accordance with its investment
objective while providing its shareholders with the right to redeem their shares
at a price based on the net asset value of the shares instead of a price set in
the market. At the meeting on September 13, 1995, the Board of Directors,
including the Independent Directors, considered and approved new contractual
arrangements for the management and operation of the Fund as an open-end
investment company. Shareholders of the Fund are now being asked to consider the
conversion of the Fund from a closed-end to an open-end investment company and
to consider related matters approved by the Board of Directors in connection
with the conversion. If Proposal No. 1 is approved, the Fund will be converted
to an open-end investment company as soon as reasonably practicable. If Proposal
No. 1 is not approved by shareholders, the Fund will remain a closed-end
investment company and the Board of Directors will consider whether other
actions should be taken, if any, with respect to the discount from net asset
value at which the Fund's shares trade.
Background of the Proposal
When the Fund was organized in 1987, a closed-end format was chosen as most
appropriate to the Fund's character and intended method of operation because it
was believed that such a structure, among other things, would permit management
of the Fund's portfolio consistent with its investment objective and policies
without the pressures and constraints to which open-end investment companies are
subject as a result of cash inflows and redemptions. While the Board of
Directors and the Manager recognized that the shares of closed-end investment
companies frequently trade at a discount from net asset value, certain
characteristics of the Fund led those parties to believe that the Fund would be
less likely to experience this phenomenon. In particular, the Fund's tender
offer provisions contained in its prospectus were believed to distinguish the
Fund from other closed-end investment companies.
The Fund's prospectus used in connection with the offering of shares in 1987
stated that the Board would consider every quarter whether to take any action if
the Fund's shares are trading at a discount from net asset value. It was
anticipated that the inclusion of this specific guidance for Board action,
relatively unusual among closed-end investment companies at the time, would
operate to reduce any market discount in the Fund's shares that might otherwise
develop. These provisions were not, however, designed to preclude earlier Board
consideration of options available to alleviate the discount or limit the
Board's flexibility in determining what course of action is appropriate at any
particular time.
Despite the foregoing arrangements, the Fund's shares, from time to time,
traded at a discount to net asset value since June, 1989. As of early September,
1990, the discount had increased, at times exceeding 16%. In response to this
development, the Fund repurchased
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a total of 7,000,000 shares of its outstanding common stock at a cost of
$50,685,700 and at an average discount of approximately 7% from its net asset
value during the year ended December 31, 1990. Those shares are being held in
treasury. Although the Fund's shares continued, from time to time, to trade at a
discount from net asset value, the Directors have determined not to repurchase
shares for a variety of reasons, including the lack of any long term effects on
the market discount to net asset value of the Fund's repurchase of shares in
1990. The discount to which the Fund's shares have been trading to net asset
value has increased, at times exceeding 15% and for the six-month period ended
June 30, 1995 it averaged approximately 17%. As a consequence, the Board of
Directors and the Manager have given further consideration to the various
alternatives whereby the discount might be reduced or eliminated and re-examined
the appropriateness of continuing to operate the Fund as a closed-end investment
company.
At a special meeting held on August 15, 1995, the Board of Directors
considered various alternatives whereby the discount at which the Fund's shares
traded to net asset value might be reduced or eliminated, including, but not
limited to, an enhanced public communications effort in conjunction with the
Fund's recent changes in investment advisory personnel, the reinstatement of a
stock repurchase program, the conversion of the Fund to an interval fund whereby
it would offer to repurchase its shares periodically at net asset value, merging
the Fund into another investment company and converting the Fund to an open-end
investment company. After consideration of the available options, the Board of
Directors concluded that it would be in the best interests of the Fund and its
shareholders for the Fund to convert to an open-end company, thereby giving
shareholders the right to retain ownership of the Fund with the same investment
objective and to dispose of Fund shares at such time as they choose at prices
based on the then current net asset value of the shares. The Board considered
that conversion to an open-end invevment company (1) was feasible, because the
Fund's investment objective and policies are consistent with operation as an
open-end company, (2) would be the most effective way to eliminate the discount
and (3) would not be likely to have a material adverse affect on the overall
performance of the Fund, except during the period immediately following the
conversion when a high level of redemptions may occur. The Board also considered
the capability of Prudential Securities, an affiliate of the Manager, and the
proposed distributor of the Fund's shares, to engage in an ongoing distribution
of the Fund's shares as an open-end investment company if the Alternative
Purchase Plan described in Proposal No. 6 is approved. The Board considered that
none of the other measures described above to mitigate or eliminate the discount
would act with the degree of certainty that conversion would, while permitting
the Fund to continue operations with its investment objective and policies
substantially intact. The Board also considered the various benefits of
operating as an open-end investment company, including the possibility that the
Fund could experience asset growth through net sales as well as the anticipated
increase in the Fund's expenses as discussed below. The Manager reported that
(i) it believed it would be able to manage the Fund's portfolio as an open-end
investment company and would have no material difficulty in managing the Fund's
portfolio to meet the increased liquidity requirements deriving from redemptions
and sales as would be expected in an open-end investment company and (ii)
Prudential Securities would be able to perform distribution services for the
Fund with the reasonable
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likelihood that, although there is no assurance, the assets of the Fund would
increase over time.
Accordingly, at a Special Meeting held on September 13, 1995, Board of
Directors, including the Independent Directors, authorized the submission of a
proposal to convert the Fund to an open-end investment company to shareholders
of the Fund for their approval. The Board also approved new contractual
arrangements for the management and operation of the Fund as an open-end
investment company and for the distribution of its shares, as described in more
detail below. In addition, the Board approved the proposed amendments to the
Fund's Articles of Incorporation, the proposed changes to its fundamental
investment restrictions and a change in its subclassification under the 1940 Act
from a closed-end to an open-end investment company.
Differences Between Fund Operations as an Open-End and Closed-End Investment
Company
The Fund is currently registered as a "closed-end" investment company under
the 1940 Act. Closed-end investment companies neither redeem their outstanding
stock nor generally engage in the continuous sale of new securities, and thus
operate with a relatively fixed capitalization. The stock of closed-end
investment companies is normally bought and sold on national securities
exchanges; the Fund's shares are currently traded on the New York and Pacific
Stock Exchanges. The Fund's shares will be delisted from these Exchanges upon
effectiveness of the registration statement converting the Fund to an open-end
investment company.
In contrast, open-end investment companies, commonly referred to as "mutual
funds," issue redeemable securities. The holders of redeemable securities have
the right to surrender those securities to the mutual fund and obtain in return
their proportionate share of the value of the fund's net assets (less any
redemption fee charged by the fund). Many mutual funds (including the Fund, if
the proposed conversion is effected) also continuously issue new shares of stock
to investors based on the fund's net asset value at the time of such issuance.
Some of the legal and practical differences between operations of the Fund
as a closed-end and an open-end investment company are as follows:
(a) Acquisition and Disposition of Shares. If the Fund were to be
converted into a mutual fund, investors wishing to acquire shares of the
Fund's common stock would be able to purchase them from the Fund's principal
underwriter at their public offering price. Shareholders desiring to realize
the value of their shares would be able to do so by exercising their right
to have such shares redeemed by the Fund at the next determined current net
asset value or at such net asset value less such redemption fee as may be
determined by the Board of Directors. The Fund's net asset value per share
is calculated by dividing (i) the value of its portfolio securities plus all
cash and other assets (including accrued interest and dividends received but
not collected) less all liabilities (including accrued expenses) by (ii) the
number of outstanding shares of the Fund.
The Board of Directors currently intends to impose a 2% fee to be
retained by the Fund during the first six months of operation as an open-end
investment company
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and no such fee thereafter on redemptions of Fund shares held prior to
conversion (including shares thereafter acquired pursuant to the automatic
reinvestment of dividends and distributions with respect to thoses shares).
Any such redemption fee retained by the Fund would tend to increase the
Fund's net asset value. The Board of Directors believes that the redemption
fee would reduce the impact of initial redemptions upon the facilities of
the Fund and its transfer agent and offset the costs associated with such
redemptions on the remaining shareholders of the Fund. The Manager is unable
to provide an estimate of the direct and indirect costs attributable to
liquidation of portfolio investments and the related restructuring of the
portfolio. Upon conversion of the Fund to an open-end investment company,
the Fund's shares would no longer be listed on the New York or Pacific Stock
Exchanges and shareholders will be able to redeem their shares at net asset
value (less any applicable redemption fee).
(b) Voting Rights. The voting rights of holders of shares of the Fund
will not change if the Fund converts to open-end status, except that the
Board of Directors will have the authority to amend the Fund's Articles of
Incorporation to authorize the issuance of additional shares of the Fund's
common stock without submitting such amendment to another shareholder vote.
As discussed in Proposal No. 6 below, the Board of Directors may authorize
the issuance of three classes of shares, each representing an identical
legal interest in the Fund's portfolio and having the same rights, but
bearing different expenses specifically related to the distribution of
shares of each class.
By virtue of the provisions of Maryland corporate law applicable to
investment companies, opportunities to vote may become less frequent if the
Fund converts to open-end status, since the Fund will not hold shareholder
meetings unless required to do so by the 1940 Act. Maryland corporate law
provides that, if the Articles of Incorporation or By-laws of either an
open-end or closed-end fund registered under the 1940 Act so provides, then
the fund is not required to hold an annual shareholder meeting in any year
in which the election of Directors is not required to be acted upon under
the 1940 Act. The current Articles of Incorporation and By-laws of the Fund
do not so provide. However, the Board of Directors has adopted amended and
restated By-laws to go into effect if Proposal No. 1 is approved, which
provide that the Fund will not be required to hold an annual meeting in any
year in which it is not required to do so under the 1940 Act. The Fund does
not intend to hold annual meetings in any year in which it is not so
required.
By not having to hold annual shareholder meetings, the Fund would save
the costs of preparing proxy materials and soliciting shareholders' votes on
the usual proposals contained therein. Based on the number of outstanding
shares and shareholders as of the record date, such costs would aggregate
approximately $125,000 per year. Under the 1940 Act, the Fund would be
required to hold a shareholder meeting if the number of Directors elected by
the shareholders were less than a majority of the total number of Directors,
or if a change were sought in the fundamental investment policies of the
Fund or in the Fund's status (such as, for
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example, a change from open-end to closed-end status). Maryland law requires
the Directors to call a special meeting of shareholders when requested in
writing to do so by the shareholders entitled to cast at least 25% of all
the votes entitled to be cast at the special meeting; provided, however,
that, unless requested by shareholders entitled to cast a majority of all
the votes entitled to be cast at the special meeting, a special meeting need
not be called to consider any matter which is substantially the same as a
matter voted on at any special meeting of the shareholders held during the
preceding twelve months. In addition, in the event of open-ending, the Fund
will be required to amend its By-laws to provide that the holders of 10% of
its outstanding shares may call a meeting of shareholders to vote on a
proposal to remove a Director and may obtain a list of shareholders and
their addresses from the Fund. Such a removal can be effected upon the
action of a majority of the outstanding shares of the Fund.
(c) Determination of Net Asset Value. Securities and Exchange Commission
(SEC) regulations under the 1940 Act generally require mutual funds to value
their assets on each business day in order to determine the current net
asset value on the basis of which their shares may be redeemed by
shareholders or purchased by investors. Net asset values of most mutual
funds are published daily by leading financial publications.
(d) Expenses; Potential Net Redemptions. The Fund's expenses are
expected to increase upon open-ending as a result of the cost of additional
services available to shareholders of a mutual fund. Open-ending could also
result in substantial and immediate redemptions of Fund shares which would
mean a reduction in the size of the Fund, which could be offset by new sales
of the Fund's shares and reinvestment of dividends and capital gains
distributions in shares of the Fund. An asset base of decreased size could
result in a substantial increase in the Fund's ratio of operating costs to
average net assets. For the fiscal year ended December 31, 1994, the Fund's
expenses aggregated 1.11% of average net assets. In addition, the Fund might
be required to sell portfolio securities in order to meet redemptions,
thereby resulting in realization of gains (or losses). As of December 31,
1994 the Fund had $5,736,141 of net unrealized depreciation for federal
income tax purposes. For federal income tax purposes, the Fund had a capital
loss carryforward of $19,895,830 as of December 31, 1994.
As a closed-end fund listed on the New York and Pacific Stock Exchanges,
the Fund does not currently bear the expense of registering its shares with
state securities commissions nor is it currently subject to state securities
law expense limitations. However, as a result of open-ending and making a
continuous offering of its shares, the Fund will be required to register its
shares with state securities commissions, will incur the costs related to
such registration and will become subject to certain limitations on expenses
imposed by state securities laws. Currently, the Fund believes that the most
restrictive state expense limitation is 2-1/2% of the Fund's average daily
net assets up to $30 million, 2% of the next $70 million of such assets and
1-1/2% of such assets in excess of $100 million. If the Fund's expenses
(excluding interest, brokerage commissions, distribution expenses,
litigation expenses and certain other items) were to exceed such limit in
any fiscal year, the compensation due to the Manager would be reduced by the
amount of such excess.
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The Manager is currently not required to reimburse the Fund for any part of
its management fees.
Significant net redemptions could also render the Fund an uneconomical
venture by virtue of diminished size. In the event the Fund were to become
too small to be considered economically viable, the Board of Directors might
consider alternatives to continuing the Fund's operations, ranging from
merger of the Fund with another investment company to liquidation of the
Fund.
(e) Elimination of Discount. The fact that shareholders who wish to
realize the value of their shares will be able to do so only by redemption
will eliminate any market discount from net asset value (less the temporary
redemption fee). It will also eliminate any possibility that the Fund's
shares will trade at a premium over net asset value. If this Proposal is
approved by the shareholders the discount may be reduced prior to the date
of any conversion to open-end status to the extent investors are induced to
purchase shares in the open market in anticipation of a prospective
open-ending.
(f) Dividend Reinvestment Plan. The Fund intends to continue to provide
the opportunity for shareholders to elect to receive dividends and capital
gains distributions in cash or, at no charge to shareholders, in shares of
the Fund. Effective upon conversion to an open-end investment company, such
reinvestments in shares would be made at net asset value, rather than at the
greater of net asset value or 95% of market value as presently provided by
the Fund's current dividend reinvestment plan.
(g) Portfolio Management. Unlike mutual funds, closed-end investment
companies are not subject to pressures to sell portfolio securities at
disadvantageous times in order to meet net redemptions. Most open-end funds
maintain adequate reserves of cash or cash equivalents in order to meet net
redemptions as they arise. Because closed-end investment companies do not
have to meet redemptions, their cash reserves can be substantial or minimal,
depending primarily on management's perception of market conditions and on
decisions to use fund assets to repurchase shares. The larger reserves of
cash or cash equivalents required to operate prudently as an open-end fund
when net redemptions are anticipated could reduce the Fund's investment
flexibility and the scope of its investment opportunities. The Fund's
portfolio will be restructured by selling portfolio securities in order to
accommodate the need for larger reserves of cash or cash equivalents. In
connection with this restructuring, there may be an increase in transaction
costs and portfolio turnover and an adverse effect on investment return.
