<PAGE>
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_] Preliminary proxy statement
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to (S)240.14a-11(c) or (S)240.14a-12
PRUDENTIAL-BACHE GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PRUDENTIAL-BACHE GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
<PAGE>
PRUDENTIAL MUTUAL FUNDS
ONE SEAPORT PLAZA
NEW YORK, NY 10292
APRIL 18, 1994
RE: IMPORTANT PROXY MATERIAL--IMMEDIATE ACTION REQUIRED
Dear Shareholder:
We are pleased to enclose a notice and proxy statement for a special meeting
of shareholders of the Prudential Mutual Funds to be held on June 23, 1994. You
are being asked to approve, among other things, a proposal to permit the
automatic conversion of Class B shares to Class A shares after a specified
number of years. Thereafter, converted shares will be subject to the lower
annual distribution-related fees applicable to Class A shares.
The proxy statement also includes proposals to revise the current
distribution and service plans for Class A and Class B shares and other
proposals recommended by the Fund's Manager and Subadviser.
Please read the enclosed materials carefully. The proxy statement discusses
each proposal in detail and the reasons why the Board of Directors/Trustees
recommend that you vote in favor of those proposals.
The Fund is using Shareholder Communications Corporation (SCC), a
professional proxy solicitation firm, to assist shareholders in the voting
process. If we have not yet received your proxy card as the date of the meeting
approaches, you may receive a telephone call from SCC reminding you to exercise
your right to vote.
Your vote is critical in allowing your Fund to hold the meeting as scheduled.
Please take a moment now to sign and return the proxy card in the enclosed
postage-paid envelope. If less than a majority of the eligible shares are
represented, the Fund, at shareholders' expense, will have to continue to
solicit votes until a quorum is obtained. Your prompt attention in this matter
benefits all shareholders. Thank you.
Sincerely,
Lawrence C. McQuade
President
SPECIAL NOTE: If you hold shares in more than one Prudential fund, you will
receive a separate proxy package for each Fund you hold. Please be sure to
sign and return each proxy card regardless of how many you receive.
<PAGE>
PRUDENTIAL GLOBAL GENESIS FUND
ONE SEAPORT PLAZA
NEW YORK, NY 10292
-----------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To our Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of Prudential-
Bache Global Genesis Fund, Inc., doing business as Prudential Global Genesis
Fund (the Fund), will be held at 3:00 P.M. on June 23, 1994, at 199 Water
Street, New York, NY 10292, for the following purposes:
1. To elect Directors.
2. To approve an amendment of the Fund's Articles of Incorporation to
permit a conversion feature for Class B shares.
3. To approve an amended and restated Class A Distribution and Service
Plan.
4. To approve an amended and restated Class B Distribution and Service
Plan.
5. To approve amendments of the Fund's investment restrictions regarding
restricted and illiquid securities.
6. To approve an amendment of the Fund's investment restriction limiting
the Fund's ability to invest in a security if the Fund would hold more
than 10% of any class of securities of an issuer.
7. To approve the elimination of the Fund's investment restriction
limiting the Fund's ability to invest in the securities of any issuer in
which officers and Directors of the Fund or officers and directors of its
investment adviser own more than a specified interest.
8. To approve an amendment of the Fund's Articles of Incorporation to
change the name of the Fund to "Prudential Global Genesis Fund, Inc."
9. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Only shares of Common Stock of the Fund of record at the close of business
on March 31, 1994 are entitled to notice of and to vote at this Meeting or any
adjournment thereof.
S. Jane Rose
Secretary
Dated: April 18, 1994
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED
ENVELOPE. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER
SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
<PAGE>
PRUDENTIAL GLOBAL GENESIS FUND
ONE SEAPORT PLAZA
NEW YORK, NY 10292
-----------------------
PROXY STATEMENT
-----------------------
This statement is furnished by the Board of Directors of Prudential-Bache
Global Genesis Fund, Inc., doing business as Prudential Global Genesis Fund
(the Fund), in connection with its solicitation of proxies for use at a
Special Meeting of Shareholders to be held at 3:00 P.M. on June 23, 1994 at
199 Water Street, New York, New York 10292, the Fund's principal executive
office. The purpose of the Meeting and the matters to be acted upon are set
forth in the accompanying Notice of Special Meeting.
If the accompanying form of Proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the Proxy. However, if no instructions are specified, shares
will be voted for the election of Directors and for each of the other
proposals. A Proxy may be revoked at any time prior to the time it is voted by
written notice to the Secretary of the Fund or by attendance at the Meeting.
If sufficient votes to approve one or more of the proposed items are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares present at the
Meeting or represented by proxy. When voting on a proposed adjournment, the
persons named as proxies will vote for the proposed adjournment all shares
that they are entitled to vote with respect to each item, unless directed to
disapprove the item, in which case such shares will be voted against the
proposed adjournment.
If a Proxy that is properly executed and returned accompanied by
instructions to withhold authority to vote 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 will be
considered not to be present at the Meeting for purposes of determining the
existence of a quorum for the transaction of business and be deemed not cast
with respect to such proposal. If no instructions are received by the broker
or nominee from the shareholder with reference to routine matters, the shares
represented thereby may be considered for purposes of determining the
1
<PAGE>
existence of a quorum for the transaction of business and will be deemed cast
with respect to such proposal. Also, a properly executed and returned Proxy
marked with an abstention will be considered present at the Meeting for
purposes of determining the existence of a quorum for the transaction of
business. However, abstentions and broker "non-votes" do not constitute a vote
"for" or "against" the matter, but have the effect of a negative vote on
matters which require approval by a requisite percentage of the outstanding
shares.
The close of business on March 31, 1994 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 10,501,448 shares of Common Stock
outstanding and entitled to vote, consisting of 1,516,239 Class A shares and
8,985,209 Class B shares. Each share will be entitled to one vote at the
Meeting. It is expected that the Notice of Special Meeting, Proxy Statement
and form of Proxy will first be mailed to shareholders on or about April 22,
1994.
As of the record date for the Meeting, the only holder of record of more
than 5% of the outstanding shares of either class of common stock was The
Feinstein Foundation Inc., 37 Alhambra Cir, Cranston, RI 02905-3400, which
held, solely of record on behalf of other persons, 179,413 shares of the
Fund's Class A common stock, which represent approximately 11.8% of the Class
A shares then outstanding.
The expense of solicitation will be borne by the Fund and will include
reimbursement of brokerage firms and others for expenses in forwarding proxy
solicitation material to beneficial owners. The solicitation of proxies will
be largely by mail. The Board of Directors of the Fund has authorized
management to retain Shareholder Communications Corporation, a proxy
solicitation firm, to assist in the solicitation of proxies for this Meeting.
This cost, including specified expenses, is not expected to exceed $9,748 and
will be borne by the Fund. In addition, solicitation may include, without cost
to the Fund, telephonic, telegraphic or oral communication by regular
employees of Prudential Securities Incorporated (Prudential Securities) and
its affiliates.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the Meeting, seven Directors will be elected to hold office for a term of
unlimited duration until their successors are elected and qualify. It is the
intention of the persons named in the accompanying form of Proxy to vote for
the election of Edward D. Beach, Donald D. Lennox, Douglas H. McCorkindale,
Lawrence C. McQuade, Thomas T. Mooney, Richard A.
2
<PAGE>
Redeker and Louis A. Weil, III, all of whom are currently members of the Board
of Directors. Each of the nominees has consented to be named in the Proxy
Statement and to serve as a Director if elected. All of the Directors, except
for Mr. Redeker, have previously been elected by shareholders. Messrs. Beach,
Lennox, McCorkindale, Mooney and Weil have served as Directors since June 18,
1987 and Mr. McQuade has served as a Director since February 18, 1988. Mr.
Redeker has served as a Director since November 9, 1993.
The Board of Directors has no reason to believe that any of the nominees
named above will become unavailable for election as a Director, but if that
should occur before the Meeting, proxies will be voted for such persons as the
Board of Directors may recommend.
The Fund's By-laws provide that the Fund will not be required to hold annual
meetings of shareholders if the election of Directors is not required under the
Investment Company Act of 1940, as amended (the Investment Company Act). It is
the present intention of the Board of Directors of the Fund not to hold annual
meetings of shareholders unless such shareholder action is required.
INFORMATION REGARDING DIRECTORS
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION OWNED AT
PAST FIVE YEARS AND DIRECTORSHIPS WITH FUND MARCH 31, 1994
----------------------------------------- --------- --------------
<S> <C> <C>
Edward D. Beach (69), President and Director of BMC Director 0
Fund, Inc.; 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.; Presi-
dent and Director of Global Utility Fund, Inc.;
Director of The Global Government Plus Fund,
Inc., The Global Yield Fund, Inc., Prudential Ad-
justable Rate Securities Fund, Inc., Prudential
Equity Fund, Inc., Prudential Global Genesis
Fund, Prudential Global Natural Resources Fund,
Prudential GNMA Fund, Prudential Government Plus
Fund, Prudential Multi-Sector Fund, Inc. and Pru-
dential Special Money Market Fund; Trustee of The
BlackRock Government Income Trust, Command Gov-
ernment Fund, Command Money Fund, Command Tax-
Free Fund, Pruden-
tial California Municipal Fund, Prudential
Equity Income Fund, Prudential FlexiFund,
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION OWNED AT
PAST FIVE YEARS AND DIRECTORSHIPS WITH FUND MARCH 31, 1994
----------------------------------------- --------- --------------
<S> <C> <C>
Prudential Municipal Bond Fund and Prudential
Municipal Series Fund.
Donald D. Lennox (75), Chairman (since February Director 1,104
1990) and Director (since April 1989) of Inter-
national Imaging Materials, Inc.; Retired
Chairman, Chief Executive Officer and Director
of Schlegel Corporation (March 1987 - February
1989); Director, Gleason Corporation, Navistar
International Corporation, Personal Sound Tech-
nologies, Inc., Prudential Global Genesis Fund,
Prudential Global Natural Resources Fund,
Prudential Institutional Liquidity Portfolio,
Inc., Prudential Multi-Sector Fund, Inc., The
Global Government Plus Fund, Inc. and The High
Yield Income Fund, Inc.; Trustee of Prudential
Equity Income Fund, Prudential FlexiFund, Pru-
dential Municipal Bond Fund and The Target
Portfolio Trust.
Douglas H. McCorkindale (54), Vice Chairman, Director 0
Gannett Co., Inc. (publishing and media) (since
March 1984); Director of Continental Airlines,
Inc., Gannett Co., Inc., Rochester Telephone
Corporation, Prudential Global Genesis Fund,
Prudential Global Natural Resources Fund, Pru-
dential Multi-Sector Fund, Inc. and The Global
Government Plus Fund, Inc.; Trustee of Pruden-
tial Equity Income Fund, Prudential FlexiFund
and Prudential Municipal Bond Fund.
*Lawrence C. McQuade (66), Vice Chairman of Pru- President and 0
dential Mutual Fund Management, Inc. (PMF) Director
(since 1988); Managing Director, Investment
Banking, Prudential Securities (1988 - 1991);
Director of Quixote Corporation (since February
1992) and BUNZL, PLC (since June 1991); for-
merly Director of Kaiser Tech Ltd. and Kaiser
Aluminum and Chemical Corp. (March 1987 - No-
vember 1988) and Crazy Eddie Inc. (1987 -1990);
formerly Executive Vice President and Director
of W.R. Grace & Co. (1975 -1987); President and
Director of Prudential Adjust-
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION OWNED AT
PAST FIVE YEARS AND DIRECTORSHIPS WITH FUND MARCH 31, 1994
----------------------------------------- --------- --------------
<S> <C> <C>
able Rate Securities Fund, Inc., Prudential Eq-
uity Fund, Prudential Global Fund, Inc., Pru-
dential Global Genesis Fund, Prudential Global
Natural Resources Fund, Prudential GNMA Fund,
Prudential Government Plus Fund, Prudential
Growth Fund, Inc., Prudential Growth Opportu-
nity Fund, Prudential High Yield Fund, Pruden-
tial IncomeVertible (R) Fund, Inc., Prudential
Institutional Liquidity Portfolio, Inc., Pru-
dential Intermediate Global Income Fund, Inc.,
Prudential MoneyMart Assets, Prudential Multi-
Sector Fund, Inc., Prudential National
Municipals Fund, Prudential Pacific Growth
Fund, Inc., Prudential Short-Term Global Income
Fund, Inc., Prudential Special Money Market
Fund, Prudential Structured Maturity Fund, Pru-
dential Tax-Free Money Fund, Prudential Utility
Fund, The Global Government Plus Fund, Inc.,
The Global Yield Fund, Inc. and The High Yield
Income Fund, Inc.; President and Trustee of The
BlackRock Government Income Trust, Command Gov-
ernment Fund, Command Money Fund, Command Tax-
Free Fund, Prudential California Municipal
Fund, Prudential Equity Income Fund, Prudential
FlexiFund, Prudential Government Securities
Trust, Prudential Municipal Bond Fund, Pruden-
tial Municipal Series Fund, Prudential U.S.
Government Fund and The Target Portfolio Trust.