However, the Manager does not expect the Fund's investment return to be
materially affected on the long term nor does it expect any significant
changes in the Fund's investment policies or procedures as a result of
open-ending.
(h) Illiquid Securities. An open-end investment company is subject to
federal and state regulatory requirements that no more than 15% of its net
assets may be invested in securities that are not readily marketable. The
Fund is currently subject to an investment restriction that it may not
invest in securities the disposition of which is restricted by applicable
securities laws. If the Fund is converted to a mutual fund, that investment
restriction will be eliminated and it will be restricted from investing
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more than 15% of its net assets in illiquid securities, including
repurchase agreements which have a maturity of longer than seven days,
securities with legal and contractual restrictions on resale (restricted
securities) and securities that are not readily marketable in securities
markets either within or outside of the United States. Restricted securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933,
as amended, and privately placed commercial paper that have a readily
available market will not be considered illiquid for purposes of this
limitation. The Fund intends to comply with any applicable state Blue Sky
laws restricting the Fund's investments in illiquid securities. The
investment adviser will monitor the liquidity of such restricted securities
under the supervision of the Board of Directors.
(i) Blue Sky Restrictions. In order to register shares of its common
stock and continuously offer such shares to the public under state
securities (Blue Sky) laws as an open-end investment company, the Fund would
have to agree to conform to certain restrictions imposed by laws and
regulations of various states covering mutual fund investments. While the
Fund is not currently subject to these restrictions, the Board of Directors
does not believe that the adoption of the restrictions would require any
amendment of the fundamental investment policies of the Fund, would
materially change the current investment practices of the Fund or would
hamper the Fund's ability to react to changing market conditions.
(j) Senior Securities and Borrowings. The 1940 Act prohibits mutual
funds from issuing "senior securities" representing indebtedness (i.e.,
bonds, debentures. notes and other similar securities), other than
indebtedness to banks where there is an asset coverage of at least 300% for
all borrowings. Closed-end investment companies, on the other hand, are
permitted to issue "senior securities" representing indebtedness to any
lender if the 300% asset coverage is met. In addition, closed-end investment
companies may issue preferred stock (subject to various limitations),
whereas open-end investment companies generally may not issue preferred
stock. This ability to issue senior securities may give closed-end
investment companies more flexibility than mutual funds in "leveraging" of
their shareholders' investments. To date, although it has the authority to
do so, the Fund has neither engaged in borrowing nor issued any senior
securities nor currently intends to do so. The investment adviser does not
believe that the greater limitations on mutual funds in this respect will
have a significant affect upon the Fund's operations.
The Board of Directors has approved an amendment to the Fund's
investment restrictions which would increase the Fund's borrowing
capabilities for temporary or emergency purposes from up to 10% to up to 20%
of the value of its total assets and to permit the Fund to borrow to take
advantage of investment opportunities. See Proposal No. 2a below.
(k) Shareholder Services. If Proposal No. 1 is approved and the Fund
becomes a mutual fund, the Board of Directors intends to consider the
provision of various services that are often available to shareholders in an
open-end investment company. These could include participation in an
Exchange Privilege which allows shareholders of the Fund to exchange their
shares for shares of certain other Prudential Mutual Funds, the use of the
Fund for retirement plans, and permitting shareholders
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to effect various transactions by telephone. The Board of Directors has
not yet determined which, if any, of such services will be available to
shareholders of the Fund. The cost of such services would normally be borne
by the Fund rather than by individual shareholders.
(l) Distribution Plans. An open-end investment company, unlike a
closed-end investment company, is permitted to finance the distribution of
its shares by adopting plans of distribution pursuant to Rule 12b-1 under
the 1940 Act. If the Fund is converted to a mutual fund and if Proposal No.
5 is approved by shareholders, the Fund will adopt a Plan of Distribution
under Rule 12b-1 in order to compensate the Fund's Distributor for services
provided and activities undertaken to distribute the shares of the Fund. See
Proposal No. 5 below. If shareholders also approve Proposal No. 6, the
Fund's currently outstanding shares will be reclassified as Class A shares
and the plan of distribution which is the subject of Proposal No. 5 will
apply to that class. In addition, if shareholders approve Proposal No. 6,
the Fund will adopt plans of distribution for the Fund's proposed Class B
and Class C shares which will be approved by the initial sole shareholders
of those classes. See Proposal No. 6 below.
(m) Minimum Investment and Involuntary Redemptions. If the Fund is
converted to an open-end fund, it will adopt requirements that an initial
investment in Fund shares and any subsequent investment must be in a
specified minimum amount, in order to reduce the administrative burdens
incurred in monitoring numerous small accounts. The Fund expects that the
minimum initial investment requirement will be $1,000 for Class A and B
shares and $5,000 for Class C shares. The Fund reserves the right to redeem
all of the shares of any shareholder, other than a shareholder which is an
IRA or other tax-deferred retirement plan, whose account has a net asset
value of less than $500 due to a redemption. The Fund will give such
shareholders 60 days' prior written notice in which to purchase sufficient
additional shares to avoid such redemption. The Fund may reserve the right
to waive the minimum for, among others, certain retirement and employee
savings plans or custodial accounts for the benefit of minors. Any such
minimum investment requirement will not apply to existing shareholders at
the time of conversion, except with respect to minimums for subsequent
investments. See Proposal No. 6 below.
(n) Qualification as a Regulated Investment Company. The Fund intends to
continue to qualify for treatment as a regulated investment company under
the Internal Revenue Code of 1986, as amended (the Internal Revenue Code),
after conversion to open-end status, so that it will continue to be relieved
of federal income tax on that part of its investment company taxable income
and net capital gain that is distributed to its shareholders. To qualify for
this treatment the Fund must currently meet several requirements, one of
which is that less than 30% of the Fund's gross income each taxable year may
be derived from the sale or other disposition of securities, options or
futures contracts held for less than three months. The Manager anticipates
that the Fund will continue to be able to meet this requirement after the
conversion. No assurance exists, however, that this requirement will be met
under all possible circumstances, particularly if the Fund is required to
sell recently acquired
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<PAGE>
portfolio securities because of unexpectedly large net redemptions or
large influxes of cash followed within a short time by significant
redemptions of Fund shares.
(o) Comparative Expense Information. Set forth below is a comparison of
the Fund's shareholder transaction expenses and annual operating expenses as
of December 31, 1994 as a closed-end fund and those expenses that would
apply to current shareholders on a pro forma (estimated) basis as an
open-end fund.
Shareholder Transaction Expenses Closed-End Open-End
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price).................. * **
Maximum Sales Load or Deferred Sales Load Imposed
on Reinvested Dividends ........................ * None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, whichever
is lower) ....................................... None None
Redemption Fees ...................................... * 2% (during
first six
months)
Exchange Fee ......................................... N/A None
Open-End
Annual Fund Operating Expenses Closed-End Fund***
(as a percentage of average net assets)
Management Fees ...................................... .75% .75%
12b-1 Fees (After Reduction) ......................... None .15****
Other Expenses ....................................... .36 .52
Total Fund Operating Expenses ........................ 1.11 1.42
_________
*Maximum sales load imposed on purchases made during the initial offering
period was approximately 7%. Purchases and sales made thereafter on the New
York or Pacific Stock Exchanges are subject to customary brokerage
commissions which may range from 1% to 5%, but may be less than 1% or more
than 5% depending on the size of the transaction. With respect to shares
issued in connection with the Fund's dividend reinvestment plan, to the
extent the plan agent is required to purchase shares on the New York or
Pacific Stock Exchanges, shareholders may also incur brokerage commissions.
**No sales load will be imposed in connection with the conversion of the Fund
from a closed-end to an open-end investment company. However, to the extent
current shareholders make additional purchases after the conversion, it is
currently expected that such purchases will be subject to a front-end sales
charge of approximately 4%.
***Estimated based on expenses expected to have been incurred if the Fund
operated as an open-end fund during the entire fiscal year ended December
31, 1994.
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<PAGE>
****This assumes shareholder approval of Proposal No. 5. Although the Plan of
Distribution described in Proposal No. 5 provides that the Fund may pay up
to an annual rate of .30 of 1% of the average daily net assets of the Fund's
shares, the Distributor has agreed to limit its distribution fee to no more
than .15 of 1% for the fiscal year ending December 31, 1996.
Set forth below are examples which show the expenses that an investor in the
Fund would pay on a $1,000 investment if the Fund remained closed-end compared
to those expenses which an investor would incur on a similar investment if
Proposal No. 1 is approved based upon the expense ratios set forth above but
without regard to any applicable sales charges or redemption fees.
Examples 1 year 3 years 5 years 10 years
You would pay the following expenses
on a $1,000 investment, assuming
5% annual return:
Closed-End............................ $11 $35 $61 $135
Open-End.............................. $14 $45 $78 $170
The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
Conversion to an Open-End Company
If the proposed conversion to open-end status is approved, the Board will
take such other actions as are necessary to effect the conversion. The
conversion of the Fund to an open-end investment company will be accomplished
by: (i) the filing of Amended and Restated Articles of Incorporation of the Fund
with the Maryland State Department of Assessments and Taxation and (ii) changing
the Fund's subclassification under the 1940 Act from a closed-end investment
company to an open-end investment company. In addition, since shares of an
open-end investment company are offered to the public on a continuous basis, on
September 13, 1995, the Board approved a contract with Prudential Securities for
the distribution of the Fund's shares to become effective upon the Fund's
conversion to an open-end investment company. The Amended and Restated Articles
of Incorporation will not be filed until shortly before a registration statement
under the Securities Act of 1933, as amended, covering the offering of the
shares of the Fund and appropriate state securities law qualifications and
registrations are anticipated to become effective, which is expected to occur
within two to four months after filing of the registration statement.
Although management will use all practicable measures to keep costs at a
minimum, certain costs will be incurred, many of which will be nonrecurring, in
connection with the change from a closed-end to an open-end investment company,
including costs associated with the seeking of necessary government clearances,
the preparation of a registration statement and prospectuses as required by
federal securities laws (including printing and mailing costs) and the payment
of necessary filing fees under the securities laws of various states. The Fund
estimates that these additional costs, which will be paid by the Fund, will
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<PAGE>
range from approximately $250,000 to $300,000, or between $.0055 and $.0066 per
share based on the current number of shares outstanding. The Board anticipates
that substantially all of these costs will be incurred by the Fund prior to the
effective date of the conversion.
Neither the Fund nor its shareholders will realize any gain or loss for tax
purposes as a result of the Fund's conversion. However, the shareholders will
recognize a gain or loss if they later redeem their shares to the extent that
the redemption proceeds are greater or less than the respective adjusted tax
bases of their shares. Payment for any such redemption will be made within seven
days after receipt of a proper request for redemption (in accordance with
redemption procedures specified in the prospectus). Such payment may be
postponed or the right of redemption suspended at times (a) when the New York
Stock Exchange is closed for other than customary weekends and holidays, (b)
when trading on such Exchange is restricted, (c) when an emergency exists as a
result of which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (d) during any other period when the SEC, by
order, so permits; provided that applicable rules and regulations of the SEC
shall govern as to whether the conditions prescribed in (b), (c) or (d) exist.
The Board of Directors also reserves the right to redeem Fund shares in kind if,
in the opinion of the Manager, such a redemption would be advisable. If
redemptions are made in kind, a shareholder would incur transaction costs in
disposing of any securities received. In anticipation that the Board of
Directors may deem it appropriate to make redemptions in kind, the Fund will
elect to be governed by Rule 18f-1 under the 1940 Act, under which it will be
obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of
the net asset value of the Fund during any 90 day period for any one
shareholder. The Board has no current intent to redeem Fund shares in kind.
Amendment of the Fund's Articles of Incorporation
If the proposed conversion is approved, the conversion of the Fund to an
open-end investment company will be accomplished by amending and restating the
Fund's Articles of Incorporation to, among other matters, authorize the issuance
of redeemable securities, provide that the Fund's outstanding common stock will
be redeemable at the option of the shareholders, change the Fund's
subclassification under the 1940 Act from a closed-end investment company to an
open-end investment company and, as described in connection with Proposal No. 6
below, pemmit the Fund to issue multiple classes of shares in connection with
the Altemative Purchase Plan. In connection with the amendment and restatement
of the Articles of Incorporation, the Board of Directors will also make
necessary conforming changes to the By-Laws of the Fund. If this Proposal No. 1
is approved but Proposal No. 6 is not, the Amended and Restated Articles set
forth at Exhibit A would be revised to eliminate the provisions required to
implement the Altemative Purchase Plan.
The proposed Amended and Restated Articles of Incorporation reflect both the
changes necessary for the Fund to operate as an open-end investment company as
noted above and modifications that will conform the structure of the Fund's
Articles to the articles of incorporation of the Prudential Mutual Funds
incorporated in the State of
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<PAGE>
Maryland that have adopted the so-called Alternative Purchase Plan. In addition
to the substantive changes enumerated in the preceding paragraph, the proposed
Amended and Restated Articles of Incorporation no longer contain provisions
requiring supermajority shareholder approvval of certain fundamental actions and
providing that Fund directors may only be removed by shareholders for cause and
with the affirmative vote of 80% of the Fund's shares. While these provisions,
which generally serve to discourage a change in the control or structure of a
company that is not supported by its board of directors, are often part of the
governing documents of closed-end investment companies whose shares are traded
on the open market, these provisions are less necessary for an open-end
investment company. Accordingly, the Amended and Restated Articles of
Incorporation propose to delete those provisions previously requiring
shareholder approval of certain fundamental actions by the affirmative vote of
at least two-thirds of the Fund's outanding shares, unless a majority of the
Board of Directors approved the action, and provide, instead, that the vote of a
majority of the outstanding shares shall be sufficient to approve any matter. In
addition, the Amended and Restated Articles of Incorporation propose to delete
the provision specifying that a director can only be removed for cause and by a
80% vote of approval by the shareholders. In the absence of such a provision,
the removal of directors by shareholders is governed by the provisions of the
Maryland Code, which provide that a director may be removed for any reason with
the affirmative vote of the majority of the outstanding shares.
The Fund's By-laws currently provide for indemnification of the Fund's
officers and Directors. Pursuant to this provision, the Fund may indemnify its
Directors or officers for expenses incurred in defending certain actions, suits
or proceedings , except that the Fund shall not indemnify any such person for
any liability arising by reason of such person's willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office or under any contract or agreement with the Fund. The Fund's
indemnification provisions are subject, however, to the limitations imposed by
the 1940 Act. Although the Fund's Articles of Incorporation currently limits the
liability of officers and Directors to the fullest extent permitted by law, if
Proposal No.1 is approved by shareholders, the Fund's Articles of Incorporation
and By-laws will be amended to conform the indemnification provisions to the
provisions in the Articles of Incorporation and By-laws of the Prudential Mutual
Funds incorporated in the State of Maryland.