Thomas T. Mooney (52), President of the Greater Director 1,023
Rochester Metro Chamber of Commerce; formerly
Rochester City Manager; Trustee of Center for
Governmental Research, Inc.; Director of Blue
Cross of Rochester, Monroe County Water Author-
ity, Rochester Jobs, Inc., Executive Service
Corps of Rochester, Monroe County Industrial
Development Corporation, Northeast Midwest In-
stitute, Global Utility Fund,
Inc., Prudential Adjustable Rate Securities
Fund, Inc., Prudential Equity Fund, Inc.,
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION OWNED AT
PAST FIVE YEARS AND DIRECTORSHIPS WITH FUND MARCH 31, 1994
----------------------------------------- --------- --------------
<S> <C> <C>
Prudential Global Genesis Fund, Prudential
Global Natural Resources Fund, Prudential GNMA
Fund, Prudential Government Plus
Fund, Prudential Multi-Sector Fund, Inc., First
Financial Fund, Inc., The Global Government
Plus Fund, Inc., The Global Yield Fund, Inc.
and The High Yield Plus Fund, Inc.; Trustee of
Prudential California Municipal Fund, Pruden-
tial Equity Income Fund, Prudential FlexiFund,
Prudential Municipal Bond Fund and Prudential
Municipal Series Fund.
*Richard A. Redeker (50), President, Chief Execu- Director 0
tive Officer and Director (since October 1993),
PMF; Executive Vice President, Director and
Member of Operating Committee (since October
1993), Prudential Securities; Director of Pru-
dential Securities Group, Inc. (PSG) (since Oc-
tober 1993); formerly Senior Executive Vice
President and Director of Kemper Financial
Services, Inc. (September 1978 - September
1993); Director of Global Utility Fund, Inc.,
Prudential Adjustable Rate Securities Fund,
Inc., Prudential Equity Fund, Inc., Prudential
Global Fund, Inc., Prudential Global Genesis
Fund, Prudential Global Natural Resources Fund,
Prudential GNMA Fund, Prudential Government
Plus Fund, Prudential Growth Fund, Inc., Pru-
dential IncomeVertible (R) Fund, Inc., Pruden-
tial Institutional Liquidity Portfolio, Inc.,
Prudential Intermediate Global Income Fund,
Inc., Prudential MoneyMart Assets, Prudential
Multi-Sector Fund, Inc., Prudential Pacific
Growth Fund, Inc., Prudential Short-Term Global
Income Fund, Inc., Prudential Special Money
Market Fund, Prudential Structured Maturity
Fund, Prudential Utility Fund, The Global Yield
Fund, Inc., The Global Government Plus Fund,
Inc., and The High Yield Income Fund, Inc.;
Trustee of The BlackRock Government Income
Trust, Command Govern-
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION OWNED AT
PAST FIVE YEARS AND DIRECTORSHIPS WITH FUND MARCH 31, 1994
----------------------------------------- --------- --------------
<S> <C> <C>
ment Fund, Command Money Fund, Command Tax-Free
Fund, Prudential California Municipal Fund,
Prudential Equity Income Fund, Prudential
FlexiFund, Prudential Municipal Bond Fund, Pru-
dential Municipal Series Fund, Prudential U.S.
Government Fund and The Target Portfolio Trust.
Louis A. Weil, III (52), Publisher and Chief Ex- Director 447
ecutive Officer, Phoenix Newspapers, Inc.
(since August 1991); Director of Central News-
papers, Inc. (since September 1991); prior
thereto, Publisher of Time Magazine (May 1989 -
March 1991); formerly, President, Publisher
and CEO of The Detroit News (February 1986 -
August 1989); formerly member of the Advisory
Board Chase Manhattan Bank-Westchester; Direc-
tor of Prudential Global Genesis Fund, Pruden-
tial Global Natural Resources Fund, Prudential
Growth Opportunity Fund, Prudential High Yield
Fund, Prudential Multi-Sector Fund, Inc., Pru-
dential National Municipals Fund, Prudential
Tax-Free Money Fund and The Global Government
Plus Fund, Inc.; Trustee of Prudential Equity
Income Fund, Prudential FlexiFund, Prudential
Government Securities Trust and Prudential Mu-
nicipal Bond Fund.
</TABLE>
- -----------
* Indicates "interested" Director, as defined in the Investment Company Act, by
reason of his affiliation with PMF or Prudential Securities.
The Directors and officers of the Fund as a group owned beneficially 2,574
shares of the Fund at March 31, 1994, representing less than 1% of the
outstanding shares of the Fund.
The Fund pays annual compensation of $5,000, plus travel and incidental
expenses, to each of the five Directors not affiliated with PMF or Prudential
Securities. The Directors have the option to receive the Director's fee
pursuant to a deferred fee agreement with the Fund. Under the terms of the
agreement, the Fund accrues daily the amount of such Director's fees which
accrues interest at a rate equivalent to the prevailing rate applicable to 90-
day
7
<PAGE>
U.S. Treasury Bills at the beginning of each calendar quarter or, pursuant to
an exemptive order of the Securities and Exchange Commission (SEC) at the rate
of return of the Fund. Payment of the interest so accrued is also deferred and
accruals become payable at the option of the Director. The Fund's obligation to
make payments of deferred Directors' fees, together with interest thereon, is a
general obligation of the Fund. During the fiscal year ended May 31, 1993 and
the six-month period ended November 30, 1993, the Fund paid Directors' fees of
$30,000 and $12,500, respectively, and travel and incidental expenses of
approximately $2,200 and $1,000, respectively.
There were four regular meetings and one special meeting of the Fund's Board
of Directors held during the fiscal year ended May 31, 1993 and two regular
meetings and no special meetings held during the period from June 1, 1993
through November 30, 1993. The Board of Directors presently has an Audit
Committee, the members of which are Messrs. Beach, Lennox, McCorkindale, Mooney
and Weil, the Fund's non-interested Directors. The Audit Committee met twice
during the fiscal year ended May 31, 1993 and once during the period from June
1, 1993 through November 30, 1993. The Audit Committee makes recommendations to
the full Board with respect to the engagement of independent accountants and
reviews with the independent accountants the plan and results of the audit
engagement and matters having a material effect upon the Fund's financial
operations. The Board also has a Nominating Committee, comprised of the Fund's
non-interested Directors, which selects and proposes candidates for election to
the Board of Directors. The Nominating Committee met once during the fiscal
year ended May 31, 1993 and twice during the period from June 1, 1993 through
November 30, 1993. The Nominating Committee does not consider nominees
recommended by shareholders to fill vacancies on the Board.
During the fiscal year ended May 31, 1993, no Director attended fewer than
75% of the aggregate of the total number of meetings of the Board of Directors
and any committees thereof of which such Director was a member.
The executive officers of the Fund, other than as shown above, are: S. Jane
Rose, Secretary, Robert F. Gunia, Vice President, and Susan C. Cote, Treasurer
and Principal Financial and Accounting Officer, each having held office since
June 18, 1987; and Marguerite E.H. Morrison, Assistant Secretary, having held
office since May 15, 1991. Mr. Gunia is 47 years old and is currently Chief
Administrative Officer (since July 1990), Director, Executive Vice President,
Treasurer and Chief Financial Officer (since June 1987) of PMF and Senior Vice
President (since March 1987) of Prudential
8
<PAGE>
Securities. He is also Vice President and Director (since May 1989) of The Asia
Pacific Fund, Inc. Ms. Cote is 39 years old and is a Senior Vice President
(since January 1989) of PMF, and a Senior Vice President of Prudential
Securities (since January 1992). Prior thereto, she was a Vice President
(January 1986 - December 1991) of Prudential Securities. Ms. Rose is 48 years
old and is a Senior Vice President (since January 1991) and Senior Counsel of
PMF and a Senior Vice President and Senior Counsel of Prudential Securities
(since July 1992). Prior thereto, she was a First Vice President (June 1987 -
December 1990) of PMF and a Vice President and Associate General Counsel of
Prudential Securities. Ms. Morrison is 38 years old and is a Vice President and
Associate General Counsel (since June 1991) of PMF and a Vice President and
Associate General Counsel of Prudential Securities. The executive officers of
the Fund are elected annually by the Board of Directors.
REQUIRED VOTE
Directors must be elected by a vote of a plurality of the shares present at
the meeting in person or by proxy and entitled to vote thereupon, provided that
a quorum is present.
MANAGEMENT OF THE FUND
THE MANAGER
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 September 28, 1988 (the Management Agreement).
The Management Agreement was last approved by the Board of Directors of the
Fund, including a majority of the Directors who are not parties to such
contract or interested persons of such parties (as defined in the Investment
Company Act) on May 4, 1993 and was approved by shareholders on September 8,
1988.
TERMS OF THE MANAGEMENT AGREEMENT
Pursuant to the Management Agreement, PMF, subject to the supervision of the
Fund's Board of Directors and in conformity with the stated policies of the
Fund, is responsible for managing or providing for the management of the
investment of the Fund's assets. In this regard, PMF
9
<PAGE>
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 Company (PIC), a wholly-owned subsidiary of The Prudential Insurance
Company of America (Prudential), provides such services pursuant to a
subadvisory agreement (the Subadvisory Agreement) with PMF. 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
Management Agreement may be furnished by any such directors, officers or
employees of PMF. In connection with its administration of the corporate
affairs of the Fund, PMF bears the following expenses:
(a) the salaries and expenses of all personnel of the Fund and PMF,
except the fees and expenses of Directors not affiliated with PMF or the
Fund's investment adviser;
(b) all expenses incurred by PMF or by the Fund in connection with
administering 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 PIC pursuant to the Subadvisory
Agreement.
The Fund pays PMF for the services performed and the facilities furnished by
it a fee at an annual rate of 1% of the Fund's average daily net assets. The
fee is computed daily and paid monthly. For the fiscal year ended May 31, 1993,
PMF voluntarily waived 100% of its management fee totalling $346,674. For the
six-month period ended November 30, 1993, PMF received a management fee of
$44,791 (after waiver of $273,289 in fees).
The Management Agreement provides that, if the expenses of the Fund
(including the fees of PMF, but excluding interest, taxes, brokerage
commissions, distribution fees and litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the Fund's
business) for any fiscal year exceed the lowest applicable annual
10
<PAGE>
expense limitation established and enforced pursuant to the statutes or
regulations of any jurisdiction in which shares of the Fund are then qualified
for offer and sale, the compensation due PMF will be reduced by the amount of
such excess, or if such reduction exceeds the compensation payable to PMF, PMF
will pay the Fund the amount of such reduction which exceeds the amount of such
compensation. Any such reductions or payments are subject to readjustment
during the year. No such reductions or payments were required during the fiscal
year ended May 31, 1993. The Fund believes the most restrictive of such annual
limitations 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.
Except as indicated above, the Fund is responsible under the Management
Agreement for the payment of its expenses, including (a) the fees payable to
PMF, (b) the fees and expenses of Directors who are not affiliated with PMF or
the investment adviser, (c) the fees and certain expenses of the Fund's
Custodian and Transfer and Dividend Disbursing Agent, including the cost of
providing records of the Fund and of pricing Fund shares, (d) the charges and
expenses of the Fund's legal counsel and independent accountants, (e) brokerage
commissions and any issue or transfer taxes chargeable to the Fund in
connection with its securities transactions, (f) all taxes and corporate fees
payable by the Fund to governmental agencies, (g) the fees of any trade
association of which the Fund may be a member, (h) the cost of any stock
certificates representing shares of the Fund, (i) the cost of fidelity and
liability insurance, (j) certain organization expenses of the Fund and the fees
and expenses involved in registering and maintaining registration of the Fund
and of its shares with the Securities and Exchange Commission and registering
the Fund and qualifying its shares under state securities laws, including the
preparation and printing of the Fund's registration statements and prospectuses
for such purposes, (k) allocable communications expenses with respect to
investor services and all expenses of shareholders' and Board of Directors'
meetings and of preparing, printing and mailing reports, proxy statements and
prospectuses to shareholders in the amount necessary for distribution to the
shareholders, (l) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business and (m) distribution fees.
The Management Agreement provides that PMF will not be liable 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 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
11
<PAGE>
negligence or reckless disregard of duty. The Management Agreement also
provides that it will terminate automatically if assigned and that it may be
terminated without penalty by the Board of Directors of the Fund, by vote of a
majority of the Fund's outstanding voting securities (as defined in the
Investment Company Act) or by the Manager, upon not more than 60 days' nor less
than 30 days' written notice.
INFORMATION ABOUT PMF
PMF is a subsidiary of Prudential Securities and an indirect, wholly-owned
subsidiary of Prudential, Prudential Plaza, Newark, New Jersey 07102. PMF was
organized in May 1987 under the laws of the State of Delaware. PMF acts as
manager for the following investment companies:
Open-End Management Investment Companies: Command Government Fund,
Command Money Fund, Command Tax-Free Fund, Prudential Adjustable Rate
Securities Fund, Inc., Prudential California Municipal Fund, Prudential
Equity Fund, Inc., Prudential Equity Income Fund, Prudential FlexiFund,
Prudential Global Fund, Inc., Prudential-Bache Global Genesis Fund, Inc.