If Proposal No 1 is approved by shareholders, the proposed Amended and
Restated Articles of Incorporation, a copy of which is attached to this Proxy
Statement as Exhibit A, are expected to be filed with the State of Maryland to
become effective simultaneously with the conversion. Such filing will not be
made, however, until shortly before a registration statement under the
Securities Act of 1933 covering the offering of the shares of the Fund and the
Fund's state securities registrations are anticipated to become effective.
Vote Required
Under the Fund's Articles of Incorporation, amendments to the Fund's
Articles of Incorporation must be approved by the holders of a majority of the
Fund's outstanding
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<PAGE>
shares. However, the Fund's Articles of Incorporation specifically provide that
the conversion of the Fund from a closed-end investment company to an open-end
investment company requires the approval of 66-2/3% or more of the outstanding
shares of the Fund's common stock. Accordingly, adoption of Proposal No. 1 will
require the vote of 66-2/3% or more of the outstanding shares of the Fund's
common stock. If the proposal to open-end the Fund and to amend the Articles of
Incorporation is not approved by the shareholders, or if it is approved but not
implemented by the Board, the Fund will continue to operate as a closed-end
fund, the current provisions of the Fund's Articles of Incorporation will remain
in effect, and the Board will consider what further actions, if any, are
desirable to reduce the discount at which the Fund's shares have traded.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 1.
TO APPROVE CHANGES TO INVESTMENT RESTRICTIONS OF THE FUND
(Proposal No. 2)
On September 13 and October 9, 1995, at the request of the Manager and
Subadviser, the Board of Directors, including a majority of the Independent
Directors, approved changes to the Fund's investment restrictions as set forth
below and recommends them to shareholders. The Directors believe that the
proposed changes would enhance the investment flexibility of the investment
adviser without materially affecting the Fund's current investment practices.
As proposed to be amended, the Fund's investment restrictions would provide
as follows (Material to be deleted is in brackets; material to be added is
underlined):
The Fund may not:
(1) Purchase securities on margin, except such short-term credits as may
be necessary for the clearance of transactions and except that the Fund may make
deposits on margin in connection with futures contracts and options.
(2) Make short sales of, or maintain a short position in, securities.
(3) Issue senior securities, borrow money or pledge its assets, except
that the Fund may borrow [on an unsecured basis] from banks [(a)] up to 20% of
the value of its total assets (calculated when the loan is made) for temporary,
extraordinary or emergency purposes, [or] for the clearance of transactions, or
for investment purposes. [in amounts not exceeding 10% of its total assets (not
including the amount borrowed) and, in addition, (b) as described under "Use of
Proceeds."] The Fund may pledge up to 20% of the value of its total assets to
secure such borrowings. For purposes of this restriction, the purchase or sale
of securities on a when-issued or delayed delivery basis, forward foreign
currency exchange contracts and collateral arrangements relating thereto, and
collateral arrangements with respect to interest rate swap transactions, reverse
repurchase agreements, dollar roll transactions, options, futures contracts and
options [on futures contracts] thereon and obligations of the Fund to Directors
pursuant to deferred compensation arrangements [collateral
16
<PAGE>
arrangements with respect to initial and variation margin] are not [considered
by the Fund] deemed to be a pledge of assets or the issuance of a senior
security.
(4) Buy or sell commodities, commodity contracts, real estate or
interests in real estate, except that the Fund may purchase and sell futures,
options on futures contracts and securities secured by real estate or interests
therein. Transactions in foreign currencies and forward contracts and options on
foreign currencies are not considered by the Fund to be transactions in
commodities or commodity contracts.
(5) Make loans [(except for purchases of publicly traded debt securities
consistent with the Fund's investment policies and repurchase agreements with a
maturity not exceeding seven days)] except through (i) repurchase agreements,
and (ii), the purchase of debt obligations and bank deposits.
(6) Make investments for the purpose of exercising control or management
over the issuers of any investments.
(7) Act as an underwriter (except to the extent the Fund may be deemed
to be an underwriter in connection with the sale of securities in the Fund's
investment portfolio) [or invest in securities the disposition of which is
restricted by applicable securities laws].
(8) Invest 25% or more of its assets in any one industry. For this
purpose "industry" does not include the U.S. Government, but does include
foreign government issuers.
The foregoing restrictions are fundamental policies that may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
Fund policies which are not fundamental may be modified by the Board of
Directors if, in the reasonable exercise of its business judgment, modification
is determined to be necessary or appropriate to carry out the Fund's objectives.
a. Increase in Borrowing Capabilities
The purpose of the change to Investment Restriction No. 3 is to increase the
Fund's borrowing capability from 10% to 20% of the value of its total assets to
permit the Fund to borrow to take advantage of investment opportunities and to
clarify that the specified transactions are not deemed to be the pledge of
assets or the issuance of senior securities. If Proposal No. 1 is approved by
shareholders, the Fund would also be permitted to borrow money to meet
redemptions.
Borrowing to invest in securities, as proposed, would involve additional
risk to the Fund, since interest expenses may be greater than the income from or
appreciation of the securities financed and the value of securities financed may
decline below the amount borrowed. If the Fund were to borrow to invest in
securities, even for only temporary purposes, any investment gains made on the
securities in excess of interest paid on the borrowing would cause the net asset
value of the Fund to rise faster than would otherwise be the case. On the other
hand, if the investment performance of the additional securities purchased
failed to cover their cost (including any interest accrued on the money
17
<PAGE>
borrowed) to the Fund, the net asset value would decrease faster than would
otherwise be the case. This is the speculative factor known as "leverage." The
Fund has no present intention to borrow to take advantage of investment
opportunities.
b. Restricted Securities
The purpose of the change to Investment Restriction No. 7 is to eliminate
the portion of the Fund's fundamental investment restriction regarding the
purchase of restricted securities (a portion of Investment Restriction (7)
above). The Board of Directors is proposing that this fundamental investment
restriction be replaced with a non-fundamental investment policy that could be
changed by the vote of the Board of Directors in response to regulatory or
market developments without further approval by shareholders. This would expand
the Fund's ability to invest in securities which have legal or contractual
restrictions on resale but have a readily available institutional market, such
as commercial paper, foreign securities and certain corporate bonds and notes.
This nonfundamental policy would provide as follows:
The Fund may invest up to 15% of its net assets in illiquid securities,
including repurchase agreements which have a maturity of longer than seven
days, securities with legal or contractual restrictions on resale
(restricted securities) and securities that are not readily marketable in
securities markets either within or outside of the United States. Restricted
securities eligible for resale pursuant to Rule 144A under the Securities
Act of 1933, as amended (the Securities Act), and privately placed
commercial paper that have a readily available market are not considered
illiquid for purposes of this limitation. The Fund intends to comply with
any applicable state blue sky laws restricting the Fund's investments in
illiquid securities. See "Investment Restrictions" in the Statement of
Additional Information. The investment adviser will monitor the liquidity of
such restricted securities under the supervision of the Board of Directors.
Repurchase agreements subject to demand are deemed to have a maturity equal
to the applicable notice period.
An open-end investment company may not hold a significant amount of
restricted securities or illiquid securities because such securities may present
problems of accurate valuation and because it is possible that the investment
company would have difficulty satisfying redemptions within seven days. The
proposed investment policy is not expected by the Manager or the Board of
Directors to affect the Fund's liquidity, for it only excludes from "illiquid
securities" those securities for which there is a readily available market. The
change is not expected to appreciably affect the Fund's ability to accurately
value its assets.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act, securities which are otherwise not readily
marketable and repurchase agreements having a maturity of longer than seven
days.
Securities which have not been registered under the Securities Act are
referred to as private placements or restricted securities and are purchased
directly from the issuer or in
18
<PAGE>
the secondary market. Mutual funds do not typically hold a significant amount of
these restricted or other illiquid securities because of the potential for
delays on resale and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register such
restricted securities in order to dispose of them, resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities. In recent years, however, a large institutional market has
developed for certain securities that are not registered under the Securities
Act, including repurchase agreements, commercial paper, foreign securities,
municipal securities and corporate bonds and notes. Institutional investors
depend on an efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand for repayment.
In the opinion of the Manager, the fact that there are contractual or legal
restrictions on resale to the general public or to certain institutions is
therefore not necessarily indicative of the liquidity of such investments.
In addition, the SEC adopted Rule 144A which allows for a broader
institutional trading market for securities otherwise subject to restriction on
resale to the general public. The market for certain restricted securities has
expanded further as a result of this regulation and the development of automated
systems for the trading, clearance and settlement of unregistered securities of
domestic and foreign issuers, such as the PORTAL System sponsored by the
National Association of Securities Dealers, Inc.(NASD). In order to take
advantage of these regulatory initiatives and the increasingly liquid
institutional trading markets, the Manager recommends that the Fund eliminate
its fundamental policy so that restricted securities that are nonetheless liquid
may be purchased without regard to the limitation. The Fund would modify its
non-fundamental policies to comply with future regulatory and market
developments without the need for calling a special meeting of shareholders.
If this proposal is approved by shareholders, the Manager will monitor the
liquidity of restricted securities in the Fund's portfolio under the supervision
of the Board of Directors. By making the Fund's policy on illiquid securities
nonfundamental, the Fund will be able to respond more quickly to such future
regulatory and market developments because a shareholder vote will not be
required to define what types of securities should be deemed illiquid.
c. Loans
The purpose of the change to Investment Restriction No. 5 is to clarify that
the Fund is authorized to make loans (i) through repurchase agreements with
maturities greater than seven days and (ii) through the purchase of debt
obligations (including private placements of debt securities) and bank deposits.
Bank deposits, which the Fund is currently permitted to purchase, are not loans
and therefore are not intended to be prohibited by the Fund's current
restriction against the making of loans. In addition, because the Fund's current
restriction against the making of loans excepts only publicly traded debt
obligations and repurchase agreements not exceeding seven days, the Subadviser
19
<PAGE>
recommends that Investment Restriction No. 5 be modified to except all debt
obligations consistent with the Fund's investment policies and all repurchase
agreements regardless of maturity. The Subadviser is recommending these changes
in light of the existence of the broader institutional trading market for
privately placed securities, such as 144A securities and commercial paper issued
in reliance on Section 4(2) of the 1933 Act, and the widely accepted use by
mutual funds of repurchase agreements exceeding seven days. As a matter of
nonfundamental policy which may be changed by the Board at a later date, the
term of any repurchase agreement will not exceed one year. In any event, in
accordance with the Fund's liquidity standards, repurchase agreements with
maturities exceeding seven days and 144A securities and Section 4(2) commercial
paper which do not meet the standards set forth in the Fund's liquidity
procedures, will be considered illiquid and subject to the Fund's 15% limit on
illiquid securities. The Fund expects to invest in both publicly traded and
privately placed debt securities (including Rule 144A securities and Section
4(2) commercial paper) consistent with its investment objective and policies.
Vote Required
Each of the proposed changes described above will require the approval of a
majority of the outstanding voting securities of the Fund, as defined in the
1940 Act. Under the 1940 Act, a majority of the outstanding voting securities of
the Fund is defined as the lesser of (i) 67% of the Fund's outstanding shares
represented at a meeting at which more than 50% of the outstanding shares are
present in person or represented by proxy, or (ii) more than 50% of the Fund's
outstanding shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2.
IF PROPOSAL NUMBER 1 IS APPROVED, TO APPROVE A NEW MANAGEMENT AGREEMENT AND
A NEW SUBADVISORY AGREEMENT
(Proposal No. 3)
On September 13, 1995, a majority of the Board of Directors, including a
majority of the Independent Directors, approved a new management agreement
between the Fund and PMF (the New Management Agreement). The terms of the New
Management Agreement are similar to the terms of the management agreement
currently in effect between the Fund and PMF dated April 28, 1988 (the Current
Management Agreement), except as discussed below. If Proposal No. 1 is approved
by shareholders of the Fund, the Current Management Agreement will be terminated
and the New Management Agreement will become effective upon effectiveness of the
conversion. The form of New Management Agreement (with deletions from the
Current Management Agreement shown in brackets and additions to that contract
shown by underscoring) appears as Exhibit C to this Proxy Statement.
The Manager
PMF, One Seaport Plaza, New York, New York 10292, serves as the Fund's
Manager under the Current Management Agreement. The Current Management Agreement
was
20
<PAGE>
last approved by the Directors of the Fund, including a majority of the
Independent Directors, on May 3, 1995 and was approved by shareholders on April
28, 1988. For the fiscal year ended December 31, 1994, PMF received a management
fee of $2,490,259.
Terms of the Current Management Agreement
Pursuant to the Current Management Agreement, PMF, subject to the
supervision of the Fund's Board of Directors and in conformity with the stated
policies of the Fund, is responsible for managing the investment operations of
the Fund and the composition of the Fund's portfolio, including the purchase,
retention and disposition thereof. In this regard, PMF provides supervision of
the Fund's investments, furnishes a continuous investment program for the Fund's
portfolio and places purchase and sale orders for portfolio securities of the
Fund and other investments. The Prudential Investment Corporation (PIC or the
Subadviser), a wholly-owned subsidiary of Prudential, provides such services
pursuant to a subadvisory agreement dated April 28, 1988 with PMF (the Current
Subadvisory Agreement). PMF also administers the Fund's corporate affairs,
subject to the supervision of the Fund's Board of Directors and, in connection
therewith, furnishes the Fund with office facilities, together with those
ordinary clerical and bookkeeping services which are not being furnished by the
Fund's Transfer and Dividend Disbursing Agent and Custodian.
PMF has authorized any of its Directors, officers and employees who have
been elected as Directors or officers of the Fund to serve in the capacities in
which they have been elected. All services furnished by PMF under the Current
Management Agreement may be furnished by any such Directors, officers or
employees of PMF. In connection with the administration of the corporate affairs
of the Fund, PMF bears the following expenses:
(a) the salaries and expenses of all PMF's personnel;
(b) all expenses incurred by PMF in connection with managing the
ordinary course of the Fund's business, other than those assumed by the
Fund, as described below; and
(c) the costs and expenses payable to the Subadvisor pursuant to the
Subadvisory Agreement.
Under the Current Management Agreement, the Fund pays PMF for the services
performed and the facilities furnished by it a fee at an annual rate of 0.75 of
1% of the Fund's average weekly net assets up to US $1 billion and 0.70% of
average weekly net assets in excess of US $1 billion. This fee is computed
weekly and paid monthly.