(d/b/a Prudential Global Genesis Fund), Prudential-Bache Global Natural
Resources Fund, Inc. (d/b/a Prudential Global Natural Resources Fund),
Prudential-Bache GNMA Fund, Inc. (d/b/a Prudential GNMA Fund), Prudential-
Bache Government Plus Fund, Inc. (d/b/a Prudential Government Plus Fund),
Prudential Government Securities Trust, Prudential Growth Fund, Inc.,
Prudential-Bache Growth Opportunity Fund, Inc. (d/b/a Prudential Growth
Opportunity Fund), Prudential-Bache High Yield Fund, Inc. (d/b/a
Prudential High Yield Fund), Prudential IncomeVertible (R) Fund, Inc.,
Prudential-Bache MoneyMart Assets Fund, Inc. (d/b/a Prudential MoneyMart
Assets), Prudential Multi-Sector Fund, Inc., Prudential Municipal Bond
Fund, Prudential Municipal Series Fund, Prudential-Bache National
Municipals Fund, Inc. (d/b/a Prudential National Municipals Fund),
Prudential Pacific Growth Fund, Inc., Prudential Short-Term Global Income
Fund, Prudential-Bache Special Money Market Fund, Inc. (d/b/a Prudential
Special Money Market Fund), Prudential-Bache Structured Maturity Fund,
Inc. (d/b/a Prudential Structured Maturity Fund), Prudential-Bache Tax-
Free Money Fund, Inc. (d/b/a Prudential Tax-Free Money Fund), Prudential
U.S. Government Fund, Prudential-Bache Utility Fund, Inc. (d/b/a
Prudential Utility Fund), Prudential Institutional Liquidity Portfolio,
Inc., Prudential Intermediate Global Income Fund, Inc., Global Utility
Fund, Inc., Nicholas-Applegate Fund, Inc. and The BlackRock Government
Income Trust.
12
<PAGE>
Closed-End Management Investment Companies: The Global Government Plus
Fund, Inc., The Global Yield Fund, Inc. and The High Yield Income Fund,
Inc.
The consolidated statement of financial condition of PMF and subsidiaries as
of December 31, 1993 is set forth as Exhibit A to this Proxy Statement.
Certain information regarding the directors and principal executive officers
of PMF is set forth below. Except as otherwise indicated, the address of each
person is One Seaport Plaza, New York, New York, 10292.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATION
---------------- ----------------- --------------------
<C> <S> <C>
Brendan D. Boyle Executive Vice President and Executive Vice
Director of Marketing President and
Director of
Marketing, PMF
John D. Brookmeyer, Jr. Director Senior Vice
Two Gateway Center President,
Newark, NJ 07102 Prudential; Senior
Vice President, PIC
Susan C. Cote Senior Vice President Senior Vice
President, PMF;
Senior Vice
President,
Prudential
Securities
Fred A. Fiandaca Executive Vice President, Executive Vice
Raritan Plaza One Chief Operating Officer and President, Chief
Edison, NJ 08847 Director Operating Officer
and Director, PMF;
Chairman, Chief
Operating Officer
and Director,
Prudential Mutual
Fund Services, Inc.
Stephen P. Fisher Senior Vice President Senior Vice
President, PMF;
Senior Vice
President,
Prudential
Securities
Frank W. Giordano Executive Vice President, Executive Vice
General Counsel and President, General
Secretary Counsel and
Secretary, PMF;
Senior Vice
President,
Prudential
Securities
Robert F. Gunia Executive Vice President, Executive Vice
Chief Financial and President, Chief
Administrative Officer, Financial and
Treasurer and Director Administrative
Officer, Treasurer
and Director, PMF;
Senior Vice
President,
Prudential
Securities
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATION
---------------- ----------------- --------------------
<C> <S> <C>
Eugene B. Heimberg Director Senior Vice
Prudential Plaza President,
Newark, NJ 07102 Prudential;
President, Director
and Chief
Investment Officer,
PIC
Lawrence C. McQuade Vice Chairman Vice Chairman, PMF
Leland B. Paton Director Executive Vice
President and
Director,
Prudential
Securities;
Director, PSG
Richard A. Redeker President, Chief Executive President, Chief
Officer and Director Executive Officer
and Director, PMF;
Executive Vice
President, Director
and Member of the
Operating
Committee,
Prudential
Securities;
Director, PSG
S. Jane Rose Senior Vice President, Senior Senior Vice
Counsel and Assistant President, Senior
Secretary Counsel and
Assistant
Secretary, PMF;
Senior Vice
President and
Senior Counsel,
Prudential
Securities
Donald G. Southwell Director Senior Vice
213 Washington Street President,
Newark, NJ 07102 Prudential;
Director, PSG
</TABLE>
THE SUBADVISER
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
September 28, 1988. The Subadvisory Agreement was approved by shareholders on
September 8, 1988 and was last approved by the Board of Directors of the Fund,
including a majority of the Directors who are not parties to such contract or
interested persons of such parties (as defined in the Investment Company Act),
on May 4, 1993.
TERMS OF THE SUBADVISORY AGREEMENT
Pursuant to the 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
14
<PAGE>
composition of the Fund's portfolio, including the purchase, retention and
disposition of securities and other investments. 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 Management Agreement with PMF are not
affected by this arrangement. PIC keeps certain books and records required to
be maintained pursuant to the Investment Company Act. The investment advisory
services of PIC to the Fund are not exclusive under the terms of the
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 Subadvisory
Agreement may be furnished by any such directors, officers or employees of
PIC. The 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 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 duty.
The Subadvisory Agreement provides that it shall terminate automatically if
assigned or upon termination of the Management Agreement and that it may be
terminated without penalty by the Fund, PMF or PIC upon not more than 60 days'
nor less than 30 days' written notice.
INFORMATION ABOUT PIC
PIC was organized in June 1984 under the laws of the State of New Jersey.
The business and other connections of PIC's directors and executive officers
are as set forth below. Except as otherwise indicated, the address of each
person is Prudential Plaza, Newark, New Jersey 07102.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIC PRINCIPAL OCCUPATION
---------------- ----------------- --------------------
<S> <C> <C>
Martin A. Berkowitz Senior Vice Senior Vice
President and President and
Chief Financial Chief Financial
and Compliance and Compliance
Officer Officer, PIC;
Vice President,
Prudential
William M. Bethke Senior Vice Senior Vice
Two Gateway Center President President,
Newark, NJ 07102 Prudential;
Senior Vice
President, PIC
John D. Brookmeyer, Jr. Senior Vice Senior Vice
Two Gateway Center President President,
Newark, NJ 07102 Prudential;
Senior
Vice President,
PIC
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIC PRINCIPAL OCCUPATION
---------------- ----------------- --------------------
<S> <C> <C>
Eugene B. Heimberg President, Director Senior Vice
and Chief President,
Investment Prudential;
Officer President,
Director and
Chief Investment
Officer, PIC
Garnett L. Keith, Jr. Director Vice Chairman and
Director,
Prudential;
Director, PIC
Harry E. Knapp, Jr. Vice President Vice President,
Four Gateway Center Prudential; Vice
Newark, NJ 07102 President, PIC
William P. Link Senior Vice Executive Vice
Four Gateway Center President President,
Newark, NJ 07102 Prudential;
Senior Vice
President, PIC
Robert E. Riley Executive Vice Executive Vice
800 Boylston Avenue President President,
Boston, MA 02199 Prudential;
Executive Vice
President, PIC;
Director, PSG
James W. Stevens Executive Vice Executive Vice
Four Gateway Center President President,
Newark, NJ 07102 Prudential;
Executive Vice
President, PIC;
Director, PSG
Robert C. Winters Director Chairman of the
Board and Chief
Executive
Officer,
Prudential;
Director, PIC;
Chairman of the
Board, PSG
Claude J. Zinngrabe, Jr. Executive Vice Vice President,
President Prudential;
Executive Vice
President, PIC
</TABLE>
THE DISTRIBUTORS
Prudential Mutual Fund Distributors, Inc. (PMFD), One Seaport Plaza, New
York, New York 10292, acts as the distributor of the Class A shares of the
Fund. Prudential Securities, One Seaport Plaza, New York, New York 10292, acts
as the distributor of the Class B shares of the Fund. PMFD and Prudential
Securities are indirect, wholly-owned subsidiaries of Prudential.
16
<PAGE>
Under separate Distribution and Service Plans (the Class A Plan and the Class
B Plan, collectively, the Plans) adopted by the Fund under Rule 12b-1 under the
Investment Company Act and separate distribution agreements (the Distribution
Agreements), PMFD and Prudential Securities (collectively, the Distributor)
incur the expenses of distributing the Fund's Class A and Class B shares,
respectively.
The Plans were last approved by the Board of Directors, including a majority
of the Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the Class A or Class
B Plan or in any agreement related to either Plan (the Rule 12b-1 Directors),
on May 4, 1993. The Class A Plan was approved by the Class A shareholders on
December 19, 1990. The Class B Plan was approved by the Class B shareholders on
January 11, 1990.
The Plans are proposed to be amended as set forth in Proposals No. 3 and 4
below.
Class A Plan. Under the Class A Plan, the Fund reimburses PMFD for its
distribution-related expenses with respect to Class A shares at an annual rate
of up to .30 of 1% of the average daily net assets of the Class A Shares. The
Class A Plan provides that (i) up to .25 of 1% of the average daily net assets
of the Class A shares may be used for personal service and/or the maintenance
of shareholder accounts (service fee) and (ii) total distribution fees
(including the service fee of .25 of 1%) may not exceed .30 of 1% of the
average daily net assets of the Class A shares. PMFD has advised the Fund that
distribution-related expenses of the Fund will not exceed .25 of 1% of the
average daily net assets of the Class A shares for the fiscal year ending May
31, 1995.
For the fiscal year ended May 31, 1993 and the six-month period ended
November 30, 1993, PMFD received payments of $6,212 and $8,270, representing
.20 of 1% of the average daily net assets of the Class A shares, respectively,
under the Class A Plan, as reimbursement of expenses related to the
distribution of Class A shares. This amount was primarily expended on account
servicing fees to Prudential Securities and Pruco Securities Corporation, an
affiliated broker-dealer (Prusec), for payment to financial advisers and other
salespersons who sell Class A shares. For the fiscal year ended May 31, 1993
and the six-month period ended November 30, 1993, PMFD also received $19,800
and $246,200, respectively, in initial sales charges.
17
<PAGE>
Class B Plan. Under the Class B Plan, the Fund reimburses Prudential
Securities for its distribution-related expenses with respect to Class B shares
at an annual rate of up to .75 of 1% of the average daily net assets of the
Class B shares. The Class B Plan also provides for the payment of a service fee
to Prudential Securities at a rate not to exceed .25 of 1% of the average daily
net assets of Class B shares. The aggregate distribution fee for Class B shares
(asset-based sales charge plus service fee) will not exceed 1% of average daily
net assets under the Class B Plan.
For the fiscal year ended May 31, 1993 and the six-month period ended
November 30, 1993, Prudential Securities received $315,614 and $276,728,
respectively, from the Fund under the Class B Plan and spent approximately
$322,000 and $1,567,500, respectively, in distributing the Fund's Class B
shares. It is estimated that of the latter amounts approximately 0.9% ($3,000)
and 0.9% ($14,300) were spent on printing and mailing of prospectuses to other
than current shareholders during the fiscal year ended May 31, 1993 and during
the six-month period ended November 30, 1993, respectively; 9.6% ($31,000) and
4.3% ($66,400) on compensation to Prusec, for commissions to its financial
advisers and other expenses, including an allocation of overhead and other
branch office distribution-related expenses, incurred by it for distribution of
Fund shares during the fiscal year ended May 31, 1993 and during the six-month
period ended November 30, 1993, respectively; 13.4% ($43,000) and 1.8%
($28,500) on interest and/or carrying charges during the fiscal year ended May
31, 1993 and during the six-month period ended November 30, 1993, respectively;
76.1% ($245,000) and 93.0% ($1,458,300) during the fiscal year ended May 31,
1993 and during the six-month period ended November 30, 1993, respectively, on
the aggregate of (i) payments of commissions to financial advisers of 18.6%
($60,000) and 41.3% ($647,500) during the fiscal year ended May 31, 1993 and
during the six-month period ended November 30, 1993, respectively, and (ii) an
allocation of overhead and other branch office distribution-related expenses of
57.5% ($185,000) and 51.7% ($810,800) during the fiscal year ended May 31, 1993
and during the six-month period ended November 30, 1993, respectively. The term
"overhead and other branch office distribution-related expenses" represents (a)
the expenses of operating Prudential Securities branch offices in connection
with the sale of Fund shares, including lease costs, the salaries and employee
benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies, (b) the costs of
client sales seminars, (c) expenses of mutual fund sales coordinators to
promote the sale of Fund shares and (d) other incidental expenses relating to
branch promotion of Fund sales.
18
<PAGE>
Prudential Securities also receives the proceeds of contingent deferred
sales charges paid by holders of Class B shares upon certain redemptions of
Class B shares. Under the current Class B Plan, the amount of distribution
expenses reimbursable by Class B shares of the Fund is reduced by the amount
of such contingent deferred sales charges. For the fiscal year ended May 31,
1993 and the six-month period ended November 30, 1993, Prudential Securities
received approximately $145,500 and $37,200, respectively, in contingent
deferred sales charges. As of December 31, 1993, the aggregate amount of
unreimbursed distribution expenses for the Fund's Class B shares was
approximately $2,844,500.
The Class A and Class B Plans continue in effect from year to year, provided
that each such continuance is approved at least annually by a vote of the
Board of Directors, including a majority vote of the Rule 12b-1 Directors,
cast in person at a meeting called for the purpose of voting on such
continuance. The Class A and Class B Plans may each be terminated at any time,
without penalty, by the vote of a majority of the Rule 12b-1 Directors or by
the vote of the holders of a majority of the outstanding shares of the
applicable class on not more than 30 days' written notice to any other party
to the Plans. Neither Plan may be amended to increase materially the amounts
to be spent for the services described therein without approval by the
shareholders of the applicable class, and all material amendments are required
to be approved by the Board of Directors in the manner described above. Each
Plan will automatically terminate in the event of its assignment. The Fund
will not be contractually obligated to pay expenses incurred under either the
Class A Plan or the Class B Plan if it is terminated or not continued. In the
event of termination or noncontinuation of the Class B Plan, the Board of
Directors may consider the appropriateness of having the Fund reimburse
Prudential Securities for the outstanding carry forward amounts plus interest
thereon.
Pursuant to each Plan, the Board of Directors reviews at least quarterly a
written report of the distribution expenses incurred on behalf of the Class A
and Class B shares of the Fund by PMFD and Prudential Securities,
respectively. The report includes an itemization of the distribution expenses
and the purposes of such expenditures. In addition, as long as the Plans
remain in effect, the selection and nomination of Rule 12b-1 Directors shall
be committed to the Rule 12b-1 Directors.
Pursuant to each Distribution Agreement, the Fund has agreed to indemnify
PMFD and Prudential Securities to the extent permitted by applicable law
against certain liabilities under the Securities Act. Each
19
<PAGE>
Distribution Agreement was last approved by the Board of Directors, including a
majority of the Rule 12b-1 Directors, on May 4, 1993.
PORTFOLIO TRANSACTIONS
The Manager is responsible for decisions to buy and sell securities, futures
and options on securities and futures for the Fund, the selection of brokers,
dealers and futures commission merchants to effect the transactions and the
negotiation of brokerage commissions, if any. For purposes of this section, the
term "Manager" includes the Subadviser. Broker-dealers may receive negotiated
brokerage commissions on Fund portfolio transactions, including options and the
purchase and sale of underlying securities upon the exercise of options. On
foreign securities exchanges, commissions may be fixed. Orders may be directed
to any broker or futures commission merchant including, to the extent and in
the manner permitted by applicable law, Prudential Securities and its
affiliates.
Equity securities traded in the over-the-counter market and bonds, including
convertible bonds, are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the
price of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price which includes an amount
of compensation to the underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain money market instruments and U.S.
Government agency securities may be purchased directly from the issuer, in
which case no commissions or discounts are paid. The Fund will not deal with
Prudential Securities (or any affiliate) in any transaction in which Prudential
Securities acts as principal. Thus, it will not deal with Prudential Securities
(or any affiliate) acting as market maker, and it will not execute a negotiated
trade with Prudential Securities if execution involves Prudential Securities
(or any affiliate) acting as principal with respect to any part of the Fund's
order.
In placing orders for portfolio securities of the Fund, the Manager is
required to give primary consideration to obtaining the most favorable price
and efficient execution. Within the framework of this policy, the Manager will
consider the research and investment services provided by brokers, dealers or
futures commission merchants who effect or are parties to portfolio
transactions of the Fund, the Manager or the Manager's other clients. Such
research and investment services are those which brokerage houses customarily
provide to institutional investors and include statistical and economic data
and research reports on particular companies and industries.
20
<PAGE>
Such services are used by the Manager in connection with all of its investment
activities, and some of such services obtained in connection with the execution
of transactions for the Fund may be used in managing other investment accounts.
Conversely, brokers, dealers or futures commission merchants furnishing such
services may be selected for the execution of transactions of such other
accounts, whose aggregate assets are far larger than the Fund's, and the
services furnished by such brokers, dealers or futures commission merchants may
be used by the Manager in providing investment management for the Fund.
Commission rates are established pursuant to negotiations with the broker,
dealer or futures commission merchant based on the quality and quantity of
execution services provided by the broker, dealer or futures commission
merchant in the light of generally prevailing rates. The Manager's policy is to
pay higher commissions to brokers, other than Prudential Securities, for
particular transactions than might be charged if a different broker had been
selected, on occasions when, in the Manager's opinion, this policy furthers the
objective of obtaining best price and execution. In addition, the Manager is
authorized to pay higher commissions on brokerage transactions for the Fund to
brokers other than Prudential Securities in order to secure research and
investment services described above, subject to review by the Fund's Board of
Directors from time to time as to the extent and continuation of this practice.
The allocation of orders among brokers and the commission rates paid are
reviewed periodically by the Fund's Board of Directors. Portfolio securities
may not be purchased from any underwriting or selling syndicate of which
Prudential Securities or any affiliate, during the existence of the syndicate,
is a principal underwriter (as defined in the Investment Company Act), except
in accordance with rules of the SEC. This limitation, in the opinion of the
Fund, will not significantly affect the Fund's ability to pursue its present
investment objective. However, in the future in other circumstances, the Fund
may be at a disadvantage because of this limitation in comparison to other
funds with similar objectives but not subject to such limitations.
Subject to the above considerations, Prudential Securities may act as a
securities broker or futures commission merchant for the Fund. In order for
Prudential Securities or any affiliate to effect any portfolio transactions for
the Fund, the commissions, fees or other remuneration received by Prudential
Securities or any affiliate must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers or futures
commission merchants in connection with comparable transactions involving
similar securities or futures being purchased or sold on an exchange during a
comparable period of time. This standard would allow Prudential Securities or
any affiliate to receive no more than the remuneration which would be
21
<PAGE>
expected to be received by an unaffiliated broker or futures commission
merchant in a commensurate arm's-length transaction. Furthermore, the Board of
Directors of the Fund, including a majority of the Directors who are not
"interested" persons, has adopted procedures which are reasonably designed to
provide that any commissions, fees or other remuneration paid to Prudential
Securities or any affiliate are consistent with the foregoing standard. In
accordance with Section 11(a) of the Securities Exchange Act of 1934,
Prudential Securities may not retain compensation for effecting transactions on
a national securities exchange for the Fund unless the Fund has expressly
authorized the retention of such compensation. Prudential Securities must
furnish to the Fund at least annually a statement setting forth the total
amount of all compensation retained by Prudential Securities from transactions
effected for the Fund during the applicable period. Brokerage and futures
transactions with Prudential Securities or any affiliate are also subject to
such fiduciary standards as may be imposed upon Prudential Securities or such
affiliate by applicable law.
The table below sets forth information concerning the payment of commissions
by the Fund, including the commissions paid to Prudential Securities, for the
periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTH PERIOD
MAY 31, 1993 ENDED NOVEMBER 30, 1993
----------------- -----------------------
<S> <C> <C>
Total brokerage commissions paid by
the Fund........................... $194,850 $319,767
Total brokerage commissions paid to
Prudential Securities and its
foreign affiliates................. $1,710 $3,200
Percentage of total brokerage
commissions paid to Prudential
Securities and its foreign
affiliates......................... 0.9% 1.0%
</TABLE>
The Fund effected approximately 1.8% and 1.6% of the total dollar amount of
its transactions involving the payment of commissions through Prudential
Securities during the fiscal year ended May 31, 1993 and during the six-month
period ended November 30, 1993, respectively. Of the total brokerage
commissions paid during the fiscal year ended May 31, 1993 and the six-month
period ended November 30, 1993, approximately $193,680 (or 99.4%) and $318,807
(or 99.7%), respectively, were paid to firms which provide research,
statistical or other services to PIC.
22
<PAGE>
APPROVAL OF A PROPOSAL TO AMEND THE FUND'S ARTICLES OF INCORPORATION TO PERMIT
THE IMPLEMENTATION OF A CONVERSION FEATURE
(FOR CONSIDERATION BY CLASS A AND
CLASS B SHAREHOLDERS VOTING JOINTLY)
(PROPOSAL NO. 2)
The Board of Directors is recommending that shareholders approve an amendment
to the Fund's Articles of Incorporation to permit the implementation of a
conversion feature for Class B shares. The conversion feature is authorized
pursuant to an exemptive order of the SEC (the SEC Order) and would provide for
the automatic conversion of Class B shares to Class A shares at relative net
asset value approximately seven years after purchase. Class A shares are
subject to a lower annual distribution and service fee than Class B shares and
conversions would occur without the imposition of any additional sales charge.
A description of the conversion feature is set forth in greater detail below.
Amendment of the Articles of Incorporation requires approval by a majority of
the Fund's outstanding shares.
THE CLASSES OF SHARES
The Fund currently offers two classes of shares, designated as Class A and
Class B shares pursuant to the Alternative Purchase Plan, in reliance upon the
SEC Order. Class A shares are currently offered with an initial sales charge of
up to 5.25% of the offering price and are subject to an annual distribution and
service fee of up to .30 of 1% of the average daily net assets of the Class A
shares pursuant to a Rule 12b-1 plan. This fee is currently charged at a rate
of .25 of 1% of the average daily net assets of the Class A shares and PMFD has
agreed to so limit its fee under the Class A Plan for the fiscal year ending
May 31, 1995. Class B shares are currently offered without an initial sales
charge but are subject to a contingent deferred sales charge or CDSC (declining
from 5% to zero of the lesser of the amount invested or the redemption
proceeds) on certain redemptions generally made within six years of purchase
and to an annual distribution and service fee pursuant to a Rule 12b-1 plan of
up to 1% of the average daily net assets of the Class B shares.
In accordance with the SEC Order, the Board of Directors may, among other
things, authorize the creation of additional classes of shares from time to
time. The Board of Directors has approved the offering of a new class of
shares, to be designated Class C shares, which will be offered simultaneously
23
<PAGE>
with the offering of Class B shares with the proposed conversion feature. It
is anticipated that Class C shares will be offered without an initial sales
charge but will be subject to an annual distribution and service fee not to
exceed 1% of the average daily net assets of the Class C shares and, subject
to approval by the Board of Directors, a 1% CDSC on certain redemptions made
within one year of purchase. If the proposed conversion feature for Class B
shares is not approved, Class C shares will not be offered.
THE PROPOSED CONVERSION FEATURE
On March 17, 1993, the Fund's Board of Directors, including a majority of
the Rule 12b-1 Directors, approved an amendment to the Fund's Articles of
Incorporation to permit the implementation of a conversion feature for the
Fund's Class B shares. A copy of the proposed amendment to the Fund's Articles
of Incorporation is attached hereto as Exhibit B.
If this proposal is approved, it is currently contemplated that conversions
of Class B shares to Class A shares will occur on a quarterly basis
approximately seven years from purchase. The first conversion is currently
anticipated to occur in or about January 1995. Conversions will be effected
automatically at relative net asset value without the imposition of any
additional sales charge. Class B shareholders will benefit from the conversion
feature because they will thereafter be subject to the lower annual
distribution and service fee applicable to Class A shares.
Since the Fund tracks amounts paid rather than the number of shares bought
on each purchase of Class B shares, it is currently anticipated that the
number of Class B shares eligible to convert to Class A shares (excluding
shares acquired through the automatic reinvestment of dividends and other
distributions) (the Eligible Shares) will be determined on each conversion
date in accordance with the following formula: (i) the ratio of (a) the
amounts paid for Class B shares purchased at least seven years prior to the
conversion date to (b) the total amount paid for all Class B shares purchased
and then held in a shareholder's account (ii) multiplied by the total number
of Class B shares then held in such shareholder's account. Each time any
Eligible Shares in a shareholder's account convert to Class A shares, all
shares or amounts representing Class B shares then in such account that were
acquired through the automatic reinvestment of dividends and other
distributions will convert to Class A shares.
For purposes of determining the number of Eligible Shares, if the Class B
shares in a shareholder's account on any conversion date are the result of
multiple purchases at different net asset values per share, the number of
Eligible Shares calculated as described above will generally be either more or
less than the number of shares actually purchased approximately seven years
24
<PAGE>
before such conversion date. For example, if 100 shares were initially
purchased at $10 per share (for a total of $1,000) and a second purchase of 100
shares was subsequently made at $11 per share (for a total of $1,100), 95.24
shares would convert approximately seven years from the initial purchase (i.e.,
$1,000 divided by $2,100 (47.62%), multiplied by 200 shares equals 95.24
shares). The Manager reserves the right to modify the formula for determining
the number of Eligible Shares in the future as it deems appropriate on notice
to shareholders.