The Current Management Agreement provides that PMF will not be liable to the
Fund for any error of judgment by PMF or for any loss suffered by the Fund in
connection with the matters to which the Current Management Agreement relates
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties under the Agreement. Except as
indicated above, the Fund is responsible under the Current Management Agreement
for the payment of its expenses, including (a) the fees and expenses incurred by
the Fund in connection with the management of the investment
21
<PAGE>
and reinvestment of the Fund's assets, (b) the fees and expenses incurred by the
Fund in connection with the administration of its corporate affairs, (c) the
fees and expenses incurred in connection with the organization of the Fund, (d)
the fees and expenses of Directors who are not affiliated with PMF or the
Manager, (e) the fees and certain expenses of the Fund's Custodian, (f) the fees
and expenses of the Fund's Transfer and Dividend Disbursing Agent that relate to
the maintenance of each shareholder account, (g) the charges and expenses of the
Fund's legal counsel and independent accountants, (h) brokerage commissions and
any issue or transfer taxes chargeable to the Fund in connection with its
securities transactions, (i) all taxes and corporate fees payable by the Fund to
governmental agencies, (j) the fees of any trade association of which the Fund
may be a member, (k) the cost of stock certificates representing, and/or
non-negotiable share deposit receipts evidencing, shares of the Fund, (l) the
cost of fidelity and liability insurance, (m) the fees and expenses involved in
registering and maintaining registration of the Fund and of its shares with the
SEC and qualifying its shares under state securities laws, including the
preparation and printing of the Fund registration statement and prospectus for
such purposes, (n) allocable communications expenses with respect to investor
services and all expenses of stockholders' and Board of Directors' meetings and
of preparing, printing and mailing prospectuses and reports to stockholders, and
(o) litigation and indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of the Fund's business.
The Current Management Agreement also provides that it will terminate
automatically if assigned and that it may be terminated by the Fund at any time,
without the payment of any penalties, by the Board of Directors, by vote of a
majority of the Fund's outstanding voting securities (as defined in the 1940
Act) or by the Manager at any time, without the payment of any penalty, upon not
more than sixty days' nor less than thirty days' written notice to the other
party. Under the 1940 Act, a majority of the outstanding voting securities of
the Fund is defined as the lesser of (i) 67% of the Fund's outstanding shares
represented at a meeting at which more than 50% of the outstanding shares are
present in person or represented by proxy, or (ii) more than 50% of the Fund's
outstanding shares.
The New Management Agreement and the Recommendation of the Board of Directors
The New Management Agreement will modify the terms of the Current Management
Agreement in minor respects to reflect the Fund's operation as an open-end
investment company, including adding a provision relating to state blue sky
limitations described under Proposal No. 1. In addition, since the Fund will
calculate its net asset value daily rather than weekly, the fee payable under
the New Management Agreement will be based on a percentage of the Fund's average
daily net assets. The management fee is currently based on a percentage of the
Fund's average weekly net assets.
Specifically, under the New Management Agreement, the advisory fee payable
to PMF by the Fund will be at an annual rate of 0.75 of 1% of the Fund's average
daily net assets up to US$1 billion and 0.70% of average daily net assets in
excess of US$1 billion. The advisory fee rate under the New Management Agreement
is the same as the fee rate under the Current Management Agreement.
22
<PAGE>
If Proposal No. 1 is not approved, the Current Management Agreement will
remain in effect in accordance with its terms.
Information about PMF
PMF, a wholly-owned subsidiary of Prudential, was organized in May 1987
under the laws of the State of Delaware. Set forth below is information about
the other global and domestic bond funds for which PMF is the manager and which
seek total return and/or current income.
<TABLE>
<CAPTION>
Approximate Net
Assets as of
September 30, 1995
Open-End Management Investment Companies (000) Management Fee (annual rate)
- ---------------------------------------- ------------------ ----------------------------
<S> <C> <C>
The BlackRock Government Income Trust $ 46,768 0.50 of 1%
Prudential Adjustable Rate Securities Fund, Inc. 29,775 0.50 of 1%
Prudential Diversified Bond Fund, Inc. 73,243 0.50 of 1%
Prudential Government Income
Fund, Inc. 1,528,904 0.50 of 1% up to $3 billion
0.35 of 1% in excess of $3 billion
Prudential Government Securities Trust
Short-Intermediate Term Series 197,134 0.40 of 1%
Prudential High Yield Fund, Inc. 3,882,997 0.50 of 1% up to $250 million
0.475 of 1% of the next $500 million
0.45 of 1% of the next $750 million
0.425 of 1% of the next $500 million
0.40 of 1% of the next $500 million
0.375 of 1% of the next $500 million
0.35 of 1% in excess of $3 billion
Prudential Intermediate Global Income
Fund, Inc. $ 210,332 0.75 of 1%
Prudential Mortgage Income Fund, Inc. 230,070 0.50 of 1%
Prudential Short-Term Global
Income Fund, Inc. (two series) 157,190 0.55 of 1%
Prudential Structured Maturity Fund, Inc.
(Income Portfolio) 210,682 0.40 of 1%
The Target Portfolio Trust:
International Bond Portfolio 33,113 0.50 of 1%
Prudential U.S. Government Fund 126,684 0.50 of 1%
</TABLE>
<TABLE>
<CAPTION>
Approximate Net
Assets as of
September 30, 1995
Closed-End Management Investment Companies (000) Management Fee (annual rate)
- ------------------------------------------ ------------------ ----------------------------
<S> <C> <C>
The Global Total Return Fund, Inc. $ 561,816 0.75 of 1% up to $500 million
0.70 of 1% of the next $500 million
0.65 of 1% in excess of $1 billion
The High Yield Income Fund, Inc. 78,115 0.70 of 1%
</TABLE>
23
<PAGE>
Certain information regarding the Directors and principal executive officers
of PMF is set forth below. The address of each person is One Seaport Plaza, New
York, NY, 10292.
Name and Address Position with PMF Principal Occupation
- ---------------- ----------------- --------------------
Brendan D. Boyle Executive Vice President, Executive Vice President, Director
Director of Marketing of Marketing and Director, PMF;
and Director Senior Vice President,
Prudential Securities
Incorporated (Prudential
Securities); Chairman and
Director, Prudential Mutual Fund
Distributors, Inc. (PMFD)
Frank W. Giordano Executive Vice Executive Vice President, General
President,General Counsel, Secretary and Director,
Counsel, Secretary, PMF and PMFD; Senior Vice
and Director President, Prudential
Securities; Director, Prudential
Mutual Fund Services, Inc.
(PMFS)
Robert F. Gunia Executive Vice Executive Vice President, Chief
President, Chief Financial and Administrative
Financial and Officer, Treasurer and Director,
Administrative Officer, PMF; Senior Vice President,
Treasurer and Director Prudential Securities; Executive
Vice President, Chief Financial
Officer, Treasurer and Director,
PMFD; Director, PMFS
Theresa A. Hamacher Director Director, PMF; Vice President,
Prudential; Vice President, PIC
Timothy J. O'Brien Director President, Chief Executive
Officer, Chief Operating Officer
and Director, PMFD; Chief
Executive Officer and Director,
PMFS; Director, PMF
Richard A. Redeker President, Chief President, Chief Executive Officer
Executive Officer and Director, PMF; Executive
and Director Vice President, Director and
Member of the Operating
Committee, Prudential
Securities; Director, Prudential
Securities Group, Inc. (PSG);
Executive Vice President, PIC;
Director, PMFD; Director, PMFS
The Subadviser
Investment advisory services are provided to the Fund by PMF through its
affiliate, PIC, under the Current Subadvisory Agreement. The Current Subadvisory
Agreement was approved by shareholders on April 28, 1988 and was last approved
by the Directors of the Fund, including a majority of the Independent Directors,
on May 3, 1995.
On September 13, 1995 the Board of Directors, including a majority of the
Independent Directors, approved a new subadvisory agreement between the Fund and
PIC (the New Subadvisory Agreement). The terms of the New Subadvisory Agreement
are identical to the terms of the Current Subadvisory Agreement, except that any
reference to the Fund as a closed-end investment company has been changed to
refer to the Fund as an open-end investment company. If Proposal No. 1 is
approved by shareholders of the Fund, the Current Subadvisory Agreement will be
terminated and the New Subadvisory Agreement will become effective on the date
that the conversion becomes effective. The form of the New Subadvisory Agreement
appears as Exhibit C to this Proxy Statement.
24
<PAGE>
Terms of the Current Subadvisory Agreement
Pursuant to the Current Subadvisory Agreement, PIC, subject to the
supervision of PMF and the Board of Directors and in conformity with the stated
policies of the Fund, manages the investment operations of the Fund and the
composition of the Fund's portfolio, including the purchase, retention and
disposition thereof. PIC is reimbursed by PMF for reasonable costs and expenses
incurred by it in furnishing such services. The fees paid by the Fund to PMF
under the Current Management Agreement with PMF are not affected by this
arrangement. PIC is reimbursed by PMF for reasonable costs and expenses incurred
by it in furnishing such services. The fees paid by the Fund to PMF under the
Current Management Agreement with PMF are not affected by this arrangement. PIC
keeps certain books and records required to be maintained pursuant to the 1940
Act. The investment advisory services of PIC to the Fund are not exclusive under
the terms of the Current Subadvisory Agreement and PIC is free to, and does,
render investment advisory services to others.
PIC has authorized any of its directors, officers and employees who may be
elected as Directors or officers of the Fund to serve in the capacities in which
they have been elected. Services furnished by PIC under the Current Subadvisory
Agreement may be furnished by any such directors, officers or employees of PIC.
The Current Subadvisory Agreement provides that PIC shall not be liable for any
error of judgment or for any loss suffered by the Fund or PMF in connection with
the matters to which the Current Subadvisory Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on PIC's part
in the performance of its duties or from its reckless disregard of its
obligations and duties under the Current Subadvisory Agreement. The Current
Subadvisory Agreement provides that it shall terminate automatically if assigned
or upon termination of the Current Management Agreement and that it may be
terminated by the Fund at any time without the payment of any penalty by the
Board of Directors of the Fund or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act and set forth above of the Fund or
by PMF or PIC upon not more that sixty days' nor less than thirty days' written
notice.
The New Subadvisory Agreement and the Recommendation of the Board of Directors
As noted above, the terms of the New Subadvisory Agreement are identical to
the terms of the Current Subadvisory Agreement, except that any reference to the
Fund as a closed-end investment company has been changed to refer to the Fund as
an open-end investment company. If Proposal No. 1 is not approved, the Current
Subadvisory Agreement will remain in effect in accordance with its terms.
Information about PIC
PIC was organized in June 1984 under the laws of the State of New Jersey.
Certain information regarding the Directors and executive officers of PIC is set
forth below. Except as otherwise indicated the address of each person is
Prudential Plaza, Newark, NJ 07102.
25
<PAGE>
Name and Address Positon with PIC Principal Occupations
- ---------------- ---------------- ---------------------
William M. Bethke Senior Vice President Senior Vice President,
Two Gateway Center Prudential; Senior Vice
Newark, NJ 07102 President, PIC
John D. Brookmeyer, Jr. Senior Vice President Senior Vice President,
51 JFK Parkway, and Director Prudential; Senior Vice
Short Hills, NJ 07078 President and Director, PIC
Barry M. Gillman Director Director, PIC
Theresa A. Hamacher Vice President Vice President, Prudential;
Vice President, PIC;
Director, PMF
Harry E. Knapp, Jr. President, Chairman President, Chairman of the
of the Board, Director Board, Director and Chief
and Chief Executive Executive Officer, PIC; Vice
Officer President, Prudential
William P. Link Senior Vice President Executive Vice President,
Four Gateway Center Prudential; Senior Vice
Newark, NJ 07102 President, PIC
Richard A. Redeker Executive Vice President, Chief Executive
One Seaport Plaza President Officer and Director, PMF;
New York, NY 10292 Executive Vice President,
Director and Member of the
Operating Committee,
Prudential Securities;
Director, Prudential
Securities Group, Inc. (PSG);
Executive Vice President,
PIC; Director, PMFD;
Director, PMFS
Eric A. Simonson Vice President Vice President and Director,
and Director PIC; Executive Vice
President, Prudential
Claude J. Zinngrabe, Jr. Executive Vice Vice President, Prudential;
President Executive Vice President, PIC
The following are the Directors and officers of the Fund who are also
affiliated with the Manager and the Subadviser, and the nature of their
affiliations:
<TABLE>
<CAPTION>
Name Position with the Trust Position with the Manager and Subadvisor
- ---- ----------------------- ----------------------------------------
<S> <C> <C>
Richard A. Redeker President and Director President, Chief Executive Officer and Director, PMF;
Executive Vice President, PIC
Robert F. Gunia Vice President Executive Vice President, Chief Financial and Admin-
istrative Officer, Treasurer and Director, PMF
S. Jane Rose Secretary Senior Vice President, Senior Counsel and Assistant
Secretary, PMF
Susan C. Cote Treasurer Chief Operating Officer and Managing Director, Pru-
dential Investment Advisors
Stephen M. Ungerman Assistant Treasurer First Vice President, PMF
Marguerite E. H. Morrison Assistant Secretary Vice President and Associate General Counsel, PMF
</TABLE>
Brokerage Commissions
For the fiscal year ended December 31, 1994, the Fund paid no brokerage
commissions.
Vote Required
Adoption of Proposal No. 3 will require the approval of a majority of the
outstanding voting securities of the Fund, as defined in the 1940 Act as set
forth under Proposal No. 2.
26
<PAGE>
If the stockholders do not approve the provisions of the New Management
Agreement and the New Subadvisory Agreement, the provisions of the Fund's
Current Management Agreement and Current Subadvisory Agreement will remain in
effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 3.
ELECTION OF DIRECTORS
(Proposal No. 4)
As prescribed in the Fund's Articles of Incorporation and By laws, at the
Fund's 1988 Annual Meeting of Shareholders, Directors were initially divided
into three classes and their initial terms of office were staggered so that one
class would be elected each year thereafter for a three-year term. The Board of
Directors is currently comprised of 7 members with their terms of office fixed
as follows: Class I: Messrs. Beach and Redeker; Class II: Messrs. Jacobs and
Mooney; and Class III: Messers. Lennox, McCorkindale and Weil.
The classified Board was intended, in part, to make it more difficult and
time-consuming to change majority control of the Board of Directors without its
consent and thus to reduce the Fund's vulnerability to an unsolicited takeover
proposal or similar action that does not contemplate an acquisition of all
outstanding voting stock of the Fund. However, the conversion of the Fund to an
open-end investment company would reduce, if not eliminate, the need for this
precautionary measure. Therefore, the Board of Directors has considered and
approved the declassification of the Board in the event that the proposed
conversion of the Fund to open-end status is approved.
Accordingly, if Proposal No. 1 to convert the Fund to an open-end investment
company is approved, the Board of Directors will be declassified and seven
Directors will be elected to hold office for an indefinite period; namely, until
the earlier to occur of (i) the next meeting of shareholders at which Directors
are elected and their successors are elected and qualify or (ii) the expiration
of their terms in accordance with the Fund's retirement policy. The Fund's
retirement policy, which was recently adopted, calls for the retirement of
Directors on December 31 of the year in which they reach the age of 72 except
that retirement is being phased in for Directors who were age 68 or older as of
December 31, 1993. Under this phasing provision, Messrs. Beach, Jacobs and
Lennox are scheduled to retire on December 31, 1999, 1998 and 1997,
respectively. It is the intention of the persons named in the accompanying form
of Proxy to vote in favor of the election of Messrs. Beach, Jacobs, Lennox,
McCorkindale, Mooney, Redeker and Weil, 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.
Alternatively, if Proposal No. 4 is not approved, the Directors will be
elected annually as their terms expire in accordance with the Fund's current
By-laws. The ClassI Directors (Messrs. Beach and Redeker) were previously
elected by stockholders at the 1995 Annual Meeting.