If the net asset value per share of Class A is higher than that of Class B at
the time of conversion (which may be the case because of the higher
distribution and service fee applicable to Class B shares), shareholders will
receive fewer Class A shares than Class B shares converted, although the
aggregate dollar value will be the same.
For purposes of calculating the applicable holding period for conversions,
all payments for purchases of Class B shares during a month will be deemed to
have been made on the last day of the month, or for Class B shares acquired
through exchange, or a series of exchanges, on the last day of the month in
which the original payment for purchases of such Class B shares was made. For
Class B shares previously exchanged for shares of a money market fund, the time
period during which such shares were held in the money market fund will be
excluded. For example, Class B shares held in a money market fund for a period
of one year will not convert to Class A shares until approximately eight years
from purchase. For purposes of measuring the time period during which shares
are held in a money market fund, exchanges will be deemed to have been made on
the last day of the month. Class B shares acquired through exchange will
convert to Class A shares after expiration of the conversion period applicable
to the original purchase of such shares. As of the date of the first conversion
(which, as noted above, is currently anticipated to occur in or about January
1995) all amounts representing Class B shares then outstanding beyond the
expiration of the applicable conversion period will automatically convert to
Class A shares, together with all shares or amounts representing Class B shares
acquired through the automatic reinvestment of dividends and distributions then
held in the shareholder's account.
The Fund has obtained an opinion of counsel to the effect that the conversion
of Class B shares into Class A shares does not constitute a taxable event for
U.S. income tax purposes. However, such opinion is not binding on the Internal
Revenue Service.
If approved by shareholders, the conversion feature may be subject to the
continuing availability of opinions of counsel or rulings of the Internal
Revenue
25
<PAGE>
Service (i) that the dividends and other distributions paid on Class A and
Class B shares will not constitute "preferential dividends" under the Internal
Revenue Code of 1986, as amended, and (ii) that the conversion of shares does
not constitute a taxable event. The conversion of Class B shares into Class A
shares may be suspended if such opinions or rulings are no longer available.
If conversions are suspended. Class B shares of the Fund will continue to be
subject, possibly indefinitely, to their higher annual distribution and
service fee.
REQUIRED VOTE
The proposed amendment to the Fund's Articles of Incorporation to implement
the conversion feature requires the affirmative vote of a majority of the
Fund's outstanding shares. In the event shareholders of the Fund do not
approve the proposed amendment, the conversion feature will not be implemented
for the Fund and Class B shares of the Fund will continue to be subject,
possibly indefinitely, to their higher annual distribution and service fee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 2.
APPROVAL OF
AMENDED AND RESTATED CLASS A DISTRIBUTION
AND SERVICE PLAN
(FOR CONSIDERATION BY CLASS A AND
CLASS B SHAREHOLDERS VOTING SEPARATELY)
(PROPOSAL NO. 3)
On May 4, 1993, the Fund's Board of Directors approved an amended and
restated Class A Distribution and Service Plan pursuant to Rule 12b-1 under
the Investment Company Act and an amended and restated Distribution Agreement
with PMFD for Class A shares of the Fund (the Proposed Class A Plan and the
Proposed Class A Distribution Agreement, respectively) and recommends
submission of the Proposed Class A Plan to the Fund's Class A shareholders for
approval or disapproval at this Special Meeting of Shareholders. As
contemplated by the SEC Order (previously defined under Proposal No. 2 above),
the Proposed Class A Plan is also being submitted for approval by Class B
shareholders because, subject to approval of Proposal No. 2, Class B shares
will automatically convert to Class A shares approximately seven years after
purchase. The Proposed Class A Distribution Agreement does not require and is
not being submitted for shareholder approval.
The purpose of the Proposed Class A Plan is to compensate PMFD, the
distributor of the Fund's Class A Shares, for providing distribution
26
<PAGE>
assistance to broker/dealers, including Prudential Securities and Prusec,
affiliated broker/dealers, and other qualified broker-dealers, if any, whose
customers invest in Class A shares of the Fund and to defray the costs and
expenses, including the payment of account servicing fees, of the services
provided and activities undertaken to distribute Class A shares (Distribution
Activities).
The Board of Directors previously adopted a plan of distribution for the
Fund's Class A shares pursuant to Rule 12b-1 under the Investment Company Act
which was approved by shareholders on December 19, 1990 and last approved by
the Board of Directors on May 4, 1993 (the Existing Class A Plan).
Shareholders of the Fund's Class A and Class B shares are being asked to
approve amendments to the Existing Class A Plan that change it from a
reimbursement type plan to a compensation type plan. The amendments do not
change the maximum annual fee that may be paid to PMFD under the Existing
Class A Plan, although the possibility exists that expenses incurred by PMFD
and for which it is entitled to be reimbursed under the Existing Class A Plan
may be less than the fee PMFD will receive under the Proposed Class A Plan.
The amendments are being proposed to facilitate administration and accounting.
The Board of Directors believes that the Proposed Class A Plan is in the best
interest of the Fund and is reasonably likely to benefit the Fund's Class A
shareholders. A copy of the Proposed Class A Plan is attached hereto as
Exhibit C.
THE EXISTING CLASS A PLAN
Under the Existing Class A Plan, the Fund reimburses PMFD for expenses
incurred for Distribution Activities at an annual rate of up to .30 of 1% of
the average daily net assets of the Class A shares (up to .25 of 1% of which
may constitute a service fee for the servicing and maintenance of shareholder
accounts). Article III, Section 26 of the NASD Rules of Fair Practice (the
NASD Rules) places an annual limit of .25 of 1% on fees that may be imposed
for the provision of personal service and/or the maintenance of shareholder
accounts (service fees) and an annual limit of .75 of 1% on asset-based sales
charges (as defined in the NASD Rules). Subject to these limits, the Fund may
impose any combination of service fees and asset-based sales charges under
both the Existing Class A Plan and the Proposed Class A Plan; provided that
the total fees do not exceed .30 of 1% per annum of the average daily net
assets of the Class A shares.
The Existing Class A Plan may not be amended to increase materially the
amount to be spent for the services described therein without approval by a
majority of the holders of the Class A shares of the Fund. In addition, all
27
<PAGE>
material amendments thereof must be approved by vote of a majority of the
Directors, including a majority of the Rule 12b-1 Directors, cast in person at
a meeting called for the purpose of voting on the Plan. So long as the Existing
Class A Plan is in effect, the selection and nomination of the Rule 12b-1
Directors will be committed to the discretion of the Rule 12b-1 Directors.
The Existing Class A Plan may be terminated at any time without payment of
any penalty by the vote of a majority of the Rule 12b-1 Directors or by the
vote of a majority of the outstanding Class A shares of the Fund (as defined in
the Investment Company Act) on written notice to any other party to such plan
and will automatically terminate in the event of its assignment (as defined in
the Investment Company Act). For a more detailed description of the Existing
Class A Plan, see "Management of the Fund--The Distributors--Class A Plan."
THE PROPOSED CLASS A PLAN
The Proposed Class A Plan amends the Existing Class A Plan in one material
respect. Under the Existing Class A Plan, the Fund reimburses PMFD for expenses
actually incurred for Distribution Activities up to a maximum of .30 of 1% per
annum of the average daily net assets of the Class A shares. The Proposed Class
A Plan authorizes the Fund to pay PMFD the same maximum annual fee as
compensation for its Distribution Activities regardless of the expenses
incurred by PMFD for Distribution Activities. The Distributor may, however, as
it currently does, voluntarily agree to limit its fee to an amount less than
the maximum annual fee. In contrast to the Existing Class A Plan, the amounts
payable by the Fund under the Proposed Class A Plan would not be directly
related to the expenses actually incurred by PMFD for its Distribution
Activities. Consequently, if PMFD's expenses for Distribution Activities are
less than the distribution and service fees it receives under the Proposed
Class A Plan, it will retain its full fees and realize a profit.
Since inception of the Existing Class A Plan, the reimbursable expenses
incurred thereunder by PMFD have generally equalled or exceeded the amount
reimbursed by the Fund. For each of the fiscal years ended May 31, 1991, 1992
and 1993, PMFD received payments of $5,139, $7,543 and $6,212, respectively,
under the Existing Class A Plan representing .20 of 1% of the average daily net
assets of the Class A shares as reimbursement of expenses incurred for
Distribution Activities. Although PMFD agreed to limit its fees under the
Existing Class A Plan to .20 of 1% for the fiscal years ended May 31, 1991 and
1992 and .25 of 1% for the fiscal year ended May 31, 1993, it in fact limited
its fee to .20 of 1% for all three fiscal years even though its
28
<PAGE>
direct and indirect reimbursable distribution expenses exceeded such amount.
PMFD believes that it would have similarly limited its fee had the Proposed
Class A Plan been in effect during the past three fiscal years, although it
could have assessed the maximum annual fee of .30 of 1%. Regardless of which
plan will be in effect, the Distributor has voluntarily agreed to limit its
fees for Distribution Activities to no more than .25 of 1% of the average
daily net assets of the Class A shares for the fiscal year ending May 31,
1995. Other expenses incurred by PMFD for Distribution Activities have been
and will continue to be, paid from the proceeds of initial sales charges.
Among the major perceived benefits of a compensation type plan, such as the
Proposed Class A Plan, over a reimbursement type plan, such as the Existing
Class A Plan, is the facilitation of administration and accounting. Under
reimbursement plans, all expenses must be specifically accounted for by the
Distributor and attributed to the specific class of shares of a fund in order
to qualify for reimbursement. Although the Proposed Class A Plan will continue
to require quarterly reporting to the Board of Directors of the amounts
accrued and paid under the Plan and of the expenses actually borne by the
Distributor, there will be no need to match specific expenses to
reimbursements as under the Existing Class A Plan. Thus, the accounting for
the Proposed Class A Plan would be simplified and the timing of when
expenditures are to be made by the Distributor would not be an issue. These
considerations combined with the reasonable likelihood, although there is no
assurance, that the per annum payment rate under the Proposed Class A Plan
will not exceed the expenses incurred by PMFD for Distribution Activities,
suggest that the costs and efforts associated with a reimbursement plan are
unwarranted.
In considering whether to approve the Proposed Class A Plan, the Directors
reviewed, among other things, the nature and scope of the services to be
provided by PMFD, the purchase options available to investors under the
Alternative Purchase Plan, the amount of expenditures under the Existing Class
A Plan, the relationship of such expenditures to the overall cost structure of
the Fund and comparative data with respect to distribution arrangements
adopted by other investment companies. Based upon such review, the Directors,
including a majority of the Rule 12b-1 Directors, determined that there is a
reasonable likelihood that the Proposed Class A Plan will benefit the Fund and
its Class A shareholders.
If approved by shareholders, the Proposed Class A Plan will continue in
effect from year to year, provided such continuance is approved at least
annually by vote of a majority of the Board of Directors, including a majority
of the Rule 12b-1 Directors.
29
<PAGE>
REQUIRED VOTE
If Proposal No. 2 is approved by shareholders, the Proposed Class A Plan
will require the approval of a majority of the Fund's outstanding Class A
shares and Class B shares (as defined in the Investment Company Act) voting
separately. If Proposal No. 2 is not approved by shareholders, the Proposed
Class A Plan will only require the approval of a majority of the Fund's
outstanding Class A shares. Under the Investment Company Act, a majority of a
class' outstanding shares is defined as the lesser of (i) 67% of a class'
outstanding voting shares represented at a meeting at which more than 50% of
the outstanding voting shares of the class are present in person or
represented by proxy, or (ii) more than 50% of a class' outstanding voting
shares. If the Proposed Class A Plan is not approved as described above, the
Existing Class A Plan will continue in its present form.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 3.
APPROVAL OF AMENDED AND RESTATED CLASS B DISTRIBUTION AND SERVICE PLAN
(FOR CONSIDERATION BY CLASS B SHAREHOLDERS ONLY)
(PROPOSAL NO. 4)
On May 4, 1993, the Fund's Board of Directors approved an amended and
restated Class B Distribution and Service Plan pursuant to Rule 12b-1 under
the Investment Company Act and an amended and restated Class B Distribution
Agreement with Prudential Securities for Class B shares of the Fund (the
Proposed Class B Plan and the Proposed Class B Distribution Agreement,
respectively) and recommends submission of the Proposed Class B Plan to the
Fund's Class B shareholders for approval or disapproval at this Special
Meeting of Shareholders. The Proposed Class B Distribution Agreement does not
require and is not being submitted for shareholder approval.
The purpose of the Proposed Class B Plan is to compensate Prudential
Securities, the distributor of the Fund's Class B shares, for providing
distribution assistance to broker/dealers, including Prusec, an affiliated
broker/dealer, and other qualified broker/dealers, if any, whose customers
invest in Class B shares of the Fund and to defray the costs and expenses,
including the payment of account servicing fees, of the services provided and
activities undertaken to distribute Class B shares (Distribution Activities).
30
<PAGE>
The Board of Directors previously adopted a plan of distribution for the
Fund's Class B shares pursuant to Rule 12b-1 under the Investment Company Act
which was approved by shareholders on January 11, 1990 and last approved by the
Board of Directors on May 4, 1993 (the Existing Class B Plan). Shareholders of
the Fund's Class B shares are being asked to approve amendments to the Existing
Class B Plan that change it from a reimbursement type plan to a compensation
type plan. The amendments do not change the maximum annual fee that may be paid
to Prudential Securities under the Existing Class B Plan, although the
possibility exists that expenses incurred by Prudential Securities and for
which it is entitled to be reimbursed under the Existing Class B Plan may be
less than the fee Prudential Securities will receive under the Proposed Class B
Plan. The amendments are being proposed to facilitate administration and
accounting. The Board of Directors believes that the Proposed Class B Plan is
in the best interest of the Fund and is reasonably likely to benefit the Fund's
Class B shareholders. A copy of the Proposed Class B Plan is attached hereto as
Exhibit D.
THE EXISTING CLASS B PLAN
Under the Existing Class B Plan, the Fund reimburses Prudential Securities
for expenses incurred for Distribution Activities at an annual rate of up to 1%
of the average daily net assets of the Class B shares (up to .25 of 1% of which
may constitute a service fee for the servicing and maintenance of shareholder
accounts). Amounts reimbursable under the Plan that are not paid because they
exceed the maximum fee payable thereunder are carried forward and may be
recovered in future years by Prudential Securities from asset-based sales
charges imposed on Class B shares, to the extent such charges do not exceed
.75% per annum of the average daily net assets of the Class B shares, and from
contingent deferred sales charges received from certain redeeming shareholders,
subject to the limitations of Article III, Section 26 of the NASD Rules
(previously defined under Proposal No. 3). The NASD Rules place an annual limit
of .25 of 1% on fees that may be imposed for the provision of personal service
and/or the maintenance of shareholder accounts (service fees) and an annual
limit of .75 of 1% on asset-based sales charges (as defined in the NASD Rules).
Pursuant to the NASD Rules, the aggregate deferred sales charges and asset-
based sales charges on Class B shares of the Fund may not, subject to certain
exclusions, exceed 6.25% of total gross sales of Class B shares.
The Existing Class B Plan may not be amended to increase materially the
amount to be spent for the services described therein without approval by a
majority of the holders of the Class B shares of the Fund. In addition, all
material amendments thereof must be approved by vote of a majority of the
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<PAGE>
Directors, including a majority of the Rule 12b-1 Directors, cast in person at
a meeting called for the purpose of voting on the Plan. So long as the Existing
Class B Plan is in effect, the selection and nomination of the Rule 12b-1
Directors will be committed to the discretion of the Rule 12b-1 Directors.
The Existing Class B Plan may be terminated at any time without payment of
any penalty by the vote of a majority of the Rule 12b-1 Directors or by the
vote of a majority of the outstanding Class B shares of the Fund (as defined in
the Investment Company Act) on written notice to any other party to such plan
and will automatically terminate in the event of its assignment (as defined in
the Investment Company Act). For a more detailed description of the Existing
Class B Plan, see "Management of the Fund--The Distributors--Class B Plan."
THE PROPOSED CLASS B PLAN
The Proposed Class B Plan amends the Existing Class B Plan in one material
respect. Under the Existing Class B Plan, the Fund reimburses Prudential
Securities for expenses actually incurred for Distribution Activities up to a
maximum of 1% per annum of the average daily net assets of the Class B shares.
The Proposed Class B Plan authorizes the Fund to pay Prudential Securities the
same maximum annual fee as compensation for its Distribution Activities
regardless of the expenses incurred by Prudential Securities for Distribution
Activities. In contrast to the Existing Class B Plan, the amounts payable by
the Fund under the Proposed Class B Plan would not be directly related to the
expenses actually incurred by Prudential Securities for its Distribution
Activities. Consequently, if Prudential Securities' expenses are less than its
distribution and service fees, it will retain its full fees and realize a
profit. However, if Prudential Securities' expenses exceed the distribution and
service fees received under the Proposed Class B Plan, it will no longer carry
forward such amounts for reimbursement in future years.
Since inception of the Existing Class B Plan, the cumulative reimbursable
expenses incurred thereunder by Prudential Securities have exceeded the amounts
reimbursed by the Fund. As of December 31, 1993, the aggregate amount of
distribution expenses incurred and not yet reimbursed by the Fund or recovered
through contingent deferred sales charges was approximately $2,844,500.
For the fiscal years ended May 31, 1991, 1992 and 1993, Prudential Securities
received $376,888, $372,362, and $315,614, respectively, from the Fund under
the Existing Class B Plan, representing 1.00% of the average
32
<PAGE>
daily net assets of the Class B shares, and spent approximately $698,700,
$409,700, and $322,000, respectively, for Distribution Activities. Since the
maximum annual fee under the Existing Class B Plan is the same as under the
Proposed Class B Plan, Prudential Securities would have received the same
annual fee under the Proposed Class B Plan as it did under the Existing Class B
Plan for the fiscal years ended May 31, 1991, 1992 and 1993.
Among the major perceived benefits of a compensation type plan, such as the
Proposed Class B Plan, over a reimbursement type plan, such as the Existing
Class B Plan, is the facilitation of administration and accounting. Under
reimbursement plans, all expenses must be specifically accounted for by the
Distributor and attributed to the specific class of shares of a fund in order
to qualify for reimbursement. Although the Proposed Class B Plan will continue
to require quarterly reporting to the Board of Directors of the amounts accrued
and paid under the Plan and of the expenses actually borne by the Distributor,
there will be no need to match specific expenses to reimbursements and no
carrying forward of such amounts, as under the Existing Class B Plan. Thus, the
accounting for the Proposed Class B Plan would be simplified and the timing of
when expenditures are to be made by the Distributor would not be an issue.
Currently, because the Existing Class B Plan is a reimbursement plan, the
Distributor retains an independent expert to perform a study of its methodology
for determining and substantiating which of its expenses should properly be
allocated to the Fund's Class B shares for reimbursement, the cost of which is
borne by the Fund and other funds for which Prudential Securities serves as
Distributor. These considerations, combined with the fact that the cumulative
expenses incurred by Prudential Securities for Distribution Activities have
exceeded the amounts reimbursed by the Fund under the Existing Class B Plan,
suggest that the costs and efforts associated with a reimbursement plan are
unwarranted.
In considering whether to approve the Proposed Class B Plan, the Directors
reviewed, among other things, the nature and scope of the services to be
provided by Prudential Securities, the purchase options available to investors
under the Alternative Purchase Plan, the amount of expenditures under the
Existing Class B Plan, the relationship of such expenditures to the overall
cost structure of the Fund and comparative data with respect to distribution
arrangements adopted by other investment companies. Based upon such review, the
Directors, including a majority of the Rule 12b-1 Directors, determined that
there is a reasonable likelihood that the Proposed Class B Plan will benefit
the Fund and its Class B shareholders.
33
<PAGE>
If approved by Class B shareholders, the Proposed Class B Plan will continue
in effect from year to year, provided such continuance is approved at least
annually by vote of a majority of the Board of Directors, including a majority
of the Rule 12b-1 Directors.
REQUIRED VOTE
The Proposed Class B Plan requires the approval of a majority of the Fund's
outstanding Class B shares as defined in the Investment Company Act and as
described under Proposal No. 3. If the Proposed Class B Plan is not approved,
the Existing Class B Plan will continue in its present form.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 4.
APPROVAL OF AMENDMENTS OF THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTIONS REGARDING RESTRICTED
AND ILLIQUID SECURITIES
(PROPOSAL NO. 5)
On May 4, 1993, at the request of the Fund's Manager and Subadviser, the
Board of Directors considered and recommends for shareholder approval revision
of the Fund's fundamental investment restrictions regarding illiquid and
restricted securities. The current restrictions are overly confining in light
of the development of an active market in those securities that, although
subject to restrictions on resale, are transferable under SEC Rule 144A. The
Board of Directors recommends elimination of the Fund's Investment Restrictions
Nos. 12 and 16, which limit the purchase of any security that is restricted as
to disposition under federal securities laws, repurchase agreements with
maturities longer than 7 days and other illiquid securities. Further, the Board
recommends modification of Investment Restriction No. 6 to eliminate
restrictions on investments in equity securities for which market quotations
are not readily available.
Investment Restriction No. 12 provides that the Fund may not:
Purchase any security restricted as to disposition under federal
securities laws if such purchase would result in more than 5% of the
value of the Fund's total assets being invested in such securities.
This restriction will not apply to securities that are readily
marketable in securities markets outside the United States.
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<PAGE>
Investment Restriction No. 16 provides that the Fund may not:
Purchase securities if as a result more than 10% of the Fund's
total assets would be invested in illiquid assets (including
repurchase agreements with a maturity longer than seven days and
securities restricted as to disposition under the federal securities
laws).
Investment Restriction No. 6 currently provides that the Fund may not:
Purchase any security if as a result the Fund would then have more
than 5% of its total assets (determined at the time of investment)
invested in securities of companies (including predecessors) less
than three years old or in equity securities for which market
quotations are not readily available, except that the Fund may invest
in the securities of any U.S. Government agency or instrumentality,
and in any security guaranteed by such an agency or instrumentality.
Investment Restriction No. 6 as it is proposed to be modified would provide
that the Fund may not (deletions in brackets):
Purchase any security if as a result the Fund would then have more
than 5% of its total assets (determined at the time of investment)
invested in securities of companies (including predecessors) less
than three years old [or in equity securities for which market
quotations are not readily available,] except that the Fund may
invest in the securities of any U.S. Government agency or
instrumentality, and in any security guaranteed by such an agency or
instrumentality.
The Board recommends replacement of such fundamental investment restrictions
with a non-fundamental investment policy that could be modified by the vote of
the Board of Directors in response to regulatory or market developments
without further approval by shareholders. The change would expand the Fund's
ability to invest in securities which have restrictions on resale but have a
readily available institutional market, such as securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 (the Securities Act).
The proposed non-fundamental policy would provide as follows:
The Fund may invest up to 10% 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. Restricted securities eligible for resale
35
<PAGE>
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the Securities Act), that have a readily available market are not
considered illiquid for purposes of this limitation. 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 investment adviser
or the Board of Directors to affect the Fund's liquidity because it excludes
from illiquid securities only those Rule 144A securities for which there is a
readily available market.
Historically, illiquid securities have been defined to include securities
subject to contractual or legal restrictions on resale, securities for which
there is no readily available market and repurchase agreements having a
maturity of longer than seven days. In recent years, however, the securities
markets have evolved significantly, with the result that new types of
instruments have developed which make the Fund's present restriction on
illiquid investments overly broad and unnecessarily restrictive in the view of
the Fund's Manager. In particular, the SEC adopted Rule 144A in April 1990,
which allows for a broader institutional trading market for securities
otherwise subject to restrictions on resale to the general public. SEC
interpretations give directors of registered investment companies the
discretion to designate restricted securities as liquid if the presence of a
readily available market can be demonstrated and if a current market value can
be ascertained. In adopting Rule 144A, the SEC recognized the increased size
and liquidity of the institutional markets for unregistered securities and the
importance of institutional investors in the capital formation process. In
1992, the SEC staff issued amended guidelines to the effect that up to 15% (as
opposed to 10%) of an open-end fund's net assets may be invested in illiquid
securities, including repurchase agreements with a maturity of longer than
seven days. The guidelines were amended in connection with the SEC's efforts to
remove unnecessary barriers to capital formation and to facilitate access to
the capital markets by small businesses.
The staff of the SEC has also taken the position that purchased over-the-
counter options and the assets used as "cover" for written over-the-counter
36
<PAGE>
options are illiquid securities unless the Fund and the counterparty have
provided for the Fund at its option to unwind the over-the-counter option. The
exercise of such an option ordinarily would involve the payment by the Fund of
an amount designed to reflect the counterparty's economic loss from an early
termination, but does allow the Fund to treat the assets used as "cover" as
"liquid."
The proposed change would expand the Fund's ability to invest in securities
which are eligible for resale pursuant to Rule 144A, which generally have a
readily available institutional market. The markets for certain equity
securities, corporate bonds and notes are almost exclusively institutional.
These institutional investors depend on an efficient institutional market in
which the unregistered security can be readily resold. In the opinion of the
Fund's Manager, the fact that there are restrictions on resale to the general
public is therefore not necessarily indicative of the liquidity of such
investments. If designated as liquid (under the supervision of the Board of
Directors), these Rule 144A securities would be exempt from the 10% limitation.
In order to take advantage of the market for Rule 144A securities and the
increasingly liquid institutional trading markets, the Manager recommends that
the Fund eliminate its fundamental policies regarding illiquid and restricted
securities so that Rule 144A securities that are nonetheless liquid may be
purchased without regard to the current limitations. By making the Fund's
policy on illiquid securities non-fundamental, the Fund will be able to respond
more quickly to regulatory and market developments because a shareholder vote
will not be required to define what types of securities should be deemed
illiquid or to change the applicable permissable percentage limitation. If this
proposal is approved by shareholders, the Manager and the Subadviser, under the
supervision of the Board of Directors, will monitor the liquidity of specific
types of securities and, based on their recommendations, the Board of Directors
will from time to time determine whether such securities should be deemed to be
liquid with reference to legal, regulatory and market developments.