All of the Directors have previously been elected by shareholders. Mr.
Jacobs has served as a Director since April 20, 1987; Messers. McCorkindale,
Mooney, Beach,
27
<PAGE>
Lennox and Weil have served as Directors since June 2, 1987; Mr. Redeker has
served as a Director since November 9, 1993.
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 Meeting, proxies will be voted for such persons as the Directors may
recommend.
If Proposal No. 1 is approved, the Fund does not intend to hold annual
meetings of shareholders in the future unless shareholder action is required.
The following table sets forth certain information concerning each of the
Directors of the Fund. Each of the nominees is currently a Director of the Fund.
INFORMATION REGARDING DIRECTORS
Shares of
Name, age, business Common Stock
experience during the past Position Owned at
five years and directorships with Fund Sept. 29, 1995
---------------------------- --------- --------------
Edward D. Beach (70), President and Director of BMC Director -0-
Fund, Inc., a closed-end investment company; prior
thereto, Vice Chairman of Broyhill Furniture
Industries, Inc.; Certified Public Accountant;
Secretary and Treasurer of Broyhill Family
Foundation, Inc.; 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
20 Prudential Mutual Funds.
*Harry A. Jacobs, Jr. (73), Senior Director (since Director -0-
January 1986) of Prudential Securities; formerly
Interim Chairman and Chief Executive Officer of
PMF (June-September 1993); Chairman of the Board
of Prudential Securiites (1982-1985) and Chairman
of the Board and Chief Executive Officer of Bache
Group Inc. (1977-1982); Director of the Center for
National Policy; Director/Trustee of 26 Prudential
Mutual Funds.
Donald D. Lennox (76), Chairman (since February Director 3,729
1990) and Director (since April 1989) of
International Imaging Materials, Inc.; Retired
Chairman, Chief Executive Officer and Director of
Schlegel Corporation (industrial manufacturing)
(March 1987-February 1989); Director of Gleason
Corporation, and Personal Sound Technologies,
Inc.; Director/Trustee of 10 Prudential Mutual
Funds.
28
<PAGE>
Shares of
Name, age, business Common Stock
experience during the past Position Owned at
five years and directorships with Fund Sept. 29, 1995
---------------------------- --------- --------------
Douglas H. McCorkindale (55), Vice Chairman, Gannett Director -0-
Co., Inc. (publishing and media) (since March
1984); Director of Gannett Co., Inc., Frontier
Corporation and Continental Airlines, Inc.;
Director/Trustee of 7 Prudential Mutual Funds.
Thomas T. Mooney (53), President of the Greater Director 2,433
Rochester Metro Chamber of Commerce; former
Rochester City Manager; Trustee of Center for
Government Research, Inc.; Director of Blue Cross
of Rochester, Monroe County Water Authority,
Rochester Jobs, Inc., Executive Service Corps of
Rochester, Monroe County Industrial Development
Corporation, Northeast Midwest Institute;
Director/Trustee of 15 Prudential Mutual Funds.
*Richard A. Redeker (52), President, Chief Executive Director -0-
Officer and Director (since October 1993), PMF;
Executive Vice 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; Director (since January
1994); Prudential Mutual Fund Distributors, Inc.;
Director (since January 1994), 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 Prudential
Mutual Funds.
Louis A. Weil, III (54), Publisher and Chief Director -0-
Executive Officer, Phoenix Newspaper, 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
Prudential Mutual Funds.
- ----------
*Indicates "interested person", as defined in the 1940 Act. Messrs. Jacobs and
Redeker are deemed to be "interested persons" by reason of their affiliations
with PMF and Prudential Securities.
29
<PAGE>
The Directors and officers as a group owned beneficially 6,162 shares of the
Fund at September 29, 1995 which represented less than 1% of the shares then
outstanding.
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 Fund pays each of its Directors who is not an affiliated person (as
defined in the Investment Company Act) of the Manager an annual fee of
US$10,000, plus US$1,250 for each Board meeting attended in person. The Fund
will reimburse all Directors for their out-of-pocket travel expenses. For the
year ended December 31, 1994, directors fees and expenses amounted to $73,000
and $1,000, respectively.
Directors may receive their Directors' fees pursuant to a deferred fee
agreement with the Fund. Under the terms of the agreement, the Fund accrues
daily the amount of Directors' fees in installments which accrue interest at a
rate equivalent to the prevailing rate applicable to 90-day U.S. Treasury Bills
at the beginning of each calendar quarter. 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 Director's fees, together with
interest thereon, is a general obligation of the Fund. For the year ended
December 31,1994, no director elected to participate in a deferred fee agreement
with the Fund.
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 that of all other investment companies
registered under the 1940 Act managed by Prudential Mutual Fund Management, Inc.
(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 As Benefits and Fund
Compensation Part of Fund Upon Complex Paid
Name and Position From Fund Expenses Retirement to Directors
- ----------------- --------- -------- ---------- ------------
<S> <C> <C> <C> <C>
Edward D. Beach-Director $10,000 None N/A $159,000(20/39)*
Donald D. Lennox-Director $10,000 None N/A $ 90,000(10/13)*
Douglas H. McCorkindale-
Director $10,000 None N/A $ 60,000(7/10)*
Thomas T. Mooney-Director $10,000 None N/A $126,000(15/36)*
Louis A. Weil, III-Director $10,000 None N/A $ 97,500(12/15)*
</TABLE>
- ----------
*Indicates number of funds/portfolios in Fund Complex (including the Fund) to
which aggregate compensation relates.
30
<PAGE>
There were nine meetings of the Fund's Board of Directors held during the
year ended December 31, 1994, of which four were regularly scheduled meetings.
The Board of Directors has an Audit Committee. 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
finaricial operations. The Audit Committee consists of Messrs. Beach, Lennox,
McCorkindale, Mooney and Weil, the Independent Directors of the Fund. The Audit
Committee met twice during the year ended December 31, 1994. For the year ended
December 31,1994, Mr. Jacobs, attended fewer then 75% of the aggregate of the
total number of meetings of the Board of Directors and any committee thereof, of
which such director is a member.
Vote Required
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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL
NO. 4.
IF PROPOSED NUMBER 1 IS APPROVED, TO APPROVE A PLAN OF DISTRIBUTION
(Proposal No. 5)
On September 13, 1995, the Board of Directors of the Fund, including a
majority of the Independent Directors who have no direct or indirect interest in
the proposed Plan of Distribution (the Plan) or any related agreement (the Rule
12b-1 Directors), approved a Plan pursuant to Rule 12b-1 under the 1940 Act and
a Distribution Agreement for the Fund's existing shares of Common Stock (the
Distribution Agreement) in connection with the conversion of the Fund from a
closed-end investment company to an open-end investment company. The Board of
Directors recommends the Plan to the shareholders of the Fund for approval or
disapproval at this Special Meeting of Shareholders. The Distribution Agreement
does not require and, is not being submitted for, shareholder approval.
The purpose of the Plan is to create incentives for the financial advisers
of Prudential Securities (the Distributor) and other qualified broker-dealers to
provide distribution assistance to their customers who are investors in the
shares of Common Stock 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 of the Fund (Distribution
Activities).
If Proposal No. 1 is approved by shareholders and if this Proposal No. 5 is
approved, the Plan will be applicable to the shares of Common Stock of the Fund
(the existing shares of the Fund) and will become effective upon conversion of
the Fund to open-end status. If Proposal No. 6 is approved, the Plan will remain
applicable to the existing shares of the Fund when they are reclassified as
Class A shares. See Proposal No. 6. A copy of the Plan is attached hereto as
Exhibit D.
31
<PAGE>
The Plan authorizes the Fund to compensate the Distributor for all costs
incurred by it in distributing the shares of the Fund at a rate not to exceed
.30 of 1% per annum of the average daily net assets of the shares of the Fund.
In addition, the Plan describes the Distribution Activities. The Plan specifies
categories of compensable expenditures which include, among others: commissions
and account servicing fees paid to, or on account of, financial advisers of
Prudential Securities and representatives of Pruco Securities Corporation
(Prusec), an affiliated broker-dealer, commissions and account servicing fees
paid to, or on account of, other broker-dealers or financial institutions (other
than national banks) which have entered into agreements with the Distributor,
advertising expenses, the cost of printing and mailing prospectuses to potential
investors and indirect and overhead costs of Prudential Securities and Prusec
associated with the sale of Fund shares, including lease, utility,
communications and sales promotion expenses.
Under the Plan, the Fund is obligated to pay distribution and/or service
fees to the Distributor as compensation for its distribution and service
activities, not as reimbursement for specific expenses incurred. If the
Distributor's expenses exceed its distribution and service fees, the Fund will
not be obligated to pay any additional expenses. If the Distributor's expenses
are less than such distribution and service fees, it will retain its full fees
and realize a profit.
Under the Plan, the Fund may pay the Distributor for its
distribution-related activities with respect to shares at an annual rate of up
to .30 of 1% of the average dally net assets of those shares. The Plan provides
that (i) up to .25 of 1% of the average daily net assets of the shares of the
Fund may be used to pay for personal service and/or the maintenance of
shareholder accounts (service fee) and (ii) total distribution fees (including
the service fee of .25 of 1%) may not exceed .30 of 1% of the average daily net
assets of the shares of the Fund. The Distributor has agreed to limit its
distribution-related fees payable under the Plan to .15 of 1% of the average
daily net assets of those shares for the fiscal year ending December 31, 1996.
In considering whether or not to approve the Plan, the Directors reviewed,
among other things, the nature and scope of the services to be provided by the
Distributor, the purchase options that may be available to shareholders if the
Alternative Purchase Plan described under Proposal No. 6 is approved by the
shareholders and the potentially higher fees payable to the Distributor if the
Plan is adopted. The Board also considered the potential benefit of the Plan to
shareholders and potential investors. The Directors took into account the
competitive market environment in which the Fund will operate as an open-end
investment company. More specifically, the Directors recognized the need to
provide adequate compensation to broker-dealers who serve existing shareholders
or offer the Fund to prospective shareholders. Without such service, the Fund
would incur a substantial risk that it could not maintain or increase its
assets, threatening the viability of the Fund as an investment company. Based
upon their review, the Directors, including a majority of the Rule 12b-1
Directors, determined that there is a reasonable likelihood that the Plan will
benefit the Fund and its shareholders.
32
<PAGE>
Prudential Securities, One Seaport Plaza, New York, New York 10292, is a
corporation organized under the laws of the State of Delaware and, as noted
above, will serve as the distributor of the Fund's shares of Common Stock.
Prudential Securities is an indirect wholly-owned subsidiary of Prudential. In
1993, Prudential Securities resolved various allegations arising out of past
sales of certain limited partnership interests with the SEC, NASD and state
securities commissions. In 1994, Prudential Securities reached an agreement with
the U.S. Attorney for the Southern District of New York to defer prosecution in
connection with such past sales, provided it complies with the terms of that
agreement for a period of three years. If, upon completion of the three year
period, Prudential Securities has complied with the terms of the agreement, no
prosecution will be instituted by the U.S. Attorney. In connection with the the
foregoing, Prudential Securities agreed, among other things, to pay penalties in
the aggregate amount of approximately forty million dollars and establish a
settlement fund in the amount of six hundred and sixty million dollars and
establish procedures to resolve legitimate claims for compensatory damages by
purchasers of certain limited partnership interests. Prudential Securities also
agreed to provide additional funds for this purpose as necessary. The Fund will
not be affected by Prudential Securities' financial condition and is an entirely
separate legal entity from Prudential Securities, which has no beneficial owner-
ship therein and the Fund's assets which are held by State Street Bank & Trust
Company, an independent custodian, are separate and distinct from Prudential
Securities.
As required by Rule 12b-1 under the 1940 Act, if approved by the
shareholders, the Plan will continue in effect from year to year, provided such
continuance is approved at least annually by a majority of the Board of
Directors and a majority of the Rule 12b-1 Directors by votes cast in person at
a meeting called for the purpose of voting on the continuation of the Plan. The
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 outstanding
voting securities of the Fund affected by the Plan. All material amendments of
the Plan must also be approved by the Directors in the manner described above.
The Plan may be terminated at any time without payment of any penalty by vote of
a majority of the Rule 12b-1 Directors of the Fund or by the vote of a majority
of the outstanding shares of the Fund (as defined in the 1940 Act) on not more
than 60 days' written notice to any other party to such Plan. The Plan will
automatically terminate in the event of its assignment (as defined in the 1940
Act). So long as the 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.
If the Plan is terminated or not continued, there will be no further payments of
any amounts except those previously accrued.
Vote Required
The proposed Plan of Distribution requires approval of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act and set
forth above in Proposal No. 2).
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 5.
33
<PAGE>
IF PROPOSAL NUMBER 1 IS APPROVED, TO APPROVE AN AMENDMENT
TO THE FUND'S ARTICLES OF INCORPORATION TO PERMIT
THE ISSUANCE OF MULTIPLE CLASSES OF SHARES
(Proposal No. 6)
PMF and Prudential Securities have established an alternative purchase plan
(the Alternative Purchase Plan) which is available to investors in Prudential
Mutual Funds and, if Proposal No. 1 and this Proposal No. 6 are approved by
shareholders, will go into effect after conversion of the Fund to open-end
status (or at such later date as the Board of Directors may determine). The
Alternative Purchase Plan would initially provide investors with the option of
purchasing shares either subject to a contingent deferred sales charge or with
an initial sales charge. It is presently anticipated that there will be a public
offering of Class A, Class B and Class C shares after the conversion. The
existing shares will be reclassified as Class A shares. On September 13, 1995,
the Board of Directors of the Fund, including a majority of the Independent
Directors, considered and approved the Alternative Purchase Plan and an
amendment to the Articles of Incorporation of the Fund in order to implement the
Alternative Purchase Plan. In so doing, the Board of Directors considered
several factors, including that implementation of the Alternative Purchase Plan
would (i) enable investors to choose the purchasing option which best suits
their individual situation, thereby encouraging current shareholders to make
additional investments in the Fund and attracting new investors and assets to
the Fund to the benefit of the Fund and its shareholders, (ii) facilitate
distribution of the Fund's shares, and (iii) maintain the competitive position
of the Fund in relation to other funds that have implemented or are seeking to
implement similar distribution arrangements. In order to implement the
Alternative Purchase Plan, the Board of Directors is recommending that
shareholders approve the amendments included in the Fund's Amended and Restated
Articles of Incorporation discussed in Proposal No. 1 above to permit the
issuance by the Fund of multiple classes of shares. A copy of the proposed
Amended and Restated Articles of Incorporation of the Fund is attached hereto as
Exhibit A.
Under the Alternative Purchase Plan, the Fund will initially offer three
classes of shares of its Common Stock, which may be purchased at a price equal
to the next determined net asset value per share plus a sales charge which, at
the election of the purchaser, may be imposed at the time of purchase (Class A
shares) or (ii) on a contingent deferred basis (Class B and Class C shares).
Class A shares will be subject to an initial sales charge of up to 4% and an
annual distribution fee of up to .30 of 1% of average daily net assets of the
Class A shares. However, the Distributor has agreed to limit its distribution
related fees payable with respect to Class A shares to .15 of 1% of the average
daily net assets of those shares for the fiscal year ending December 31, 1996.
It is currently anticipated that Class B shares will be subject to a contingent
deferred sales charge (declining from 5% to zero) which will be imposed on most
redemptions made within six years of purchase and an annual distribution and
service fee of up to 1% of the average daily
34
<PAGE>
net assets of the Class B shares and will automatically convert to Class A
shares approximately seven years after purchase. It is currently anticipated
that Class C shares will be subject to a contingent deferred sales charge of 1%
on redemptions made within one year of purchase and an annual distribution and
service fee of 1% of the average daily net assets of the Class C shares.
Distribution fees are paid out of Fund assets and sales charges (including
contingent deferred sales charges) are paid directly by the investor. These
alternatives will permit an investor to choose the method of purchasing shares
that is most beneficial given the amount of the purchase, the length of time the
investor expects to hold the shares and other circumstances.
Each share of Class A, Class B and Class C will represent an identical legal
interest in the investment portfolio of the Fund and have the same rights,
except that each Class will bear certain expenses specifically related to the
distribution of its shares. Although the legal rights of Class A, Class B and
Class C shares will be identical, it is likely that the different expenses borne
by each class will result in different net asset values and dividends. Class B
and Class C shares will have a higher expense ratio and pay lower dividends than
the Class A shares. Each Class will have exclusive voting rights with respect to
its plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act. The
three classes will also have different exchange privileges. Upon any liquidation
of the Fund, holders of Class B and Class C shares may receive less than holders
of Class A shares as a result of higher accumulated expenses from the Class B
and Class C distribution fee.
The implementation of the Alternative Purchase Plan will not alter the
rights and privileges of the current shareholders of the Fund, nor will it
affect the net asset value of a current shareholder's investment in the Fund. By
providing investors with a broader choice as to the method of purchasing shares,
the Board of Directors believes that it will attract a broader base of
shareholders, thereby bringing more investment dollars into the Fund, which will
benefit the holders of each Class of shares by facilitating the management of
the Fund's portfolio and by reducing the operating expense ratio of the Fund.
If the shareholders approve Proposal No. 1 and this Proposal No. 6, the
Fund's authorized shares will be increased from 200 million to 2 billion and
will be classified into 1 billion authorized shares of Class A Common Stock, 500
million authorized shares of Class B Common Stock, and 500 million authorized
shares of Class C Common Stock, each with par value $.01. The shares of Common
Stock currently issued and outstanding will be reclassified as Class A Common
Stock.
Upon implementation of the Alternative Purchase Plan, Class A shares will be
sold at the next determined net asset value per share with an initial sales
charge subject to certain reductions as may be set forth in the Fund's
Prospectus. In addition, if Proposal No. 5 is approved by shareholders, the plan
of distribution adopted pursuant to Rule 12b-1 under the 1940 Act (the Class A
Plan) applicable to the Fund's shares will remain in effect and apply to Class A
shares, which will continue to be subject to a distribution fee at the annual
rate of up to .30 of 1% of the average daily net assets of the Class A shares.
The Class B and Class C shares will be issued and sold at the next determined
net asset value per share subject to a contingent deferred sales charge imposed
upon certain redemptions of shares, as set forth above and as may be further
provided in the Prospectus of the Fund. In addition, the Class B and Class C
shares will be subject to a distribution and service fee at the annual rate of
up to 1% of the average daily net assets of the Class B and Class C shares,
35
<PAGE>
pursuant to a plan of distribution adopted pursuant to Rule 12b-1 under the 1940
Act (the Class B and Class C Plan) which will be approved by the initial sole
shareholder of Class B and Class C shares. Finally, as described in the Fund's
Amended and Restated Articles of Incorporation, Class B shares will
automatically convert to Class A shares at such times to be determined from time
to time by the Board of Directors and as set forth in the Fund's Prospectus. If
the proposed amendment to the Fund's Articles of Incorporation is approved, it
is currently expected that conversions of Class B shares to Class A shares will
occur on a quarterly basis approximately seven years from purchase.
The exchange privileges of Class A, Class B and Class C shares will differ.
Each Class of shares of the Fund will generally be exchangeable for Class A,
Class B and Class C shares, respectively, of other Prudential Mutual Funds and
one or more specified money market funds on the basis of the relative NAV,
except as may be set forth in the Fund's Prospectus.
The proposed amendment to the Articles of Incorporation will also permit the
Board of Directors to classify and reclassify shares of the Fund into additional
classes of Common Stock at a future date. The Board of Directors currently has
no intention of creating any classes of Common Stock other than the Class A,
Class B and Class C shares of the Fund.
Vote Required
Under the Fund's Articles of Incorporation, amendment of the Articles of
Incorporation requires the affirmative vote of a majority of the outstanding
shares of Common Stock of the Fund. In the event shareholders do not approve the
proposed amendment of the Articles of Incorporation and the Alternative Purchase
Plan is not adopted, the Fund will continue to offer a single class of shares of
Common Stock and, upon shareholder approval of Proposal No. 5, the shares would
be subject to a distribution fee based upon the Fund's average daily net asset
value.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 6.
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 questions as to an adjournment of the Meeting, the persons named
in the enclosed Proxy will vote thereon according to their best judgment in the
interest of the Fund taking into account all relevant circumstances.
SHAREHOLDERS' PROPOSALS
A shareholders' proposal intended to be presented at any meeting of the
shareholders of the Fund hereinafter called must be received by the Fund a
reasonable time before the Directors' solicitation relating thereto is made in
order to be included in the Fund's proxy
36
<PAGE>
statement and form of proxy relating to that meeting. The mere submission of a
proposal by a shareholder does not guarantee that such proposal will be included
in the proxy statement because certain rules under the federal securities laws
must be complied with before inclusion of the proposal is required. If the
Proposal No. 1 is approved and the Fund is converted to open-end status, the
Fund does not intend to hold annual meetings of shareholders unless otherwise
required by law.
S. JANE ROSE
Secretary
Dated: October 24, 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.
37
<PAGE>
EXHIBIT A
THE GLOBAL GOVERNMENT PLUS FUND, INC.
Amended and Restated Articles of Incorporation
The Global Government Plus Fund, Inc. ((hereinafter called the
"Corporation"), a Maryland corporation having its principal offices in the city
of Baltimore, Maryland and New York, New York, hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby restated in its entirety to
read as follows:
ARTICLE I.
The name of the Corporation is The Global Government Plus Fund, Inc.
ARTICLE II.
Purposes
The purpose for which the Corporation is formed is to act as an open-end
investment company of the management type registered as such with the Securities
and Exchange Commission pursuant to the Investment Company Act of 1940, as
amended (the Investment Company Act) and to exercise and generally to enjoy all
of the powers, rights and privileges granted to, or conferred upon, corporations
by the General Laws of the State of Maryland now or hereinafter in force.
ARTICLE III.
Address in Maryland
The post office address of the place at which the principal office of the
Corporation in the State of Maryland is located is c/o CT Corporation System, 32
South Street Baltimore, Maryland 21202.
The name of the Corporation's resident agent is The Corporation Trust
Incorporated, and its post office address is 32 South Street, Baltimore Maryland
21202. Said resident agent is a corporation of the State of Maryland.
ARTICLE IV.
Common Stock
Section 1. The total number of shares of capital stock which the Corporation
shall have authority to issue is 2,000,000,000 shares of the par value of $.01
per share and of the aggregate par value of $20,000,000 to be divided into three
classes, consisting of
A-1
<PAGE>
1,000,000,000 shares of Class A Common Stock, 500,000,000 shares of Class B
Common Stock and 500,000,000 shares of Class C Common Stock. The shares of
Common Stock issued and outstanding will be reclassified Class A Common Stock.
The shares of Common Stock issued and outstanding on the date Class B and Class
C shares are first issued will be reclassified Class A Common Stock.
(a) Each share of Class A, Class B and Class C Common Stock of the
Corporation shall represent the same interest in the Corporation and have
identical voting, dividend, liquidation and other rights, except that (i)
expenses related to the distribution of a class of shares shall be borne
solely by such class; (ii) the bearing of any such expenses solely by shares
of a class shall be appropriately reflected (in the manner determined by the
Board of Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of such class; (iii) the Class A Common
Stock shall be subject to a front-end sales load and a Rule 12b-1
distribution fee as determined by the Board of Directors from time to time;
(iv) the Class B Common Stock shall be subject to a contingent deferred
sales charge and a Rule 12b-1 distribution fee as determined by the Board of
Directors from time to time; and (v) the Class C Common Stock shall be
subject to a contingent deferred sales charge and a Rule 12b-1 distribution
fee as determined by the Board of Directors from time to time. All shares of
a particular class shall represent an equal proportionate interest in that
class, and each share of any particular class shall be equal to each other
share of that class.
(b) Each share of the Class B Common Stock of the Corporation shall be
converted automatically, and without any action or choice on the part of the
holder thereof, into shares (including fractions thereof) of the Class A
Common Stock of the Corporation (computed in the manner hereinafter
described), at the applicable net asset value of each Class, at the time of
the calculation of the net asset value of such Class B Common Stock at such
times, which may vary between shares originally issued for cash and shares
purchased through the automatic reinvestment of dividends and distributions
with respect to Class B Common Stock (each a Conversion Date), determined by
the Board of Directors in accordance with applicable laws, rules,
regulations and interpretations of the Securities and Exchange Commission
and the National Association of Securities Dealers, Inc. and pursuant to
such procedures as may be established from time to time by the Board of
Directors and disclosed in the Corporation's then current prospectus for
such Class A and Class B Common Stock.
(c) The number of shares of the Class A Common Stock of the Corporation
into which a share of the Class B Common Stock is converted pursuant to
Paragraph (1)(b) hereof shall equal the number (including for this purpose
fractions of a share) obtained by dividing the net asset value per share of
the Class B Common Stock for purposes of sales and redemptions thereof at
the time of the calculation of the net asset value on the Conversion Date by
the net asset value per share of the Class A Common Stock for purposes of
sales and redemptions thereof at the time of the calculation of the net
asset value on the Conversion Date.
A-2
<PAGE>
(d) On the Conversion Date, the shares of the Class B Common Stock of
the Corporation converted into shares of the Class A Common Stock will cease
to accrue dividends and will no longer be outstanding and the rights of the
holders thereof will cease (except the right to receive declared but unpaid
dividends to the Conversion Date).
(e) The Board of Directors shall have full power and authority to adopt
such other terms and conditions concerning the conversion of shares of the
Class B Common Stock to shares of the Class A Common Stock as they deem
appropriate; provided such terms and conditions are not inconsistent with
the terms contained in this Section 1 and subject to any restrictions or
requirements under the Investment Company Act of 1940 and the rules,
regulations and interpretations thereof promulgated or issued by the
Securities and Exchange Commission, and conditions or limitations contained
in an order issued by the Securities and Exchange Commission applicable to
the Corporation, or any restrictions or requirements under the Internal
Revenue Code of 1986, as amended, and the rules, regulations and
interpretations promulgated or issued thereunder.
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 standing 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 a separate vote of any class or
series is required by the
A-3
<PAGE>
Investment Company Act of 1940, as amended, 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 and 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 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,
A-4
<PAGE>
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
(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 class or
A-5
<PAGE>
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 of 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 following 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
A-6
<PAGE>
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 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 to such series, and shall also be charged with its
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,
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and as to whether the same or general assets of the Corporation are
allocable to one or more classes.
Section 8. Any fractional shares 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 pre-emptive 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 provisions 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 outstanding shares of all classes or
of the outstanding shares of a particular class or classes, as the case may be,
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
all classes or series or of the total number of shares of such class or classes
or series, as the case may be, outstanding and entitled to vote thereupon
pursuant to the provisions of these Articles of Incorporation.
ARTICLE V.
Directors
The By-Laws of the Corporation may fix the number of directors at no less
than three and may authorize the Board of Directors, by the vote of a majority
of the entire Board of Directors, to increase or decrease the number of
directors within a limit specified in the By-Laws (provided that, if there are
no shares outstanding, the number of directors may be less than three but not
less than one), and to fill the vacancies created by any such increase in the
number of directors. Unless otherwise provided by the By-Laws of the
Corporation, the directors of the Corporation need not be stockholders.
The By-Laws of the Corporation may divide the directors of the Corporation
into classes and prescribe the tenure of office of the several classes; but no
class shall be elected for a period shorter than one year or for a period longer
than five years, and the term of office of at least one class shall expire each
year.
ARTICLE VI.
Indemnification of Directors and Officers
The Corporation shall indemnify to the fullest extent permitted by law
(including the Investment Company Act), as currently in effect or as the same
may hereafter be amended,
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any person made or threatened to be made a party to any action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that such person or such person's testator or intestate is or was a
director or officer of the Corporation or serves or served at the request of the
Corporation any other enterprise as a director or officer. To the fullest extent
permitted by law (including the Investment Company Act), as currently in effect
or as the same may hereafter be amended, expenses incurred by any such person in
defending any such action, suit or proceeding shall be paid or reimbursed by the
Corporation promptly upon receipt by it of an undertaking of such person to
repay such expenses if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation. The rights provided to any person
by this Article VI shall be enforceable against the Corporation by such person
who shall be presumed to have relied upon it in serving or continuing to serve
as a director or officer as provided above. No amendment of this Article VI
shall impair the rights of any person arising at any time with respect to events
occurring prior to such amendment. For purposes of this Article VI, the term
"Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation or merger; the term "other enterprise" shall
include any corporation, partnership, joint venture, trust or employee benefit
plan; service "at the request of the Corporation" shall include service as a
director or officer of the Corporation which imposes duties on, or involves
services by, such director or officer with respect to an employee benefit plan,
its participants or beneficiaries; any excise taxes assessed on a person with
respect to an employee benefit plan shall be deemed to be indemnifiable
expenses; and action by a person with respect to any employee benefit plan which
such person reasonably believes to be in the interest of the participants and
beneficiaries of such plan shall be deemed to be action not opposed to the best
interests of the Corporation.
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,
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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. Any determination made in good faith and, so far as accounting
matters are involved, in accordance with generally accepted accounting
principles applied by or pursuant to the direction of the Board of Directors or
as otherwise required or permitted by the Securities and Exchange Commission,
shall be final and conclusive, and shall be binding upon the Corporation and all
holders of shares, past, present and future, of each class or series, and shares
are issued and sold on the condition and undertaking, evidenced by acceptance of
certificates for such shares by, or confirmation of such shares being held for
the account of, any stockholder, that any and all such determinations shall be
binding as aforesaid.
Nothing in this Section 2 shall be construed to protect any director or
officer of the Corporation against liability to the Corporation or its
stockholders to which such director or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office.
Section 3. 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 4. 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.
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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ARTICLE VIII.
Amendments
The Corporation reserves the right from time to time to amend, alter or
repeal any of the provisions of these Articles of Incorporation (including any
amendment that changes the terms of any of the outstanding shares by
classification, reclassification or otherwise), and to add or insert any other
provisions that may, under the statutes of the State of Maryland at the time in
force, be lawfully contained in articles of incorporation, and all rights at any
time conferred upon the stockholders of the Corporation by these Articles of
Incorporation are subject to the provisions of this Article VIII.
SECOND: The foregoing amendment and restatement of the Articles of
Incorporation of the Corporation has been advised by the Board of Directors and
approved by a majority of the shareholders of the Corporation.
THIRD: (a) As of immediately before the amendment the total number of shares
of Common Stock which the Corporation had authority to issue was 200,000,000
shares of Common Stock, par value of $.01 per share, having an aggregate par
value of $2,000,000.
(b) As amended, the total number of shares of stock of all classes which
the Corporation has authority to issue is 2,000,000,000 shares, all of which
are Common Stock, par value $ .01 per share.
(c) The aggregate par value of all shares having a par value was
$2,000,000 before the amendment and $20,000,000 as amended.
(d) A description of the Class A, Class B and Class C Common Stock is as
set forth herein above.
IN WITNESS WHEREOF, THE GLOBAL GOVERNMENT PLUS FUND, INC. has caused these
presents to be signed in its name and on its behalf by its President and
attested by its Secretary on , 1995.
THE GLOBAL GOVERNMENT PLUS
FUND, INC.
By___________________________________________
Richard A. Redeker
President
Attest:__________________________________
S. Jane Rose
Secretary
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The undersigned, President of The Global Government Plus Fund, Inc., who
executed on behalf of said Corporation the foregoing amendment to the Articles
of Incorporation of which this certificate is made a part, hereby acknowledges
the foregoing amendment and restatement of the Articles of Incorporation to be
the act of the Corporation, and further certifies that, to the best of his
knowledge, information and belief, all matters and facts set forth therein are
true in all material respects and that this statement is made under the
penalties of perjury.
-------------------------------------
Richard A. Redeker
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EXHIBIT B
THE GLOBAL GOVERNMENT PLUS FUND, INC.
Management Agreement
Agreement made this ___ day of _______, 1995 between The Global Government
Plus Fund, Inc., a Maryland corporation (the Fund), and Prudential Mutual Fund
Management, Inc., a Delaware corporation (the Manager).
W I T N E S S E T H
WHEREAS, the Fund is a non-diversified, open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
1940 Act); and
WHEREAS, the Fund desires to retain the Manager to render or contract to
obtain as hereinafter provided investment advisory services to the Fund and the
Fund also desires to avail itself of the facilities available to the Manager
with respect to the administration of its day to day corporate affairs, and the
Manager is willing to render such investment advisory and administrative
services;
NOW, THEREFORE, the parties agree as follows:
1. The Fund hereby appoints the Manager to act as manager of the Fund and
administrator of its corporate affairs for the period and on the terms set forth
in this Agreement. The Manager accepts such appointment and agrees to render the
services herein described, for the compensation herein provided. The Manager is
authorized to enter into an agreement with The Prudential Investment Corporation
(PIC or the Subadviser) pursuant to which PIC shall furnish to the Fund the
investment advisory services in connection with the management of the Fund (the
Subadvisory Agreement). The Manager will continue to have responsibility for all
investment advisory services furnished pursuant to the Subadvisory Agreement.
2. Subject to the supervision of the Board of Directors of the Fund, the
Manager shall administer the Fund's corporate affairs and, in connection
therewith, shall furnish the Fund with office facilities and with clerical,
bookkeeping and recordkeeping services at such office facilities and, subject to
Section 1 hereof and the Subadvisory Agreement, the Manager shall manage the
investment operations of the Fund and the composition of the Fund's portfolio,
including the purchase, retention and disposition thereof, in accordance with
the Fund's investment objectives, policies and restrictions as stated in the
Prospectus (hereinafter defined) and subject to the following understandings:
(a) The Manager shall provide supervision of the Fund's investments and
determine from time to time what investments or securities will be
purchased, retained, sold or loaned by the Fund, and what portion of the
assets will be invested or held uninvested as cash.
(b) The Manager, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Articles of Incorporation,
By-Laws and
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Prospectus (hereinafter defined) of the Fund and with the instructions
and directions of the Board of Directors of the Fund and will conform to and
comply with the requirements of the 1940 Act and all other applicable
federal and state laws and regulations.
(c) The Manager shall determine the securities and futures contracts to
be purchased or sold by the Fund and will place orders pursuant to its
determinations with or through such persons, brokers, dealers or futures
commission merchants (including but not limited to Prudential Securities
Incorporated) in conformity with the policy with respect to brokerage as set
forth in the Fund's Registration Statement and Prospectus (hereinafter
defined) or as the Board of Directors may direct from time to time. In
providing the Fund with investment supervision, it is recognized that the
Manager will give primary consideration to securing the most favorable price
and efficient execution. Consistent with this policy, the Manager may
consider the financial responsibility, research and investment information
and other services provided by brokers, dealers or futures commission
merchants who may effect or be a party to any such transaction or other
transactions to which other clients of the Manager may be a party. It is
understood that Prudential Securities Incorporated may be used as a broker
for securities transactions but that no formula has been adopted for
allocation of the Fund's investment transaction business. It is also
understood that it is desirable for the Fund that the Manager have access to
supplemental investment and market research and security and economic
analysis provided by brokers or futures commission merchants and that such
brokers may execute brokerage transactions at a higher cost to the Fund than
may result when allocating brokerage to other brokers or futures commission
merchants on the basis of seeking the most favorable price and efficient
execution. Therefore, the Manager is authorized to pay higher brokerage
commissions for the purchase and sale of securities and futures contracts
for the Fund to brokers or futures commission merchants who provide such
research and analysis, subject to review by the Fund's Board of Directors
from time to time with respect to the extent and continuation of this
practice. It is understood that the services provided by such broker or
futures commission merchant may be useful to the Manager in connection with
its services to other clients.
On occasions when the Manager deems the purchase or sale of a security or a
futures contract to be in the best interest of the Fund as well as other clients
of the Manager or the Subadviser, the Manager, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities or futures contracts to be so sold or purchased in
order to obtain the most favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities or futures
contracts so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Manager in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Fund and to
such other clients.
(d) The Manager shall maintain all books and records with respect to the
Fund's portfolio transactions and shall render to the Fund's Board of
Directors such periodic and special reports as the Board may reasonably
request.
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(e) The Manager shall be responsible for the financial and accounting
records to be maintained by the Fund (including those being maintained by
the Fund's Custodian).
(f) The Manager shall provide the Fund's Custodian on each business day
with information relating to all transactions concerning the Fund's assets.
(g) The investment management services of the Manager to the Fund under
this Agreement are not to be deemed exclusive, and the Manager shall be free
to render similar services to others.
3. The Fund has delivered to the Manager copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:
(a) Articles of Incorporation of the Fund, as filed with the Secretary
of State of Maryland (such Articles of Incorporation, as in effect on the
date hereof and as amended from time to time, are herein called the
"Articles of Incorporation");
(b) By-Laws of the Fund (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Board of Directors of the Fund
authorizing the appointment of the Manager and approving the form of this
agreement;
(d) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (the Registration Statement), as filed with
the Securities and Exchange Commission (the Commission) relating to the Fund
and shares of the Fund's Common Stock and all amendments thereto;
(e) Notification of Registration of the Fund under the 1940 Act on Form
N-8A as filed with the Commission and all amendments thereto; and
(f) Prospectus of the Fund (such Prospectus and Statement of Additional
Information, as currently in effect and as amended or supplemented from time
to time, being herein called the "Prospectus").
4. The Manager shall authorize and permit any of its directors, officers and
employees who may be elected as directors or officers of the Fund to serve in
the capacities in which they are elected. All services to be furnished by the
Manager under this Agreement may be furnished through the medium of any such
directors, officers or employees of the Manager.
5. The Manager shall keep the Fund's books and records required to be
maintained by it pursuant to paragraph 2 hereof. The Manager agrees that all
records which it maintains for the Fund are the property of the Fund and it will
surrender promptly to the Fund any such records upon the Fund's request,
provided however that the Manager may retain a copy of such records. The Manager
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act any such records as are required to be maintained by the Manager
pursuant to Paragraph 2 hereof.
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6. During the term of this Agreement, the Manager shall pay the following
expenses:
(i) the salaries and expenses of all personnel of the Fund and the
Manager except the fees and expenses of directors who are not affiliated
persons of the Manager or the Fund's investment adviser,
(ii) all expenses incurred by the Manager or by the Fund in
connection with managing the ordinary course of the Fund's business
other than those assumed by the Fund herein, and
(iii) the costs and expenses payable to PIC pursuant to the
Subadvisory Agreement. The Fund assumes and will pay the expenses
described below:
(a) the fees and expenses incurred by the Fund in connection with the
management of the investment and reinvestment of the Fund's assets,
(b) the fees and expenses of directors who are not affiliated persons of
the Manager or the Fund's investment adviser,
(c) the fees and expenses of the Custodian that relate to (i) the
custodial function and the recordkeeping connected therewith,
(ii) preparing and maintaining the general accounting records of the
Fund and the providing of any such records to the Manager useful to the
Manager in connection with the Manager's responsibility for the
accounting records of the Fund pursuant to Section 31 of the 1940 Act
and the rules promulgated thereunder,
(iii) the pricing of the shares of the Fund, including the cost of
any pricing service or services which may be retained pursuant to the
authorization of the Board of Directors of the Fund, and
(iv) for both mail and wire orders, the cashiering function in
connection with the issuance and redemption of the Fund's securities,
(d) the fees and expenses of the Fund's Transfer and Dividend Disbursing
Agent, which may be the Custodian, that relate to the maintenance of each
shareholder account,
(e) the charges and expenses of legal counsel and independent
accountants for the Fund,
(f) brokers' commissions and any issue or transfer taxes chargeable to
the Fund in connection with its securities and futures transactions,
(g) all taxes and corporate fees payable by the Fund to federal, state
or other governmental agencies,
(h) the fees of any trade associations of which the Fund may be a
member,
(i) the cost of stock certificates representing, and/or non-negotiable
share deposit receipts evidencing, shares of the Fund,
(j) the cost of fidelity, directors and officers and errors and
omissions insurance,
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(k) the fees and expenses involved in registering and maintaining
registration of the Fund and of its shares with the Securities and Exchange
Commission, registering the Fund as a broker or dealer and qualifying its
shares under state securities laws, including the preparation and printing
of the Fund's registration statements, prospectuses and statements of
additional information for filing under federal and state securities laws
for such purposes,
(l) allocable communications expenses with respect to investor services
and all expenses of shareholders' and directors' meetings and of preparing,
printing and mailing reports to shareholders in the amount necessary for
distribution to the shareholders,
(m) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business, and
(n) any expenses assumed by the Fund pursuant to a Plan of Distribution
adopted in conformity with Rule 12b-1 under the 1940 Act.
7. In the event the expenses of the Fund for any fiscal year (including the
fees payable to the Manager but excluding interest, taxes, brokerage
commissions, distribution fees and litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the Fund's
business) exceed the lowest applicable annual expense limitation established and
enforced pursuant to the statute or regulations of any jurisdictions in which
shares of the Fund are then qualified for offer and sale, the compensation due
the Manager will be reduced by the amount of such excess, or, if such reduction
exceeds the compensation payable to the Manager, the Manager will pay to the
Fund the amount of such reduction which exceeds the amount of such compensation.
8. For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to the Manager as full compensation therefor a fee
at an annual rate of 0.75 of 1% of the Fund's average daily net assets up to US
$1 billion and .70 of 1% of such assets in excess of US $1 billion. This fee
will be computed daily and will be paid to the Manager monthly. Any reduction in
the fee payable and any payment by the Manager to the Fund pursuant to paragraph
7 shall be made monthly. Any such reductions or payments are subject to
readjustment during the year.
9. The Manager shall not be liable for any error of judgment or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3) of
the 1940 Act) or loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
10. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Fund at any
time, without the payment of any
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penalty, by the Board of Directors of the Fund or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund, or by
the Manager at any time, without the payment of any penalty, on not more than 60
days' nor less than 30 days' written notice to the other party. This Agreement
shall terminate automatically in the event of its assignment (as defined in the
1940 Act).
11. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Manager who may also be a director, officer
or employee of the Fund to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any business,
whether of a similar or dissimilar nature, nor limit or restrict the right of
the Manager to engage in any other business or to render services of any kind to
any other corporation, firm, individual or association.
12. Except as otherwise provided herein or authorized by the Board of
Directors of the Fund from time to time, the Manager shall for all purposes
herein be deemed to be an independent contractor and shall have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
13. During the term of this Agreement, the Fund agrees to furnish the
Manager at its principal office all prospectuses, proxy statements, reports to
shareholders, sales literature, or other material prepared for distribution to
shareholders of the Fund or the public, which refer in any way to the Manager,
prior to use thereof and not to use such material if the Manager reasonably
objects in writing within five business days (or such other time as may be
mutually agreed) after receipt thereof. In the event of termination of this
Agreement, the Fund will continue to furnish to the Manager copies of any of the
above mentioned materials which refer in any way to the Manager. Sales
literature may be furnished to the Manager hereunder by first-class or overnight
mail, facsimile transmission equipment or hand delivery. The Fund shall furnish
or otherwise make available to the Manager such other information relating to
the business affairs of the Fund as the Manager at any time, or from time to
time, reasonably requests in order to discharge its obligations hereunder.
14. This Agreement may be amended by mutual consent, but the consent of the
Fund must be obtained in conformity with the requirements of the 1940 Act.
15. Any notice or other communication required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (1) to the Manager at One Seaport Plaza, New York, N.Y. 10292,
Attention: Secretary; or (2) to the Fund at One Seaport Plaza, New York, N.Y.
10292, Attention: President.
16. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE GLOBAL GOVERNMENT PLUS
FUND, INC.
By___________________________________________
Robert F. Gunia
Vice President
PRUDENTIAL MUTUAL FUND
MANAGEMENT, INC.
By___________________________________________
Richard A. Redeker
President
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EXHIBIT C
THE GLOBAL GOVERNMENT PLUS FUND, INC.
Subadvisory Agreement
Agreement made as of this ____ day of______________, 1995 between
Prudential Mutual Fund Management Inc., a Delaware Corporation (PMF or the
Manager), and The Prudential Investment Corporation, a New Jersey Corporation
(the Subadviser).
WHEREAS, the Manager has entered into a Management Agreement, dated
________________ __, 1995 (the Management Agreement), with The Global Government
Plus Fund, Inc. (the Fund), a Maryland corporation and a non-diversified
open-end management investment company registered under the Investment Company
Act of 1940 (the 1940 Act), pursuant to which PMF will act as Manager of the
Fund.
WHEREAS, PMF desires to retain the Subadviser to provide investment advisory
services to the Fund in connection with the management of the Fund and the
Subadviser is willing to render such investment advisory services.
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the Board of
Directors of the Fund, the Subadviser shall manage the investment operations of
the Fund and the composition of the Fund's portfolio, including the purchase,
retention and disposition thereof, in accordance with the Fund's investment
objectives, policies and restrictions as stated in the Prospectus, (such
Prospectus and Statement of Additional Information as currently in effect and as
amended or supplemented from time to time, being herein called the
"Prospectus"), and subject to the following understandings:
(i) The Subadviser shall provide supervision of the Fund's
investments and determine from time to time what investments and
securities will be purchased, retained, sold or loaned by the Fund, and
what portion of the assets will be invested or held uninvested as cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Subadviser shall act in conformity with the Articles of
Incorporation, By-Laws and Prospectus of the Fund and with the
instructions and directions of the Manager and of the Board of Directors
of the Fund and will conform to and comply with the requirements of the
1940 Act, the Internal Revenue Code of 1986 and all other applicable
federal and state laws and regulations.
(iii) The Subadviser shall determine the securities and futures
contracts to be purchased or sold by the Fund and will place orders with
or through such persons, brokers, dealers or futures commission
merchants (including but not limited to Prudential Securities
Incorporated) to carry out the policy with respect to brokerage as set
forth in the Fund's Registration Statement and Prospectus or as the
Board of Directors may direct from time to time. In providing the Fund
with investment supervision, it is recognized that the
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Subadviser will give primary consideration to securing the most
favorable price and efficient execution. Within the framework of this
policy, the Subadviser may consider the financial responsibility,
research and investment information and other services provided by
brokers, dealers or futures commission merchants who may effect or be a
party to any such transaction or other transactions to which the
Subadviser's other clients may be a party. It is understood that
Prudential Securities Incorporated may be used as a broker for
securities transactions but that no formula has been adopted for
allocation of the Fund's investment transaction business. It is also
understood that it is desirable for the Fund that the Subadviser have
access to supplemental investment and market research and security and
economic analysis provided by brokers or futures commission merchants
who may execute brokerage transactions at a higher cost to the Fund than
may result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and efficient execution. Therefore, the
Subadviser is authorized to place orders for the purchase and sale of
securities and futures contracts for the Fund with such brokers or
futures commission merchants, subject to review by the Fund's Board of
Directors from time to time with respect to the extent and continuation
of this practice. It is understood that the services provided by such
brokers or futures commission merchants may be useful to the Subadviser
in connection with the Subadviser's services to other clients.
On occasions when the Subadviser deems the purchase or sale of a security or
futures contract to be in the best interest of the Fund as well as other clients
of the Subadviser, the Subadviser, to the extent permitted by applicable laws
and regulations, may, but shall be under no obligation to, aggregate the
securities or futures contracts to be sold or purchased in order to obtain the
most favorable price or lower brokerage commissions and efficient execution. In
such event, allocation of the securities or futures contracts so purchased or
sold, as well as the expenses incurred in the transaction, will be made by the
Subadviser in the manner the Subadviser considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such other clients.
(iv) The Subadviser shall maintain all books and records with
respect to the Fund's portfolio transactions required by subparagraphs
(b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1
under the 1940 Act and shall render to the Fund's Board of Directors
such periodic and special reports as the Directors may reasonably
request.
(v) The Subadviser shall provide the Fund's Custodian on each
business day with information relating to all transactions concerning
the Fund's assets and shall provide the Manager with such information
upon request of the Manager.
(vi) The investment management services provided by the Subadviser
hereunder are not to be deemed exclusive, and the Subadviser shall be
free to render similar services to others.
C-2
<PAGE>
(b) The Subadviser shall authorize and permit any of its directors,
officers and employees who may be elected as directors or officers of the
Fund to serve in the capacities in which they are elected. Services to be
furnished by the Subadviser under this Agreement may be furnished through
the medium of any of such directors, officers or employees.
(c) The Subadviser shall keep the Fund's books and records required to
be maintained by the Subadviser pursuant to paragraph 1(a) hereof and shall
timely furnish to the Manager all information relating to the Subadviser's
services hereunder needed by the Manager to keep the other books and records
of the Fund required by Rule 31a-1 under the 1940 Act. The Subadviser agrees
that all records which it maintains for the Fund are the property of the
Fund and the Subadviser will surrender promptly to the Fund any of such
records upon the Fund's request, provided however that the Subadviser may
retain a copy of such records. The Subadviser further agrees to preserve for
the periods prescribed by Rule 31a-2 of the Commission under the 1940 Act
any such records as are required to be maintained by it pursuant to
paragraph 1(a) hereof.
2. The Manager shall continue to have responsibility for all services to be
provided to the Fund pursuant to the Management Agreement and shall oversee and
review the Subadviser's performance of its duties under this Agreement.
3. The Manager shall reimburse the Subadviser for reasonable costs and
expenses incurred by the Subadviser determined in a manner acceptable to the
Manager in furnishing the services described in paragraph 1 hereof.
4. The Subadviser shall not be liable for any error of judgment or for any
loss suffered by the Fund or the Manager in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the Subadviser's part in the performance of its
duties or from its reckless disregard of its obligations and duties under this
Agreement.
5. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Fund at any
time, without the payment of any penalty, by the Board of Directors of the Fund
or by vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund, or by the Manager or the Subadviser at any time, without
the payment of any penalty, on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall terminate automatically
in the event of its assignment (as defined in the 1940 Act) or upon the
termination of the Management Agreement.
6. Nothing in this Agreement shall limit or restrict the right of any of the
Subadviser's directors, officers, or employees who may also be a director,
officer or employee of the Fund to engage in any other business or to devote his
or her time and attention in part to the management or other aspects of any
business, whether of a similar or a dissimilar nature, nor limit or restrict the
Subadviser's right to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
C-3
<PAGE>
7. During the term of this Agreement, the Manager agrees to furnish the
Subadviser at its principal office all prospectuses, proxy statements, reports
to stockholders, sales literature or other material prepared for distribution to
stockholders of the Fund or the public, which refer to the Subadviser in any
way, prior to use thereof and not to use material if the Subadviser reasonably
objects in writing five business days (or such other time as may be mutually
agreed) after receipt thereof. Sales literature may be furnished to the
Subadviser hereunder by first-class or overnight mail, facsimile transmission
equipment or hand delivery.
8. This Agreement may be amended by mutual consent, but the consent of the
Fund must be obtained in conformity with the requirements of the 1940 Act.
9. This Agreement shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
PRUDENTIAL MUTUAL FUND
MANAGEMENT, INC.
By________________________________________________
Richard A. Redeker
President
THE PRUDENTIAL INVESTMENT
CORPORATION
By________________________________________________
Vice President
C-4
<PAGE>
EXHIBIT D
THE GLOBAL GOVERNMENT PLUS FUND, INC.
Distribution and Service Plan
(Class A Shares)
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 The Global Government Plus Fund, Inc. (the Fund)
and by Prudential Securities Incorporated, the Fund's distributor (the
Distributor).
The Fund has entered into a distribution agreement pursuant to which the
Fund will employ the Distributor to distribute Class A shares issued by the Fund
(Class A shares). Under the Plan, the Fund intends to pay to the Distributor, as
compensation for its services, a distribution and service fee with respect to
Class A shares.
A majority of the Board of Directors of the Fund, including a majority of
those Directors who are not "interested persons" of the Fund (as defined in the
Investment Company Act) and who have no direct or indirect financial interest in
the operation of this Plan or any agreements related to it (the Rule 12b-1
Directors), 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 Class A 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 to 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 Class A shares of the
Fund and to service shareholder accounts using all of the facilities of the
Prudential Securities distribution network, including sales personnel and branch
office and central support
D-1
<PAGE>
systems, and also using such other qualified broker-dealers and financial
institutions as the Distributor may select, including Pruco Securities
Corporation (Prusec). Services provided and activities undertaken to distribute
Class A 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 of .25 of 1% per
annum of the average daily net assets of the Class A shares (service fee). The
Fund shall calculate and accrue daily amounts payable by the Class A shares of
the Fund hereunder and shall pay such amounts monthly or at such other intervals
as the Board of Directors may determine. 3. Payment for Distribution Activities
The Fund shall pay to the Distributor as compensation for its services a
distribution fee, together with the service fee (described in Section 2 hereof),
of .30 of 1% per annum of the average daily net assets of the Class A shares of
the Fund for the performance of Distribution Activities. The Fund shall
calculate and accrue daily amounts payable by the Class A shares of the Fund
hereunder and shall pay such amounts monthly or at such other intervals as the
Board of Directors may determine. Amounts payable under the Plan shall be
subject to the limitations of Article III, Section 26 of the NASD Rules of Fair
Practice.
Amounts paid to the Distributor by the Class A shares of the Fund will not
be used to pay the distribution expenses incurred with respect to any other
class of shares of the Fund except that distribution expenses attributable to
the Fund as a whole will be allocated to the Class A shares according to the
ratio of the sales of Class A shares to the total sales of the Fund's shares
over the Fund's fiscal year or such other allocation method approved by the
Board of Directors. The allocation of distribution expenses among classes will
be subject to the review of the Board of Directors.
The Distributor shall spend such amounts as it deems appropriate on
Distribution Activities which include, among others:
(a) sales commissions and trailer commissions paid to, or on account of,
account executives of the Distributor;
(b) indirect and overhead costs of the Distributor associated with
Distribution Activities, including central office and branch expenses;
(c) amounts paid to Prusec for performing services under a selected
dealer agreement between Prusec and the Distributor for sale of Class A
shares of the Fund, including sales commissions, trailer commissions paid
to, or on account of, agents and indirect and overhead costs associated with
Distribution Activities;
(d) 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-2
<PAGE>
(e) sales commissions (including trailer commissions) paid to, or on
account of, broker-dealers and financial institutions (other than Prusec)
which have entered into selected dealer agreements with the Distributor with
respect to Class A shares of the Fund.
4. Quarterly Reports; Additional Information
An appropriate officer of the Fund will provide to the Board of Directors 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 of the Fund such additional information as the
Board 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 of the Fund of the
commissions and account servicing fees to be paid by the Distributor to account
executives of the Distributor and 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 Class A shares of the Fund.
If approved by a vote of a majority of the outstanding voting securities of
the Class A shares 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 of the Fund and a majority of the Rule 12b-1
Directors 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 by vote of a majority of the outstanding voting securities
(as defined in the Investment Company Act) of the Class A shares of the Fund.
7. Amendments
The Plan may not be amended to change the combined service and distribution
fees 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 Class A shares of the Fund. All
material amendments of the Plan shall be approved by a majority of the Board of
Directors of the Fund and a majority of the Rule 12b-1 Directors by votes cast
in person at a meeting called for the purpose of voting on the Plan.
D-3
<PAGE>
8. Rule 12b-1 Directors
While the Plan is in effect, the selection and nomination of the Directors
shall be committed to the discretion of the Rule 12b-1 Directors.
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: ______________, 1995
D-4
<PAGE>
THE GLOBAL GOVERNMENT PLUS
FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS, DECEMBER 6, 1995.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert F. Gunia, S. Jane Rose and Marguerite
E.H. Morrison 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 Global Government Plus Fund, Inc. held of record
by the undersigned on September 29, 1995 at the Special Meeting of Shareholders
to be held on December 6, 1995, or any adjournment thereof.
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 THROUGH 6.
Address changes: _______________________________________________________________
_______________________________________________________________
_______________________________________________________________
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE>
THE GLOBAL GOVERNMENT PLUS FUND, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS.
Left Column
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
Proposal 1 For Against Abstain
[ ] [ ] [ ]
Proposal 2(a)
[ ] [ ] [ ]
RECORD DATE SHARES
- --------------------------------------------------------------------------------
REGISTRATION
- --------------------------------------------------------------------------------
----------------
Please be sure to sign and date this Proxy. Date
- -----Shareholder sign here----------------Co-owner sign here-----
(Center Column)
Proposal 2(b)
[ ] [ ] [ ]
Proposal 2(c)
[ ] [ ] [ ]
Proposal 3 For Against Abstain
[ ] [ ] [ ]
NOTE: Please sign exactly as name appears above. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in
full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by aathorized person.
(Right Column)
4. Election of Directors. With- For All
For hold Except
If proposal No. 1 is approved, to elect [ ] [ ] [ ]
the following seven Directors: Edward
D. Beach, Harry A. Jacobs, Jr., Donald
D. Lennox, Douglas H. McCorkindale,
Thomas T. Mooney, Richard A. Redeker
and Louis A. Weil, III.
INSTRUCTION: To withhold authority for any individual nominee, mark the
"For All Except" box and strike a line through that nominee(s) name in the
list above.
Proposal 5 For Against Abstain
[ ] [ ] [ ]
Proposal 6
[ ] [ ] [ ]
SEE BELOW FOR PROPOSALS
Mark box at right if address change has
been noted on the reverse side of this card. [ ]
- --------------------------------------------------------------------------------
DETACH CARD DETACH CARD
THE GLOBAL GOVERNMENT PLUS FUND, INC.
PROPOSALS
1. To approve a proposal to convert the Fund to an open-end investment company.
2. To approve changes to investment restrictions of the Fund as follows:
(a) To increase the Fund's borrowing capabilities.
(b) To amend the Fund's restrictions regarding restricted securities.
(c) To clarify the Fund's loan policies.
3. If Proposal No. 1 is approved, to approve a new Management Agreement between
the Fund and Prudential Mutual Fund Management, Inc. and a new Subadvisory
Agreement between Prudential Mutual Fund Management, Inc. and The Prudential
Investment Corporation.
4. To elect Directors, see above.
5. If Proposal No. 1 is approved, to approve a Plan of Distirbution pursuant to
Rule 12b-1 under the Investment Company Actof 1940, as amended.
6. If Proposal No. 1 is approved, to approve an amendment to the Fund's Articles
of Incorporation to permit the issuance of multiple classes of shares.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
<PAGE>
Your vote is important! PROXY SERVICES, PO BOX 550, NEW YORK, NY 10013-0550
- --------------------------------------------------------------------------------
We have been requested to forward to you the enclosed proxy material relative to
shares carried by us in your account but not registered in your name. Such
shares can be voted only by us as the holder of record.
We wish to call your attention to the fact that, under the rules of the New York
Stock Exchange, we cannot vote your shares on one or more of the matters to be
acted upon at the meeting without your specific voting instructions.
Accordingly, in order for your shares to be voted on all matters, please give
your instructions over your signature on the enclosed form and return it to us
promptly in the self-addressed stamped envelope, also enclosed. It is understood
that, if you sign without otherwise marking the form, you wish us to vote the
shares as recommended by management on all matters to be acted upon at the
meeting. If we do not hear from you by the tenth day before the meeting, we may
vote your shares in our discretion to the extent permitted by the rules of the
Exchange.
If you are unable to communicate with us by such date, we will, nevertheless,
follow voting instructions, even if our discretionary vote has already been
given, provided your instructions are received prior to the stockholders'
meeting.
Should you wish to attend the meeting in person or have a proxy covering your
shares, we shall be pleased to issue the same to you.
- --------------------------------------------------------------------------------
FORM 2501 (REV. 2/95)