In reaching liquidity decisions, the Manager and the Subadviser will
consider, inter alia, the following factors:
1. the frequency of trades and quotes for the security;
2. the number of dealers wishing to purchase or sell the security and
the number of other potential purchasers;
3. dealer undertakings to make a market in the security; and
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<PAGE>
4. the nature of the security and the nature of the marketplace trades
(e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer).
The Board of Directors believes that adoption of Proposal No. 5 is in the
best interests of the Fund and its shareholders.
REQUIRED VOTE
Adoption of Proposal No. 5 requires the affirmative vote of the holders of a
majority of the outstanding voting securities of the Fund. Under the Investment
Company Act, a majority of the Fund's outstanding voting securities is defined
as the lesser of (i) 67% of the Fund's outstanding voting shares represented at
a meeting at which more than 50% of the Fund's outstanding voting shares are
present in person or represented by proxy, or (ii) more than 50% of the Fund's
outstanding voting shares. If the proposed changes in investment policies are
not approved, the current limitations would remain a fundamental policy which
could not be changed without the approval of a majority of the outstanding
voting securities of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 5.
APPROVAL OF A MODIFICATION OF THE FUND'S INVESTMENT
RESTRICTION LIMITING THE FUND'S ABILITY TO INVEST IN A
SECURITY IF THE FUND WOULD HOLD MORE THAN TEN
PERCENT OF ANY CLASS OF SECURITIES OF AN ISSUER
(PROPOSAL NO. 6)
On May 4, 1993, at the request of the Fund's Manager and Subadviser, the
Board of Directors considered and recommends for shareholder approval
modification of Investment Restriction No. 5 to delete the restriction that
prohibits the Fund from purchasing a security if the Fund would hold more than
ten percent of any class of securities of an issuer.
The Fund currently may not purchase a security if the Fund would then hold
more than 10% of any class of securities of an issuer. Under this restriction,
all common stock issues of an issuer, all preferred stock issues, and all debt
issues are each taken as a separate single class. The Fund's
38
<PAGE>
Subadviser believes the restriction is confining and has requested its
deletion. This restriction is not required under federal securities laws. If
the proposal is approved, and a state securities commission requires inclusion
of this limitation, the Fund would continue to comply with the restriction as
a non-fundamental operating policy so long as the Fund sells its shares in
that state.
Investment Restriction No. 5 currently provides that the Fund may not:
Purchase any security if as a result the Fund would then hold more
than 10% of any class of securities of an issuer (taking all common
stock issues of an issuer as a single class, all preferred stock
issues as a single class and all debt issues as a single class) or
more than 10% of the outstanding voting securities of an issuer.
The Board of Directors is proposing that Investment Restriction No. 5 be
modified to provide that the Fund may not:
Purchase any security if as a result the Fund would then hold more than
10% of the outstanding voting securities of an issuer.
Currently, the Fund may not hold more than 10% of the outstanding voting
securities of an issuer pursuant to Section 5(b)(1) of the Investment Company
Act and state securities laws. This restriction would remain in effect.
The Board of Directors believes that adoption of Proposal No. 6 is in the
best interests of the Fund and its shareholders.
REQUIRED VOTE
Adoption of Proposal No. 6 requires the approval of a majority of the
outstanding voting securities of the Fund, as defined by the Investment
Company Act and as described under Proposal No. 5 above. If the proposed
change in investment policy is not approved, the current limitations would
remain a fundamental policy which could not be changed without the approval of
a majority of the outstanding voting securities of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 6.
39
<PAGE>
APPROVAL OF ELIMINATION OF THE FUND'S INVESTMENT
RESTRICTION LIMITING INVESTMENT IN THE SECURITIES OF
ANY ISSUER IN WHICH THE OFFICERS AND DIRECTORS OF
THE FUND OR ITS INVESTMENT ADVISER OWN MORE THAN A SPECIFIED INTEREST
(PROPOSAL NO. 7)
On May 4, 1993, at the request of the Fund's Manager, the Board of Directors
considered and recommends for shareholder approval elimination of the Fund's
Investment Restriction No. 7, which provides that the Fund may not:
Invest in securities of any issuer if, to the knowledge of the
Fund, any officer or Director of the Fund or the Fund's Manager or
Subadviser owns more than 1/2 of 1% of the outstanding securities of
such issuer, and such officers and Directors who own more than 1/2 of
1% own in the aggregate more than 5% of the outstanding securities of
such issuer.
The Manager has advised the Board of Directors that the restriction upon the
Fund investing in companies in which officers and directors of the Fund or the
Manager own more than 1/2 of 1% of the outstanding securities of such company
was initially adopted to comply with a restriction imposed in connection with
the sale of the Fund's shares in Ohio. If the proposal is approved, the Fund
would continue to comply with the restriction as a non-fundamental operating
policy so long as the Fund sells its shares in Ohio. However, if Ohio were to
eliminate the requirement or the Fund stopped offering its shares for sale in
Ohio, the Board of Directors could eliminate the operating policy without the
necessity of shareholder approval. The Fund does not currently intend to stop
offering its shares in Ohio, nor are the Fund or the Fund's Manager aware of
any proposal to change the Ohio law.
The Board of Directors believes that adoption of Proposal No. 7 is in the
best interests of the Fund and its shareholders.
REQUIRED VOTE
Amendment of the Fund's investment restrictions to delete Investment
Restriction No. 7 requires the approval of a majority of the Fund's outstanding
voting securities, as defined in the Investment Company Act and as described
under Proposal No. 5. If the proposed change in investment policy is not
approved, the current limitations would remain a fundamental
40
<PAGE>
policy which could not be changed without the approval of a majority of the
outstanding voting securities of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 7.
APPROVAL OF AN AMENDMENT OF ARTICLES OF INCORPORATION
TO CHANGE THE NAME OF THE FUND
(PROPOSAL NO. 8)
The Board of Directors proposes that the Fund's name be changed from
Prudential-Bache Global Genesis Fund, Inc. to Prudential Global Genesis Fund,
Inc. and that the Articles of Incorporation of the Fund be amended to effect
the name change. The Fund is currently doing business under the name Prudential
Global Genesis Fund.
The Board of Directors considered the proposed name change from "Prudential-
Bache" to "Prudential" in connection with the change in the name of Prudential-
Bache Securities Inc. to Prudential Securities Incorporated (Prudential
Securities), Distributor of the Fund's Class B shares. Management of the Fund
expressed its opinion that the proposed name, "Prudential Global Genesis Fund,
Inc." more accurately reflects the Fund's affiliation with PMF, Prudential
Securities and The Prudential Insurance Company of America, their parent
company.
The Board of Directors believes that adoption of Proposal No. 8 is in the
best interest of the Fund and its shareholders.
REQUIRED VOTE
The name change must be approved by the holders of a majority of the Fund's
shares of common stock in accordance with the Fund's Articles of Incorporation.
The name change will be effected as soon as is practicable after shareholder
approval. If this proposal is not approved, the Board of Directors will
consider whether it is appropriate for the Fund to continue to do business
under the name Prudential Global Genesis Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 8.
41
<PAGE>
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of shareholders arise,
including any question as to an adjournment of the Meeting, the persons named
in the enclosed proxy will vote thereon according to their best judgment in the
interests of the Fund.
SHAREHOLDER PROPOSALS
The Fund is not required to hold annual meetings of shareholders and the
Board of Directors currently does not intend to hold such meetings unless
shareholder action is required in accordance with the Investment Company Act or
the Fund's By-laws. A shareholder proposal intended to be presented at any
meeting of shareholders of the Fund hereinafter called must be received by the
Fund a reasonable time before the Board of Directors' solicitation relating
thereto is made in order to be included in the Fund's proxy statement and form
of proxy relating to that meeting and presented at the meeting. The mere
submission of a proposal by a shareholder does not guarantee that such proposal
will be included in the proxy statement because certain rules under the federal
securities laws must be complied with before inclusion of the proposal is
required.
S. Jane Rose
Secretary
Dated: April 18, 1993
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.
42
<PAGE>
EXHIBIT A
PRUDENTIAL MUTUAL FUND MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
<TABLE>
<S> <C>
ASSETS
Cash and short-term investments................................... $ 42,667,507
Loan to affiliate................................................. 85,000,000
Management, administration and other fees receivable.............. 17,897,292
Transfer agency and fiduciary fees receivable..................... 3,744,874
Furniture, equipment and leasehold improvements, net.............. 10,495,702
Other assets...................................................... 4,676,430
------------
$164,481,805
============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Due to affiliates................................................ $ 48,794,366
Accounts payable and accrued expenses............................ 11,208,209
Income taxes payable to affiliate--net........................... 2,937,828
------------
62,940,403
------------
COMMITMENTS (Note 6)
STOCKHOLDERS' EQUITY:
Class A common stock, $1 par value (1,000
shares authorized, 850 shares outstanding)..................... 850
Class B common stock, $1 par value (1,000
shares authorized, 150 shares outstanding)..................... 150
Additional paid-in capital....................................... 24,999,000
Retained earnings................................................ 76,541,402
------------
101,541,402
------------
$164,481,805
============
</TABLE>
See notes to consolidated statement of financial condition.
A-1
<PAGE>
PRUDENTIAL MUTUAL FUND MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Prudential Mutual Fund Management, Inc. ("PMF") and subsidiaries (the
"Company"), an indirect wholly-owned subsidiary of The Prudential Insurance
Company of America (the "Prudential"), were created to operate as the manager,
distributor and/or transfer agent for investment companies.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statement includes the accounts of PMF and its
wholly-owned subsidiaries, Prudential Mutual Fund Services, Inc. ("PMFS") and
Prudential Mutual Fund Distributors, Inc. ("PMFD"). All intercompany profits,
transactions and balances have been eliminated.
INCOME TAXES
The Company is a member of a group of affiliated companies which join in
filing a consolidated Federal income tax return. Pursuant to a tax allocation
agreement, tax expense is determined for individual profitable companies on a
separate return basis. Profit members pay this amount to an affiliated company
which in turn apportions the payment among the loss members in proportion to
their losses. In January 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). The
adoption of SFAS 109 did not have a material effect on the Company's financial
position.
2.SHORT-TERM INVESTMENTS
At December 31, 1993, the Company had invested $35,411,571 in several money
market funds which PMF manages.
A-2
<PAGE>
3. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Furniture, equipment and leasehold improvements consist of the following:
<TABLE>
<S> <C>
Furniture.......................................................... $ 6,481,799
Equipment.......................................................... 9,181,984
Leasehold improvements............................................. 3,407,213
-----------
19,070,996
Less accumulated depreciation and amortization..................... 8,575,294
-----------
$10,495,702
===========
</TABLE>
4.RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Company participates in a variety of
financial and administrative transactions with affiliates.
The loan to affiliate bears interest at 3.45 percent at December 31, 1993 and
is due on demand.
The caption "Due to affiliates" includes $18,241,795 at December 31, 1993 for
reimbursement of employee compensation and benefits, and other administrative
and operating expenses. This amount is noninterest-bearing and payable on
demand.
The Company has entered into subadvisory agreements with The Prudential
Investment Corporation ("PIC"), a wholly-owned subsidiary of Prudential. Under
these agreements, PIC furnishes investment advisory services to substantially
all the funds for which the Company acts as Manager. At December 31, 1993 there
were unpaid fees due to PIC of $23,926,277, included in the caption "Due to
affiliates."
Distribution expenses include commissions and account servicing fees paid to,
or on account of, financial advisors of Prudential Securities Incorporated
("Prudential Securities") and Pruco Securities Corporation ("PruSec"),
affiliated broker-dealers and indirect wholly-owned subsidiaries of Prudential,
advertising expenses, the cost of printing and mailing prospectuses to
potential investors, and indirect and overhead costs of Prudential Securities
and PruSec, including lease, utility, communications and sales promotion
expenses. At December 31, 1993 there were unpaid distribution expenses of
approximately $6,626,000, included in the caption "Due to affiliates."
A-3
<PAGE>
5.CAPITAL
PMFD is subject to the SEC Uniform Net Capital Rule (Rule 15c3-1), which
requires the maintenance of minimum net capital and requires that the ratio of
aggregate indebtedness to net capital, both as defined, shall not exceed 15 to
1. At December 31, 1993, PMFD had net capital of $2,308,981, which was
$1,859,405 in excess of its required net capital of $449,576. PMFD had a ratio
of aggregate indebtedness to net capital of 2.9 to 1.
6.COMMITMENTS
The Company leases office space under operating leases expiring in 2003. The
leases are subject to escalation based upon certain costs incurred by the
lessor. Future minimum rentals, as of December 31, 1993, under the leases, are
as follows:
<TABLE>
<CAPTION>
YEAR MINIMUM RENTAL
---- --------------
<S> <C>
1994...................................................... $ 2,738,000
1995...................................................... 2,865,000
1996...................................................... 3,375,000
1997...................................................... 3,385,000
1998...................................................... 3,230,000
Thereafter................................................. 13,800,000
-----------
$29,393,000
===========
</TABLE>
7.PENSION AND OTHER POSTRETIREMENT BENEFITS
The Company has two defined benefit pension plans (the "Plans") sponsored by
the Prudential and Prudential Securities. The Plans cover substantially all of
the Company's employees. The funding policy is to contribute annually the
amount necessary to satisfy the Internal Revenue Service funding standards. In
addition, the Company has two defined benefit plans for key executives, the
Supplemental Retirement Plan (SRP) for which estimated pension costs are
currently accrued but not funded.
The Company provides certain health care and life insurance benefits for
eligible retired employees. Effective January 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("SFAS 106"). SFAS 106 changed the
practice of accounting for postretirement benefits on a cash basis to an
accrual basis, whereby employers record the projected future cost of providing
such postretirement benefits as employees render services
A-4
<PAGE>
instead of when benefits are paid. This new accounting method has no effect on
the Company's cash outlays for these retirement benefits. The adoption of SFAS
106 did not materially impact the Company's financial position.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits," ("SFAS 112") which is effective for fiscal years beginning after
December 15, 1993. Although several benefits are fully insured which result in
no SFAS 112 obligation, the Company currently has an obligation and resulting
expense under SFAS 112 for medical benefits provided under long-term
disability. The Company will adopt SFAS 112 on January 1, 1994. Management
believes that implementation will have no material effect on the Company's
financial position.
8.CONTINGENCY
On October 12, 1993, a purported class action lawsuit was instituted against
PMF, et al and certain current and former directors of a fund managed by PMF.
The plaintiffs seek damages in an unspecified amount for excessive management
and distribution fees they allege were incurred by them. Although the outcome
of this litigation cannot be predicted at this time, the defendants believe
they have meritorious defenses to the claims asserted in the complaint and
intend to defend this action vigorously. In any case, management does not
believe that the outcome of this action is likely to have a material adverse
effect on the Company's financial position.
* * * * * *
A-5
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of Prudential Mutual Fund
Management, Inc.:
We have audited the accompanying consolidated statement of financial
condition of Prudential Mutual Fund Management, Inc. and subsidiaries as of
December 31, 1993. This consolidated financial statement is the responsibility
of the Company's management. Our responsibility is to express an opinion on
this consolidated financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated statement
of financial condition. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, such consolidated statement of financial condition presents
fairly, in all material respects, the financial position of Prudential Mutual
Fund Management, Inc. and subsidiaries at December 31, 1993 in conformity with
generally accepted accounting principles.
Deloitte & Touche
New York, New York
January 26, 1994
A-6
<PAGE>
EXHIBIT B
FORM OF AMENDMENT TO ARTICLES OF INCORPORATION
Article V, Section 1 of the Fund's Articles of Incorporation is proposed to
be amended and restated as follows:
ARTICLE V
Common Stock
Section 1. The total number of shares of capital stock which the Corporation
shall have authority to issue is 500,000,000 shares of the par value of $.01
per share and of the aggregate par value of $5,000,000 to be divided initially
into three classes, consisting of 166,666,666.6 shares of Class A Common Stock,
166,666,666.7 shares of Class B Common Stock and 166,666,666.7 shares of Class
C Common Stock.
(a) Each share of Class A Common Stock, Class B Common Stock 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 each class
of shares shall be borne solely by such class; (ii) The bearing of such
expenses solely by shares of each 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 each 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
B-1
<PAGE>
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 acquired through the automatic reinvestment of
dividends and distributions with respect to Class B Common Stock (each
"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.
(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, any 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.
B-2
<PAGE>
EXHIBIT C
PRUDENTIAL GLOBAL GENESIS FUND
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 Prudential Global Genesis Fund (the Fund) and
by Prudential Mutual Fund Distributors, Inc., 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
C-1
<PAGE>
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
distribution networks of Prudential Securities Incorporated (Prudential
Securities) and Pruco Securities Corporation (Prusec), including sales
personnel and branch office and central support systems, and also using such
other qualified broker-dealers and financial institutions as the Distributor
may select. 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
C-2
<PAGE>
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) amounts paid to Prudential Securities for performing services under
a selected dealer agreement between Prudential Securities and the
Distributor for sale of Class A shares of the Fund, including sales
commissions and trailer commissions paid to, or on account of, account
executives and indirect and overhead costs associated with Distribution
Activities, including central office and branch expenses;
(b) amounts paid to Prusec for performing services under a selected
dealer agreement between Prusec and the Distributor for sale of Class A
shares of the Fund, including sales commissions and trailer commissions
paid to, or on account of, agents and indirect and overhead costs
associated with Distribution Activities;
(c) advertising for the Fund in various forms through any available
medium, including the cost of printing and mailing Fund prospectuses,
statements of additional information and periodic financial reports and
sales literature to persons other than current shareholders of the Fund;
and
(d) sales commissions (including trailer commissions) paid to, or on
account of, broker-dealers and financial institutions (other than
Prudential Securities and Prusec) which have entered into selected dealer
agreements with the Distributor with respect to 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 of Directors shall from time to time reasonably request, including
information about Distribution Activities undertaken or to be undertaken by the
Distributor.
C-3
<PAGE>
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
expenses 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.
8. Rule 12b-1 Directors
While the Plan is in effect, the selection and nomination of the Rule 12b-1
Directors shall be committed to the discretion of the Rule 12b-1 Directors.
C-4
<PAGE>
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:
C-5
<PAGE>
EXHIBIT D
PRUDENTIAL GLOBAL GENESIS FUND
DISTRIBUTION AND SERVICE PLAN
(Class B 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 Prudential Global Genesis Fund, (the Fund) and
by Prudential Securities Incorporated (Prudential Securities), 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 B shares issued by the Fund
(Class B shares). Under the Plan, the Fund wishes to pay to the Distributor, as
compensation for its services, a distribution and service fee with respect to
Class B shares.
A majority of the Board of Directors of the Fund including a majority 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 B 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.
D-1
<PAGE>
The Plan
The material aspects of the Plan are as follows:
1. Distribution Activities
The Fund shall engage the Distributor to distribute Class B 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 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 B 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 B shares (service fee). The
Fund shall calculate and accrue daily amounts payable by the Class B 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 of .75 of 1% per annum of the average daily net assets of the
Class B shares of the Fund for the performance of Distribution Activities. The
Fund shall calculate and accrue daily amounts payable by the Class B 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 B 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 B shares according to the ratio
of the sale of Class B 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.
D-2
<PAGE>
The Distributor shall spend such amounts as it deems appropriate on
Distribution Activities which include, among others:
(a) sales commissions (including trailer commissions) paid to, or on
account of, account executives of the Distributor;
(b) indirect and overhead costs of the Distributor associated with
performance of 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 B
shares of the Fund, including sales commissions and 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
(e) sales commissions (including trailer commissions) paid to, or on
account of, broker-dealers and other financial institutions (other than
Prusec) which have entered into selected dealer agreements with the
Distributor with respect to Class B 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
they 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 other 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 B shares of the Fund.
D-3
<PAGE>
If approved by a vote of a majority of the outstanding voting securities of
the Class B 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 B shares of the Fund.
7. Amendments
The Plan may not be amended to change the combined service and distribution
expenses 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 B 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.
8. Rule 12b-1 Directors
While the Plan is in effect, the selection and nomination of the Rule 12b-1
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:
D-4
<PAGE>
1--Election of Trustees
- --------------------------------------
[X] [X] [X]
Approve Withhold Withhold
All All Those Listed
Nominees Nominees On Back
- --------------------------------------
TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL
NOMINEE, PLEASE WRITE NAME ON BACK OF
FORM.
Edward D. Beach
Donald D. Lennox
Douglas H. McCorkindale
Lawrence C. McQuade
Thomas T. Mooney
Richard A. Redeker
Louis A. Weil, III
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
For Against Abstain
2. To approve an amendment of the Fund's Articles [X] [X] [X]
of Incorporation to permit a conversion feature
for Class B Shares.
3. To approve an amended and restated Class A [X] [X] [X]
Distribution and Service Plan.
4. NOT APPLICABLE TO CLASS A SHAREHOLDERS. [X] [X] [X]
5. To approve amendments of the Fund's [X] [X] [X]
investment restrictions regarding restricted
and illiquid securities.
6. To approve an amendment of the Fund's investment [X] [X] [X]
restriction limiting the Fund's ability to invest
in a security if the Fund would hold more than
10% of any class of securities of an issuer.
7. To approve the elimination of the Fund's [X] [X] [X]
investment restriction limiting the Fund's
ability to invest in the securities of any
issuer in which officers and Directors of the
Fund or officers and directors of its investment
adviser own more than a specified interest.
8. To approve an amendment of the Fund's Articles of [X] [X] [X]
Incorporation to change the name of the Fund to
"Prudential Global Genesis Fund, Inc."
9. To transact such other business as may properly [X] [X] [X]
come before the Meeting or any adjournment thereof.
Only shares of Class A common stock of
the Fund of record at the close of
business on March 31, 1994 are
entitled to notice of and to vote at
the Meeting or any adjournment thereof.
- --------------------------------- PLEASE SIGN EXACTLY AS NAME APPEARS
Signature Date AT LEFT. WHEN SHARES ARE HELD BY
- --------------------------------- JOINT TENANTS, BOTH SHOULD SIGN. WHEN
Signature (Joint Ownership) SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
<PAGE>
[_]
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
YOUR PROXY WILL BE ELECTRONICALLY SCANNED.
CAREFULLY DETACH HERE AND RETURN BOTTOM
PORTION ONLY.
PROXY (CLASS A) THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES.
PRUDENTIAL-BACHE GLOBAL The undersigned hereby appoints Susan C. Cote, S.
GENESIS FUND, INC. Jane Rose and Marguerite E. H. Morrison as
ONE SEAPORT PLAZA Proxies, each with the power of substitution, and
NEW YORK, NEW YORK 10292 hereby authorizes each of them to represent and to
vote as designated below, all the shares of Class A
common stock of Prudential Global Genesis Fund held
of record by the undersigned on March 31, 1994 at
the Special Meeting of Shareholders to be held on
June 23, 1994, or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL
BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL OF THE PROPOSALS LISTED
BELOW.
Your Account No.: Your voting shares are:
<PAGE>
1--Election of Trustees
- -----------------------------------
[X] [X] [X]
Approve Withhold Withhold
All All Those Listed
Nominees Nominees On Back
- -----------------------------------
TO WITHHOLD AUTHORITY FOR ANY
INDIVIDUAL NOMINEE, PLEASE
WRITE NAME ON BACK OF FORM.
Edward D. Beach
Donald D. Lennox
Douglas H. McCorkindale
Lawrence C. McQuade
Thomas T. Mooney
Richard A. Redeker
Louis A. Weil, III
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
For Against Abstain
2. To approve an amendment of the Fund's Articles [X] [X] [X]
of Incorporation to permit a conversion feature
for Class B Shares.
3. To approve an amended and restated Class A [X] [X] [X]
Distribution and Service Plan.
4. To approve an amended and restated Class B [X] [X] [X]
Distribution and Service Plan
5. To approve amendments of the Fund's [X] [X] [X]
investment restrictions regarding restricted
and illiquid securities.
6. To approve an amendment of the Fund's investment [X] [X] [X]
restriction limiting the Fund's ability to
invest in a security if the Fund would hold
more than 10% of any class of securities of an
issuer.
7. To approve the elimination of the Fund's [X] [X] [X]
investment restriction limiting the Fund's
ability to invest in the securities of any issuer
in which officers and Directors of the Fund or
officers and directors of its investment adviser
own more than a specified interest.
8. To approve an amendment of the Fund's Articles of [X] [X] [X]
Incorporation to change the name of the Fund to
"Prudential Global Genesis Fund, Inc."
9. To transact such other business as may properly [X] [X] [X]
come before the Meeting or any adjournment
thereof.
Only shares of Class B common stock of
the Fund of record at the close of
business on March 31, 1994 are entitled
to notice of and to vote at the Meeting
or any adjournment thereof.
- --------------------------------- PLEASE SIGN EXACTLY AS NAME APPEARS
Signature Date AT LEFT. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN
- --------------------------------- SIGNING AS ATTORNEY, EXECUTOR,
Signature (Joint Ownership) ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
<PAGE>
[_]
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
YOUR PROXY WILL BE ELECTRONICALLY SCANNED.
CAREFULLY DETACH HERE AND RETURN BOTTOM
PORTION ONLY.
PROXY (CLASS B) THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES.
PRUDENTIAL-BACHE GLOBAL The undersigned hereby appoints Susan C. Cote, S.
GENESIS FUND, INC. Jane Rose and Marguerite E. H. Morrison as
ONE SEAPORT PLAZA Proxies, each with the power of substitution, and
NEW YORK, NEW YORK 10292 hereby authorizes each of them to represent and to
vote as designated below, all the shares of Class B
common stock of Prudential Global Genesis Fund held
of record by the undersigned on March 31, 1994 at
the Special Meeting of Shareholders to be held on
June 23, 1994, or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL
BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL OF THE PROPOSALS LISTED
BELOW.
Your Account No.: Your voting shares are:
