As filed with the Securities and Exchange Commission on December 2, 1996
Securities Act Registration No. 33-37356
Investment Company Act Registration No. 811-5695
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
Post-Effective Amendment No. 10 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 16 [X]
(Check appropriate box or boxes)
GLOBAL UTILITY FUND, INC.
(Exact name of registrant as specified in charter)
GATEWAY CENTER THREE
NEWARK, NEW JERSEY 07102
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (201) 367-7530
S. Jane Rose, Esq.
Gateway Center 3
Newark, New Jersey 07102
(Name and Address of Agent for Service of Process) Copy to:
Arthur J. Brown, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
Approximate date of proposed public offering:
As soon as practicable after the effective date of the Registration Statement.
It is proposed that this filing will become effective (check appropriate box):
(left column)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a), of Rule 485.
[ ] on (date) pursuant to paragraph (a)(1)
(right column)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount Being Offering Price Aggregate Registration
Being Registered Registered Per Share* Offering Price** Fee
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<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share Indefinite*** N/A N/A N/A
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Common Stock, par value
$.001 per share 3,461,326 $16.98 $58,773,332 $100.00
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<FN>
* Computed under Rule 457(d) on the basis of the offering price per share on the close of business
on November 21, 1996.
** Registrant elects to calculate the maximum aggregate offering price pursuant to Rule 24e-2.
$102,463,920 of shares was redeemed during the fiscal year ended September 30, 1996. $44,020,588
of shares was used for reductions pursuant to paragraph (c) of Rule 24f-2 during the fiscal year
ended September 30, 1996. $58,443,332 of shares is the amount of redeemed shares used for
reduction for this amendment.
*** Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has previously
registered an indefinite number of shares of Common Stock, par value $.001 per share. The
Registrant filed a notice under such Rule for its fiscal year ended September 30, 1996 on
November 27, 1996.
</FN>
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 495)
<TABLE>
<CAPTION>
N-1A Item No. Location
--------
<S> <C> <C>
Part A
Item 1.Cover Page ............................................................... Cover Page
Item 2. Synopsis ................................................................ Fund Expenses
Item 3.Condensed Financial Information .......................................... Fund Expenses; Financial Highlights;
How The Fund Calculates
Performance
Item 4.General Description of Registrant ........................................ Cover Page; Fund Highlights; How The
Fund Invests; General Information
Item 5.Management of the Fund ................................................... Financial Highlights; How The Fund is
Managed
Item 5A.Management's Discussion of Fund Performance ............................. Financial Highlights
Item 6.Capital Stock and Other Securities ....................................... Taxes, Dividends and Distributions;
General Information
Item 7.Purchase of Securities Being Offered ..................................... Shareholder Guide; How The Fund
Values its Shares
Item 8.Redemption or Repurchase ................................................. Shareholder Guide; How The Fund
Values its Shares
Item 9.Pending Legal Proceedings ................................................ Not Applicable
Part B
Item 10.Cover Page ............................................................... Cover Page
Item 11.Table of Contents ........................................................ Table of Contents
Item 12.General Information and History .......................................... General Information
Item 13.Investment Objectives and Policies ....................................... Investment Objective and Policies;
Investment Restrictions
Item 14.Management of the Fund ................................................... Information Regarding Directors and
Officers; Manager; Subadviser;
Distributor
Item 15.Control Persons and Principal Holders of Securities ...................... Not Applicable
Item 16.Investment Advisory and Other Services ................................... Manager; Distributor; Custodian,
Transfer and Dividend Disbursing
Agent and Independent Accountants
Item 17.Brokerage Allocation and Other Practices ................................. Portfolio Transactions and Brokerage
Item 18.Capital Stock and Other Securities ....................................... Not Applicable
Item 19.Purchase, Redemption and Pricing of Securities Being Offered ............. Purchase and Redemption of Fund
Shares; Shareholder Investment
Account; Net Asset Value
Item 20.Tax Status ............................................................... Taxes
Item 21.Underwriters ............................................................. Distributor
Item 22.Calculation of Performance Data .......................................... Performance Information
Item 23.Financial Statements ..................................................... Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Post-Effective Amendment to the
Registration Statement.
<PAGE>
Global
Utility Fund, Inc.
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Prospectus dated November 29, 1996
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Global Utility Fund, Inc. (the Fund) is a diversified, open-end management
investment company. The Fund's investment objective is to provide total return,
without incurring undue risk, by investing primarily in income-producing
securities of domestic and foreign companies in the utility industries. Under
normal circumstances, at least 65% of the Fund's total assets will be invested
in a diversified portfolio of equity and debt securities of domestic and foreign
utility companies, principally electric, telecommunications, gas or water
companies. There can be no assurance that the Fund's investment objective will
be achieved. See "How the Fund Invests-Investment Objective and Policies." The
Fund's address is Gateway Center Three, Newark, New Jersey 07102, and its
telephone number is 1-800-225-1852.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Additional information about
the Fund has been filed with the Securities and Exchange Commission in a
Statement of Additional Information, dated November 29, 1996, which information
is incorporated herein by reference (is legally considered a part of this
Prospectus) and available without charge upon request to the Fund, at the
address or telephone number noted above.
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Investors are advised to read this Prospectus and retain it for future
reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
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FUND HIGHLIGHTS
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The following summary is intended to highlight certain information contained
in this Prospectus and is qualified in its entirety by the more detailed
information appearing elsewhere herein.
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What is Global Utility Fund, Inc.?
Global Utility Fund, Inc. is a mutual fund. A mutual fund pools the
resources of investors by selling its shares to the public and investing the
proceeds of such sale in a portfolio of securities designed to achieve its
investment objective. Technically, the Fund is an open-end, diversified
management investment company.
What is the Fund's Investment Objective?
The Fund's investment objective is to provide total return, without
incurring undue risk, by investing primarily in income-producing securities of
domestic and foreign companies in the utility industries. Under normal
circumstances, at least 65% of the Fund's total assets will be invested in a
diversified portfolio of equity and debt securities of domestic and foreign
utility companies, principally electric, telecommunications, gas or water
companies. There can be no assurance that the Fund's objective will be achieved.
See "How the Fund Invests-Investment Objective and Policies" at page 8.
Risk Factors and Special Characteristics
The Fund concentrates its investments in the securities of companies in the
utility industries. Consequently, factors specifically affecting those
industries, such as substantial government regulation, interest rate movements,
and increased competition, may have a greater affect on the value of the Fund's
shares than on those of an investment company that does not concentrate its
investments in the utility industries. In addition, as a result of the Fund's
ability to invest in companies in the utility industries around the world, the
Fund is subject to risks relating to political and economic developments abroad,
as well as those relating to the different and rapidly evolving regulatory
environments for utility companies in foreign markets. As with an investment in
any mutual fund, an investment in this Fund can decrease in value and you can
lose money. See "How the Fund Invests-Investment Objective and Policies" at page
8. The Fund may also engage in various hedging and return enhancement
strategies, including derivatives. See "How the Fund Invests-Hedging and Return
Enhancement Strategies-Risks of Hedging and Return Enhancement Strategies" at
page 13.
Who Manages the Fund?
Prudential Mutual Fund Management LLC (PMF or the Manager) is the Manager of
the Fund and is compensated for its services based on a percentage of the Fund's
average daily net assets. As of October 31, 1996, PMF served as manager or
administrator to 60 investment companies, including 38 mutual funds, with
aggregate assets of approximately $53 billion. Wellington Management Company,
LLP (Wellington Management or the Subadviser) furnishes investment advisory
services in connection with the management of the Fund under a Subadvisory
Agreement with PMF and is compensated for its services by PMF based on a
percentage of the Fund's average daily net assets. As of September 30, 1996, the
Subadviser held investment authority over approximately $124 billion of assets.
See "How the Fund is Managed-Manager" at page 15 and "How the Fund is
Managed-Subadviser" at page 15.
Who Distributes the Fund's Shares?
Prudential Securities Incorporated (Prudential Securities or PSI), a major
securities underwriter and securities and commodities broker, acts as the
Distributor of the Fund's Class A, Class B, Class C and Class Z shares. PSI is
paid a distribution and service fee with respect to Class A shares that is
currently being charged at the annual rate of .25% of 1% of the average daily
net assets of the Class A shares, and with respect to Class B and Class C shares
at an annual rate of 1% of the average daily net assets of each of the Class B
and Class C shares. Prudential Securities incurs the expense of distributing the
Fund's Class Z shares under a Distribution Agreement with the Fund, none of
which is paid for or reimbursed by the Fund.
See "How the Fund is Managed-Distributor" at page 16.
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2
<PAGE>
- --------------------------------------------------------------------------------
What is the Minimum Investment?
The minimum initial investment is $1,000 for Class A and Class B shares and
$5,000 for Class C shares. The minimum subsequent investment is $100 for Class
A, Class B and Class C shares. Class Z shares are not subject to any minimum
investment requirements. There is no minimum investment requirement for certain
retirement and employee savings plans or custodial accounts for the benefit of
minors. For purchases made through the Automatic Savings Accumulation Plan the
minimum initial and subsequent investment is $50. See "Shareholder Guide-How to
Buy Shares of the Fund" at page 22 and "Shareholder Guide-Shareholder Services"
at page 30.
How Do I Purchase Shares?
You may purchase shares of the Fund through Prudential Securities, Pruco
Securities Corporation (Prusec) or directly from the Fund, through its transfer
agent, Prudential Mutual Fund Services, Inc. (PMFS or the Transfer Agent) at the
net asset value per share (NAV) next determined after receipt of your purchase
order by the Transfer Agent or Prudential Securities plus a sales charge which
may be imposed either (i) at the time of purchase (Class A shares) or (ii) on a
deferred basis (Class B or Class C shares). Class Z shares are offered to a
limited group of investors at net asset value without any sales charge. See "How
the Fund Values its Shares" at page 18 and "Shareholder Guide-How to Buy Shares
of the Fund" at page 22.
What Are My Purchase Alternatives?
The Fund offers four classes of shares:
<TABLE>
<S> <C>
* Class A Shares: Sold with an initial sales charge of up to 5% of the offering price.
* Class B Shares: Sold without an initial sales charge but are subject to a contingent deferred
sales charge or CDSC (declining from 5% to zero of the lower of the amount
invested or the redemption proceeds) which will be imposed on certain
redemptions made within six years of purchase. Although Class B shares are
subject to higher ongoing distribution-related expenses than Class A shares,
Class B shares will automatically convert to Class A shares (which are
subject to lower ongoing distribution-related expenses) approximately seven
years after purchase.
* Class C Shares: Sold without an initial sales charge and, for one year after purchase, are
subject to a 1% CDSC on redemptions. Like Class B shares, Class C shares are
subject to higher ongoing distribution-related expenses than Class A shares
but do not convert to another class.
* Class Z shares: Sold without either an initial or contingent deferred sales charge to a
limited group of investors. Class Z shares are not subject to any ongoing
service or distribution-related expenses.
</TABLE>
See "Shareholder Guide-Alternative Purchase Plan" at page 22.
How Do I Sell My Shares?
You may redeem your shares at any time at the NAV next determined after
Prudential Securities or the Transfer Agent receives your sell order. However,
the proceeds of redemptions of Class B and Class C shares may be subject to a
CDSC. See "Shareholder Guide-How to Sell Your Shares" at page 25.
How Are Dividends and Distributions Paid?
The Fund expects to pay dividends of net investment income, if any,
quarterly and make distributions of any net capital gains at least annually.
Dividends and distributions will be automatically reinvested in additional
shares of the Fund at NAV without a sales charge unless you request that they be
paid to you in cash. See "Taxes, Dividends and Distributions" at page 19.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
FUND EXPENSES
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder Transaction Expenses+ Class A Shares Class B Shares Class C Shares Class Z Shares
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) ................ 5% None None None
Maximum Sales Load or Deferred
Sales Load Imposed on
Reinvested Dividends ........... None None None None
Deferred Sales Load (as a
percentage of original purchase
price or redemption proceeds,
whichever is lower) ............ None 5% during the first year, 1% on redemptions None
decreasing by 1% annually to made within one year
1% in the fifth and sixth years of purchase
and 0% the seventh year*
Redemption Fees ..................... None None None None
Exchange Fees ....................... None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets) Class A Shares Class B Shares Class C Shares Class Z Shares
-------------- -------------- -------------- --------------
Management Fees ..................... .66% .66% .66% .66%
12b-1 Fees .......................... .25%++ 1.00% 1.00% None
Other Expenses ...................... .39% .39% .39% .39%
----- ----- ----- -----
Total Fund Operating Expenses ....... 1.30% 2.05% 2.05% 1.05%
===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Example 1 year 3 years 5 years 10 years
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time
period:
Class A ............................................................. $63 $89 $118 $199
Class B ............................................................. $71 $94 $120 $210
Class C ............................................................. $31 $64 $110 $238
Class Z** ........................................................... $11 $33 $ 58 $128
You would pay the following expenses on the same investment assuming
no redemption:
Class A ............................................................. $63 $89 $118 $199
Class B ............................................................. $21 $64 $110 $210
Class C ............................................................. $21 $64 $110 $238
Class Z** ........................................................... $11 $33 $ 58 $128
</TABLE>
The above example is based on data for the fiscal year ended September 30, 1996.
The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
The purpose of this table is to assist investors in understanding the various
costs and expenses that an investor in the Fund will bear, whether directly or
indirectly. For more complete descriptions of the various costs and expenses,
see "How the Fund is Managed." "Other Expenses" includes operating expenses of
the Fund, such as Directors' and professional fees, registration fees, reports
to shareholders and transfer agency and custodian (domestic and foreign) fees.
- ----------------------
*Class B shares will automatically convert to Class A shares approximately
seven years after purchase. See "Shareholder Guide-Conversion Feature-Class B
Shares."
**Estimate based on expenses expected to have been incurred if Class Z shares
had been in existence throughout the fiscal year ended September 30, 1996.
+Pursuant to rules of the National Association of Securities Dealers, Inc., the
aggregate initial sales charges, deferred sales charges and asset-based sales
charges on shares of the Fund may not exceed 6.25% of total gross sales,
subject to certain exclusions. This 6.25% limitation is imposed on the Fund
rather than on a per shareholder basis. Therefore, long-term shareholders of
the Fund may pay more in total sales charges than the economic equivalent of
6.25% of such shareholders' investment in such shares. See "How the Fund is
Managed-Distributor."
++Although the Class A Distribution and Service Plan provides that the Fund may
pay a distribution fee of up to .30 of 1% per annum of the average daily net
asset value of the Class A shares, PSI has agreed to limit its distribution
fees with respect to Class A shares of the Fund to not more than .25 of 1% of
the average daily net assets of the Class A shares for the fiscal year ending
September 30, 1997. Total operating expenses without such limitation would be
1.35%. See "How the Fund is Managed-Distributor."
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(for a share of common stock outstanding throughout each period indicated)
(Class A Shares)
- --------------------------------------------------------------------------------
(left column)
The following financial highlights with respect to the five years ended
September 30, 1996 have been audited by Deloitte & Touche LLP, independent
accountants, whose report was unqualified. This information should be read in
conjunction with the financial statements and the notes thereto, which appear in
the Statement of Additional Information.
(right column)
The following financial highlights contain selected data for a Class A share of
common stock outstanding, total return, ratios to average net assets and other
supplemental data for the periods indicated. The information is based on data
contained in the financial statements. Further performance information is
contained in the annual report, which may be obtained without charge. See
"Shareholder Services-Reports to Shareholders."
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
January 2,
1990(a)
Year Ended September 30, through
----------------------------------------------------------------- September
1996 1995 1994 1993 1992 1991(d) 30, 1990(d)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period . $ 14.72 $ 13.66 $ 14.63 $ 12.96 $ 12.62 $ 10.50 $ 11.16
-------- -------- -------- -------- -------- -------- --------
Income from investment operations
Net investment income ................ .51 .49 .47 .44 .53 .57 .48
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions ....................... .73 1.35 (.82) 2.46 1.01 2.23 (.67)
-------- -------- -------- -------- -------- -------- --------
Total from investment operations . 1.24 1.84 (.35) 2.90 1.54 2.80 (.19)
-------- -------- -------- -------- -------- -------- --------
Less distributions
Dividends from net investment income . (.51) (.48) (.42) (.47) (.53) (.62) (.41)
Distributions in excess of net invest
ment income ........................ - - - (.01) - - -
Distributions from net realized gains
on investment and foreign currency
transactions ....................... (.42) (.30) (.20) (.75) (.67) (.08) -
-------- -------- -------- -------- -------- -------- --------
Total distributions .................. (.93) (.78) (.62) (1.23) (1.20) (.70) (.41)
-------- -------- -------- -------- -------- -------- --------
Capital charge in respect of issuance
of shares .......................... - - - - - - -
Redemption fee retained by Fund ...... - - - - - .02 (.06)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period ....... $ 15.03 $ 14.72 $ 13.66 $ 14.63 $ 12.96 $ 12.62 $ 10.50
======== ======== ======== ======== ======== ======== ========
TOTAL RETURN(c) ...................... 8.65% 14.23% (2.49)% 23.87% 13.15% 27.63% (1.98%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) ...... $112,800 $124,423 $126,254 $138,714 $114,654 $132,804 $161,892
Average net assets (000) ............. $120,122 $122,837 $139,166 $119,001 $120,708 $151,217 $166,915
Ratios to average net assets:
Expenses, including distribution
fees ............................... 1.30% 1.31% 1.25% 1.30% 1.39% 1.49% 1.05%(b)
Expenses, excluding distribution
fees ............................... 1.05% 1.06% 1.02% 1.10% 1.19% 1.36% 1.05%(b)
Net investment income .............. 3.38% 3.58% 3.39% 3.37% 4.16% 5.06% 5.97%(b)
Portfolio turnover rate .............. 13% 15% 19% 14% 57% 135% 27%
Average commission rate per share .... $.0542 - - - - - -
<FN>
(a)Commencement of investment operations.
(b)Annualized.
(c)Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares
on the first day and a sale on the last day of each period and includes reinvestment of dividends and distributions.
Total return for periods of less than a full year are not annualized.
(d)Prior to Februrary 4, 1991, the Fund operated as a closed-end investment company. Effective February 4, 1991, the
Fund commenced operations as an open-end investment company. Accordingly, historical expenses and ratios to average
net assets are not necessarily indicative of future expenses and related ratios.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(for a share of common stock outstanding throughout each period indicated)
(Class B Shares)
- --------------------------------------------------------------------------------
(left column)
The following financial highlights with respect to the five years ended
September 30, 1996 have been audited by Deloitte & Touche LLP, independent
accountants, whose report was unqualified. This information should be read in
conjunction with the financial statements and the notes thereto, which appear in
the Statement of Additional Information.
(right column)
The following financial highlights contain selected data for a Class B share of
common stock outstanding, total return, ratios to average net assets and other
supplemental data for the periods indicated. The information is based on data
contained in the financial statements. Further performance information is
contained in the annual report, which may be obtained without charge. See
"Shareholder Services-Reports to Shareholders."
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
March 18,
1991(a)
Year Ended September 30, Through
---------------------------------------------------- September 30,
1996 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ........... $ 14.71 $ 13.66 $ 14.63 $ 12.97 $ 12.63 $ 11.97
-------- -------- -------- -------- -------- --------
Income from investment operations
Net investment income .......................... .40 .39 .37 .34 .43 .25
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions ................................. .74 1.34 (.82) 2.45 1.01 .63
-------- -------- -------- -------- -------- --------
Total from investment operations ........... 1.14 1.73 (.45) 2.79 1.44 .88
-------- -------- -------- -------- -------- --------
Less distributions
Dividends from net investment income ........... (.40) (.38) (.32) (.37) (.43) (.22)
Distributions in excess of net
investment income ............................ - - - (.01) - -
Distributions from net realized gains on
investment and foreign currency
transactions ................................. (.42) (.30) (.20) (.75) (.67) -
-------- -------- -------- -------- -------- --------
Total distributions ............................ (.82) (.68) (.52) (1.13) (1.10) (.22)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 15.03 $ 14.71 $ 13.66 $ 14.63 $ 12.97 $ 12.63
======== ======== ======== ======== ======== ========
TOTAL RETURN(c) ................................ 7.90% 13.32% (3.22)% 22.87% 12.23% 7.44%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) ................ $187,557 $227,189 $272,673 $185,259 $ 60,432 $ 30,147
Average net assets (000) ....................... $210,305 $237,983 $270,466 $ 90,254 $ 45,661 $ 18,923
Ratios to average net assets:
Expenses, including distribution fees ........ 2.05% 2.06% 2.02% 2.10% 2.19% 2.47%(b)
Expenses, excluding distribution fees ........ 1.05% 1.06% 1.02% 1.10% 1.19% 1.47%(b)
Net investment income ........................ 2.62% 2.83% 2.68% 2.59% 3.43% 4.16%(b)
Portfolio turnover rate ........................ 13% 15% 19% 14% 57% 135%
Average commission rate per share .............. $.0542 - - - - -
<FN>
(a)Commencement of offering of Class B shares.
(b)Annualized.
(c)Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares
on the first day and a sale on the last day of each period and includes reinvestment of dividends and distributions.
Total return for periods of less than a full year are not annualized.
</FN>
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(for a share of common stock outstanding throughout each period indicated)
(Class C Shares)
- --------------------------------------------------------------------------------
(left column)
The following financial highlights have been audited by Deloitte & Touche LLP,
independent accountants, whose report was unqualified. This information should
be read in conjunction with the financial statements and the notes thereto,
which appear in the Statement of Additional Information.
(right column)
The following financial highlights contain selected data for a Class C share of
common stock outstanding, total return, ratios to average net assets and other
supplemental data for the period indicated. The information is based on data
contained in the financial statements. Further performance information is
contained in the annual report, which may be obtained without charge. See
"Shareholder Services-Reports to Shareholders."
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
August 1,
1994(a)
Year Ended September 30, Through
------------------------ September 30,
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ....................... $ 14.71 $ 13.66 $ 13.93
------- ------- -------
Income from investment operations
Net investment income ...................................... .40 .39 .06
Net realized and unrealized gain (loss) on investment
and foreign currency transactions ........................ .74 1.34 (.24)
------- ------- -------
Total from investment operations ....................... 1.14 1.73 (.18)
------- ------- -------
Less distributions
Dividends from net investment income ....................... (.40) (.38) (.07)
Distributions from net realized gains on investment
and foreign currency transactions ........................ (.42) (.30) (.02)
------- ------- -------
Total distributions ........................................ (.82) (.68) (.09)
------- ------- -------
Net asset value, end of period ............................. $ 15.03 $ 14.71 $ 13.66
======= ======= =======
TOTAL RETURN(c) ............................................ 7.90% 13.32% (1.32)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) ............................ $ 661 $ 563 $ 226
Average net assets (000) ................................... $ 608 $ 410 $ 131
Ratios to average net assets:
Expenses, including distribution fees .................... 2.05% 2.06% 2.06%(b)
Expenses, excluding distribution fees .................... 1.05% 1.06% 1.06%(b)
Net investment income .................................... 2.66% 2.83% 2.46%(b)
Portfolio turnover rate .................................... 13% 15% 19%
Average commission rate per share .......................... $ .0542 - -
<FN>
- ------------------
(a)Commencement of offering of Class C shares.
(b)Annualized.
(c)Total return does not consider the effects of sales loads. Total return is calculated assuming a
purchase of shares on the first day and a sale on the last day of each period and includes
reinvestment of dividends and distributions. Total return for periods of less than a full year are
not annualized.
</FN>
</TABLE>
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7
<PAGE>
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HOW THE FUND INVESTS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide total return, without
incurring undue risk, by investing primarily in income-producing securities of
domestic and foreign companies in the utility industries. The Fund's total
return will consist of current income and growth of capital. The Fund seeks to
achieve its objective by investing, under normal circumstances, at least 65% of
its total assets in a diversified portfolio of common stocks, debt securities
and preferred stocks issued by domestic and foreign companies primarily engaged
in the ownership or operation of facilities used in the generation, transmission
or distribution of electricity, telecommunications, gas or water. There can be
no assurance that such objective will be achieved. See "Investment Objective and
Policies" in the Statement of Additional Information.
The Fund's investment objective is a fundamental policy and, therefore, may
not be changed without the approval of the holders of a majority of the Fund's
outstanding voting securities, as defined in the Investment Company Act of 1940,
as amended (the Investment Company Act). Fund policies that are not fundamental
may be modified by the Board of Directors.
The Fund's portfolio will include issuers located in at least three
countries, one of which will be the United States, although the Subadviser
expects to invest the Fund's assets in more than three countries. Under normal
conditions, the percentage of assets invested in U.S. securities will be higher
than that invested in securities of any other single country.
Investments are selected on the basis of fundamental analysis to identify
those securities that, in the judgment of the Subadviser, provide current income
and potential for growth of income and long-term capital appreciation.
Fundamental analysis involves assessing a company and its business environment,
management, balance sheet, income statement, anticipated earnings and dividends
and other related measures of value. The Subadviser monitors and evaluates the
economic and political climate and the principal securities markets of the
country in which each company is located. The relative weightings among common
stocks, debt securities and preferred stocks will vary from time to time based
upon the Subadviser's judgment of the extent to which investments in each
category will contribute to meeting the Fund's investment objective.
The Fund normally may invest up to 35% of its total assets in debt
securities, which may include investments both in securities of issuers in the
utility industries and in securities of issuers outside of such industries. Debt
securities in which the Fund invests generally are limited to those rated
investment grade, that is, rated in one of the four highest rating categories by
Standard & Poor's (S&P) or Moody's Investors Service, Inc. (Moody's) or deemed
to be of equivalent quality in the judgment of the Subadviser. However, the Fund
may invest up to 5% of its assets in debt securities rated below investment
grade (i.e., below Baa or BBB). If the Fund holds a security that is downgraded
to a rating below Baa or BBB and, as a result of such downgrade, more than 5% of
the Fund's assets would be invested in securities rated below Baa or BBB, the
Fund would take steps to reduce its investments in such securities to 5% or less
of its assets as promptly as practical. There is no limitation on the percentage
of the Fund's net assets that may be invested in securities rated Baa or BBB.
Securities rated Baa by Moody's are described as having speculative
characteristics; securities rated below investment grade are generally described
by the rating services as speculative. Investments in lower rated securities
involve a greater possibility that adverse changes, or perceived changes, in the
business or financial condition of the issuer or in general economic conditions
may impair the ability of the issuer to make timely payment of interest and
repayment of principal. The prices of such securities tend to fluctuate more
than those of higher rated securities. To the extent that there is no
established or a relatively inactive secondary market in a particular lower
rated security, it could be difficult at times to sell or value such security.
A change in prevailing interest rates is likely to affect the Fund's net
asset value because prices of debt securities and equity securities of utility
companies tend to increase when interest rates decline and decrease when
interest rates rise.
8
<PAGE>
During periods when the Subadviser deems it necessary for temporary
defensive purposes, the Fund may invest without limit in high quality money
market instruments. These instruments may include commercial paper, adjustable
rate preferred stock, certificates of deposit, bankers' acceptances and other
bank obligations, short-term obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, and short-term obligations of
foreign issuers, denominated in U.S. dollars and traded in the United States.
Utility Industries-Description and Risk Factors
Under normal circumstances, the Fund invests at least 65% of its total
assets in common stocks, debt securities and preferred stocks of companies in
the utility industries. (The Fund considers purchased options and futures
contracts on securities in the utility industries to fall into this category;
however, no more than 5% of the Fund's total assets invested in such instruments
will be counted towards satisfaction of the Fund's 65% test.) The average
dividend yields (indicated annual dividend divided by current stock price) of
common stocks issued by domestic utility companies, in the Subadviser's opinion,
have historically exceeded those of industrial companies' common stocks, while
the prices of utility stocks have tended to be less volatile than stocks of
industrial companies. According to the Subadviser, debt securities of domestic
utility companies historically also have yielded slightly more than similar debt
securities of industrial companies, and have had higher total returns. For
certain periods, the total return of domestic utility companies' securities has
underperformed that of industrial companies' securities. There can be no
assurance that positive relative yields or total returns (i.e., yield plus price
change) on domestic utility securities will occur in the future. The markets for
securities of foreign utility companies are rapidly evolving and comparable data
on such securities are currently unavailable; however, the Subadviser believes
that there are similarities in the yield characteristics of foreign utility
companies relative to foreign industrial companies. See "Foreign Securities."
The utility companies in which the Fund invests include companies primarily
engaged in the ownership or operation of facilities used in the generation,
transmission or distribution of electricity, telecommunications, gas or water.
For these purposes, "primarily engaged" means that (1) more than 50% of the
company's assets are devoted to the ownership or operation of one or more
facilities as described above, or (2) more than 50% of the company's operating
revenues are derived from the business or combination of businesses described
above. See "Investment Objective and Policies" in the Statement of Additional
Information.
Utility companies in the United States and in foreign countries are
generally subject to substantial regulation. Such regulation is intended to
ensure appropriate standards of review and adequate capacity to meet public
demand. The nature of regulation of utility industries is evolving both in the
United States and in foreign countries. Although certain companies may develop
more profitable opportunities, others may be forced to defend their core
businesses and may be less profitable. Electric utility companies have
historically been subject to the risks associated with increases in fuel and
other operating costs, high interest costs on borrowings, costs associated with
compliance with environmental, nuclear facility and other safety regulations and
changes in the regulatory climate. Increased scrutiny of electric utilities
might result in higher costs and higher capital expenditures, with the risk that
regulators may disallow inclusion of these costs in rate authorizations.
Increasing competition due to past regulatory changes in the telephone
communications industry continues and, whereas certain companies have
benefitted, many companies may be adversely affected in the future. Gas
transmission companies and gas distribution companies continue to undergo
significant changes as well. Many companies have diversified into oil and gas
exploration and development, making returns more sensitive to energy prices.
Water supply utilities are in an industry that is highly fragmented due to local
ownership and generally the companies are more mature and are experiencing
little or no per capita volume growth. There is no assurance that favorable
developments will occur in the utility industries generally, or that business
opportunities will continue to undergo significant changes or growth. See
"Investment Objective and Policies-Utility Industries-Description and Risk
Factors" in the Statement of Additional Information.
9
<PAGE>
Foreign Securities
The Fund invests in common stocks, debt securities and preferred stocks of
companies in utility industries around the world.
The Subadviser attempts to take advantage of differences between economic
trends and the performance of securities markets in various countries. The
Subadviser believes that the Fund's portfolio benefits from the availability of
opportunities for income and growth in foreign markets and that the portfolio
achieves broader diversification from foreign investment. Global diversification
reduces the effect that events in any one country will have on overall
investment returns. Of course, losses by an investment in the United States, or
any foreign market represented in the Fund's portfolio may offset gains from
investment in another market.
Investments in securities of foreign utility companies involve many of the
same risks noted above for domestic utility companies. Foreign investment also
involves additional risks relating to political and economic developments
abroad, as well as those that result from the differences between the
regulations to which U.S. and foreign issuers are subject. These risks may
include expropriation, confiscatory taxation, limitations on the use or transfer
of Fund assets, political or social instability and foreign relations
developments. In addition, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rates of inflation, capital reinvestment, resource self-sufficiency and
balance of payments positions. Securities of many foreign issuers may be less
liquid and their prices more volatile than those of securities of comparable
U.S. issuers. Further, a change in the value of a foreign currency against the
U.S. dollar will result in a corresponding change in the U.S. dollar value of
the Fund's assets denominated in that currency. See "Investment Objective and
Policies-Foreign Securities" in the Statement of Additional Information.
Foreign securities in which the Fund may invest include American Depository
Receipts, European Depository Receipts and Global Depository Receipts (ADRs,
EDRs and GDRs, respectively). ADRs are U.S. dollar-denominated securities
deposited in a U.S. securities depository and are created for trading in the
U.S. markets. The value of an ADR will fluctuate with the value of the
underlying security, reflect any changes in exchange rates and otherwise involve
risks associated with investing in foreign securities. ADRs in which the Fund
may invest may be sponsored or unsponsored. There may be less information
available about foreign issuers of unsponsored ADRs. EDRs and GDRs are receipts
evidencing an arrangement with a non-U.S. bank similar to that for ADRs and are
designed for use in non-U.S. securities markets. EDRs and GDRs are not
necessarily quoted in the same currency as the underlying security.
Investment Outside the Utility Industries
The Fund may invest up to 35% of its assets in securities of companies that
are outside the utility industries. Such investments may include common stocks,
debt securities, preferred stocks, and money market instruments, including
repurchase agreements, and are selected to meet the Fund's investment objective
of total return. This limitation also includes investments in options and
futures contracts to the extent that they relate to securities outside the
utility industries, and in forward currency contracts. Securities outside the
utility industries in which the Fund may invest may be issued by either U.S. or
non-U.S. companies and governments. Some of these issuers may be in industries
related to utility industries and, therefore, may be subject to similar risks.
Securities that are issued by foreign companies or are denominated in foreign
currencies are subject to the risks outlined in "Foreign Securities" above, and
in "Investment Objective and Policies-Foreign Securities" in the Statement of
Additional Information.
U.S. Government Securities
The Fund is also permitted to invest in securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities (U.S. Government
Securities). Such investments may be backed by the "full faith and credit" of
the United States, including U.S. Treasury bills, notes and bonds as well as
certain agency securities and mortgage-backed securities issued by the
Government National Mortgage Association (GNMA). The guarantees on these
securities do not extend to the securities' yield or value or to the yield or
value of the Fund's shares. Other investments in agency securities are not
necessarily backed by the "full faith and credit" of the United States.
10
<PAGE>
Foreign Government Securities
The Fund may invest in securities issued or guaranteed by foreign
governments. Such securities are typically denominated in foreign currencies and
are subject to the currency fluctuation and other risks of foreign securities
investments outlined in "Foreign Securities" above, and in "Investment Objective
and Policies-Foreign Securities" in the Statement of Additional Information. The
foreign government securities in which the Fund intends to invest generally will
consist of obligations supported by national or local governments or similar
political subdivisions. Foreign government securities also include debt
obligations of supranational entities, including international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Examples include the International Bank for Reconstruction
and Development (the World Bank), the European Investment Bank, the Asian
Development Bank and the Inter-American Development Bank.
Foreign government securities also include debt securities of
"quasi-governmental agencies" and debt securities denominated in multinational
currency units. An example of a multinational currency unit is the European
Currency Unit. A European Currency Unit represents specified amounts of the
currencies of certain of the twelve member states of the European Economic
Community. Debt securities of quasi-governmental agencies are issued by entities
owned by either a national or local government or are obligations of a political
unit that is not backed by the national government's full faith and credit and
general taxing powers. Foreign government securities also include
mortgage-related securities issued or guaranteed by national or local
governmental instrumentalities including quasi-governmental agencies.
HEDGING AND RETURN ENHANCEMENT STRATEGIES
The Fund may also engage in various portfolio strategies, including
derivatives, to reduce certain risks of its investments and to attempt to
enhance return, but not for speculation. These strategies currently include the
use of options, forward currency exchange contracts and futures contracts and
options thereon. The Fund's ability to use these strategies may be limited by
market conditions, regulatory limits and tax considerations and there can be no
assurance that any of these strategies will succeed. See "Investment Objective
and Policies-Additional Investment Policies" in the Statement of Additional
Information. The Fund, and thus the investor, may lose money if the Fund is
unsuccessful in its use of these strategies. New financial products and risk
management techniques continue to be developed and the Fund may use these new
investments and techniques to the extent consistent with its investment
objective and policies.
Options Transactions
The Fund may purchase and write (i.e., sell) put and call options on
securities and currencies that are traded on national securities exchanges or in
the over-the-counter market to enhance income or to hedge the Fund's portfolio.
These options will be on equity and debt securities, foreign currencies, indices
of prices of equity and debt securities, and other financial indices. Options
traded over-the-counter (OTC Options) are two-party contracts involving only the
purchaser and seller and have negotiated strike prices and expiration dates.
Financial indices measure the upward or downward movements of stock and bond
markets, based upon a weighted average of the prices of the securities
comprising the index. The Fund may write put and call options to generate
additional income through the receipt of premiums, purchase put options in an
effort to protect the value of a security that it owns against a decline in
market value and purchase call options in an effort to protect against an
increase in price of securities (or currencies) it intends to purchase. The Fund
may also purchase or write put and call options to offset previously written or
purchased put and call options of the same series. See "Investment Objective and
Policies-Additional Investment Policies-Options on Securities" in the Statement
of Additional Information.
A call option gives the purchaser, in exchange for a premium paid, the right
for a specified period of time to purchase the securities or currency subject to
the option at a specified price (the "exercise price" or "strike price").
11
<PAGE>
The writer of a call option, in return for the premium, has the obligation, upon
exercise of the option, to deliver, depending upon the terms of the option
contract, the underlying securities or a specified amount of cash to the
purchaser upon receipt of the exercise price. When the Fund writes a call
option, the Fund gives up the potential for gain on the underlying securities or
currency in excess of the exercise price of the option during the period that
the option is open.
A put option gives the purchaser, in return for a premium, the right, for a
specified period of time, to sell the securities or currency subject to the
option to the writer of the put at the specified exercise price. The writer of
the put option, in return for the premium, has the obligation, upon exercise of
the option, to acquire the securities or currency underlying the option at the
exercise price. The Fund might, therefore, be obligated to purchase the
underlying securities or currency for more than their current market price.
The Fund will write only "covered" options and options for which the Fund
maintains in a segregated account cash or liquid securities with a value
equivalent at all times to its obligations under the option. An option is
covered if the Fund, so long as it is obligated under the option, owns an
offsetting position in the underlying security or currency. When the Fund writes
a "covered" option, its losses are limited to the current value of the
offsetting position of the underlying security. When the Fund otherwise writes
an option, its losses are potentially unlimited. See "Investment Objective and
Policies-Additional Investment Policies-Options on Securities" in the Statement
of Additional Information.
Forward Currency Exchange Contracts
The Fund may enter into forward foreign currency exchange contracts to
protect the value of its portfolio against future changes in the level of
currency exchange rates. The Fund may enter into such contracts on a spot, i.e.,
cash, basis at the rate then prevailing in the currency exchange market or on a
forward basis, by entering into a forward contract to purchase or sell currency.
A forward contract on foreign currency is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days agreed
upon by the parties from the date of the contract at a price set on the date of
the contract.
The Fund's dealings in forward contracts will be limited to hedging
involving either specific transactions or portfolio positions. The Fund, and
thus the investor, may lose money if the Fund is unsuccessful in its use of
these strategies. Transaction hedging is the purchase or sale of a forward
contract with respect to specific receivables or payables of the Fund generally
arising in connection with the purchase or sale of its portfolio securities and
accruals of interest or dividends receivable and Fund expenses. Position hedging
is the sale of a foreign currency with respect to portfolio security positions
denominated or quoted in that currency or in a currency bearing a high degree of
positive correlation to the value of the currency (cross hedge). Although there
are no limits on the number of forward contracts which the Fund may enter into,
the Fund may not position hedge with respect to a particular currency for an
amount greater than the aggregate market value (determined at the time of making
any sale of forward currency) of the securities held in its portfolio
denominated or quoted in, or currently convertible into, such currency. See
"Investment Objective and Policies-Additional Investment Policies-Special
Characteristics of Forward Currency Contracts and Associated Risks" in the
Statement of Additional Information.
Futures Contracts and Options Thereon
The Fund may purchase and sell financial futures contracts and options
thereon which are traded on a commodities exchange or board of trade for certain
hedging and risk management purposes and to attempt to enhance return in
accordance with regulations of the Commodity Futures Trading Commission. The
Fund, and thus the investor, may lose money if the Fund is unsuccessful in its
use of these strategies. These futures contracts and related options will be on
equity and debt securities, foreign currencies, indices of prices of equity and
debt securities,
12
<PAGE>
and other financial indices. A financial futures contract is an agreement to
purchase or sell an agreed amount of securities or currencies at a set price for
delivery in the future. The value of all futures contracts sold will not exceed
the total market value of the Fund's portfolio.
The Fund's successful use of futures contracts and related options depends
upon the Subadviser's ability to predict the direction of the market and is
subject to various additional risks. The correlation between movements in the
price of a futures contract and the price of the securities or currencies being
hedged is imperfect and there is a risk that the value of the securities or
currencies being hedged may increase or decrease at a greater rate than the
related futures contract resulting in losses to the Fund. Certain futures
exchanges or boards of trade have established daily limits on the amount that
the price of a futures contract or related options may vary, either up or down,
from the previous day's settlement price. These daily limits may restrict the
Fund's ability to purchase or sell certain futures contracts or related options
on any particular day.
The Fund's ability to enter into options, forward contracts, futures
contracts and options thereon is limited by the requirements of the Internal
Revenue Code of 1986, as amended (the Internal Revenue Code), for qualification
as a regulated investment company.
See "Taxes" in the Statement of Additional Information.
Risks of Hedging and Return Enhancement Strategies
Participation in the options or futures markets and in currency exchange
transactions involves investment risks and transaction costs to which the Fund
would not be subject absent the use of these strategies. The Fund, and thus the
investor, may lose money if the Fund is unsuccessful in its use of these
strategies. If the Subadviser's prediction of movements in the direction of the
securities, foreign currency and interest rate and equity markets are
inaccurate, the adverse consequences to the Fund may leave the Fund in a worse
position than if such strategies were not used. Risks inherent in the use of
options, foreign currency and futures contracts and options on futures contracts
include (1) dependence on the Subadviser's ability to predict correctly
movements in the direction of interest rates, securities prices and currency
markets; (2) imperfect correlation between the price of options and futures
contracts and options thereon and movements in the prices of the securities or
currencies being hedged; (3) the fact that skills needed to use these strategies
are different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
(5) the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences and (6) in the case of over-the-counter options, the
risk of default by the counter party. See "Investment Objective and Policies"
and "Taxes" in the Statement of Additional Information.
OTHER INVESTMENTS AND POLICIES
At the discretion of the Subadviser, the Fund may employ the following
strategies in pursuing its investment objective.
Securities Lending
The Fund may lend its portfolio securities to brokers or dealers, banks or
other recognized institutional borrowers of securities, provided that the
borrower at all times maintains cash or liquid securities in an amount
equivalent to the market value of the securities loaned. During the time
portfolio securities are on loan, the borrower will pay the Fund an amount
equivalent to any dividend or interest paid on such securities and the Fund may
earn additional income by investing the collateral, or the Fund may receive an
agreed-upon amount of interest income from the borrower. In accordance with
applicable regulatory requirements, the Fund may lend up to 30% of the value of
its total assets.
Repurchase Agreements
The Fund may enter into repurchase agreements whereby the seller of a
security agrees to repurchase that security from the Fund at a mutually
agreed-upon time and price. The period of maturity is usually quite short,
possibly overnight
13
<PAGE>
or a few days, although it may extend over a number of months. The resale price
is in excess of the purchase price, reflecting an agreed-upon rate of return
effective for the period of time the Fund's money is invested in the security.
The Fund's repurchase agreements will at all times be fully collateralized in an
amount at least equal to the resale price. The instruments held as collateral
are valued daily, and if the value of instruments declines, the Fund will
require additional collateral. If the seller defaults and the value of the
collateral securing the repurchase agreement declines, the Fund may incur a
loss.
When-Issued and Delayed Delivery Securities
The Fund may purchase or sell securities on a when-issued or delayed
delivery basis. When-issued or delayed delivery transactions arise when
securities are purchased or sold by the Fund with payment and delivery taking
place as much as a month or more in the future in order to secure what is
considered to be an advantageous price and yield to the Fund at the time of
entering into the transaction. The Fund's Custodian will maintain, in a
segregated account of the Fund, cash, or liquid securities obligations having a
value equal to or greater than the Fund's purchase commitments. The securities
so purchased are subject to market fluctuation and no interest accrues to the
purchaser during the period between purchase and settlement. At the time of
delivery of the securities the value may be more or less than the purchase price
and an increase in the percentage of the Fund's assets committed to the purchase
of securities on a when-issued or delayed delivery basis may increase the
volatility of the Fund's net asset value.
Borrowing
The Fund may borrow an amount up to 33-1/3% of the value of its total assets
(calculated when the loan is made) from banks for temporary or emergency
purposes. The Fund may pledge up to 33-1/3% of its assets to secure such
borrowings. However, the Fund will not purchase portfolio securities if
borrowings exceed 5% of the Fund's total assets.
Illiquid Securities
The Fund may hold up to 10% of its total assets in repurchase agreements
which have a maturity of longer than seven days or in other illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market. Securities eligible for resale in accordance with Rule 144A
under the Securities Act of 1933, as amended (the Securities Act) and privately
placed commercial paper, that have legal or contractual restrictions on resale
but have a readily available market are not considered illiquid for purposes of
this limitation. The Subadviser will monitor the liquidity of such restricted
securities under the supervision of the Board of Directors. The Fund's
investment in Rule 144A securities could have the effect of increasing
illiquidity to the extent that qualified institutional buyers become, for a
limited time, uninterested in purchasing Rule 144A securities. Repurchase
agreements subject to demand are deemed to have a maturity equal to the notice
period. See "Investment Objective and Policies-Illiquid Securities" in the
Statement of Additional Information.
The staff of the Securities and Exchange Commission (SEC) has taken the
position that purchased OTC Options and the assets used as "cover" for written
OTC Options are illiquid securities unless the Fund and the counterparty have
provided for the Fund, at the Fund's election, to unwind the OTC 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."
INVESTMENT RESTRICTIONS
The Fund is subject to certain investment restrictions which, like its
investment objective, constitute fundamental policies. Fundamental policies
cannot be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities, as defined in the Investment Company Act.
See "Investment Restrictions" in the Statement of Additional Information.
14
<PAGE>
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HOW THE FUND IS MANAGED
- --------------------------------------------------------------------------------
The Fund has a Board of Directors which, in addition to overseeing the
actions of the Fund's Manager, Subadviser and Distributor, as set forth below,
decides upon matters of general policy. The Fund's Manager conducts and
supervises the daily business operations of the Fund. The Fund's Subadviser
furnishes daily investment advisory services.
For the fiscal year ended September 30, 1996, the Fund's total expenses as a
percentage of average net assets for the Fund's Class A, Class B and Class C
shares were 1.30%, 2.05% and 2.05%, respectively. See "Financial Highlights."
MANAGER
Prudential Mutual Fund Management LLC (PMF or the Manager), Gateway Center
Three, Newark, New Jersey 07102, is the Manager of the Fund. It is compensated
for its services by the Fund at an annual rate of .70% of the Fund's average
daily net assets for the portion of such assets up to and including $250
million, .55% of the Fund's average daily net assets in excess of $250 million
up to and including $500 million, .50% of the Fund's average daily net assets in
excess of $500 million up to and including $1 billion and .45% of the Fund's
average daily net assets in excess of $1 billion. PMF is organized as a limited
liability company. It is the successor to Prudential Mutual Fund Management,
Inc., which transferred its assets to PMF in September 1996. PMF is a
wholly-owned subsidiary of The Prudential Insurance Company of America
(Prudential), a major diversified insurance and financial services company. For
the fiscal year ended September 30, 1996, the Fund paid management fees to PMF
of .66% of the Fund's average net assets.
As of October 31, 1996, PMF served as the manager to 37 open-end investment
companies, constituting all of the Prudential Mutual Funds, and as manager or
administrator to 22 closed-end investment companies with aggregate assets of
approximately $52 billion.
Under the Management Agreement with the Fund, PMF manages the investment
operations of the Fund and also administers the Fund's corporate affairs. See
"Management of the Fund-The Manager" in the Statement of Additional Information.
SUBADVISER
Wellington Management Company, LLP, 75 State Street, Boston, Massachusetts
02109, serves as the Fund's Subadviser under a Subadvisory Agreement among the
Fund, PMF and Wellington Management Company, LLP (Wellington Management or the
Subadviser). The Subadviser furnishes investment advisory services in connection
with the management of the Fund. It is compensated for its services by PMF, not
the Fund, at an annual rate of .50% of the Fund's average daily net assets for
the portion of such assets up to and including $250 million, .35% of the Fund's
average daily net assets in excess of $250 million up to and including $500
million, .30% of the Fund's average daily net assets in excess of $500 million
up to and including $1 billion and .25% of the Fund's average daily net assets
in excess of $1 billion. PMF continues to have responsibility for all investment
advisory services in accordance with the Management Agreement and supervises
Wellington Management's performance of such services. For the fiscal year ended
September 30, 1996, PMF paid subadvisory fees to Wellington Management of .46%
of the Fund's average net assets.
The Subadviser is a Massachusetts general partnership of which the following
persons are managing partners: Robert W. Doran, Duncan M. McFarland, and John R.
Ryan. The Subadviser is a professional investment counseling firm which provides
investment services to investment companies, employee benefit plans, endowment
funds, foundations and other institutions and individuals. As of September 30,
1996, the Subadviser held investment authority over approximately $124 billion
of assets. The Subadviser is not affiliated with the Manager or any of its
affiliates.
The current manager of the equity portion of the Fund's portfolio is William
C. S. Hicks, a Senior Vice President and Partner of Wellington Management. Mr.
Hicks has responsibility for the day-to-day management of the Fund's portfolio.
15
<PAGE>
Mr. Hicks has managed the Fund's portfolio since May 1992 and has been an
investment professional with Wellington Management since 1962. Mr. Hicks also
serves as portfolio manager for a variety of corporate and public retirement
plans and was previously Wellington Management's Director of Research. Effective
May 31, 1996, the fixed income portion of the Fund's portfolio will be managed
by Earl E. McEvoy, a Senior Vice President and Partner of Wellington Management.
Mr. McEvoy has been an investment professional with Wellington Management
COmpany, LLP since 1978 and currently manages significant assets for a variety
of the firm's institutional and mutual fund clients.
DISTRIBUTOR
Prudential Securities Incorporated (Prudential Securities or PSI), One
Seaport Plaza, New York, New York 10292 is a corporation organized under the
laws of the State of Delaware and serves as the distributor of the Class A,
Class B, Class C and Class Z shares of the Fund. It is an indirect, wholly-owned
subsidiary of Prudential.
Under separate Distribution and Service Plans (the Class A Plan, the Class B
Plan and the Class C Plan, collectively, the Plans) adopted by the Fund under
Rule 12b-1 under the Investment Company Act and a distribution agreement (the
Distribution Agreement), Prudential Securities incurs the expense of
distributing the Fund's Class A, Class B and Class C shares. Prudential
Securities also incurs the expense of distributing the Fund's Class Z shares
under the Distribution Agreement, none of which is paid for or reimbursed by the
Fund. These expenses include commissions and account servicing fees paid to, or
on account of, financial advisers of Prudential Securities and representatives
of Pruco Securities Corporation (Prusec), an affiliated broker-dealer,
commissions and account servicing fees paid to, or on account of, other
broker-dealers or financial institutions (other than national banks) which have
entered into agreements with PSI, advertising expenses, the cost of printing and
mailing prospectuses to potential investors and indirect and overhead costs of
Prudential Securities and Prusec associated with the sale of Fund shares,
including lease, utility, communications and sales promotion expenses.
Under the Plans, the Fund is obligated to pay distribution and/or service
fees to PSI as compensation for its distribution and service activities, not as
reimbursement for specific expenses incurred. If PSI's expenses exceed its
distribution and service fees, the Fund will not be obligated to pay any
additional expenses. If PSI's expenses are less than such distribution and
service fees, it will retain its full fees and realize a profit.
Under the Class A Plan, the Fund may pay PSI for its distribution-related
activities 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 to pay for personal service and/or the maintenance of shareholder
accounts (service fee) and (ii) total distribution fees (including the service
fee of .25 of 1%) may not exceed .30 of 1% of the average daily net assets of
the Class A shares. PSI has agreed to limit its distribution-related fees
payable under the Class A Plan to .25% of the average daily net assets of the
Class A shares for the fiscal year ending September 30, 1997.
Under the Class B and Class C Plans, the Fund pays Prudential Securities for
its distribution-related activities with respect to Class B and Class C shares
at an annual rate of 1% of the average daily net assets of each of the Class B
and Class C shares. The Class B and Class C Plans provide for the payment to
Prudential Securities of (i) an asset-based sales charge of .75 of 1% of the
average daily net assets of each of the Class B and Class C shares and (ii) a
service fee of .25 of 1% of the average daily net assets of each of the Class B
and Class C shares. The service fee is used to pay for personal service and/or
the maintenance of shareholder accounts. Prudential Securities also receives
contingent deferred sales charges from certain redeeming shareholders. See
"Shareholder Guide-How to Sell Your Shares-Contingent Deferred Sales Charges."
For the fiscal year ended September 30, 1996, the Fund paid distribution
expenses of .25%, 1% and 1% of the average net assets of the Class A, Class B
and Class C shares, respectively. The Fund records all payments made under the
Plans as expenses in the calculation of net investment income. See "Distributor"
in the Statement of Additional Information.
16
<PAGE>
Distribution expenses attributable to the sale of Class A, Class B or Class
C shares of the Fund will be allocated to each class based upon the ratio of
sales of each class to the sales of all shares of the Fund other than expenses
allocable to a particular class. The distribution fee and sales charge of one
class will not be used to subsidize the sale of another class.
Each Plan provides that it shall continue in effect from year to year
provided that a majority of the Board of Directors of the Fund, including a
majority of the 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 the Plan or any agreement related to the
Plan (the Rule 12b-1 Directors), vote annually to continue the Plan. Each Plan
may be terminated at any time by vote of a majority of the Rule 12b-1 Directors
or of a majority of the outstanding shares of the applicable class of the Fund.
The Fund will not be obligated to pay expenses incurred under any plan if it is
terminated or not continued.
In addition to distribution and service fees paid by the Fund under the
Class A, Class B and Class C Plans, the Manager (or one of its affiliates) may
pay a finder's fee out of its own resources to dealers (including PSI) and other
persons who distribute shares of the Fund (including Class Z shares). Such
payments may be calculated by reference to the net asset value of shares sold by
such persons or otherwise.
The Distributor is subject to the rules of the National Association of
Securities Dealers, Inc. (NASD) governing maximum sales charges. See
"Distributor" in the Statement of Additional Information.
On October 21, 1993, PSI entered into an omnibus settlement with SEC, state
securities regulators (with the exception of the Texas Securities Commissioner
who joined the settlement on January 18, 1994) and the NASD to resolve
allegations that from 1980 through 1990 PSI sold certain limited partnership
interests in violation of securities laws to persons for whom such securities
were not suitable and misrepresented the safety, potential returns and liquidity
of these investments. Without admitting or denying the allegations asserted
against it, PSI consented to the entry of an SEC Administrative Order which
stated that PSI's conduct violated the federal securities laws, directed PSI to
cease and desist from violating the federal securities laws, pay civil
penalties, and adopt certain remedial measures to address the violations.
Pursuant to the terms of the SEC settlement, PSI agreed to the imposition of
a $10,000,000 civil penalty, established a settlement fund in the amount of
$330,000,000 and procedures to resolve legitimate claims for compensatory
damages by purchasers of the partnership interests. PSI has agreed to provide
additional funds, if necessary, for the purpose of the settlement fund. PSI's
settlement with the state securities regulators included an agreement to pay a
penalty of $500,000 per jurisdiction. PSI consented to a censure and to the
payment of $5,000,000 in settling the NASD action.
In October 1994, a criminal complaint was filed with the United States
Magistrate for the Southern District of New York alleging that PSI committed
fraud in connection with the sale of certain limited partnership interests in
violation of federal securities laws. An agreement was simultaneously filed to
defer prosecution of these charges for a period of three years from the signing
of the agreement, provided that PSI complies with the terms of the agreement.
If, upon completion of the three year period, PSI has complied with the terms of
the agreement, no prosecution will be instituted by the United States for the
offenses charged in the complaint. If on the other hand, during the course of
the three year period, PSI violates the terms of the agreement, the U.S.
Attorney can then elect to pursue these charges. Under the terms of the
agreement, PSI agreed, among other things, to pay an additional $330,000,000
into the fund established by the SEC to pay restitution to investors who
purchased certain PSI limited partnership interests.
For more detailed information concerning the foregoing matters, see
"Distributor" in the Statement of Additional Information, a copy of which may be
obtained at no cost by calling 1-800-225-1852.
17
<PAGE>
The Fund is not affected by PSI's financial condition and is an entirely
separate legal entity from PSI, which has no beneficial ownership therein and
the Fund's assets which are held by State Street Bank and Trust Company, an
independent custodian, are separate and distinct from PSI.
PORTFOLIO TRANSACTIONS
Prudential Securities may act as a broker or futures commission merchant for
the Fund, provided that the commissions, fees or other remuneration it receives
are fair and reasonable. See "Portfolio Transactions and Brokerage" in the
Statement of Additional Information.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for the Fund's portfolio securities and
cash and, in that capacity, maintains certain financial and accounting books and
records pursuant to an agreement with the Fund. Its mailing address is P.O. Box
1713, Boston, Massachusetts 02105.
Prudential Mutual Fund Services, Inc. (PMFS), Raritan Plaza One, Edison, New
Jersey 08837, serves as Transfer Agent and Dividend Disbursing Agent and in
those capacities maintains certain books and records for the Fund. PMFS is a
wholly-owned subsidiary of PMF.
Its mailing address is P.O. Box 15005, New Brunswick, New Jersey 08906-5005.
- --------------------------------------------------------------------------------
HOW THE FUND VALUES ITS SHARES
- --------------------------------------------------------------------------------
The Fund's net asset value per share or NAV is determined by subtracting its
liabilities from the value of its assets and dividing the remainder by the
number of outstanding shares. NAV is calculated separately for each class. The
Board of Directors has fixed the specific time of day for the computation of the
Fund's net asset value to be as of 4:15 p.m., New York time.
Portfolio securities are valued according to market quotations or, if such
quotations are not readily available, at fair value as determined in good faith
under procedures established by the Fund's Board of Directors.
The Fund will compute its NAV once daily on days that the New York Stock
Exchange is open for trading except on days on which no orders to purchase, sell
or redeem shares have been received by the Fund or days on which changes in
the value of the Fund's portfolio securities do not materially affect the NAV.
The New York Stock Exchange is closed on the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. See "Net Asset Value" in the Statement of
Additional Information.
Although the legal rights of each class of shares are substantially
identical, the different expenses borne by each class will result in different
NAVs and dividends. The NAV of Class B and Class C shares will generally be
lower than the NAV of Class A shares as a result of the larger
distribution-related fee to which Class B and Class C shares are subject. The
NAV of Class Z shares will generally be higher than the NAV of the other three
classes because Class Z shares are not subject to any distribution or service
fees. It is expected, however, that the net asset value per share of the four
classes will tend to converge immediately after the recording of dividends which
will differ by approximately the amount of the distribution or service fee
expense accrual differential among the classes.
18
<PAGE>
- --------------------------------------------------------------------------------
HOW THE FUND CALCULATES PERFORMANCE
- --------------------------------------------------------------------------------
From time to time the Fund may advertise its total return (including
"average annual" total return and "aggregate" total return) and yield in
advertisements or sales literature. Total return and yield are calculated
separately for Class A, Class B, Class C and Class Z shares. These figures are
based on historical earnings and are not intended to indicate future
performance. The "total return" shows how much an investment in the Fund would
have increased (decreased) over a specified period of time (i.e., one, five or
ten years or since inception of the Fund) assuming that all distributions and
dividends by the Fund were reinvested on the reinvestment dates during the
period and less all recurring fees. The "aggregate" total return reflects actual
performance over a stated period of time. "Average annual" total return is a
hypothetical rate of return that, if achieved annually, would have produced the
same aggregate total return if performance had been constant over the entire
period. "Average annual" total return smooths out variations in performance and
takes into account any applicable initial or contingent deferred sales charges.
Neither "average annual" total return nor "aggregate" total return takes into
account any federal or state income taxes that may be payable upon redemption.
The "yield" refers to the income generated by an investment in the Fund over a
one-month or 30-day period. This income is then "annualized;" that is, the
amount of income generated by the investment during that 30-day period is
assumed to be generated each 30-day period for twelve periods and is shown as a
percentage of the investment. The income earned on the investment is also
assumed to be reinvested at the end of the sixth 30-day period. The Fund also
may include comparative performance information in advertising or marketing the
Fund's shares. Such performance information may include data from Lipper
Analytical Services, Inc., Morningstar Publications, Inc., other industry
publications, business periodicals and market indices. See "Performance
Information" in the Statement of Additional Information. Further performance
information is contained in the Fund's annual and semi-annual reports to
shareholders, which may be obtained without charge. See "Shareholder
Guide-Shareholder Services-Reports to Shareholders."
- --------------------------------------------------------------------------------
TAXES, DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
Taxation of the Fund
The Fund has elected to qualify and intends to remain qualified as a
regulated investment company under the Internal Revenue Code. Accordingly, the
Fund will not be subject to federal income tax on its net investment income and
capital gains, if any, that it distributes to its shareholders. See "Taxes" in
the Statement of Additional Information.
Taxation of Shareholders
Any dividends out of net investment income, together with distributions of
net short-term capital gains (i.e. the excess of net short-term capital gains
over net long-term capital losses) distributed to shareholders, will be taxable
as ordinary income to the shareholders whether or not reinvested. Certain gains
or losses from fluctuations in foreign currency exchange rates ("Section 988"
gains or losses) will affect the amount of ordinary income the Fund will be able
to pay as dividends. See "Taxes" in the Statement of Additional Information. Any
net capital gain (the excess of net long-term capital gain over net short-term
capital loss) distributed to shareholders will be taxable as long-term capital
gain to the shareholders, whether or not reinvested and regardless of the length
of time a shareholder has owned his or her shares. For corporate shareholders,
the maximum rate of tax on net capital gain is currently the same as the maximum
tax rate for ordinary income. The maximum long-term capital gains tax for
individuals is 28%.
Any gain or loss realized upon a sale or redemption (including any exchange)
of Fund shares by a shareholder who is not a dealer in securities will be
treated as a long-term capital gain or loss if the shares have been held for
more than
19
<PAGE>
one year and otherwise as a short-term capital gain or loss. Any such loss on
shares that are held for six months or less, however, will be treated as a
long-term capital loss to the extent of any capital gain distributions received
by the shareholder.
The Fund has obtained opinions of counsel to the effect that (i) the
conversion of Class B shares into Class A shares or (ii) the exchange of any
class of the Fund's shares for any other class of its shares does not constitute
a taxable event for federal income tax purposes. However, such opinions are not
binding on the Internal Revenue Service.
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state or local taxes.
Withholding Taxes
Under the Internal Revenue Code, the Fund is required to withhold and remit
to the U.S. Treasury 31% of dividends, capital gain distributions and redemption
proceeds payable to any individuals and certain other noncorporate shareholders
who fail to furnish correct tax identification numbers on IRS Form W-9 (or IRS
Form W-8 in the case of certain foreign shareholders) with the required
certifications regarding the shareholder's status under the federal income tax
laws. Withholding at this rate is also required from dividends and capital gain
distributions (but not redemption proceeds) payable to shareholders who are
otherwise subject to backup withholding. Dividends from net investment income
and short-term capital gains to a foreign shareholder will generally be subject
to U.S. withholding tax at the rate of 30% (or lower treaty rate).
Dividends and Distributions
The Fund expects to pay quarterly dividends of net investment income, if
any, and make distributions at least annually of any net capital gains. To the
extent that, in a given year, distributions to shareholders exceed the Fund's
current and accumulated earnings and profits, shareholders will receive a
non-taxable return of capital. Dividends paid by the Fund with respect to each
class of shares, to the extent any dividends are paid, will be calculated in the
same manner, at the same time, on the same day and will be in the same amount
except that each class will bear its own distribution charges. This generally
will result in lower dividends for Class B and Class C shares in relation to
Class A and Class Z shares and lower dividends for Class A shares in relation to
Class Z shares. Distributions of net capital gains, if any, will be paid in the
same amount for each class of shares. See "How the Fund Values its Shares."
Dividends and distributions will be paid in additional Fund shares based on
the NAV of each class on the record date, or such other date as the Board of
Directors may determine, unless the shareholder elects in writing not less than
five business days prior to the record date to receive such dividends and
distributions in cash. Such election should be submitted to Prudential Mutual
Fund Services, Inc., Attention: Account Maintenance, P.O. Box 15015, New
Brunswick, New Jersey 08906-5015. The Fund will notify each shareholder after
the close of the Fund's taxable year of both the dollar amount and the taxable
status of that year's dividends and distributions on a per share basis. If you
hold shares through Prudential Securities, you should contact your financial
adviser to elect to receive dividends and distributions in cash.
When the Fund goes "ex-dividend," the NAV of each class is reduced by the
amount of the dividend or distribution allocable to each class. If you buy
shares just prior to the ex-dividend date, the price you pay will include the
dividend or distribution and a portion of your investment will be returned to
you as a taxable dividend or distribution. You should, therefore, consider the
timing of dividends and distributions when making your purchases.
20
<PAGE>
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMON STOCK
The Fund was incorporated in Maryland on November 18, 1988 and commenced
operations as a closed-end diversified management investment company on January
2, 1990. On December 20, 1990, shareholders approved open-ending the Fund and
since February 4, 1991, the Fund has operated as an open-end fund. The Fund is
authorized to issue 2 billion shares of $.001 par value per share divided into
four classes, designated Class A, Class B, Class C and Class Z shares, each of
which consists of 500 million authorized shares. The four classes of shares
represent an interest in the same portfolio of investments of the Fund and have
the same rights, except that (i) each class (except Class Z) is subject to
different sales charges and distribution or service fees, which may affect
performance, (ii) each class has exclusive voting rights on any matter submitted
to shareholders that relates solely to its distribution arrangement and has
separate voting rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other class, (iii) each
class has a different exchange privilege, (iv) only Class B shares have a
conversion feature and (v) Class Z shares are offered exclusively for sale to a
limited group of investors commencing on or about December 23, 1996. See "How
the Fund is Managed-Distributor." In accordance with the Fund's Articles of
Incorporation, the Board of Directors may authorize the creation of additional
series of common stock and classes within such series, with such preferences,
privileges, limitations and voting and dividend rights as the Board may
determine.
The Board of Directors may increase or decrease the number of authorized
shares without the approval of shareholders. Shares of the Fund, when issued,
are fully paid, nonassessable, fully transferable and redeemable at the option
of the holder. Shares are also redeemable at the option of the Fund under
certain circumstances and described under "Shareholder Guide-How to Sell Your
Shares." Each share of each class of common stock is equal as to earnings,
assets and voting privileges, except as noted above, and each class bears the
expenses related to the distribution of its shares (with the exception of Class
Z shares, which are not subject to any distribution or service fee). Except for
the conversion feature applicable to the Class B shares, there are no
conversion, preemptive or other subscription rights. In the event of
liquidation, each share of common stock of the Fund is entitled to its portion
of all the Fund's assets after all debt and expenses of the Fund have been paid.
Since Class B and Class C shares generally bear higher distribution expenses
than Class A and Class Z shares, the liquidation proceeds to shareholders of
those classes are likely to be lower than to Class A shareholders. The Fund's
shares do not have cumulative voting rights for the election of directors.
The Fund does not intend to hold annual meetings of shareholders unless
otherwise required by law. The Fund will not be required to hold meetings of
shareholders unless, for example, the election of directors is required to be
acted on by shareholders under the Investment Company Act. Shareholders have
certain rights, including the right to call a meeting upon a vote of 10% of the
Fund's outstanding shares for the purpose of voting on removal of one or more
directors or to transact any other business.
ADDITIONAL INFORMATION
This Prospectus, including the Statement of Additional Information which has
been incorporated by reference herein, does not contain all the information set
forth in the Registration Statement filed by the Fund with the SEC under the
Securities Act of 1933. Copies of the Registration Statement may be obtained at
a reasonable charge from the SEC or may be examined, without charge, at the
office of the SEC in Washington, D.C.
- --------------------------------------------------------------------------------
SHAREHOLDER GUIDE
- --------------------------------------------------------------------------------
HOW TO BUY SHARES OF THE FUND
You may purchase shares of the Fund through Prudential Securities, Prusec or
directly from the Fund through its transfer agent, Prudential Mutual Fund
Services, Inc. (PMFS or the Transfer Agent), Attention: Investment
21
<PAGE>
Services, P.O. Box 15020, New Brunswick, New Jersey 08906-5020. The minimum
initial investment is $1,000 for Class A and Class B shares and $5,000 for Class
C shares (the minimum for Class C shares may be waived from time to time). The
minimum subsequent investment is $100 for all classes, except for Class Z
shares, which are not subject to any minimum investment requirements. All
minimum investment requirements are waived for certain retirement and employee
savings plans or custodial accounts for the benefit of minors. For purchases
made through the Automatic Savings Accumulation Plan, the minimum initial and
subsequent investment is $50. The minimum initial investment requirement is
waived for purchases of Class A shares effected through an exchange of Class B
shares of The BlackRock Government Income Trust. See "Shareholder Services"
below.
The purchase price is the NAV next determined following receipt of an order
by the Transfer Agent or Prudential Securities plus a sales charge which, at the
option of the purchaser, may be imposed either (i) at the time of purchase
(Class A shares) or (ii) on a deferred basis (Class B or Class C shares). Class
Z shares are offered to a limited group of investors at net asset value without
any sales charge. See "Alternative Purchase Plan" below. See also "How the Fund
Values its Shares." Participants in programs sponsored by Prudential Retirement
Services should contact their client representative for more information about
Class Z shares.
Application forms can be obtained from PMFS, Prudential Securities, Prusec
or a selected dealer (Class A only). If a stock certificate is desired, it must
be requested in writing for each transaction. Certificates are issued only for
full shares. Shareholders who hold their shares through Prudential Securities
will not receive stock certificates.
The Fund reserves the right to reject any purchase order (including any
exchange into the Fund) or to suspend or modify the continuous offering of its
shares. See "How to Sell Your Shares" below.
Your dealer is responsible for forwarding payment promptly to the Fund. The
Distributor reserves the right to cancel any purchase order for which payment
has not been received by the third business day following the investment.
Transactions in Fund shares may be subject to postage and handling charges
imposed by your dealer.
Purchase by Wire. For an initial purchase of shares of the Fund by wire, you
must first telephone PMFS to receive an account number at 1-800-225-1852
(toll-free). The following information will be requested: your name, address,
tax identification number, class election, dividend distribution election,
amount being wired, and wiring bank. Instructions should then be given by you to
your bank to transfer funds by wire to State Street Bank and Trust Company,
Boston, Massachusetts, Custody and Shareholder Services Division, Attention:
Global Utility Fund, Inc., specifying on the wire the account number assigned by
PMFS and your name and identifying the sales charge alternative (Class A, Class
B, Class C or Class Z shares).
If you arrange for receipt by State Street of Federal Funds prior to 4:15
P.M., New York time, on a business day, you may purchase shares of the Fund as
of that day.
In making a subsequent purchase order by wire, you should wire State Street
directly and should be sure that the wire specifies Global Utility Fund, Inc.,
Class A, Class B, Class C or Class Z and your name and individual account
number. It is not necessary to call PMFS to make subsequent purchase orders
utilizing Federal Funds. The minimum amount which may be invested by wire is
$1,000.
ALTERNATIVE PURCHASE PLAN
The Fund offers four classes of shares (Class A, Class B, Class C and Class
Z shares) which allows you to choose the most beneficial sales charge structure
for your individual circumstances given the amount of the purchase, the length
of time you expect to hold the shares and other relevant circumstances
(Alternative Purchase Plan).
22
<PAGE>
<TABLE>
<CAPTION>
Annual 12b-1 Fees
(as a % of average
Sales Charge daily net assets) Other information
------------------------------------- -------------------------- --------------------------------------
<S> <C> <C> <C>
Class A Maximum initial sales charge of 5% of .30 of 1% (Currently being Initial sales charge waived or reduced
the public offering price. charged at a rate of for certain purchases
.25 of 1%)
Class B Maximum contingent deferred sales 1% Shares convert to Class A shares
charge or CDSC of 5% of the lesser of approximately seven years after
the amount invested or the redemption purchase
proceeds; declines to zero after six
years
Class C Maximum CDSC of 1% of the lesser of 1% Shares do not convert to another class
the amount invested or the redemption
proceeds on redemptions made within
one year of purchase
Class Z None None Sold to a limited group of investors
</TABLE>
The income attributable to each class and the dividends payable on the
shares of each class will be reduced by the amount of the distribution fee (if
any) of each class. Class B and Class C shares bear the expenses of a higher
distribution fee which will generally cause them to have higher expense ratios
and to pay lower dividends than the Class A and Class Z shares.
Financial advisers and other sales agents who sell shares of the Fund will
receive different compensation for selling Class A, Class B, Class C and Class Z
shares and will generally receive more compensation initially for selling Class
A and Class B shares than for selling Class C and Class Z shares.
In selecting a purchase alternative, you should consider, among other
things, (1) the length of time you expect to hold your investment, (2) the
amount of any applicable sales charge (whether imposed at the time of purchase
or redemption) and distribution-related fees, as noted above, (3) whether you
qualify for any reduction or waiver of any applicable sales charge, (4) the
various exchange privileges among the different classes of shares (see "How to
Exchange Your Shares" below) and (5) the fact that Class B shares automatically
convert to Class A shares approximately seven years after purchase (see
"Conversion Feature-Class B Shares" below).
The following is provided to assist you in determining which method of
purchase best suits your individual circumstances and is based on current fees
and expenses being charged to the Fund:
If you intend to hold your investment in the Fund for less than 7 years and
do not qualify for a reduced sales charge on Class A shares, since Class A
shares are subject to a maximum initial sales charge of 5% and Class B shares
are subject to a CDSC of 5% which declines to zero over a 6 year period, you
should consider purchasing Class C shares over either Class A or Class B shares.
If you intend to hold your investment for 7 years or more and do not qualify
for a reduced sales charge on Class A shares, since Class B shares convert to
Class A shares approximately 7 years after purchase and because all of your
money would be invested initially in the case of Class B shares, you should
consider purchasing Class B shares over either Class A or Class C shares.
23
<PAGE>
If you qualify for a reduced sales charge on Class A shares, it may be more
advantageous for you to purchase Class A shares over either Class B or Class C
shares regardless of how long you intend to hold your investment. However,
unlike Class B and Class C shares, you would not have all of your money invested
initially because the sales charge on Class A shares is deducted at the time of
purchase.
If you do not qualify for a reduced sales charge on Class A shares and you
purchase Class B or Class C shares, you would have to hold your investment for
more than 6 years in the case of Class B shares and Class C shares for the
higher cumulative annual distribution-related fee on those shares to exceed the
initial sales charge plus cumulative annual distribution-related fee on Class A
shares. This does not take into account the time value of money, which further
reduces the impact of the higher Class B or Class C distribution-related fee on
the investment, fluctuations in net asset value, the effect of the return on the
investment over this period of time or redemptions when the CDSC is applicable.
All purchases of $1 million or more, either as part of a single investment
or under Rights of Accumulation or Letters of Intent, must be for Class A
shares, unless the purchaser is eligible to purchase Class Z shares. See
"Reduction and Waiver of Initial Sales Charges" and Class Z shares below.
Class A Shares
The offering price of Class A shares is the NAV next determined following
receipt of an order by the Transfer Agent or Prudential Securities plus a sales
charge (expressed as a percentage of the offering price and of the amount
invested) imposed on a single transaction as shown in the following table:
Sales Charge as Sales Charge as Dealer Concession
Amount of Percentage of Percentage of as Percentage of
Purchase Offering Price Amount Invested Offering Price
- ---------------- --------------- --------------- -----------------
Less than $25,000 5.00% 5.26% 4.75%
$25,000 to $49,999 4.50% 4.71% 4.25%
$50,000 to $99,999 4.00% 4.17% 3.75%
$100,000 to $249,999 3.25% 3.36% 3.00%
$250,000 to $499,999 2.50% 2.56% 2.40%
$500,000 to $999,999 2.00% 2.04% 1.90%
$1,000,000 and above None None None
Prudential Securities may reallow the entire initial sales charge to
dealers. Selling dealers may be deemed to be underwriters, as that term is
defined in the Securities Act.
In connection with the sale of Class A shares at NAV (without an initial
sales charge), the Manager, PSI or one of their affiliates may pay dealers,
financial advisers and other persons who distribute shares a finder's fee based
on a percentage of the net asset value of shares sold by such persons.
Reduction and Waiver of Initial Sales Charges. Reduced sales charges are
available through Rights of Accumulation and Letters of Intent. Shares of the
Fund and shares of other Prudential Mutual Funds (excluding money market funds
other than those acquired pursuant to the exchange privilege) may be aggregated
to determine the applicable reduction. See "Purchase and Redemption of Fund
Shares-Reduction and Waiver of Initial Sales Charges-Class A Shares" in the
Statement of Additional Information.
Benefit Plans. Class A shares may be purchased at NAV, without payment of an
initial sales charge, by pension, profit-sharing or other employee benefit plans
qualified under Section 401 of the Internal Revenue Code and deferred
compensation and annuity plans under Sections 457 and 403(b)(7) of the Internal
Revenue Code (collectively, Benefit Plans), provided that the Benefit Plan has
existing assets of at least $1 million invested in shares of Prudential Mutual
Funds (excluding money market funds other than those acquired pursuant to the
exchange privilege) or 250 eligible employees or participants. In the case of
Benefit Plans whose accounts are held directly with the Transfer Agent or
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Prudential Securities and for which the Transfer Agent or Prudential Securities
does individual account record keeping (Direct Account Benefit Plans) and
Benefit Plans sponsored by PSI or its subsidiaries (PSI or Subsidiary Prototype
Benefit Plans), Class A shares may be purchased at NAV by participants who are
repaying loans made from such plans to the participant.
PruArray and SmartPath Plans. Class A shares may be purchased at NAV by
certain savings, retirement and deferred compensation plans, qualified or
non-qualified under the Internal Revenue Code, including pension,
profit-sharing, stock-bonus or other employee benefit plans under Section 401 of
the Internal Revenue Code and deferred compensation and annuity plans under
Sections 457 and 403(b)(7) of the Internal Revenue Code that participate in
Prudential's PruArray or SmartPath Programs (benefit plan record keeping
services) (hereafter referred to as a PruArray or SmartPath Plan), provided that
the plan has at least $1 million in existing assets or 250 eligible employees or
participants.The term "existing assets" for this purpose includes stock issued
by a PruArray or SmartPath Plan sponsor and shares of non-money market
Prudential Mutual Funds and shares of certain unaffiliated non-money market
mutual funds that participate in the PruArray or SmartPath Programs
(Participating Funds). "Existing assets" also include shares of money market
funds acquired by exchange from a Participating Fund.
Special Rules Applicable to Retirement Plans. After a Benefit Plan, PruArray
or SmartPath Plan qualifies to purchase Class A shares at NAV, all subsequent
purchases will be made at NAV.
Other Waivers. In addition, Class A shares may be purchased at NAV, through
Prudential Securities or the Transfer Agent, by the following persons: (a)
current and former Directors/Trustees and current officers of the Prudential
Mutual Funds (including the Fund), (b) employees of Prudential Securities and
PMF and their subsidiaries and members of the families of such persons who
maintain an "employee related" account at Prudential Securities or the Transfer
Agent, (c) employees and special agents of Prudential and its subsidiaries and
all persons who have retired directly from active service with Prudential or one
of its subsidiaries, (d) registered representatives and employees of dealers who
have entered into a selected dealer agreement with Prudential Securities
provided that purchases at NAV are permitted by such person's employer and (e)
investors who have a business relationship with a financial adviser who joined
Prudential Securities from another firm, provided that (i) the purchase is made
within 180 days of the commencement of the financial adviser's employment at
Prudential Securities, or within one year in the case of Benefit Plans, (ii) the
purchase is made with proceeds of a redemption of shares of any open-end fund
sponsored by the financial adviser's previous employer (other than a money
market fund or other no-load fund which imposes a distribution or service fee of
.25 of 1% or less) and (iii) the financial adviser served as the client's broker
on the previous purchases.
You must notify the Transfer Agent either directly or through Prudential
Securities or Prusec that you are entitled to the reduction or waiver of the
sales charge. The reduction or waiver will be granted subject to confirmation of
your entitlement. No initial sales charges are imposed upon Class A shares
acquired upon the reinvestment of dividends and distributions. See "Purchase and
Redemption of Fund Shares-Reduction and Waiver of Initial Sales Charges-Class A
Shares" in the Statement of Additional Information.
Class B and Class C Shares
The offering price of Class B and Class C shares for investors choosing one
of the deferred sales charge alternatives is the NAV next determined following
receipt of an order by the Transfer Agent or Prudential Securities. Although
there is no sales charge imposed at the time of purchase, redemptions of Class B
and Class C shares may be subject to a CDSC. See "How to Sell Your
Shares-Contingent Deferred Sales Charges." Prudential Securities will pay sales
commissions at the time of sale from its own resources of up to 4% and 1% of the
purchase price of Class B shares and Class C shares, respectively, to dealers,
financial advisers and other persons who sell Class B and Class C shares. This
facilitates the ability of the Fund to sell the Class B and Class C shares
without an initial sales charge being deducted at the time of purchase.
Prudential Securities anticipates that it will recoup its advancement of sales
commissions from the combination of the CDSC and the distribution fee. See
"Distributor," above.
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Class Z Shares
Class Z shares of the Fund are available for purchase by the following
categories of investors:
(i) pension, profit-sharing or other employee benefit plans qualified under
Section 401 of the Internal Revenue Code, deferred compensaton and annuity plans
under Section 457 and 403(b)(7) of the Internal Revenue Code and non-qualified
plans for which the Fund is an available option (collectively, Benefit Plans),
provided such Benefit Plans (in combination with other plans sponsored by the
same employer or group of related employers) have at least $50 million in
defined contribution assets; (ii) participants in any fee-based program
sponsored by Prudential Securities or its affiliates which includes mutual funds
as investment options and for which the Fund is an available option; and (iii)
investors who are, or have executed a letter of intent to become, shareholders
of any series of The Prudential Institutional Fund (Institutional Fund) on or
before one or more series of Institutional Fund reorganize or who on that date
have investments in certain products for which Institutional Fund provides
exchangeability. After a Benefit Plan qualifies to purchase Class Z shares, all
subsequent purchases by such Plan will be for Class Z shares.
HOW TO SELL YOUR SHARES
You can redeem your shares at any time for cash at the NAV next determined
after the redemption request is received in proper form by the Transfer Agent or
Prudential Securities. See "How the Fund Values Its Shares." In certain cases,
however, redemption proceeds from the Class B shares will be reduced by the
amount of any applicable contingent deferred sales charge, as described below.
See "Contingent Deferred Sales Charges."
If you hold shares of the Fund through Prudential Securities or through a
dealer which has entered into a selected dealer agreement with the Fund's
Distributor you must redeem your shares by contacting your financial adviser. If
you hold shares in non-certificate form, a written request for redemption signed
by you exactly as the account is registered is required. If you hold
certificates, the certificates, signed in the name(s) shown on the face of the
certificates, must be received by the Transfer Agent in order for the redemption
request to be processed. If the certificates, must be received by the Transfer
Agent in order for the redemption request to be processed. If redemption is
requested by a corporation, partnership, trust or fiduciary, written evidence of
authority acceptable to the Transfer Agent must be submitted before such request
will be accepted. All correspondence and documents concerning redemptions should
be sent to the Fund in care of its Transfer Agent, Prudential Mutual Fund
Services, Inc., Attention: Redemption Services, P.O. Box 15010, New Brunswick,
New Jersey 08906-5010.
If the proceeds of the redemption (a) exceed $50,000, (b) are to be paid to
a person other than the record owner, (c) are to be sent to an address other
than the address on the Transfer Agent's records, or (d) are to be paid to a
corporation, partnership, trust or fiduciary, the signature(s) on the redemption
request and on the certificates, if any, or stock power, must be guaranteed by
an "eligible guarantor institution." An "eligible guarantor institution"
includes any bank, broker, dealer or credit union. The Transfer Agent reserves
the right to request additional information from and make reasonable inquiries
of, any eligible guarantor institution. For clients of Prusec, a signature
guarantee may be obtained from the agency or office manager of most Prudential
Insurance and Financial Services or Preferred Services offices.
Payment for shares presented for redemption will be made by check within
seven days after receipt by the Transfer Agent of the certificate and/or written
request except as indicated below. If you hold shares through Prudential
Securities, payment for shares presented for redemption will be credited to your
Prudential Securities account, unless you indicate otherwise. Such payment may
be postponed or the right of redemption suspended at times (a) when the New York
Stock Exchange is closed for other than customary weekends and holidays, (b)
when trading on such Exchange is restricted, (c) when an emergency exists as a
result of which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (d) during any other period when the SEC, by
order, so permits; provided that applicable rules and regulations of the SEC
shall govern as to whether the conditions prescribed in (b), (c) or (d) exist.
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Payment for redemption of recently purchased shares will be delayed until
the Fund or its Transfer Agent has been advised that the purchase check has been
honored, up to 10 calendar days from the time of receipt of the purchase check
by the Transfer Agent. Such delay may be avoided by purchasing shares by wire or
by certified or official bank check.
Redemption in Kind. If the Board of Directors determines that it would be
detrimental to the best interests of the remaining shareholders of the Fund to
make payment wholly or partly in cash, the Fund may pay the redemption price in
whole or in part by a distribution in kind of securities from the investment
portfolio of the Fund, in lieu of cash, in conformity with applicable rules of
the SEC. Securities will be readily marketable and will be valued in the same
manner as in a regular redemption. See "How the Fund Values Its Shares." If your
shares are redeemed in kind, you would incur transaction costs in converting the
assets into cash. The Fund, however, has elected to be governed by Rule 18f-1
under the Investment Company Act, under which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net asset value
of the Fund during any 90-day period for any one shareholder.
Involuntary Redemption. In order to reduce expenses of the Fund, the Board
of Directors may redeem all of the shares of any shareholder, other than a
shareholder which is an IRA or other tax-deferred retirement plan, whose account
has a net asset value of less than $500 due to a redemption. The Fund will give
such shareholders 60 days' prior written notice in which to purchase sufficient
additional shares to avoid such redemption. No CDSC will be imposed on any such
involuntary redemption.
90-day Repurchase Privilege. If you redeem your shares and have not
previously exercised the repurchase privilege, you may reinvest any portion or
all of the proceeds of such redemption in shares of the Fund at the net asset
value next determined after the order is received, which must be within 90 days
after the date of the redemption. Any CDSC paid in connection with such
redemption will be credited (in shares) to your account. (If less than a full
repurchase is made, the credit will be on a pro rata basis.) You must notify the
Fund's Transfer Agent, either directly or through Prudential Securities, at the
time the repurchase privilege is exercised to adjust your account for the CDSC
you previously paid. Thereafter, any redemptions will be subject to the CDSC
applicable at the time of the redemption. See "Contingent Deferred Sales
Charges" below. Exercise of the repurchase privilege will generally not affect
federal income tax treatment of any gain realized upon redemption. However, if
the redemption was made within a 30-day period of the repurchase and if the
redemption resulted in a loss, some or all of the loss, depending on the amount
reinvested, will not be allowed for federal income tax purposes.
Contingent Deferred Sales Charges
Redemptions of Class B shares will be subject to a contingent deferred sales
charge or CDSC declining from 5% to zero over a six-year period. Class C shares
redeemed within one year of purchase will be subject to a 1% CDSC. The CDSC will
be deducted from the redemption proceeds and reduce the amount paid to you. The
CDSC will be imposed on any redemption by you which reduces the current value of
your Class B or Class C shares to an amount which is lower than the amount of
all payments by you for shares during the preceding six years, in the case of
Class B shares, and one year, in the case of Class C shares. A CDSC will be
applied on the lesser of the original purchase price or the current value of the
shares being redeemed. Increases in the value of your shares or shares acquired
through reinvestment of dividends or distributions are not subject to a CDSC.
The amount of any CDSC will be paid to and retained by the Distributor. See "How
the Fund is Managed-Distributor" and "Waiver of the Contingent Deferred Sales
Charges-Class B Shares" below.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of shares until the time of redemption
of such shares. Solely for purposes of determining the number of years from the
time of any payment for the purchase of shares, all payments during a month will
be aggregated and deemed to have been made on the last day of the month. The
CDSC will be calculated from the first day of the month after the initial
purchase, excluding the time shares were held in a money market fund. See "How
to Exchange Your Shares."
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The following table sets forth the rates of the CDSC applicable to
redemptions of Class B shares:
Contingent Deferred Sales Charge
Year Since Purchase As a Percentage of Dollars Invested
Payment Made or Redemption Proceeds
------------------- ------------------------------------
First .................... 5.0%
Second ................... 4.0%
Third .................... 3.0%
Fourth ................... 2.0%
Fifth .................... 1.0%
Sixth .................... 1.0%
Seventh .................. None
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares acquired pursuant to the reinvestment of dividends and distributions;
then of amounts representing the increase in net asset value above the total
amount of payments for the purchase of Fund shares made during the preceding six
years; then of amounts representing the cost of shares held beyond the
applicable CDSC period; and finally, of amounts representing the cost of shares
held for the longest period of time within the applicable CDSC period.
For example, assume you purchased 100 Class B shares at $10 per share for a
cost of $1,000. Subsequently, you acquired 5 additional Class B shares through
dividend reinvestment. During the second year after the purchase you decided to
redeem $500 of your investment. Assuming at the time of the redemption the net
asset value had appreciated to $12 per share, the value of the investor's Class
B shares would be $1,260 (105 shares at $12 per share). The CDSC would not be
applied to the value of the reinvested dividend shares and the amount which
represents appreciation ($260). Therefore, $240 of the $500 redemption proceeds
($500 minus $260) would be charged at a rate of 4% (the applicable rate in the
second year after purchase) for a total CDSC of $9.60.
For federal income tax purposes, the amount of the CDSC will reduce the gain
or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.
Waiver of the Contingent Deferred Sales Charges-Class B shares. The CDSC
will be waived in the case of a redemption following the death or disability of
a shareholder or, in the case of a trust account, following the death or
disability of the grantor. The waiver is available for total or partial
redemptions of shares owned by a person, either individually or in joint tenancy
(with rights of survivorship), at the time of death or initial determination of
disability, provided that the shares were purchased prior to death or
disability.
The CDSC will also be waived in the case of a total or partial redemption in
connection with certain distributions made without penalty under the Internal
Revenue Code from a tax-deferred retirement plan, an IRA or Section 403(b)
custodial account. These distributions include: (i) in the case of a
tax-deferred retirement plan, a lump-sum or other distribution after retirement;
(ii) in the case of an IRA or Section 403(b) custodial account, a lump-sum or
other distribution after attaining age 59-1/2; and (iii) a tax-free return of an
excess contribution or plan distributions following the death or disability of
the shareholder, provided that the shares were purchased prior to death or
disability. The waiver does not apply in the case of a tax-free rollover or
transfer of assets, other than one following a separation from service (i.e.,
following voluntary or involuntary termination of employment or following
retirement). Under no circumstances will the CDSC be waived on redemptions
resulting from the termination of a tax-deferred retirement plan, unless such
redemptions otherwise qualify for a waiver as described above. In the case of
Direct Account and PSI or Subsidiary Prototype Benefit Plans, the CDSC will be
waived on redemptions which represent borrowings from such plans. Shares
purchased with amounts used to repay a loan from such plans on which a CDSC was
not previously deducted will thereafter be subject to a CDSC without regard to
the time such amounts were previously invested. In the case of a 401(k)
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<PAGE>
plan, the CDSC will also be waived upon the redemption of shares purchased with
amounts used to repay loans made from the account to the participant and from
which a CDSC was previously deducted.
In addition, the CDSC will be waived on redemptions of shares held by a
Director of the Fund.
You must notify the Fund's Transfer Agent either directly or through
Prudential Securities or Prusec, at the time of redemption, that you are
entitled to waiver of the CDSC and provide the Transfer Agent with such
supporting documentation as it may deem appropriate. The waiver will be granted
subject to confirmation of your entitlement. See "Purchase and Redemption of
Fund Shares-Waiver of the Contingent Deferred Sales Charge-Class B Shares" in
the Statement of Additional Information.
A quantity discount may apply to redemptions of Class B shares purchased
prior to August 1, 1994. See "Purchase and Redemption of Fund Shares-Quantity
Discount-Class B Shares Purchased Prior to August 1, 1994" in the Statement of
Additional Information.
CONVERSION FEATURE-CLASS B SHARES
Class B shares will automatically convert to Class A shares on a quarterly
basis approximately seven years after purchase. Conversions will be effected at
relative net asset value without the imposition of any additional sales charge.
The first conversion of Class B shares occurred in February 1995, when the
conversion feature was first implemented.
Since the Fund tracks amounts paid rather than the number of shares bought
on each purchase of Class B shares, 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 your account (ii) multiplied by the total
number of Class B shares purchased and then held in your account. Each time any
Eligible Shares in your account convert to Class A shares, all shares or amounts
representing Class B shares then in your 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 your 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 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.
Since annual distribution-related fees are lower for Class A shares than
Class B shares, the per share net asset value of the Class A shares may be
higher than that of the Class B shares at the time of conversion. Thus, although
the aggregate dollar value will be the same, you may receive fewer Class A
shares than Class B shares converted. See "How the Fund Values its Shares."
For purposes of calculating the applicable holding period for conversions,
all payments for 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 one year, will not
convert to Class A shares until approximately eight years from purchase. For
purposes of
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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.
The conversion feature may be subject to the continuing availability of
opinions of counsel or rulings of the Internal Revenue Service (i) that the
dividends and other distrbutions paid on Class A, Class B, Class C and Class Z
shares will not constitute "preferential dividends" under the Internal Revenue
Code 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.
HOW TO EXCHANGE YOUR SHARES
As a shareholder of the Fund you have an exchange privilege with certain
other Prudential Mutual Funds, including one or more specified money market
funds, subject to the minimum investment requirement of such funds. Class A,
Class B, Class C and Class Z shares may be exchanged for Class A, Class B, Class
C and Class Z shares, respectively, of another fund on the basis of the relative
NAV. No sales charge will be imposed at the time of the exchange. Any applicable
CDSC payable upon the redemption of shares exchanged will be calculated from the
first day of the month after the initial purchase, excluding the time shares
were held in a money market fund. For purposes of calculating the holding period
applicable to the Class B conversion feature, the time period during which Class
B shares were held in a money market fund will be excluded. See "Conversion
Feature-Class B Shares" above. An exchange will be treated as a redemption and
purchase for tax purposes. See "Shareholder Investment Account-Exchange
Privilege" in the Statement of Additional Information.
In order to exchange shares by telephone, you must authorize telephone
exchanges on your initial application form or by written notice to the Transfer
Agent and hold shares in non-certificate form. Thereafter, you may call the Fund
at (800) 225-1852 to execute a telephone exchange of shares on weekdays, except
holidays, between the hours of 8:00 a.m. and 6:00 p.m., New York time. For your
protection and to prevent fraudulent exchanges, your telephone call will be
recorded and you will be asked to provide your personal identification number. A
written confirmation of the exchange transaction will be sent to you. Neither
the Fund nor its agents will be liable for any loss, liability or cost which
results from acting upon instructions reasonably believed to be genuine under
the foregoing procedures. (The Fund or its agents could be subject to liability
if they fail to employ reasonable procedures.) All exchanges will be made on the
basis of the relative NAV of the two funds next determined after the request is
received in good order. The Exchange Privilege is available only in states where
the exchange may legally be made.
If you hold shares through Prudential Securities or through a dealer which
has entered into a selected dealer agreement with the Fund's Distributor, you
must exchange your shares by contacting your financial adviser.
If you hold certificates, the certificates, signed in the name(s) shown on
the face of the certificates must be returned in order for the shares to be
exchanged. See "How to Sell Your Shares" above.
You may also exchange shares by mail by writing to Prudential Mutual Fund
Services, Inc., Attention: Exchange Processing, P.O. Box 15010, New Brunswick,
New Jersey 08906-5010.
In periods of severe market or economic conditions the telephone exchange of
shares may be difficult to implement and shareholders should make exchanges by
mail by writing to Prudential Mutual Fund Services, Inc. at the address above.
Special Exchange Privilege. A special exchange privilege is available for
shareholders who qualify to purchase Class A shares at NAV (see "Alternative
Purchase Plan-Class A Shares-Reduction and Waiver of Initial Sales Charges"
above) and for shareholders who qualify to purchase Class Z shares (see
"Alternative Purchase Plan-Class Z
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Shares" above). Under this exchange privilege, amounts representing any Class B
and Class C shares (which are not subject to a CDSC) held in such a
shareholder's account will be automatically exchanged for Class A shares for
shareholders who qualify to purchase Class A shares at NAV on a quarterly basis,
unless the shareholder elects otherwise. Similarly, shareholders who qualify to
purchase Class Z shares will have their Class B and Class C shares (which are
not subject to a CDSC) and their Class A shares exchanged for Class Z shares on
a quarterly basis. Eligibility for this exchange privilege will be calculated on
the business day prior to the date of the exchange. Amounts representing Class B
or Class C shares which are not subject to a CDSC include the following: (1)
amounts representing Class B or Class C shares acquired pursuant to the
automatic reinvestment of dividends and distributions, (2) amounts representing
the increase in the net asset value above the total amount of payments for the
purchase of Class B or Class C shares and (3) amounts representing Class B or
Class C shares held beyond the applicable CDSC period. Class B and Class C
shareholders must notify the Transfer Agent either directly or through
Prudential Securities or Prusec that they are eligible for this special exchange
privilege.
Participants in any fee-based program for which the Fund is an available
option will have their Class A shares, if any, exchanged for Class Z shares when
they elect to have those assets become a part of the fee-based program. Upon
leaving the program (whether voluntarily or not), such Class Z shares (and, to
the extent provided for in the program, Class Z shares acquired through
participation in the program) will be exchanged for Class A shares at net asset
value. Similarly, participants in PSI's 401(k) Plan for which the Fund's Class Z
shares is an available option and who wish to transfer their Class Z shares out
of the PSI 401(k) Plan following separation from service (i.e., voluntary or
involuntary termination of employment or retirement) will have their Class Z
shares exchanged for Class A shares at net asset value.
The Fund reserves the right to reject any exchange order including exchanges
(and market timing transactions) which are of size and/or frequency engaged in
by one or more accounts acting in concert or otherwise, that have or may have an
adverse effect on the ability of the Subadviser to manage the portfolio. The
determination that such exchanges or activity may have an adverse effect and the
determination to reject any exchange order shall be in the discretion of the
Manager and the Subadviser.
The Exchange Privilege is not a right and may be modified, suspended or
terminated upon 60 day's notice to Shareholders.
SHAREHOLDER SERVICES
In addition to the exchange privilege, as a shareholder in the Fund, you can
take advantage of the following additional services and privileges:
*Automatic Reinvestment of Dividends and/or Distributions Without a Sales
Charge. For your convenience, all dividends and distributions are automatically
reinvested in full and fractional shares of the Fund at NAV without a sales
charge. You may direct the Transfer Agent in writing not less than 5 full
business days prior to the record date to have subsequent dividends and/or
distributions sent in cash rather than reinvested. If you hold shares through
Prudential Securities, you should contact your financial adviser.
*Automatic Savings Accumulation Plan (ASAP). Under ASAP you may make regular
purchases of the Fund's shares in amounts as little as $50 via an automatic
charge to a bank account or Prudential Securities account (including a Command
Account). For additional information about this service, you may contact your
Prudential Securities financial adviser, Prusec representative or the Transfer
Agent directly.
*Tax-Deferred Retirement Plans. Various tax-deferred retirement plans,
including a 401(k) plan, self-directed individual retirement accounts and
"tax-sheltered accounts" under Section 403(b)(7) of the Internal Revenue Code
are
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available through the Distributor. These plans are for use by both self-employed
individuals and corporate employers. These plans permit either self-direction of
accounts by participants, or a pooled account arrangement. Information regarding
the establishment of these plans, the administration, custodial fees and other
details is available from Prudential Securities or the Transfer Agent. If you
are considering adopting such a plan, you should consult with your own legal or
tax adviser with respect to the establishment and maintenance of such a plan.
*Systematic Withdrawal Plan. A systematic withdrawal plan is available to
shareholders which provides for monthly or quarterly checks. Withdrawals of
Class B and Class C shares may be subject to a CDSC. See "How to Sell Your
Shares-Contingent Deferred Sales Charges" and "Shareholder Investment
Account-Systematic Withdrawal Plan."
*Reports to Shareholders. The Fund will send you annual and semi-annual
reports. The financial statements appearing in annual reports are audited by
independent accountants. In order to reduce duplicate mailing and printing
expenses the Fund will provide one annual report and semi-annual shareholder
report and annual prospectus per household. You may request additional copies of
such reports by calling (800) 225-1852 or by writing to the Fund at One Seaport
Plaza, New York, NY 10292. In addition, monthly unaudited financial data is
available upon request from the Fund.
*Shareholder Inquiries. Inquiries should be addressed to the Fund at Gateway
Center Three, Newark, New Jersey 07102, or by telephone at (800) 225-1852 (toll
free) or, from outside the U.S.A., at (908) 417-7555 (collect).
For additional information regarding the services and privileges described
above, see "Shareholder Investment Account" in the Statement of Additional
Information.
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THE PRUDENTIAL MUTUAL FUND FAMILY
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Prudential Mutual Fund Management offers a broad range of mutual funds
designed to meet your individual needs. We welcome you to review the investment
options available through our family of funds. For more information on the
Prudential Mutual Funds, including charges and expenses, contact your Prudential
Securities financial adviser or Prusec representative or telephone the Fund at
(800) 225-1852 for a free prospectus. Read the prospectus carefully before you
invest or send money.
- --------------------------------------------------------------------------------
(left column)
Taxable Bond Funds
Prudential Diversified Bond Fund, Inc.
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential Mortgage Income Fund, Inc.
Prudential Structured Maturity Fund, Inc.
Income Portfolio
The BlackRock Government Income Trust
Tax-Exempt Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Yield Series
Insured Series
Intermediate Series
Prudential Municipal Series Fund
Florida Series
Hawaii Income Series
Maryland Series
Massachusetts Series
Michigan Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
Global Funds
Prudential Europe Growth Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Global Limited Maturity Fund, Inc.
Limited Maturity Portfolio
Prudential Intermediate Global Income Fund, Inc.
Prudential Natural Resources Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Series
International Stock Series
The Global Government Plus Fund, Inc.
The Global Total Return Fund, Inc.
Global Utility Fund, Inc.
(right column)
Equity Funds
Prudential Allocation Fund
Balanced Portfolio
Strategy Portfolio
Prudential Distressed Securities Fund, Inc.
Prudential Dryden Fund
Prudential Active Balanced Fund
Prudential Stock Index Fund
Prudential Emerging Growth Fund, Inc.
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
Prudential Jennison Fund, Inc.
Prudential Jennison Growth Fund
Prudential Jennison Growth & Income Fund
Prudential Multi-Sector Fund, Inc.
Prudential Small Companies Fund, Inc.
Prudential Utility Fund, Inc.
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Money Market Funds
* Taxable Money Market Funds
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund, Inc.
Money Market Series
Prudential MoneyMart Assets, Inc.
* Tax-Free Money Market Funds
Prudential Tax-Free Money Fund, Inc.
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
* Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
* Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
- --------------------------------------------------------------------------------
A-1
<PAGE>
(left column)
No dealer, sales representative or any other person
has been authorized to give any information or to make
any representations, other than those contained in
this Prospectus, in connection with the offer
contained herein, and, if given or made, such other
information or representations must not be relied upon
as having been authorized by the Fund or the
Distributor. This Prospectus does not constitute an
offer by the Fund or by the Distributor to sell or a
solicitation of an offer to buy any of the securities
offered hereby in any jurisdiction to any person to
whom it is unlawful to make such offer in such
jurisdiction.
- -----------------------------------------------------
TABLE OF CONTENTS
Page
----
FUND HIGHLIGHTS.................................. 2
Risk Factors and Special Characteristics.... 2
FUND EXPENSES.................................... 4
FINANCIAL HIGHLIGHTS............................. 5
HOW THE FUND INVESTS............................. 8
Investment Objective and Policies.......... 8
Hedging and Return Enhancement Strategies... 11
Other Investments and Policies.............. 13
Investment Restrictions..................... 14
HOW THE FUND IS MANAGED.......................... 15
Manager..................................... 15
Subadviser.................................. 15
Distributor................................. 16
Portfolio Transactions...................... 18
Custodian and Transfer and
Dividend Disbursing Agent............... 18
HOW THE FUND VALUES ITS SHARES................... 18
HOW THE FUND CALCULATES PERFORMANCE.............. 19
TAXES, DIVIDENDS AND DISTRIBUTIONS............... 19
GENERAL INFORMATION.............................. 21
Description of Common Stock................. 21
Additional Information...................... 21
SHAREHOLDER GUIDE................................ 21
How to Buy Shares of the Fund............... 21
Alternative Purchase Plan................... 22
How to Sell Your Shares..................... 26
Conversion Feature -Class B Shares.......... 29
How to Exchange Your Shares ................ 30
Shareholder Services............................. 31
THE PRUDENTIAL MUTUAL FUND FAMILY................ A-1
- -----------------------------------------------------
MF150A 4443442
- -----------------------------------------------------
Class A: 37936G 30 3
CUSIP Nos.: Class B: 37936G 20 4
Class C: 37936G 40 2
Class Z: 37936G 50 1
- -----------------------------------------------------
(right column)
Global Utility
Fund, Inc.
Prudential Mutual Funds LOGO
BUILDING YOUR FUTURE
ON OUR STRENGTH SM
PROSPECTUS
November 29, 1996
<PAGE>
GLOBAL UTILITY FUND, INC.
Statement of Additional Information
November 29, 1996
Global Utility Fund, Inc. (the Fund) is a diversified, open-end management
investment company. The Fund's investment objective is to provide total return,
without incurring undue risk, by investing primarily in income-producing
securities of domestic and foreign companies in the utility industries. Under
normal circumstances, at least 65% of the Fund's total assets will be invested
in a diversified portfolio of equity and debt securities of domestic and foreign
utility companies, principally electric, telecommunications, gas or water
companies. There can be no assurance that the Fund's investment objective will
be achieved. See "Investment Objective and Policies."
The Fund's address is Gateway Center Three, Newark, New Jersey 07102, and
its telephone number is 1-800-225-1852.
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Fund's Prospectus, dated November 29, 1996, a copy
of which may be obtained upon request from the Fund at the address or telephone
number above.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Cross-reference
to page in
Page Prospectus
---- ---------------
<S> <C> <C>
General Information .............................................................. B-2 21
Investment Objective and Policies ................................................ B-2 8
Investment Restrictions .......................................................... B-15 14
Information Regarding Directors and Officers ..................................... B-16 15
Management of the Fund ........................................................... B-19 15
Portfolio Transactions and Brokerage ............................................. B-23 18
Purchase and Redemption of Fund Shares ........................................... B-24 22
Shareholder Investment Account ................................................... B-27 30
Net Asset Value .................................................................. B-30 18
Taxes ............................................................................ B-31 19
Performance Information .......................................................... B-33 19
Custodian, Transfer and Dividend Disbursing Agent and Independent Accountants .... B-34 18
Financial Statements ............................................................. B-36 -
Independent Auditors' Report ..................................................... B-48 -
Appendix I-Description of Bond Ratings ........................................... A-1 -
Appendix II-Historical Performance Data .......................................... A-1 -
</TABLE>
- --------------------------------------------------------------------------------
MF150B
<PAGE>
GENERAL INFORMATION
Global Utility Fund, Inc. (the Fund), a Maryland corporation, is a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the 1940 Act). The Fund was
incorporated under the name The Utility Income Fund, Inc. On October 20, 1989
the Fund changed its name to Global Utility Fund, Inc. The Fund operated as a
closed-end fund until February 1, 1991. Since February 4, 1991, the Fund has
operated as an open-end fund.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide total return, without
incurring undue risk, by investing primarily in income-producing securities of
domestic and foreign companies in the utility industries. The Fund's total
return will consist of current income and growth of capital. Wellington
Management Company, the Fund's subadviser (the Subadviser), will seek to achieve
the Fund's objective by investing, under normal circumstances, at least 65% of
the Fund's total assets in a diversified portfolio of common stocks, debt
securities and preferred stocks issued by domestic and foreign companies
primarily engaged in the ownership or operation of facilities used in the
generation, transmission or distribution of electricity, telecommunications, gas
or water. There can be no assurance that the Fund's investment objective will be
achieved.
Utility Industries-Description and Risk Factors
Utility companies in the United States and in foreign countries are
generally subject to regulation. In the United States, most utility companies
are regulated by state and/or federal authorities. Such regulation is intended
to ensure appropriate standards of service and adequate capacity to meet public
demand. Prices are also regulated, with the intention of protecting the public
while ensuring that the rate of return earned by utility companies is sufficient
to allow them to attract capital in order to grow and continue to provide
appropriate services. There can be no assurance that such pricing policies or
rates of return will continue in the future.
The nature of regulation of utility industries is evolving both in the
United States and in foreign countries. Changes in regulations in the United
States increasingly allow utility companies to provide services and products
outside their traditional geographic areas and lines of business, creating new
areas of competition within the industries. Furthermore, the Subadviser believes
that the emergence of competition will result in utility companies potentially
earning more than their traditional regulated rates of return. Although certain
companies may develop more profitable opportunities, others may be forced to
defend their core businesses and may be less profitable. The Subadviser seeks to
take advantage of favorable investment opportunities that are expected to arise
from these structural changes. Of course, there can be no assurance that
favorable developments will occur in the future.
Foreign utility companies are also subject to regulation, although such
regulation may or may not be comparable to that in the United States. Foreign
regulatory systems vary from country to country, and may evolve in ways
different from regulation in the United States. See "Foreign Securities" in this
Statement of Additional Information and in the Prospectus.
The Fund's investment policies are designed to enable it to capitalize on
evolving investment opportunities throughout the world. For example, the rapid
growth of certain foreign economies will necessitate expansion of capacity in
the utility industries in those countries. Although many foreign utility
companies currently are government-owned, thereby limiting current investment
opportunities for the Fund, the Subadviser believes that, in order to attract
significant capital for growth, foreign governments are likely to seek global
investors through the privatization of their utility industries. Privatization,
which refers to the trend toward investor ownership of assets rather than
government ownership, is expected to occur in newer, faster-growing economies
and also in more mature economies. In addition, the economic unification of
European markets is expected to improve economic growth, reduce costs and
increase competition in Europe, which will result in opportunities for
investment by the Fund in European utility industries. Of course, there is no
assurance that such favorable developments will occur or that investment
opportunities in foreign markets for the Fund will increase.
The revenues of domestic and foreign utility companies generally reflect the
economic growth and developments in the geographic areas in which they do
business. The Subadviser takes into account anticipated economic growth rates
and other economic developments when selecting securities of utility companies.
Further descriptions of some of the anticipated opportunities and risks of
specific segments within the global utility industries are set forth below.
Electric. The electric utility industry consists of companies that are
engaged principally in the generation, transmission and sale of electric energy,
although many such companies also provide other energy-related services.
Domestic electric utility companies in general recently have been favorably
affected by lower fuel and financing costs and the full or near completion of
major construction programs. In addition, many of these companies recently have
generated cash flows in excess of current operating expenses and construction
expenditures, permitting some degree of diversification into unregulated
businesses. Some electric utilities have also taken advantage of the right to
sell power outside of their traditional geographic areas. Electric utility
companies have historically been subject to the risks associated with increases
in fuel and other operating costs, high interest
B-2
<PAGE>
costs on borrowings needed for capital construction programs, costs associated
with compliance with environmental, nuclear facility and other safety
regulations and changes in the regulatory climate. For example, in the United
States, the construction and operation of nuclear power facilities is subject to
increased scrutiny by, and evolving regulations of, the Nuclear Regulatory
Commission. Increased scrutiny might result in higher operating costs and higher
capital expenditures, with the risk that regulators may disallow inclusion of
these costs in rate authorizations.
Telecommunications. The telephone communications industry is a distinct
utility industry segment that is subject to different risks and opportunities.
Companies that provide telephone services and access to the telephone networks
comprise the largest portion of this segment. The telephone industry is large
and highly concentrated. Telephone companies in the United States are still
experiencing the effects of the break-up of American Telephone & Telegraph
Company, which occurred in 1984. Since that date the number of local and
long-distance companies and the competition among such companies has increased.
In addition, since 1984, companies engaged in telephone communication services
have expanded their nonregulated activities into other businesses, including
cellular telephone services, data processing, equipment retailing and software
services. This expansion has provided significant opportunities for certain
telephone companies to increase their earnings and dividends at faster rates
than have been allowed in traditional regulated businesses. Increasing
competition and other structural changes, however, could adversely affect the
profitability of such utilities.
Gas. Gas transmission companies and gas distribution companies are also
undergoing significant changes. In the United States, interstate transmission
companies are regulated by the Federal Energy Regulatory Commission, which is
reducing its regulation of the industry. Many companies have diversified into
oil and gas exploration and development, making returns more sensitive to energy
prices. In the recent decade, gas utility companies have been adversely affected
by disruption in the oil industry and have also been affected by increased
concentration and competition. In the opinion of the Subadviser, however,
environmental considerations could improve the gas industry outlook in the
future. For example, natural gas is the cleanest of the hydrocarbon fuels and
this may result in incremental shifts in fuel consumption toward natural gas and
away from oil and coal.
Water. Water supply utilities are companies that collect, purify, distribute
and sell water. In the United States and around the world, the industry is
highly fragmented, because most of the supplies are owned by local authorities.
Companies in this industry are generally mature and are experiencing little or
no per capita volume growth. In the opinion of the Subadviser, there may be
opportunities for certain companies to acquire other water utility companies.
The Subadviser believes that favorable investment opportunities may result from
consolidation within this industry.
There can be no assurance that the positive developments noted above,
including those relating to business growth and changing regulation, will occur
or that risk factors other than those noted above will not develop in the
future.
Foreign Securities
Foreign securities in which the Fund invests generally will be denominated
in foreign currencies and will be traded on foreign markets, including foreign
stock exchanges. Foreign securities also may include securities of foreign
issuers that are traded in U.S. dollars in the United States although the
underlying security is usually denominated in a foreign currency. These
securities include, but are not limited to, securities traded in the form of
American Depository Receipts (ADRs) and securities registered in the United
States by foreign (including Canadian) governmental or private issuers, foreign
banks and foreign branches of U.S. banks. These securities also include European
Depository Receipts and Global Depository Receipts (EDRs and GDRs,
respectively).
Restrictions and controls on investment in the securities markets of some
countries may have an adverse effect on the availability and costs to the Fund
of investments in those countries. Costs may be incurred in connection with
conversions between various currencies. Moreover, there may be less publicly
available information about foreign issuers than about domestic issuers, and
foreign issuers generally are not subject to accounting, auditing and financial
reporting standards and requirements comparable to those of domestic issuers.
The value of the assets of the Fund as measured in dollars also may be
affected favorably or unfavorably by fluctuations in currency rates and exchange
control regulations. A change in the value of any such currency relative to the
U.S. dollar will result in a corresponding change in the U.S. dollar value of
the Fund's assets denominated in that currency. These changes will also affect
the Fund's return, income and distributions to shareholders. In addition,
although the Fund will receive income in such currencies, the Fund will be
required to compute and distribute its income in U.S. dollars. Therefore, if the
value of the U.S. dollar strengthens against a foreign currency after the Fund's
income has been accrued and translated into U.S. dollars, the Fund would
experience a foreign currency loss. Similarly, if the U.S. dollar value weakens
against a foreign currency between the time the Fund incurs expenses and the
time such expenses are paid, the amount of such currency required to be
converted into U.S. dollars in order to pay such expenses in U.S. dollars will
be greater than the equivalent amount of such currency at the time such expenses
were incurred. Under the Internal Revenue Code of 1986, as amended (the Code),
changes in an exchange rate which occur between the time the Fund accrues
interest or other receivables or accrues expenses or other liabilities
denominated in a foreign currency and
B-3
<PAGE>
the time the Fund actually collects such receivables or pays such liabilities
will result in foreign exchange gains or losses that increase or decrease
investment company taxable income. Similarly, dispositions of certain debt
securities (by sale, at maturity or otherwise) at a U.S. dollar value that is
higher or lower than the Fund's original U.S. dollar cost may result in foreign
exchange gains or losses, which will increase or decrease investment company
taxable income. To the extent the Fund's currency exchange transactions do not
fully protect the Fund against adverse changes in exchange rates, decreases in
the value of the currencies of the countries in which the Fund invests relative
to the U.S. dollar will result in a corresponding decrease in the U.S. dollar
value of the Fund's assets denominated in those currencies. The exchange rates
between the U.S. dollar and other currencies can be volatile and are determined
by factors such as supply and demand in the currency exchange markets,
international balances of payments, government intervention, speculation and
other economic and political conditions.
The costs attributable to foreign investing that the Fund must bear are
higher than those attributable to domestic investing. For example, the cost of
maintaining custody of foreign securities generally exceeds custodian costs for
domestic securities, and transaction and settlement costs of foreign investing
also frequently are higher than those attributable to domestic investing.
Investment income on certain foreign securities in which the Fund may invest may
be subject to foreign withholding or other government taxes that could reduce
the return to investors on these securities. Tax treaties between the United
States and certain foreign countries, however, may reduce or eliminate the
amount of foreign tax to which the Fund would be subject. See "Taxes."
Other Investment Strategies
At the discretion of the Subadviser, the Fund may employ the following
strategies in pursuing its investment objective.
Lending of Securities and Repurchase Agreements. As described in the
Prospectus, consistent with applicable regulatory requirements, the Fund may
lend securities valued at up to 30% of its total assets to brokers, dealers,
banks or other recognized institutional borrowers of securities, provided that
such loans are callable at any time by the Fund and are at all times secured by
cash or equivalent collateral that is equal to at least the market value,
determined daily, of the loaned securities. If the borrower fails to maintain
the requisite amount of collateral, the loan automatically terminates and the
Fund could use the collateral to replace the securities while holding the
borrower liable for any excess of the replacement cost over the value of the
collateral. As with any extension of credit, there are risks of delay in
recovery and in some cases even loss of rights in the collateral should the
borrower of the securities fail financially. On termination of the loan, the
borrower is required to return the securities to the Fund, and any gain or loss
in the market price during the loan would inure to the Fund. The Fund may pay
reasonable administrative and custodial fees in connection with loans of its
securities.
The Fund may purchase U.S. Government securities and concurrently enter into
"repurchase agreements" with the seller of the securities whereby the seller
agrees to repurchase the securities at a specified price within a specified time
(generally one business day). The Fund's repurchase agreements will at all times
be fully collateralized in an amount as least equal to the repurchase price,
including accrued interest earned on the loan. The collateral will be held by
the Fund's custodian bank, either physically or in a book-entry account. The
Fund will not enter into a repurchase agreement with a maturity of more than
seven days if, as a result, more than 10% of the value of its total assets would
be invested in such repurchase agreements and other illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market.
The Fund will enter into securities lending and repurchase agreement
transactions only with parties that meet creditworthiness standards approved by
the Fund's Board of Directors. The Subadviser will monitor and evaluate the
creditworthiness of such parties under the general supervision of the Board of
Directors. In the event of a default or bankruptcy by a contra-party, the Fund
will promptly seek to liquidate the collateral. To the extent that the proceeds
from any sale of such collateral upon a default in the obligation to repurchase
are less than the repurchase price, the Fund will suffer a loss.
The Fund participates in a joint repurchase account with other investment
companies managed by Prudential Mutual Fund Management, Inc. (PMF) pursuant to
an order of the SEC. On a daily basis, any uninvested cash balances of the Fund
may be aggregated with those of such investment companies and invested in one or
more repurchase agreements. Each fund participates in the income earned or
accrued in the joint account based on the percentage of its investment.
When-Issued and Delayed Delivery Securities. From time to time in the
ordinary course of business, the Fund may purchase securities on a when-issued
or delayed delivery basis, i.e., delivery and payment can take place as much as
a month or more after the date of the transaction. The purchase price and other
terms of the securities are fixed on the transaction date. Such investments are
subject to market fluctuation, and no interest accrues to the Fund until
delivery and payment take place. At the time the Fund makes the commitment to
purchase securities on a when-issued or delayed delivery basis, it will record
the transaction and thereafter reflect the value of such investments in
determining its net asset value on each day that net asset value is determined.
The Fund will make commitments for such when-issued transactions only with the
intention of actually acquiring the underlying securities. To facilitate such
acquisitions, the Fund's custodian bank will maintain, in a separate account of
the Fund, cash or liquid securities having a value equal to or greater than such
commitments. On delivery dates for such transactions, the Fund will meet its
obligations from maturities or sales of securities held in the separate account
and/or from then available
B-4
<PAGE>
cash flow. If the Fund chooses to dispose of the right to acquire a when-issued
security prior to its acquisition, it could, as with the disposition of other
assets held in its portfolio, incur a gain or loss due to market fluctuation.
High Yield Securities. Fixed-income securities are subject to the risk of an
issuer's inability to meet principal and interest payments on the obligations
(credit risk) and may also be subject to price volatility due to such factors as
interest rate sensitivity, market perception of the creditworthiness of the
issuer and general market liquidity (market risk). Lower rated or unrated (i.e.,
high yield) securities, commonly known as "junk bonds," are more likely to react
to developments affecting market and credit risk than are more highly rated
securities, which react primarily to movements in the general level of interest
rates. The Subadviser considers both credit risk and market risk in making
investment decisions for the Fund. Investors should carefully consider the
relative risks of investing in high yield securities and understand that such
securities are not generally meant for short-term investing.
Lower rated or unrated debt obligations also present risks based on payment
expectations. If an issuer calls the obligation for redemption, the Fund may
have to replace the security with a lower yielding security, resulting in a
decreased return for investors. If the Fund experiences unexpected net
redemptions, it may be forced to sell its higher quality securities, resulting
in a decline in the overall credit quality of the Fund's portfolio and
increasing the exposure of the Fund to the risks of high yield securities.
Additional Investment Policies
In seeking to protect against the effect of changes in interest rates or
currency exchange rates that are adverse to the present or prospective position
of the Fund and to enhance returns, the Fund may employ certain hedging, yield
enhancement and risk management techniques including the purchase and sale of
options, futures and options on futures on equity and debt securities, indices
of prices of equity and debt securities, other financial indices, foreign
currencies and forward contracts on foreign currencies. The Fund's ability to
engage in these practices may be limited by tax considerations and certain other
legal considerations. See "Taxes."
Options on Securities
The Fund may purchase put and call options and write put and call options on
equity and debt securities, aggregates of equity and debt securities or indices
of prices thereof, other financial indices and foreign currencies. These may
include options traded on U.S. or foreign exchanges and options traded in U.S.
or foreign over-the-counter (OTC) markets. Currently, many options on equity
securities and options on currencies are exchange-traded, whereas options on
debt securities are primarily traded on the OTC market.
When the Fund writes an option, it receives a premium which it retains
whether or not the option is exercised. The Fund's principal objective in
writing options is to realize, through the receipt of premiums, a greater return
than would be realized on the underlying securities alone.
The purchaser of a call option has the right, for a specified period of
time, to purchase the securities subject to the option at a specified price (the
exercise price or strike price). By writing a call option, the Fund becomes
obligated during the term of the option, upon exercise of the option, to sell,
depending upon the terms of the option contract, the underlying securities or a
specified amount of cash to the purchaser against receipt of the exercise price.
When the Fund writes a call option, the Fund loses the potential for a gain on
the underlying securities in excess of the exercise price of the option during
the period that the option is open.
Conversely, the purchaser of a put option has the right, for a specified
period of time, to sell the securities subject to the option to the writer of
the put at the specified exercise price. By writing a put option, the Fund
becomes obligated during the term of the option, upon exercise of the option, to
purchase the securities underlying the option at the exercise price. The Fund
might, therefore, be obligated to purchase the underlying securities for more
than their current market price.
The Fund may write only "covered" options or options for which it
establishes and maintains with its Custodian for the term of the option a
segregated account consisting of cash or liquid securities having a value at
least equal to the fluctuating market value of the optioned securities. An
option is covered so long as the Fund is obligated as the writer of a call
option, to own the underlying securities subject to the option or an option to
purchase the same underlying securities, having an exercise price equal to or
less than the exercise price of the "covered" option.A put option written by the
Fund will be considered "covered" if, so long as the Fund is obligated as the
writer of the option, it owns an option to sell the underlying securities
subject to the option having an exercise price equal to or greater than the
exercise price of the "covered" option; otherwise the Fund will deposit and
maintain with its Custodian in a segregated account cash or liquid securities
having a value equal to or greater than the exercise price of the option.
The Fund may also buy and write straddles (i.e., a combination of a call and
a put written on the same security at the same exercise price where the same
issue of the security is considered "cover" for both the put and the call). In
such cases, the Fund will
B-5
<PAGE>
also deposit in a segregated account with its Custodian cash or liquid
securities equivalent in value to the amount, if any, by which the put is
"in-the-money," i.e., the amount by which the exercise price of the put exceeds
the current market value of the underlying security.
The Fund may write both American style options and European style options.
An American style option is an option which may be exercised by the holder at
any time prior to its expiration. A European style option, however, may only be
exercised as of the expiration of the option. The writer of an American style
option has no control over when the underlying securities must be sold, in the
case of a call option, or purchased, in the case of a put option, since such
options may be exercised by the holder at any time prior to the expiration of
the option. Whether or not an option expires unexercised, the writer retains the
amount of the premium. This amount may be offset or exceeded, in the case of a
covered call option, by a decline and, in the case of a covered put option, by
an increase in the market value of the underlying security during the option
period. If a call option is exercised the writer must fulfill the obligation to
sell the underlying security at the exercise price, which will usually be lower
than the then market value of the underlying security. If a put option is
exercised, the writer must fulfill the obligation to purchase the underlying
security at the exercise price, which will usually exceed the then market value
of the underlying security.
The writer of an exchange-traded option that wishes to terminate its
obligation may effect a "closing purchase transaction." This is accomplished by
buying an option of the same series as the option previously written. (Options
of the same series are options with respect to the same underlying security,
having the same expiration date and the same strike price.) The effect of the
purchase is that the writer's position will be canceled by the exchange's
affiliated clearing organization. However, the writer of an option may not
effect a closing purchase transaction after being notified of the exercise of
the option. Likewise, an investor who is the holder of an option may liquidate a
position by effecting a "closing sale transaction." This is accomplished by
selling an option of the same series as the option previously purchased. There
is no guarantee that either a closing purchase or a closing sale transaction can
be effected.
An exchange-traded option position may be closed out only where there exists
a secondary market for an option of the same series. If a secondary market does
not exist, it might not be possible to effect closing transactions in a
particular option the Fund has purchased with the result that the Fund would
have to exercise the option in order to realize any profit. If the Fund is
unable to effect a closing purchase transaction in a secondary market in an
option the Fund has written, it will not be able to sell the underlying security
until the option expires or it delivers the underlying security upon exercise or
it otherwise covers its position. Reasons for the absence of a liquid secondary
market include the following: (i) there may be insufficient trading interest in
certain options; (ii) restrictions may be imposed by a securities exchange
(Exchange) on opening transactions or closing transactions or both; (iii)
trading halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities; (iv) unusual
or unforeseen circumstances may interrupt normal operations on an Exchange; (v)
the facilities of an Exchange or clearing organization may not at all times be
adequate to handle current trading volume; or (vi) one or more Exchanges could,
for economic or other reasons, decide or be compelled at some future date to
discontinue trading of options (or a particular class or series of options), in
which event the secondary market on that Exchange (or in that class or series of
options) would cease to exist, although outstanding options would continue to be
exercisable in accordance with their terms.
Exchange-traded options in the U.S. are issued by clearing organizations
affiliated with the Exchange on which the option is listed which, in effect,
give their guarantee to every exchange-traded option transaction. In contrast,
OTC options are contracts between the Fund and its contra-party with no clearing
organization guarantee. Thus when the Fund purchases an OTC option, it relies on
the dealer from which it has purchased the OTC option to make or take delivery
of the securities underlying the option. Failure by the dealer to do so would
result in the loss of the premium paid by the Fund as well as the loss of the
expected benefit of the transaction. The Board of Directors will evaluate the
creditworthiness of any dealer from which the Fund proposes to purchase options.
Exchange-traded options generally have a continuous liquid market while OTC
options may not. Consequently, the Fund will generally be able to realize the
value of an OTC option it has purchased only by exercising it or reselling it to
the dealer who issued it. Similarly, when the Fund writes an OTC option, it
generally will be able to close out the OTC option prior to its expiration only
by entering into a closing purchase transaction with the dealer to which the
Fund originally sold the OTC option. While the Fund will enter into OTC options
only with dealers which agree to, and which are expected to be capable of,
entering into closing transactions with the Fund, there can be no assurance that
the Fund will be able to liquidate an OTC option at a favorable price at any
time prior to expiration. Until the Fund is able to effect a closing purchase
transaction in a covered OTC call option the Fund has written, it will not be
able to liquidate securities used as cover until the option expires or is
exercised or different cover is substituted. In the event of insolvency of the
contra-party, the Fund may be unable to liquidate an OTC option. With respect to
options written by the Fund, inability to enter into a closing purchase
transaction may result in material losses to the Fund. For example, since the
Fund must maintain a covered position with respect to any call option on a
security it writes, the Fund may be limited in its ability to sell the
underlying security while the option is outstanding. This may impair the Fund's
ability to sell a portfolio security at a time when such a sale might be
advantageous.
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The Fund may write options in connection with buy-and-write transactions;
that is, the Fund may purchase a security and concurrently write a call option
against that security. The exercise price of the call the Fund determines to
write will depend upon the expected price movement of the underlying security.
The exercise price of a call option may be below (in-the-money), equal to
(at-the-money) or above (out-of-the-money) the current value of the underlying
security at the time the option is written. Buy-and-write transactions using
in-the-money call options may be used when it is expected that the price of the
underlying security will remain flat or decline moderately during the option
period. Buy-and-write transactions using at-the-money call options may be used
when it is expected that the price of the underlying security will remain fixed
or advance moderately during the option period. A buy-and-write transaction
using an out-of-the-money call option may be used when it is expected that the
premium received from writing the call option plus the appreciation in the
market price of the underlying security up to the exercise price will be greater
than the appreciation in the price of the underlying security alone. If the call
option is exercised in such a transaction, the Fund's maximum gain will be the
premium received by it for writing the option, adjusted upwards or downwards by
the difference between the Fund's purchase price of the security and the
exercise price of the option. If the option is not exercised and the price of
the underlying security declines, the amount of such decline will be offset in
part, or entirely, by the premium received.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close out the position or
take delivery of the underlying security at the exercise price. In that case,
the Fund's return will be the premium received from writing the put option,
minus the amount by which the market price of the security is below the exercise
price. Out-of-the-money, at-the-money and in-the-money covered put options may
be written by the Fund in the same market environments in which call options are
written in equivalent buy-and-write transactions.
The Fund may purchase a call option on a security it intends to acquire in
order to hedge against (and thereby benefit from) an anticipated market
appreciation in the price of the underlying security at limited risk and with a
limited cash outlay. If the market price does rise as anticipated, the Fund will
benefit from that rise but only to the extent that the rise exceeds the premium
paid. If the anticipated rise does not occur or if it does not exceed the
premium, the Fund will bear the expense of the option premium without gaining an
offsetting benefit.
The Fund may purchase put options on securities to hedge against a decline
in the value of its portfolio. If the market price of the Fund's portfolio
should increase, however, the profit which the Fund might otherwise have
realized will be reduced by the amount of the premium paid for the put option
and by transaction costs. The Fund may purchase call options on securities to
hedge against an anticipated rise in the price it will have to pay for
securities it intends to buy in the future. If the market price of the
securities should fall instead of rise, however, the benefit the Fund obtains
from purchasing the securities at a lower price will be reduced by both the
amount of the premium paid for the call options and transaction costs.
The Fund may purchase put options if the Fund believes that a defensive
posture is warranted for all or a portion of its portfolio. Protection is
provided during the life of the put because the put gives the Fund the right to
sell the underlying security at the put exercise price, regardless of a decline
in the underlying security's market price below the exercise price. This right
limits the Fund's losses from the security's possible decline in value below the
strike price of the option to the premium paid for the put option and related
transaction costs.
The Fund may wish to protect certain portfolio securities against a decline
in market value at a time when put options on those particular securities are
not available for purchase. The Fund may therefore purchase a put option on
other carefully selected securities, the values of which historically have a
high degree of positive correlation to the values of such portfolio securities.
If the Subadviser's judgement is correct, changes in the value of the put
options should generally offset changes in the value of the portfolio securities
being hedged. But the correlation between the two values may not be as close in
these transactions as in transactions in which the Fund purchases a put option
on an underlying security it owns. If the Subadviser's judgement is not correct,
the value of the securities underlying the put option may decrease less than the
value of the Fund's portfolio securities and therefore the put option may not
provide complete protection against a decline in the value of the Fund's
portfolio securities below the level sought to be protected by the put option.
The Fund may similarly wish to hedge against appreciation in the value of
securities that it intends to acquire at a time when call options on such
securities are not available. The Fund may, therefore, purchase call options on
other carefully selected securities, the values of which historically have a
high degree of positive correlation to values of securities that the Fund
intends to acquire. In such circumstances the Fund will be subject to risks
analogous to those summarized immediately above in the event that the
correlation between the value of call options so purchased and the value of the
securities intended to be acquired by the Fund is not as close as anticipated
and the value of the securities underlying the call options increases less than
the value of the securities to be acquired by the Fund.
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Futures Contracts
The Fund will enter into futures contracts only for certain bona fide
hedging, return enhancement and risk management purposes. The Fund may enter
into futures contracts for the purchase or sale of equity and debt securities,
aggregates of debt securities or indices of prices thereof, aggregates of equity
securities or indices of prices thereof, and other financial indices. It may
also enter futures contracts for the purchase or sale of foreign currencies
(such as the Japanese Yen, the British Pound and the West German Deutsche Mark)
or composite foreign currencies (such as the European Currency Unit) in which
securities held or to be acquired by the Fund are denominated, or the value of
which have a high degree of positive correlation to the value of such currencies
as to constitute an appropriate vehicle for hedging. The Fund may enter into
such futures contracts both on U.S. and foreign exchanges.
A "sale" of a futures contract (or a "short" futures position) means the
assumption of a contractual obligation to deliver the securities or currency
underlying the contract at a specified price at a specified future time. A
"purchase" of a futures contract (or a "long" futures position) means the
assumption of a contractual obligation to acquire the securities or currency
underlying the contract at a specified price at a specified future time. Certain
futures contracts are settled on a net cash payment basis rather than by the
sale and delivery of the securities or currency underlying the futures
contracts. U.S. futures contracts have been designed by exchanges that have been
designated as "contract markets" by the Commodity Futures Trading Commission
(the CFTC), an agency of the U.S. Government, and must be executed through a
futures commission merchant (i.e., a brokerage firm) which is a member of the
relevant contract market. Futures contracts trade on these contract markets and
the exchange's affiliated clearing organization guarantees performance of the
contracts as between the clearing members of the exchange.
At the time a futures contract is purchased or sold, the Fund must allocate
cash or securities as a deposit payment (initial margin). It is expected that
the initial margin on U.S. exchanges will vary from 3 to 15% of the value of the
securities or the commodities underlying the contract. Under certain
circumstances, however, such as periods of high volatility, the Fund may be
required by an exchange to increase the level of its initial margin payment.
Thereafter, the futures contract is valued daily and the payment in cash of
"variation margin" may be required, a process known as "mark to market." Each
day the Fund is required to provide or is entitled to receive variation margin
in an amount equal to any decline (in the case of a long futures position) or
increase (in the case of short futures position) in the contract's value since
the preceding day.
Although futures contracts by their terms may call for the actual delivery
or acquisition of underlying securities or currency, in most cases the
contractual obligation is extinguished or offset before the expiration of the
contract without having to make or take delivery of the securities or currency.
The offsetting of a contractual obligation is accomplished by buying (to offset
an earlier sale) or selling (to offset an earlier purchase) an identical futures
contract calling for delivery in the same month. Such a transaction cancels the
obligation to make or take delivery of the underlying securities or currency. In
all transactions on a U.S. futures exchange, the Fund will incur brokerage fees
and related transaction costs when it purchases or sells futures contracts. The
Fund may also incur brokerage fees and related transaction costs when it
purchases or sells futures contracts in markets outside the United States.
The ordinary spreads between values in the cash and futures markets, due to
differences in the character of those markets, are subject to distortions.
First, all participants in the futures market are subject to initial and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationships between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced, thus producing price distortions. Third,
from the point of view of speculators, the margin deposit requirements in the
futures market are less onerous than margin requirements in the securities
market. Increased participation by speculators in the futures market may cause
temporary price distortions. Due to the possibility of distortion, a correct
forecast of general interest rate trends by the Subadviser may still not result
in a successful transaction.
In addition, futures contracts entail risks. Although the Fund believes that
use of such contracts will benefit the Fund, if the Subadviser's judgment about
the general direction of interest rates is incorrect, the Fund's overall
performance would be poorer than if it had not entered into any such contracts.
For example, if the Fund has hedged against the possibility of an increase in
interest rates which would adversely affect the price of debt securities held in
its portfolio and interest rates decrease instead, the Fund will lose part or
all of the benefit of the increased value of its assets which it has hedged
because it will have offsetting losses in its futures positions. In addition,
particularly in such situations, if the Fund has insufficient cash, it may have
to sell assets from its portfolio to meet daily variation margin requirements.
The Fund may have to sell assets at a time when it may be advantageous or
disadvantageous to do so.
If the Fund seeks to hedge against a decline in the value of its portfolio
securities and sells futures contracts for that purpose on other securities
which historically have had a high degree of positive correlation to the value
of the portfolio securities, the value of its portfolio securities might decline
more rapidly than the value of a poorly correlated futures contract rises. In
that case, the hedge will be less effective than if the correlation had been
greater. In a similar but more extreme situation, the value of the futures
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<PAGE>
position might in fact decline while the value of portfolio securities holds
steady or rises. This would result in a loss that would not have occurred but
for the attempt to hedge.
Options on Futures Contracts
The Fund will also enter into options on futures contracts for certain bona
fide hedging, return enhancement and risk management purposes. The Fund may
purchase put and call options and write (i.e., sell) put and call options on
futures contracts that are traded on U.S. and foreign futures exchanges. An
option on a futures contract gives the purchaser the right, in return for the
premium paid, to assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the option exercise period. The writer of the
option is required upon exercise to assume a short futures position (if the
option is a call) or a long futures position (if the option is a put). Upon
exercise of the option, the assumption of offsetting futures positions by the
writer and holder of the option will be accompanied by delivery of the
accumulated cash balance in the writer's futures margin account which represents
the amount by which the market price of the futures contract at exercise,
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option on the futures contract.
The Fund will be considered "covered" with respect to a call option it
writes on a futures contract if the Fund owns the securities or currency which
is deliverable under the futures contract or an option to purchase that futures
contract having a strike price equal to or less than the strike price of the
"covered" option and having an expiration date not earlier than the expiration
date of the "covered" option; otherwise, it will segregate and maintain with its
Custodian for the term of the option cash or liquid securities equal to the
fluctuating value of the optioned futures. The Fund will be considered "covered"
with respect to a put option it writes on a futures contract if it owns an
option to sell that futures contract having a strike price equal to or greater
than the strike price of the "covered" option and having an expiration date not
earlier than the expiration date of the "covered" option; otherwise, it will
segregate and maintain with its Custodian for the term of the option cash, U.S.
Government securities or liquid high-grade debt obligations at all times equal
in value to the exercise price of the put (less any initial margin deposited by
the Fund with its Custodian with respect to such put option). There is no
limitation on the amount of the Fund's assets which can be placed in the
segregated account.
Writing a put option on a futures contract serves as a partial hedge against
an increase in the value of securities the Fund intends to acquire. If the
futures price at expiration of the option is above the exercise price, the Fund
will retain the full amount of the option premium which provides a partial hedge
against any increase that may have occurred in the price of the securities the
Fund intends to acquire. If the market price of the underlying futures contract
when the option is exercised is below the exercise price, however, the Fund will
incur a loss, which may be wholly or partially offset by the decrease in the
value of the securities the Fund intends to acquire.
Writing a call option on a futures contract serves as a partial hedge
against a decrease in the value of the Fund's portfolio securities. If the
market price of the underlying futures contract at expiration of a written call
option is below the exercise price, the Fund will retain the full amount of the
option premium, thereby partially hedging against any decline that may have
occurred in the Fund's holdings of debt securities. If the futures price when
the option is exercised is above the exercise price, however, the Fund will
incur a loss, which may be wholly or partially offset by the increase in the
value of the securities in the Fund's portfolio which were being hedged.
The Fund will purchase put options on futures contracts to hedge its
portfolio against the risk of a decline in the value of the debt securities it
owns as a result of rising interest rates or fluctuating currency exchange
rates. The Fund will also purchase call options on futures contracts as a hedge
against an increase in the value of securities the Fund intends to acquire as a
result of declining interest rates or fluctuating currency exchange rates.
Interest Rate Futures Contracts and Options Thereon
The Fund will purchase or sell interest rate futures contracts to take
advantage of, or to protect the Fund against, fluctuations in interest rates
affecting the value of debt securities which the Fund holds or intends to
acquire. For example, if interest rates are expected to increase, the Fund might
sell futures contracts on debt securities, the values of which historically have
a high degree of positive correlation to the values of the Fund's portfolio
securities. Such a sale would have an effect similar to selling an equivalent
value of the Fund's portfolio securities. If interest rates increase, the value
of the Fund's portfolio securities will decline, but the value of the futures
contracts to the Fund will increase at approximately an equivalent rate thereby
keeping the net asset value of the Fund from declining as much as it otherwise
would have. The Fund could accomplish similar results by selling debt securities
with longer maturities and investing in debt securities with shorter maturities
when interest rates are expected to increase. However, since the futures market
may be more liquid than the cash market, the use of futures contracts as a risk
management technique allows the Fund to maintain a defensive position without
having to sell its portfolio securities.
Similarly, the Fund may purchase interest rate futures contracts when it is
expected that interest rates may decline. The purchase of futures contracts for
this purpose constitutes a hedge against increases in the price of debt
securities (caused by
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<PAGE>
declining interest rates) which the Fund intends to acquire. Since fluctuations
in the value of appropriately selected futures contracts should approximate that
of the debt securities that will be purchased, the Fund can take advantage of
the anticipated rise in the cost of the debt securities without actually buying
them. Subsequently, the Fund can make the intended purchase of the debt
securities in the cash market and liquidate its futures position. To the extent
the Fund enters into futures contracts for this purpose, it will maintain in a
segregated asset account with the Fund's Custodian assets sufficient to cover
the Fund's obligations with respect to such futures contracts, which will
consist of cash or liquid securities in an amount equal to the difference
between the fluctuating market value of such futures contracts and the aggregate
value of the initial margin deposited by the Fund with its Custodian with
respect to such futures contracts.
The purchase of a call option on a futures contract is similar in some
respects to the purchase of a call option on an individual security. Depending
on the pricing of the option compared to either the price of the futures
contract upon which it is based or the price of the underlying debt securities,
it may or may not be less risky than ownership of the futures contract or
underlying debt securities. As with the purchase of futures contracts, when the
Fund is not fully invested, it may purchase a call option on a futures contract
to hedge against a market advance due to declining interest rates.
The purchase of a put option on a futures contract is similar to the
purchase of protective put options on portfolio securities. The Fund will
purchase a put option on a futures contract to hedge the Fund's portfolio
against the risk of rising interest rates and consequent reduction in the value
of portfolio securities.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the securities which are deliverable upon
exercise of the futures contract. If the futures price at expiration of the
option is below the exercise price, the Fund will retain the full amount of the
option premium which provides a partial hedge against any decline that may have
occurred in the Fund's portfolio holdings. The writing of a put option on a
futures contract constitutes a partial hedge against increasing prices of the
securities which are deliverable upon exercise of the futures contract. If the
futures price at expiration of the option is higher than the exercise price, the
Fund will retain the full amount of the option premium which provides a partial
hedge against any increase in the price of debt securities which the Fund
intends to purchase. If a put or call option the Fund has written is exercised,
the Fund will incur a loss which will be reduced by the amount of the premium it
received. Depending on the degree of correlation between changes in the value of
its portfolio securities and changes in the value of its futures positions, the
Fund's losses from options on futures it has written may to some extent be
reduced or increased by changes in the value of its portfolio securities.
Currency Futures and Options Thereon
Generally, foreign currency futures contracts and options thereon are
similar to the interest rate futures contracts and options thereon discussed
previously. By entering into currency futures and options thereon on U.S. and
foreign exchanges, the Fund will seek to establish the rate at which it will be
entitled to exchange U.S. dollars for another currency at a future time. By
selling currency futures, the Fund will seek to establish the number of dollars
it will receive at delivery for a certain amount of a foreign currency. In this
way, whenever the Fund anticipates a decline in the value of a foreign currency
against the U.S. dollar, the Fund can attempt to "lock in" the U.S. dollar value
of some or all of the securities held in its portfolio that are denominated in
that currency. By purchasing currency futures, the Fund can establish the number
of dollars it will be required to pay for a specified amount of a foreign
currency in a future month. Thus if the Fund intends to buy securities in the
future and expects the U.S. dollar to decline against the relevant foreign
currency during the period before the purchase is effected, the Fund can attempt
to "lock in" the price in U.S. dollars of the securities it intends to acquire.
The purchase of options on currency futures will allow the Fund, for the
price of the premium and related transaction costs it must pay for the option,
to decide whether or not to buy (in the case of a call option) or to sell (in
the case of a put option) a futures contract at a specified price at any time
during the period before the option expires. If the Subadviser, in purchasing an
option, has been correct in its judgement concerning the direction in which the
price of a foreign currency would move as against the U.S. dollar, the Fund may
exercise the option and thereby take a futures position to hedge against the
risk it had correctly anticipated or close out the option position at a gain
that will offset, to some extent, currency exchange losses otherwise suffered by
the Fund. If exchange rates move in a way the Fund did not anticipate, however,
the Fund will have incurred the expense of the option without obtaining the
expected benefit; any such movement in exchange rates may also thereby reduce
rather than enhance the Fund's profits on its underlying securities
transactions.
Options on Currencies
Instead of purchasing or selling futures or forward currency exchange
contracts, the Fund may attempt to accomplish similar objectives by purchasing
put or call options on currencies either on exchanges or in OTC markets or by
writing put options or covered call options on currencies. A put option gives
the Fund the right to purchase a currency at the exercise price until the option
expires. A call option gives the Fund the right to purchase a currency at the
exercise price until the option expires. Both
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<PAGE>
options serve to insure against adverse currency price movements in the
underlying portfolio assets designated in a given currency. Currency options
traded on U.S. or other exchanges may be subject to position limits which may
limit the ability of the Fund to fully hedge its positions by purchasing such
options.
As in the case of interest rate futures contracts and options thereon, the
Fund may hedge against the risk of a decrease or increase in the U.S. dollar
value of a foreign currency denominated security which the Fund owns or intends
to acquire by purchasing or selling options contracts, futures contracts or
options thereon with respect to a foreign currency other than the foreign
currency in which such security is denominated, where the values of such
different currencies (vis-a-vis the U.S. dollar) historically have a high degree
of positive correlation.
Special Characteristics of Forward Currency Contracts and Associated Risks
The Fund may use forward currency contracts to protect against uncertainty
in the level of future exchange rates. The Fund will not speculate with forward
currency contracts or foreign currency exchange rates. A forward currency
contract involves bilateral obligations of one party to purchase, and another
party to sell, a specified currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time the contract is entered into.
The Fund may enter into forward currency contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the purchase
or sale of a security denominated in a foreign currency, or when the Fund
anticipates the receipt in a foreign currency of dividend or interest payments
on a security that it holds, the Fund may desire to "lock-in" the U.S. dollar
price of the security or the U.S. dollar equivalent of such payment, as the case
may be, by entering into a forward contract for the purchase or sale, for a
fixed amount of U.S. dollars per unit of foreign currency, of the amount of
foreign currency involved in the underlying transaction. The Fund will thereby
be able to protect itself against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the period
between the date on which the security is purchased or sold, or on which the
payment is declared, and the date on which such payments are made or received.
The Fund also may use forward currency contracts to "lock-in" the U.S.
dollar value of portfolio positions, to increase the Fund's exposure to foreign
currencies that the Subadviser believes may rise in value relative to the U.S.
dollar or to shift the Fund's exposure to foreign currency fluctuations from one
country to another. For example, when the Subadviser believes that the currency
of a particular foreign country may suffer a substantial decline relative to the
U.S. dollar or another currency, it may enter into a forward contract to sell
the amount of the former foreign currency approximating the value of some or all
of the Fund's portfolio securities denominated in such foreign currency. This
investment practice generally is referred to as "cross-hedging" when another
foreign currency is used. The Fund may only cross-hedge using a currency
bearing, in the Subadviser's view, a high degree of positive correlation to the
currency being hedged.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it is sold. Accordingly, it may be necessary for
the Fund to purchase additional foreign currency on the spot (i.e., cash) market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of foreign currency the Fund is obligated to deliver and if
a decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of the
foreign currency received upon the sale of the portfolio security if its market
value exceeds the amount of foreign currency the Fund is obligated to deliver.
The projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Forward contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing the Fund to sustain losses
on these contracts and transaction costs. The Fund may enter into forward
contracts or maintain a net exposure on such contracts only if (1) the
consummation of the contracts would not obligate the Fund to deliver an amount
of foreign currency in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency or (2) the Fund maintains cash or
liquid securities in a segregated account in an amount not less than the value
of the Fund's total assets committed to the consummation of the contract. Under
normal circumstances, consideration of the prospect for currency parities will
be incorporated into the longer term investment decisions made with regard to
overall diversification strategies. However, the Subadviser believes that it is
important to have the flexibility to enter into such forward contracts when it
determines that the best interests of the Fund will be served.
At or before the maturity of a forward contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a forward contract requiring it to purchase a specified currency by
entering into a second contract entitling it to sell the same amount of the same
currency on the maturity date of the first contract. The Fund would realize a
gain or loss as a result of entering into such an offsetting forward currency
contract under either circumstance to the extent the exchange rate or rates
between the currencies involved moved between the execution dates of the first
contract and the offsetting contract.
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<PAGE>
The cost to the Fund of engaging in forward currency contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because forward currency contracts are
usually entered into on a principal basis, no fees or commission are involved.
The use of forward contracts does not eliminate fluctuations in the prices of
the underlying securities the Fund owns or intends to acquire, but it does fix a
rate of exchange in advance. In addition, although forward currency contracts
limit the risk of loss due to a decline in the value of the hedged currencies,
at the same time they limit any potential gain that might result should the
value of the currencies increase.
Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. The Fund may convert foreign currency from time to time, and
investors should be aware of the costs of currency conversion. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
Additional Risks of Options on Securities and Currencies, Futures
Contracts, Options on Futures Contracts and Forward Contracts
Options, futures contracts and options thereon and forward contracts on
securities and currencies may be traded on foreign exchanges. Such transactions
may not be regulated as effectively as similar transactions in the U.S., may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of governmental actions affecting trading in, or the prices of, foreign
securities. The value of such positions also could be adversely affected by (i)
other complex foreign political, legal and economic factors, (ii) lesser
availability than in the U.S. of data on which to make trading decisions, (iii)
delays in the Fund's ability to act upon economic events occurring in the
foreign markets during non-business hours in the U.S., (iv) the imposition of
different exercise and settlement terms and procedures and margin requirements
than in the U.S., and (v) lesser trading volume.
Exchanges on which options, futures and options on futures are traded may
impose limits on the positions that the Fund may take in certain circumstances.
If so, this would limit the ability of the Fund to fully hedge against these
risks.
Options on foreign currency futures contracts may involve certain additional
risks. Trading options on foreign currency futures contracts is relatively new.
The ability to establish and close out positions in such options is subject to
the maintenance of a liquid secondary market. To mitigate this problem, the Fund
will not purchase or write options on foreign currency futures contracts unless
and until, in the Subadviser's opinion, the market for such options has
developed sufficiently that the risks in connection with such options are not
greater than the risks in connection with transactions in the underlying foreign
currency futures contracts. Compared to the purchase or sale of foreign currency
futures contracts, the purchase of call or put options thereon involves less
potential risk to the Fund because the maximum amount at risk is the premium
paid for the option (plus transaction costs). However, there may be
circumstances when the purchase of a call or put option on a foreign currency
futures contract would result in a loss, such as when there is no movement in
the price of the underlying currency or futures contract, when use of the
underlying futures contract would not.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information available is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
(i.e., less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around-the-clock market. To the extent
that the U.S. options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the options market until they
reopen. Because foreign currency transactions occurring in the interbank market
involve substantially larger amounts than those that may be involved in the use
of foreign currency options, investors may be disadvantaged by having to deal in
an odd lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
and may have no relationship to the investment merits of a foreign security.
A holder of a stock index option who exercises it before the closing index
value for that day is available runs the risk that the level of the underlying
index may subsequently change. For example, in the case of a call, if such a
change causes the closing index value to fall below the exercise price of the
option on that index, the exercising holder will be required to pay the
difference between the closing index value and the exercise price of the option.
Special Risk Considerations Relating to Futures and Options Thereon
The Fund's ability to establish and close out positions in futures contracts
and options on futures contracts will be subject to the development and
maintenance of a liquid market. Although the Fund generally will purchase or
sell only those futures
B-12
<PAGE>
contracts and options thereon for which there appears to be a liquid market,
there is no assurance that a liquid market on an exchange will exist for any
particular futures contract or option thereon at any particular time. In the
event no liquid market exists for a particular futures contract or option
thereon in which the Fund maintains a position, it will not be possible to
effect a closing transaction in that contract or to do so at a satisfactory
price and the Fund would have to either make or take delivery under the futures
contract or, in the case of a written option, wait to sell the underlying
securities until the option expires or is exercised. In the case of a futures
contract or an option on a futures contract which the Fund has written and which
the Fund is unable to close, the Fund would be required to maintain margin
deposits on the futures contract or option and to make variation margin payments
until the contract is closed.
Successful use of futures contracts and options thereon by the Fund is
subject to the ability of the Fund's Subadviser to predict correctly movements
in the direction of interest rates and currency exchange rates and other factors
affecting markets for securities. If the Subadviser's expectations are not met,
the Fund would be in a worse position than if a hedging strategy had not been
pursued. For example, if the Fund has hedged against the possibility of an
increase in interest rates which would adversely affect the price of securities
in its portfolio and the price of such securities increases instead, the Fund
will lose part or all of the benefit of the increased value of its securities
because it will have offsetting losses in its futures positions. In addition, in
such situations, if the Fund has insufficient cash to meet daily variation
margin requirements, it may have to sell securities to meet such requirements.
Such sales of securities may be, but will not necessarily be, at increased
prices which reflect the rising market. The Fund may have to sell securities at
a time when it is disadvantageous to do so.
Limitations on the Purchase and Sale of Futures Contracts and Options on
Futures Contracts
The Fund will engage in transactions in interest rate and foreign currency
futures contracts and options thereon only for bona fide hedging, return
enhancement and risk management purposes, in each case in accordance with the
rules and regulations of the CFTC, and not for speculation. In instances
involving the purchase of futures contracts or call options thereon or the
writing of put options thereon by the Fund, an amount of cash or liquid
securities equal to the market value of the futures contracts and options
thereon (less any related margin deposits), will be deposited in a segregated
account with the Fund's Custodian to cover the position, or the Fund will own an
offsetting position in securities, currencies or other options, forward-currency
contracts or futures contracts sufficient to ensure that the use of such
techniques is unleveraged. There are no limitations on the Fund's use of futures
contracts and options on futures contracts beyond the restrictions set forth
above and the economic limitations that are implicit in the use of futures and
options on futures, within these restrictions, only for bona fide hedging, yield
enhancement and risk management purposes, in each case in accordance with rules
and regulations of the CFTC and not for speculation.
Although the Fund intends to purchase or sell futures and options on futures
only on exchanges where there appears to be an active market, there is no
guarantee that an active market will exist for any particular contract or at any
particular time. If there is not a liquid market at a particular time, it may
not be possible to close a futures position at such time, and, in the event of
adverse price movements, the Fund would continue to be required to make daily
cash payments of variation margin. However, when futures positions are used to
hedge portfolio securities, such securities will not be sold until the futures
positions can be liquidated. In such circumstances, an increase in the price of
securities, if any, may partially or completely offset losses on the futures
contracts.
Illiquid Securities
The Fund may not hold more than 10% of its total assets in repurchase
agreements which have a maturity of longer than seven days or in other illiquid
securities, including securities that are illiquid by virtue of the absence of a
readily available market (either within or outside of the United States) or
legal or contractual restrictions on resale. Securities eligible for resale in
accordance with Rule 144A under the Securities Act of 1933, as amended (the
Securities Act) and privately placed commercial paper that have legal or
contractual restrictions on resale but have a readily available market are not
considered illiquid for purposes of this limitation. The Subadviser will monitor
the liquidity of such restricted securities under the supervision of the Board
of Directors.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act, securities which are not otherwise readily
marketable, and repurchase agreements having a maturity of longer than seven
days. Securities which have not been registered under the Securities Act are
referred to as private placements or restricted securities and are purchased,
directly from the issuer or in the secondary market. Mutual funds do not
typically hold a significant amount of these restricted or other illiquid
securities because of the potential for delays on resale and uncertainty in
valuation. Limitations on resale may have an adverse effect on the marketability
of portfolio securities, and a mutual fund might be unable to dispose of
restricted or other illiquid securities promptly or at reasonable prices and
might thereby experience difficulty satisfying redemptions within seven days. A
mutual fund might also have to register such restricted securities in order to
dispose of them, resulting in additional expense and delay. Adverse market
conditions could impede such a public offering of securities.
B-13
<PAGE>
In recent years, however, a large institutional market has developed for
certain securities that are not registered under the Securities Act including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.
Rule 144A under the Securities Act allows for a broader institutional
trading market for securities otherwise subject to restriction on resale to the
general public. Rule 144A establishes a "safe harbor" from the registration
requirements of the Securities Act for resales of certain securities to
qualified institutional buyers. The Subadviser anticipates that the market for
certain restricted securities such as foreign convertible securities will expand
further as a result of this new regulation and the development of automated
systems for the trading, clearance and settlement of unregistered securities of
domestic and foreign issuers, such as the PORTAL System sponsored by the
National Association of Securities Dealers, Inc.
Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act and commercial paper for which there is a readily available
market will not be deemed to be illiquid. The Subadviser will monitor the
liquidity of restricted securities in the Fund's portfolio under the supervision
of the Board of Directors. In reaching liquidity decisions, 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 (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). In addition, in order for commercial paper that is issued in
reliance on Section 4(2) of the Securities Act to be considered liquid, (i) it
must be rated in one of the two highest rating categories by at least two
nationally recognized statistical rating organizations (NRSRO), or if only one
NRSRO rates the securities, by that NRSRO, or, if unrated, be of comparable
quality in the view of the investment adviser; and (ii) it must not be "traded
flat" (i.e., without accrued interest) or in default as to principal or
interest. Repurchase agreements subject to demand are deemed to have a maturity
equal to the notice period.
Borrowing
As stated in the Prospectus, the Fund may borrow an amount up to 33 1/3% of
the value of its total assets (computed at the time the loan is made) from banks
for temporary or emergency purposes. However, the Fund will not purchase
portfolio securities if borrowings exceed 5% of the Fund's total assets. Upon
the vote of the Board of Directors to change the nonfundamental policy described
above, the Fund is authorized, at the Subadviser's discretion and under the
supervision of the Board of Directors, to borrow from banks amounts up to 33
1/3% of the Fund's total assets (including the amount borrowed), less all
liabilities and indebtedness other than the specific bank borrowing, which is
equivalent to permitting such borrowing to equal 50% of the value of the Fund's
net assets.
Portfolio Turnover
The Fund has no fixed policy with respect to portfolio turnover; however, as
a result of the Fund's investment policies, the Subadviser expects the annual
portfolio turnover rate will be less than 100%. For the Fund's fiscal years
ended September 30, 1995 and 1996 its portfolio turnover was 15% and 13%,
respectively. The portfolio turnover rate is calculated by dividing the lesser
of sales or purchases of portfolio securities by the average monthly value of
the Fund's portfolio securities, excluding securities having a maturity at the
date of purchase of one year or less. High portfolio turnover may involve
correspondingly greater brokerage commissions and other transaction costs which
will be borne directly by the Fund.
INVESTMENT RESTRICTIONS
The following restrictions are fundamental policies. Fundamental policies
are those which cannot be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities. A "majority of the Fund's
outstanding voting securities," when used in this Statement of Additional
Information, means the lesser of (i) 67% of the voting shares represented at a
meeting at which more than 50% of the outstanding voting shares are present in
person or represented by proxy or (ii) more than 50% of the outstanding voting
shares.
The Fund may not:
(1) Invest 25% or more of its total assets in any nonutility industry. (The
Fund will invest 25% or more of its total assets in the utility industries as a
group. Utility industries for this purpose consist of companies primarily
engaged in the ownership or operation of facilities used in the generation,
transmission or distribution of electricity, telecommunications, gas or water.)
For this purpose "industry" does not include the U.S. Government and agencies
and instrumentalities of the U.S. Government.
(2) Invest more than 5% of its total assets in securities of companies
having a record, together with predecessors, of less than three years of
continuous operation. This restriction shall not apply to U.S. Government
agencies and instrumentalities.
B-14
<PAGE>
(3) As to 75% of its total assets, invest more than 5% of the market or
other fair value of its total assets in the securities of any one issuer (other
than U.S. Government Securities) or purchase more than 10% of the voting
securities, or more than 10% of any class of securities, of any one issuer. For
purposes of this restriction, all outstanding debt securities of an issuer are
considered as one class, and all preferred stock of an issuer is considered as
one class.
(4) Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of transactions. The Fund may make deposits of
margin in connection with futures contracts and options.
(5) Invest in securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets; provided
that the Fund may invest in securities issued by foreign investment companies to
the extent permitted by the 1940 Act.
(6) Make short sales of securities or maintain a short position, except in
connection with the use of options, futures contracts, options thereon and
forward currency contracts.
(7) Issue senior securities, as defined in the 1940 Act, except that the
Fund may borrow money from banks in an amount at the time of the borrowing not
in excess of 33 1/3% of the Fund's total assets (including the amount borrowed)
less all liabilities and indebtedness other than the borrowing. Transactions
involving options, futures contracts, options on futures contracts and forward
currency contracts as described in the Prospectus and collateral arrangements
with respect thereto are not considered by the Fund to be the issuances of
senior securities; and neither such arrangements, the purchase or sale of
securities on a when-issued or delayed delivery basis nor obligations of the
Fund to the Directors pursuant to deferred compensation arrangements, are deemed
to be the issuance of a senior security.
(8) Buy or sell commodities, commodity contracts, real estate or interests
in real estate, except that the Fund may purchase and sell futures contracts,
options on futures contracts and securities secured by real estate or interests
therein or issued by companies that invest therein. Transactions in foreign
currencies, forward currency contracts and options on foreign currencies,
futures contracts and options on futures contracts are not considered by the
Fund to be transactions in commodities or commodity contracts.
(9) Make loans, except loans of portfolio securities and repurchase
agreements, provided that for purposes of this restriction the purchase of debt
securities in accordance with the Fund's investment objective and policies are
not considered by the Fund to be "loans."
(10) Make investments for the purpose of exercising control or management
over the issuer of any security.
(11) Act as an underwriter (except to the extent the Fund may be deemed to
be an underwriter in connection with the sale of securities in the Fund's
investment portfolio).
If a percentage restriction is adhered to at the time of an investment or
transaction, later changes in percentage resulting in a change in values of
portfolio securities or amount of total assets will not be considered a
violation of any of the foregoing limitations. However, in the event that the
Fund's asset coverage for borrowings falls below 300%, the Fund will take prompt
action to reduce its borrowings, as required by applicable law.
INFORMATION REGARDING DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
Name, Address+ Position(s) held Principal Occupations
and Age with the Fund During Past 5 Years
- ------------- ---------------- ---------------------
<S> <C> <C>
Eugene C. Dorsey (69) Director Retired President, Chief Executive Officer and Trustee of
the Gannett Foundation (now Freedom Forum); former Publisher of
four Gannett Newspapers and Vice President of Gannett Company;
former chairman of Independent Sector, Washington, D.C. (national
coalition of philanthropic organizations); former Chairman of the
American Council for the Arts; Director of the Advisory Board of
Chase Manhattan Bank of Rochester, Prudential Diversified Bond
Fund, Inc., Prudential Equity Fund, Inc., Prudential Europe Growth
Fund, Inc. Prudential Institutional Liquidity Portfolio, Inc., Prudential
Jennison Series Fund, Inc., Prudential Mortgage Income Fund, Inc.
and The High Yield Income Fund, Inc.; Trustee of Prudential Califor-
nia Municipal Fund, Prudential Municipal Series Fund and The Target
Portfolio Trust.
</TABLE>
B-15
<PAGE>
<TABLE>
<CAPTION>
Name, Address+ Position(s) held Principal Occupations
and Age with the Fund During Past 5 Years
- ------------- ---------------- ---------------------
<S> <C> <C>
*Douglas H. McCorkindale (57) Director Vice Chairman, Gannett Co. Inc. (publishing and media) (since March
1984); Director of Gannett Co. Inc., Frontier Corporation,
Continental Airlines, Inc., Prudential Distressed Securities Fund,
Inc., Prudential Global Genesis Fund, Inc., Prudential Global Natural
Resources, Inc., Prudential Multi-Sector Fund, Inc. and The Global
Government Plus Fund, Inc.; Trustee of Prudential Allocation Fund,
Prudential Equity Income Fund and Prudential Municipal Bond Fund.
Thomas T. Mooney (54) Director President of the Greater Rochester Metro Chamber of Commerce;
55 St. Paul Street former Rochester City Manager; Trustee of Center for
Rochester, NY 14604 Governmental Research, Inc.; Director of Blue Cross of Rochester,
Monroe County Water Authority, Rochester Jobs, Inc., Northeast-
Midwest Institute, The Business Council of New York State,
Executive Service Corps of Rochester, Monroe County Industrial
Development Corporation, First Financial Fund, Inc., The Global
Government Plus Fund, Inc., The Global Total Return Fund, Inc. and
The High Yield Plus Fund, Inc.
*Richard A. Redeker (52) Director Director (Since January 1994) of Prudential Mutual Fund
Distributors, Inc. (PMFD) and Prudential Mutual Fund Services, Inc.
(PMFS); formerly President, Chief Executive Officer and Director
(October 1993-September 1996), of Prudential Mutual Fund
Management, Inc. (PMF); Executive Vice President, Director and
Member of the Operating Committee (October 1993-September
1996), Prudential Securities Incorporated (Prudential Securities);
Director (October 1993-September 1996) of Prudential Securities
Group, Inc.; Executive Vice President, The Prudential Investment
Corporation (July 1994-September 1996); Senior Executive Vice
President and Director of Kemper Financial Services, Inc.
(September 1978-September 1993); Director of The Global
Government Plus Fund, Inc., The Global Total Return Fund, Inc. and
The High Yield Income Fund, Inc.
Edward D. Beach (71) President President and Director of BMC Fund, Inc., a closed-end investment
800 Golfview Park company; prior thereto, Vice Chairman of Broyhill Furniture
Lenoir, NC 28645 Industries, Inc.; Certified Public Accountant; Secretary and
Treasurer of Broyhill Family Foundation, Inc.; Member of the Board
of Trustees of Mars Hill College; President, Treasurer and Director of
First Financial Fund, Inc. and The High Yield Plus Fund, Inc.; Director
of The Global Total Return Fund, Inc. and The Global Government
Plus Fund, Inc.
Robert F. Gunia (49) Vice President Chief Administrative Officer (since July 1990), Director (since January
1989), Executive Vice President, Treasurer and Chief Financial
Officer of PMF; Senior Vice President (since March 1987)
of Prudential Securities; Executive Vice President, Treasurer,
Comptroller, and Director (since March 1991) of PMFD; Director
(since June 1987) of PMFS; Vice President and Director of The Asia
Pacific Fund, Inc. (since May 1989).
</TABLE>
B-16
<PAGE>
<TABLE>
<CAPTION>
Name, Address+ Position(s) held Principal Occupations
and Age with the Fund During Past 5 Years
- ------------- ---------------- ---------------------
<S> <C> <C>
Grace Torres (36) Treasurer and First Vice President (since March 1994) of PMF and Prudential
Principal Financial Securities. Prior thereto, Vice President, Bankers Trust Company.
and Accounting
Officer
Stephen M. Ungerman (42) Assistant First Vice President of PMF (since February 1993). Prior thereto,
Treasurer Senior Tax Manager at Price Waterhouse.
S. Jane Rose (50) Secretary Senior Vice President (since January 1991) and Senior Counsel
and First Vice President (June 1987-December 1990) of
PMF; Senior Vice President and Senior Counsel of Prudential
Securities (since July 1992); formerly Vice President and Associate
General Counsel of Prudential Securities.
- --------
* Indicates those directors that are "interested persons" of the Fund as defined
in the 1940 Act.
+ Unless otherwise indicated, the address is Gateway Center Three, Newark,
New Jersey 07102.
</TABLE>
The Directors of the Fund are also trustees, directors and officers of some
or all of the other investment companies distributed by Prudential Securities.
The officers conduct and supervise the daily business operations of the
Fund, while the directors, in addition to their functions set forth under
"Management of the Fund" below, review such actions and decide on general
policy.
The Fund pays each of its Directors who is not an affiliated person of the
Manager or the Subadviser annual compensation of $6,000 and $500 per Board
meeting attended, in addition to certain out-of-pocket expenses. Directors may
receive their Director's fees pursuant to a deferred fee agreement with the
Fund.
The Directors have adopted a retirement policy which calls for the
retirement of Directors on December 31 of the year in which they reach the age
of 72, except that retirement is being phased in for Directors who were age 68
or older as of December 31, 1993.
Pursuant to the terms of the Management Agreement with the Fund, the Manager
or Subadviser, as appropriate, pays all compensation of officers and employees
of the Fund as well as the fees and expenses of all Directors of the Fund who
are not employed by the Manager or Subadviser.
The following table sets forth the aggregate compensation paid by the Fund
for the fiscal year ended September 30, 1996 to the Directors who are not
affiliated with the Manager or Subadviser and the aggregate compensation paid to
such Directors for service on the Fund's board and that of all other investment
companies registered under the 1940 Act managed by Prudential Mutual Fund
Management LLC (Fund Complex) for the calendar year ended December 31, 1995.
Compensation Table
<TABLE>
Total
Pension or Compensation
Retirement From Fund
Aggregate Benefits Accrued Estimated Annual and Fund
Compensation As Part of Fund Benefits Upon Complex Paid
Name and Position From Fund Expenses Retirement to Directors
- ----------------- ------------ --------------- ------------- ------------
<S> <C> <C> <C> <C>
Eugene C. Dorsey, Director ........ None None N/A $ 85,783(10/34)**
Thomas T. Mooney, Director ........ $8,000 None N/A $125,625(14/19)**
Douglas H. McCorkindale, Director . None None N/A $ 63,750(7/10)**
</TABLE>
*All compensation for the calendar year ended December 31, 1995 represents
deferred compensation. Aggregate compensation from the Fund for the fiscal
year ended September 30, 1996, including accrued interest, amounted to
approximately $9,697, all of which represents deferred compensation. Aggregate
compensation from all of the funds in the Fund Complex for the calendar year
ended December 31, 1995, including accrued interest, amounted to approximately
$57,417.
**Indicates number of funds/portfolios in Fund Complex (including the Fund) to
which aggregate compensation relates.
As of November 3, 1996, the Directors and officers of the Fund as a group
owned less than 1% of the outstanding common stock of the Fund.
B-17
<PAGE>
As of November 3, 1996, the beneficial owners, directly or indirectly, of
more than 5% of the outstanding shares of any class of beneficial interest were:
Richard L. Campbell, 1367 Vernon North Drive, Dunwoody, GA, who held 2,669 Class
C shares (7.0%); Ernie Romero, 333 Gerald Drive, Lafayette, LA, who held 1,902
Class C shares (5.0%) and Coben, Inc., 8615 Marbach Road, San Antonio, TX, which
held 3,936 Class C shares (10.3%).
As of November 3, 1996, Prudential Securities was the record holder for
other beneficial owners of 6,145,873 Class A shares (or 74% of the outstanding
Class A shares), 11,707,719 Class B shares (or 77% of the outstanding Class B
shares) and 34,214 Class C shares (or 90% of the outstanding Class C shares) of
the Fund. In the event of any meetings of shareholders, Prudential Securities
will forward, or cause the forwarding of, proxy materials to the beneficial
owners for which it is record holder.
MANAGEMENT OF THE FUND
The Manager
The manager of the Fund is Prudential Mutual Fund Management LLP (PMF or the
Manager), Gateway Center Three, Newark, New Jersey 07102. PMF serves as manager
to all of the other open-end management investment companies that, together with
the Fund, comprise the Prudential Mutual Funds. See "How the Fund is
Managed-Manager" in the Prospectus. As of October 31, 1996, PMF managed and/or
administered open-end and closed-end management investment companies with assets
of approximately $52 billion. According to the Investment Company Institute, as
of September 30, 1996, the Prudential Mutual Funds were the 17th largest family
of mutual funds in the United States.
PMF is a subsidiary of Prudential Securities Incorporated (PSI) and The
Prudential Insurance Company of America (Prudential). PMF has two wholly-owned
subsidiaries: Prudential Mutual Fund Services, Inc. (PMFS or the Transfer Agent)
and Prudential Mutual Fund Investment Management, Inc. PMFS serves as the
transfer agent for the Prudential Mutual Funds and, in addition, provides
customer service, record keeping and management and administration services to
qualified plans.
Prudential is one of the largest diversified financial services institutions
in the world and, based on total assets, the largest insurance company in North
America as of December 31, 1995. Its primary business is to offer a full range
of products and services in three areas: insurance, investments and home
ownership for individuals and families; health-care management and other benefit
programs for employees of companies and members of groups; and asset management
for institutional clients and their associates. Prudential (together with its
subsidiaries) employs nearly 100,000 persons world-wide, and maintains a sales
force of approximately 19,000 agents, 3,400 insurance brokers and 6,000
financial advisers. It insures or provides other financial services to more than
50 million people worldwide-to more than one of every five people in the United
States. Prudential is a major issuer of annuities, including variable annuities.
Prudential seeks to develop innovative products and services to meet consumer
needs in each of its business areas. As of December 31, 1995, Prudential through
its subsidiaries provided automobile insurance for more than 1.8 million cars
and insured more than 1.5 million homes. For the year ended December 31, 1994,
The Prudential Bank, a subsidiary of Prudential, served 940,000 customers in 50
states providing credit card services and loans totaling more than $1.2 billion.
Assets held by PSI for its clients totaled approximately $150 billion at
December 31, 1994. During 1994, over 28,000 new customer accounts were opened
each month at PSI. The Prudential Real Estate Affiliates, the fourth largest
real estate brokerage network in the United States, has more than 34,000 brokers
and agents and more than 1,100 offices in the United States.
Based on data for the year ended December 31, 1995 for the Prudential Mutual
Funds, on an average day, there are approximately $80 million in common stock
transactions, over $100 million in bond transactions and over $4.1 billion in
money market transactions. In 1994, the Prudential Mutual Funds effected more
than 57,000 trades in money market securities and held on average $21 billion of
money market securities. Based on complex-wide data for the year ended December
31, 1994, on an average day, 7,168 shareholders telephoned PMFS, the Transfer
Agent of the Prudential Mutual Funds, on the Prudential Mutual Funds' toll-free
number. On an annual basis, that represents approximately 1.8 million telephone
calls and approximately 1.1 million fund transactions.
Pursuant to the Management Agreement with the Fund (the Management
Agreement), PMF, subject to the supervision of the Fund's Board of Directors and
in conformity with the stated objective and policies of the Fund, manages both
the investment operations of the Fund and the composition of the Fund's
portfolio, including the purchase, retention, disposition and loan of
securities. In connection therewith, PMF is obligated to keep certain books and
records of the Fund. PMF also administers the Fund's corporate affairs and, in
connection therewith, furnishes the Fund with office facilities, together with
those ordinary clerical and bookkeeping services which are not being furnished
by State Street Bank and Trust Company, the Fund's custodian, and Prudential
Mutual Fund Services, Inc. (PMFS or the Transfer Agent), the Fund's transfer and
dividend disbursing agent. The management services of PMF for the Fund are not
exclusive under the terms of the Management Agreement and PMF is free to, and
does, render management services to others.
For its services, PMF receives from the Fund, pursuant to the Management
Agreement, a fee at an annual rate of .70% of the average daily net assets of
the Fund up to and including $250 million, .55% of the Fund's average daily net
assets in excess of $250
B-18
<PAGE>
million up to and including $500 million, .50% of the Fund's average daily net
assets in excess of $500 million up to and including $1 billion and .45% of the
Fund's average daily net assets in excess of $1 billion. The fee is computed
daily and payable monthly. The Management Agreement also provides that, in the
event 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 expense limitation established and enforced pursuant to the
statutes or regulations of any jurisdiction in which the Fund's shares are
qualified for offer and sale, the compensation due to PMF will be reduced by the
amount of such excess. Reductions in excess of the total compensation payable to
PMF will be paid by PMF to the Fund. No such reductions were required during the
fiscal year ended September 30, 1996.
In connection with its management of the corporate affairs of the Fund, PMF
bears the following expenses: the salaries and expenses of all of its and the
Fund's personnel except the fees and expenses of Directors who are not
affiliated persons of PMF or the Subadviser; all expenses incurred by PMF or by
the Fund in connection with managing the ordinary course of the Fund's business,
other than those assumed by the Fund as described below; and the subadvisory fee
payable to the Subadviser pursuant to the Subadvisory Agreement among the Fund,
PMF and the Subadviser (the Subadvisory Agreement), dated February 4, 1991.
Under the terms of the Management Agreement, the Fund is responsible for the
payment of the following expenses: (a) the fees payable to the Manager, (b) the
fees and expenses of Directors who are not affiliated persons of the Manager or
the Fund's Subadviser, (c) the fees and certain expenses of the Custodian and
Transfer and Dividend Disbursing Agent, including the cost of providing records
to the Manager in connection with its obligation of maintaining required records
of the Fund and of pricing the Fund's shares, (d) the charges and expenses of
legal counsel and independent accountants for the Fund, (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 associations of
which the Fund may be a member, (h) the cost of stock certificates representing
shares of the Fund, (i) the cost of fidelity and liability insurance, (j)
certain organizational expenses of the Fund and the fees and expenses involved
in registering and maintaining registration of the Fund and of its shares with
the SEC, 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
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 for any error
of judgment or for any loss suffered by the Fund in connection with the matters
to which the Management Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard of duty. The
Management Agreement provides that it will terminate automatically if assigned,
and that it may be terminated without penalty by either party upon not more than
60 days' nor less than 30 days' written notice. The Management Agreement will
continue in effect for a period of more than two years from the date of
execution only so long as such continuance is specifically approved at least
annually in conformity with the 1940 Act. 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 the contract or "interested persons" of any
such party, on May 9, 1996, and by shareholders of the Fund, on December
20,1990.
The Subadviser
Wellington Management Company, LLP (Wellington Management), 75 State Street,
Boston, Massachusetts 02109, serves as the Fund's Subadviser. The Subadvisory
Agreement provides that Wellington Management shall furnish investment advisory
services in connection with the management of the Fund. In connection therewith,
Wellington Management is obligated to keep certain books and records of the
Fund. PMF continues to have responsibility for all investment advisory services
pursuant to the Management Agreement and supervises Wellington Management's
performance of such services. Under the Subadvisory Agreement, PMF, not the
Fund, pays Wellington Management a fee, computed daily and payable monthly, at
an annual rate of .50% of the Fund's average daily net assets for the portion of
such assets up to and including $250 million, .35% of the Fund's average daily
net assets in excess of $250 million up to and including $500 million, .30% of
the Fund's average daily net assets in excess of $500 million up to and
including $1 billion and .25% of the Fund's average daily net assets in excess
of $1 billion.
The Subadvisory Agreement provides that Wellington Management will not be
liable for any error of judgment or for any loss suffered by the Fund in
connection with the matters to which the Subadvisory Agreement relates, except a
loss resulting from willful misfeasance, bad faith, gross negligence or reckless
disregard of duty. The Subadvisory Agreement provides that it will terminate
automatically if assigned, and that it may be terminated without penalty by any
party upon not more than 60 days' nor less than 30 days' written notice. The
Subadvisory Agreement will continue in effect for a period of more than two
years from the date of execution only so long as such continuance is
specifically approved at least annually in conformity with the 1940 Act. The
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<PAGE>
Subadvisory Agreement was last approved by the Board of Directors of the Fund,
including all of the Directors who are not parties to the contract or
"interested persons" of any such party as defined in the Investment Company Act
on May 4, 1995, and by shareholders of the Fund, on December 30, 1991.
For the fiscal years ended September 30, 1994, 1995 and 1996, the Fund paid
$2,628,090, $2,361,766 and $2,195,690, respectively, to PMF under the Management
Agreement and PMF paid subadvisory fees of $1,808,784, $1,639,306 and
$1,533,621, respectively, to Wellington Management under the Subadvisory
Agreement.
The Distributor
Prudential Securities Incorporated (Prudential Securities or PSI), One
Seaport Plaza, New York, New York 10292, acts as the distributor of the shares
of the Fund.
Pursuant to separate Plans of Distribution (the Class A Plan, the Class B
Plan and the Class C Plan, collectively, the Plans) adopted by the Fund under
Rule 12b-1 under the 1940 Act and a distribution agreement (the Distribution
Agreement), Prudential Securities (the Distributor) incurs the expenses of
distributing the Fund's Class A shares, Class B shares and Class C shares.
Prudential Securities also incurs the expense of distributing the Fund's Class Z
shares, none of which is paid or reimbursed by the Fund. See "How the Fund is
Managed-Distributor" in the Prospectus.
Prior to February 4, 1991, the Fund operated as a closed-end fund and
offered only one class of shares (the existing Class A shares). On October 15,
1990, 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 the Plan (the Rule 12b-1 Directors), at a meeting called for the
purpose of voting on the Class A Plan, adopted a plan of distribution for the
Class A shares of the Fund. On November 13, 1990, the Board of Directors,
including the Rule 12b-1 Directors, at a meeting called for the purpose of
voting on the Class B Plan, adopted a plan of distribution for the Class B
shares of the Fund. On February 10, 1993, the Board of Directors, including a
majority of the Rule 12b-1 Directors, at a meeting called for the purpose of
voting on each Plan, approved modifications to the Fund's Class A and Class B
Plans and Distribution Agreements to conform them to recent amendments to the
National Association of Securities Dealers, Inc. (NASD) maximum sales charge
rule described below. As modified, 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 to pay
for personal service and 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%. As modified, the Class B Plan provides that (i) up to .25
of 1% of the average daily net assets of the Class B shares may be paid as a
service fee and (ii) up to .75 of 1% (not including the service fee) of the
average daily net assets of the Class B shares (asset-based sales charge) may be
used as reimbursement for distribution-related expenses with respect to the
Class B shares. On May 5, 1993, the Board of Directors, including a majority of
the Rule 12b-1 Directors, at a meeting called for the purpose of voting on each
Plan, adopted a plan of distribution for the Class C shares of the Fund and
approved further amendments to the plans of distribution for the Fund's Class A
and Class B shares changing them from reimbursement type plans to compensation
type plans. The Plans were last approved by the Board of Directors, including a
majority of the Rule 12b-1 Directors, on May 9, 1996. The Class A Plan, as
amended, was approved by Class A and Class B shareholders, and the Class B Plan,
as amended, was approved by Class B shareholders on July 19, 1994. The Class C
Plan was approved by the sole shareholder of Class C shares on August 1, 1994.
Class A Plan. For the fiscal year ended September 30, 1996, PMFD and PSI
received payments of $300,305, under the Class A Plan. This amount was primarily
expended for payment of account servicing fees to financial advisers and other
persons who sell Class A shares. For the fiscal year ended September 30, 1995,
PMFD and PSI also received approximately $68,100 in initial sales charges.
Class B Plan. For the fiscal year ended September 30, 1996, Prudential
Securities received $2,103,048 from the Fund under the Class B Plan and spent
approximately $739,300 in distributing the Fund's Class B shares. It is
estimated that of the latter amount, $8,000 (1.1%) was spent on printing and
mailing of prospectuses to other than current shareholders; $85,200 (11.5%) on
compensation to Pruco Securities Corporation (Prusec), an affiliated
broker-dealer, for commissions to its representatives and other expenses,
including an allocation on account of overhead and other branch office
distribution-related expenses, incurred by it for distribution of Fund shares;
and $646,100 (87.4%) on the aggregate of (i) payments of commissions and account
servicing fees to financial advisers ($340,600 or 46.1%) and (ii) an allocation
on account of overhead and other branch office distribution-related expenses
($305,500 or 41.3%). 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 shares.
Prudential Securities also receives the proceeds of contingent deferred
sales charges paid by investors upon certain redemptions of Class B shares. See
"Shareholder Guide-How to Sell Your Shares-Contingent Deferred Sales Charge" in
the Prospectus. The amount of distribution expenses reimbursable by Class B
shares of the Fund is reduced by the amount of such
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<PAGE>
proceeds. For the fiscal year ended September 30, 1996, Prudential Securities
received contingent deferred sales charges of approximately $728,700.
Class C Plan. For the fiscal year ended September 30, 1996, Prudential
Securities received $6,078 under the Class C Plan and spent approximately $6,300
in distributing the Fund's Class C shares. Prudential Securities receives the
proceeds of contingent deferred sales charges paid by investors upon certain
redemptions of Class C shares. See "Shareholder Guide-How to Sell Your
Shares-Contingent Deferred Sales Charges" in the Prospectus. For the fiscal year
ended September 30, 1996, Prudential Securities received approximately $700 in
contingent deferred sales charges upon certain redemptions of Class C shares.
The Class A, Class B and Class C 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 Plans may 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 the other party to the Plans. The Plans may not be
amended to increase materially the amounts to be spent for the services
described therein without approval by the shareholders of the applicable class
(by both Class A and Class B shareholders, voting separately, in the case of
material amendment to the Class A Plan) 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 any Plan if it is
terminated or not continued.
Pursuant to each Plan, the Board of Directors will review at least quarterly
a written report of the distribution expenses incurred on behalf of each class
of shares of the Fund by the Distributor. 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 the Rule
12b-1 Directors shall be committed to the Rule 12b-1 Directors.
Pursuant to the Distribution Agreement, the Fund has agreed to indemnify
Prudential Securities to the extent permitted by applicable law against certain
liabilities under the Securities Act. The restated Distribution Agreement was
approved by the Board of Directors, including a majority of the Rule 12b-1
Directors, on May 9, 1996, which provides for PSI to serve as distributor of
each class of shares.
On October 21, 1993, PSI entered into an omnibus settlement with the SEC,
state securities regulators in 51 jurisdictions and the NASD to resolve
allegations that PSI sold interests in more than 700 limited partnerships (and a
limited number of other types of securities) from January 1, 1980 through
December 31, 1990, in violation of securities laws to persons for whom such
securities were not suitable in light of the individuals' financial condition or
investment objectives. It was also alleged that the safety, potential returns
and liquidity of the investments had been misrepresented. The limited
partnerships principally involved real estate, oil and gas producing properties
and aircraft leasing ventures. The SEC Order (i) included findings that PSl's
conduct violated the federal securities laws and that an order issued by the SEC
in 1986 requiring PSI to adopt, implement and maintain certain supervisory
procedures had not been complied with; (ii) directed PSI to cease and desist
from violating the federal securities laws and imposed a $10 million civil
penalty; and (iii) required PSI to adopt certain remedial measures including the
establishment of a Compliance Committee of its Board of Directors. Pursuant to
the terms of the SEC settlement, PSI established a settlement fund in the amount
of $330,000,000 and procedures, overseen by a court approved Claims
Administrator, to resolve legitimate claims for compensatory damages by
purchasers of the partnership interests. PSI has agreed to provide additional
funds, if necessary, for that purpose. PSl's settlement with the state
securities regulators included an agreement to pay a penalty of $500,000 per
jurisdiction. PSI consented to a censure and to the payment of $5,000,000 in
settling the NASD action. In settling the above referenced matters, PSI neither
admitted nor denied the allegations asserted against it.
On January 18,1994, PSI agreed to the entry of a Final Consent Order and a
Parallel Consent Order by the Texas Secunties Commissioner. The firm also
entered into a related agreement with the Texas Securities Commissioner. The
allegations were that the firm had engaged in improper sales practices and other
improper conduct resulting in pecuniary losses and other harm to investors
residing in Texas with respect to purchases and sales of limited partnership
interests during the period of January 1, 1980 through December 31, 1990.
Without admitting or denying the allegations, PSI consented to a reprimand,
agreed to cease and desist from future violations, and to provide voluntary
donations to the State of Texas in the aggregate amount of $1,500,000. The firm
agreed to suspend the creation of new customer accounts, the general
solicitation of new accounts, and the offer for sale of securities in or from
PSI's North Dallas office to new customers during a period of twenty consecutive
business days, and agreed that its other Texas offices would be subject to the
same restrictions for a period of five consecutive business days. PSI also
agreed to institute training programs for its securities salesmen in Texas.
On October 27, 1994, Prudential Securities Group, Inc. and PSI entered into
agreements with the United States Attorney deferring prosecution (provided PSI
complies with the terms of the agreement for three years) for any alleged
criminal activity related to the sale of certain limited partnership programs
from 1983 to 1990. In connection with these agreements, PSI agreed to
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<PAGE>
add the sum of $330,000,000 to the fund established by the SEC and executed a
stipulation providing for a reversion of such funds to the United States Postal
Inspection Service. PSI further agreed to obtain a mutually acceptable outside
director to sit on the Board of Directors of PSG and the Compliance Committee of
PSI. The new director will also serve as an independent "ombudsman" whom PSI
employees can call anonymously with complaints about ethics and compliance.
Prudential Securities shall report any allegations or instances of criminal
conduct and material improprieties to the new director. The new director will
submit compliance reports which shall identify all such allegations or instances
of criminal conduct and material improprieties every three months for a
three-year period.
NASD Maximum Sales Charge Rule. Pursuant to rules of the NASD, the
Distributor is required to limit aggregate initial sales charges, deferred sales
charges and asset-based sales charges to 6.25% of total gross sales of each
class of shares. Interest charges on unreimbursed distribution expenses equal to
the prime rate plus one percent per annum may be added to the 6.25% limitation.
Sales from the reinvestment of dividends and distributions are not included in
the calculation of the 6.25% limitation. The annual asset-based sales charge on
shares of the Fund may not exceed .75% of 1% per class. The 6.25% limitation
applies to the Fund rather than on a per shareholder basis. If aggregate sales
charges were to exceed 6.25% of total gross sales of any class, all sales
charges on shares of that class would be suspended.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Directors of the Fund and
the oversight and review of the Manager, the Subadviser will arrange for the
execution of the Fund's portfolio transactions and the allocation of brokerage.
In executing portfolio transactions, the Subadviser seeks to obtain the best net
results for the Fund, taking into account such factors as price (including the
applicable brokerage commission or dealer spread), size of order, difficulty of
execution and operational facilities of the firm involved. The Fund may invest
in securities traded in the OTC markets and deal directly with the dealers who
make markets in the securities involved, unless a better price or execution
could be obtained by using a broker. While the Subadviser generally will seek
reasonably competitive commission rates, payment of the lowest commission or
spread is not necessarily consistent with best net results in particular
transactions. The Fund will not deal with Prudential Securities (or any
affiliate) in any transaction in which Prudential Securities acts as principal.
Purchases and sales of securities on a securities exchange are effected through
brokers who charge a negotiated commission for their services. On a foreign
securities exchange, commissions may be fixed. Orders may be directed to any
broker including, to the extent and in the manner permitted by applicable law,
Prudential Securities.
In placing orders with brokers and dealers, the Subadviser will attempt to
obtain the best net price and the most favorable execution for orders; however,
the Subadviser may, in its discretion, purchase and sell portfolio securities
through brokers and dealers who provide the Subadviser or the Fund with
research, analysis, advice and similar services. The Subadviser may, in return
for research and analysis, pay brokers a higher commission than may be charged
by other brokers, provided that the Subadviser determines in good faith that
such commission is reasonable in terms either of that particular transaction or
of the overall responsibility of the Subadviser to the Fund and its other
clients, and that the total commission paid by the Fund will be
reasonable in relation to the benefits to the Fund over the long term.
Information and research received from such brokers and dealers will be in
addition to, and not in lieu of, the services required to be performed by the
Manager under its Management Agreement with the Fund and by the Subadviser under
the Subadvisory Agreement. Commission rates are established pursuant to
negotiations with the broker based on the quality and quantity of execution
services provided by the broker in the light of generally prevailing rates. The
Subadviser's policy is to pay higher commissions to brokers or futures
commission merchants other than Prudential Securities (or any affiliate) for
particular transactions than might be charged if a different broker had been
selected, on occasions when, in the Subadviser's opinion, this policy furthers
the objective of obtaining best price and execution. 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.
Purchases and sales of securities, futures or options on futures on an
exchange (including a board of trade), and options on securities may be effected
through securities brokers or futures commission merchants that charge a
commission for their services. The Fund has no obligation to deal with any
broker or group of brokers in the execution of transactions. The Fund
contemplates that, consistent with the policy of obtaining the best net results,
the Fund may use Prudential Securities and its affiliates for brokerage
transactions. In order for Prudential Securities or its affiliates to effect any
such transaction for the Fund, the commissions, fees or other remuneration
received by Prudential Securities or its affiliates must be reasonable and fair
compared to the commissions, fees or other remuneration paid to other brokers in
connection with comparable transactions involving similar securities, futures or
options on futures being purchased or sold on an exchange during a comparable
period of time. The Fund's Board of Directors has adopted procedures designed to
ensure that all brokerage commissions, fees or other remuneration paid to such
firm or its affiliates are reasonable and fair.
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<PAGE>
Investment decisions for the Fund and for other investment accounts managed
by the Subadviser are made independently of each other in the light of differing
considerations for the various accounts. However, the same investment decision
may occasionally be made for two or more such accounts. In such cases,
simultaneous transactions are inevitable. Purchases or sales are then averaged
as to price and allocated to accounts according to a formula deemed equitable to
each account. While in some cases this practice could have a detrimental effect
upon the price or value of the security as far as the Fund is concerned, in
other cases it is believed to be beneficial to the Fund.
The Fund's brokerage transactions involving securities of companies
headquartered in countries other than the United States will be conducted
primarily on the markets and principal exchanges of such countries. Foreign
markets are generally not as developed as those located in the United States,
which may result in higher transaction costs, delayed settlement and less
liquidity for trades effected in foreign markets. Transactions on foreign
exchanges are usually subject to fixed commissions that generally are higher
than negotiated commissions on U.S. transactions. There is generally less
government supervision and regulation of exchanges and brokers in foreign
countries than in the United States.
In accordance with Section 11(a) under 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 transactions with
Prudential Securities (or any affiliate) are also subject to such fiduciary
standards as may be imposed upon Prudential Securities (or any affiliate) by
applicable law.
The table presented below shows certain information regarding the payment of
commissions by the Fund, including the amount of such commissions paid to
Prudential Securities for the three-year period ended September 30, 1996.
Fiscal year ended September 30,
1996 1995 1994
-------- -------- --------
Total brokerage commissions paid by the Fund . $140,846 $258,076 $284,986
Total brokerage commissions paid to
Prudential Securities ...................... - $ 3,000 $ 2,400
Percentage of total brokerage commissions
paid to Prudential Securities ............ - 1.2% 0.8%
The Fund effected no transactions that involved the payment of commissions
through Prudential Securities during the fiscal year ended September 30, 1996.
PURCHASE AND REDEMPTION OF FUND SHARES
Shares of the Fund may be purchased at a price equal to the next determined
net asset value per share plus a sales charge which, at the election of the
investor, may be imposed either (i) at the time of purchase (Class A shares), or
(ii) on a deferred basis (Class B or Class C shares). See "Shareholders
Guide-How to Buy Shares of the Fund" in the Prospectus.
Specimen Price Make-up
Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold at a maximum sales charge of 5% and Class
B*, Class C* and Class Z** shares are sold at net asset value.
Using the Fund's net asset value at September 30, 1996, the maximum offering
price of the Fund's shares was as follows:
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<PAGE>
Class A
Net asset value and redemption price per share ..................... $15.03
======
Maximum Sales Charge (5% of offering price) ........................ .79
------
Offering price to public ........................................... $15.82
======
Class B
Net asset value, offering price, and redemption price per
Class B share* ................................................. $15.03
======
Class C
Net asset value, offering price, and redemption price per
Class C share* ................................................. $15.03
======
Class Z
Net asset value, offering price, and redemption price per
Class Z share** ................................................ $15.03
======
----------
*Class B and Class C shares are subject to a contingent deferred sales charge
on certain redemptions. See "Shareholder Guide-How to Sell Your Shares-
Contingent Deferred Sales Charges" in the Prospectus.
**Class Z shares of the Fund were not offered prior to the date of this
prospectus.
Reduction and Waiver of Initial Sales Charges-Class A Shares
Combined Purchase and Cumulative Purchase Privilege. If an investor or
eligible group of related investors purchases Class A shares of the Fund
concurrently with Class A shares of other Prudential Mutual Funds, the purchases
may be combined to take advantage of the reduced sales charges applicable to
larger purchases. See the table of breakpoints under "Shareholder
Guide-Alternative Purchase Plan" in the Prospectus.
An eligible group of related Fund investors includes any combination of the
following:
(a) an individual;
(b) the individual's spouse, their children and their parents;
(c) the individual's and spouse's Individual Retirement Account (IRA);
(d) any company controlled by the individual (a person, entity or group that
holds 25% or more of the outstanding voting securities of a corporation will be
deemed to control the corporation, and a partnership will be deemed to be
controlled by each of its general partners);
(e) a trust created by the individual, the beneficiaries of which are the
individual, his or her spouse, parents or children;
(f) a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act account
created by the individual or the individual's spouse; and
(g) one or more employee benefit plans of a company controlled by an
individual.
In addition, an eligible group of related Fund investors may include an
employer (or group of related employers) and one or more qualified retirement
plans of such employer or employers (an employer controlling, controlled by or
under common control with another employer is deemed related to that employer).
The Distributor must be notified at the time of purchase that the investor
is entitled to a reduced sales charge. The reduced sales charges will be granted
subject to confirmation of the investor's holdings. The Combined Purchase and
Cumulative Purchase Privilege does not apply to individual participants in any
retirement or group plans.
Rights of Accumulation. Reduced sales charges are also available through
Rights of Accumulation, under which an investor or an eligible group of related
investors, as described above under "Combined Purchase and Cumulative Purchase
Privilege," may aggregate the value of their existing holdings of shares of the
Fund and shares of other Prudential Mutual Funds (excluding money market funds
other than those acquired pursuant to the exchange privilege) to determine the
reduced sales charge. However, the value of shares held directly with the
Transfer Agent and through Prudential Securities will not be aggregated to
determine the reduced sales charges. All shares must be held either directly
through the Transfer Agent or through Prudential Securities. The value of
existing holdings for purposes of determining the reduced sales charge is
calculated using the maximum offering price (net asset value plus maximum sales
charge) as of the previous business day. See "How the Fund Values Its Shares" in
the Prospectus. The Distributor must be notified at the time of purchase that
the investor is entitled to a reduced sales charge. The reduced sales charges
will be granted subject to confirmation of the investor's holdings. Rights of
accumulation are not available to individual participants in any retirement or
group plans.
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<PAGE>
Letters of Intent. Reduced sales charges are also available to investors (or
an eligible group of related investors), including retirement and group plans,
who enter into a written Letter of Intent providing for the purchase, within a
thirteen-month period, of shares of the Fund and shares of other Prudential
Mutual Funds (Investment Letter of Intent). Retirement and group plans may also
qualify to purchase Class A shares at net asset value by entering into a Letter
of Intent whereby they agree to enroll, within a thirteen-month period, a
specified number of eligible employees or participants (Participant Letter of
Intent).
For purposes of the Investment Letter of Intent, shares of the Fund and
shares of other Prudential Mutual Funds (excluding money market funds other than
those acquired pursuant to the exchange privilege) which were previously
purchased and are still owned are also included in determining the applicable
reduction. However, the value of shares held directly with the Transfer Agent
and through Prudential Securities will not be aggregated to determine the
reduced sales charge. All shares must be held either directly through the
Transfer Agent or through Prudential Securities.
A Letter of Intent, in the case of an Investment Letter of Intent, permits a
purchaser to establish a total investment goal to be achieved by any number of
investments over a thirteen-month period and, in the case of a Participant
Letter of Intent, to establish minimum eligible employee or participant goals
over a thirteen-month period. Each investment made during the period, in the
case of an Investment Letter of Intent, will receive the reduced sales charge
applicable to the amount represented by the goal, as if it were a single
investment. In the case of a Participant Letter of Intent, each investment made
during the period will be made at net asset value. Escrowed Class A shares
totaling 5% of the dollar amount of the Letter of Intent will be held by the
Transfer Agent in escrow in the name of the purchaser, except in the case of
retirement and group plans where the employer or plan sponsor will be
responsible for paying any applicable sales charge. The effective date of an
Investment Letter of Intent (except in the case of retirement and group plans)
may be back-dated up to 90 days, in order that any investments made during this
90-day period, valued at the purchaser's cost, can be applied to the fulfillment
of the Letter of Intent goal.
The Investment Letter of Intent does not obligate the investor to purchase,
nor the Fund to sell, the indicated amount. Similarly, the Participant Letter of
Intent does not obligate the retirement or group plan to enroll the indicated
number of eligible employees or participants. In the event the Letter of Intent
goal is not achieved within the thirteen-month period, the purchaser (or the
employer or plan sponsor in the case of any retirement or group plan) is
required to pay the difference between the sales charge otherwise applicable to
the purchases made during this period and sales charges actually paid. Such
payment may be made directly to the Distributor or, if not paid, the Distributor
will liquidate sufficient escrowed shares to obtain such difference. Investors
electing to purchase Class A shares of the Fund pursuant to a Letter of Intent
should carefully read such Letter of Intent.
PSI must be notified at the time of purchase that the investor is entitled
to receive a reduced sales charge. The reduced sales charge will, in the case of
an Investment Letter of Intent, be granted subject to confirmation of the
investor's holdings, or in the case of a Participant Letter of Intent, subject
to confirmation of the number of eligible employees or participants in the
retirement or group plan. Letters of Intent are not available to individual
participants in any retirement or group plans.
Waiver of the Contingent Deferred Sales Charge-Class B Shares
The Contingent Deferred Sales Charge is waived under circumstances described
in the Prospectus. See "Shareholder Guide-How to Sell Your Shares-Waiver of
Contingent Deferred Sales Charges-Class B Shares" in the Prospectus. In
connection with these waivers, the Transfer Agent will require you to submit the
supporting documentation set forth below.
(Left column)
Category of Waiver
Death
Disability-An individual will be considered disabled if he
or she is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental
impairment which can be expected to result in death or to be
of long-continued and indefinite duration.
Distribution from an IRA or 403(b) Custodial Account
Distribution from Retirement Plan
Excess Contributions
(Right column)
Required Documentation
A copy of the shareholder's death certificate or, in the case of
a trust, a copy of the grantor's death certificate, plus a
copy of the trust agreement identifying the grantor.
A copy of the Social Security Administration award letter or
a letter from a physician on the physician's letterhead stating
that the shareholder (or, in the case of a trust, the grantor)
is permanently disabled. The letter must also indicate the date
of disability.
A copy of the distribution form from the custodial firm
indicating (i) the date of birth of the shareholder and (ii)
that the shareholder is over age 59-1/2 and is taking a normal
distribution-signed by the shareholder.
A letter signed by the plan administrator/trustee indicating
the reason for the distribution.
A letter from the shareholder (for an IRA) or the plan
administrator/trustee on company letterhead indicating the
amount of the excess and whether or not taxes have been paid.
B-25
<PAGE>
The Transfer Agent reserves the right to request such additional documents
as it may deem appropriate.
Quantity Discount-Class B Shares Purchased prior to August 1, 1994
The CDSC is reduced on redemptions of Class B shares of the Fund purchased
prior to August 1, 1994 if immediately after a purchase of such shares, the
aggregate cost of all Class B shares of the Fund owned by you in a single
account exceeded $500,000. For example, if you purchased $100,000 of Class B
shares of the Fund and the following year purchase an additional $450,000 of
Class B shares with the result that the aggregate cost of your Class B shares of
the Fund following the second purchase was $550,000, the quantity discount would
be available for the second purchase of $450,000 but not for the first purchase
of $100,000. The quantity discount will be imposed at the following rates
depending on whether the aggregate value exceeded $500,000 or $1 million:
Contingent Deferred Sales Charge
as a Percentage of Dollars Invest
or Redemption Proceeds
Year Since Purchase ----------------------------------
Payment Made $500,001 to $1 million Over $1 million
---------------------- ---------------------- ---------------
First ............................. 3.0% 2.0%
Second ............................ 2.0% 1.0%
Third ............................. 1.0% 0%
Fourth and thereafter ............. 0% 0%
You must notify the Fund's Transfer Agent either directly or through
Prudential Securities or Prusec, at the time of redemption, that you are
entitled to the reduced CDSC. The reduced CDSC will be granted subject to
confirmation of your holdings.
SHAREHOLDER INVESTMENT ACCOUNT
Upon the initial purchase of Fund shares, a Shareholder Investment Account
is established for each investor under which the shares are held for the
investor by the Transfer Agent. If a stock certificate is desired, it must be
requested in writing for each transaction. Certificates are issued only for full
shares and may be redeposited in the Account at any time. There is no charge to
the investor for issuance of a certificate. The Fund makes available to its
shareholders the following privileges and plans.
Automatic Reinvestment of Dividends and/or Distributions. For the
convenience of investors, all dividends and distributions are automatically
reinvested in full and fractional shares of the Fund at the net asset value on
the record date. An investor may direct the Transfer Agent in writing not less
than 5 full business days prior to the record date, to have subsequent dividends
and/or distributions sent in cash rather than reinvested. In the case of
recently purchased shares for which registration instructions have not been
received on the record date, cash payment will be made directly to the dealer.
Any shareholder who receives a cash payment representing a dividend or
distribution may reinvest such distribution at net asset value by returning the
check or the proceeds to the Transfer Agent within 30 days after the payment
date. Such investment will be made at the net asset value per share next
determined after receipt of the check or proceeds by the Transfer Agent.
Exchange Privilege. The Fund makes available to its shareholders the
privilege of exchanging their shares of the Fund for shares of certain other
Prudential Mutual Funds, including one or more specified money market funds,
subject in each case to the minimum investment requirements of such funds.
Shares of such other Prudential Mutual Funds may also be exchanged for shares of
the Fund. All exchanges are made on the basis of relative net asset value next
determined after receipt of an order in proper form. An exchange will be treated
as a redemption and purchase for tax purposes. Shares may be exchanged for
shares of another fund only if shares of such fund may legally be sold under
applicable state laws. For retirement and group plans having a limited menu of
Prudential Mutual Funds, the Exchange Privilege is available for those funds
eligible for investment in the particular program.
It is contemplated that the exchange privilege may be applicable to new
mutual funds whose shares may be distributed by the Distributor.
Class A. Shareholders of the Fund will be able to exchange their Class A
shares for Class A shares of certain Prudential Mutual Funds, shares of
Prudential Government Securities Trust (Short-Intermediate Term Series) and
shares of the money market funds specified below. No fee or sales load will be
imposed upon the exchange. Shareholders of money market funds who acquired such
shares upon exchange of Class A shares of the Fund or Class A or Class C shares
of certain other Prudential Mutual Funds may use the Exchange Privilege only to
acquire Class A shares of the Prudential Mutual Funds participating in the
Exchange Privilege.
The following money market funds participate in the Class A Exchange
Privilege:
Prudential California Municipal Fund
(California Money Market Series)
Prudential Government Securities Trust
(Money Market Series)
(U.S. Treasury Money Market Series)
B-26
<PAGE>
Prudential Municipal Series Fund
(Connecticut Money Market Series)
(Massachusetts Money Market Series)
(New Jersey Money Market Series)
(New York Money Market Series)
Prudential MoneyMart Assets, Inc.
Prudential Tax-Free Money Fund, Inc.
Class B and Class C. Shareholders of the Fund may exchange their Class B and
Class C shares for shares of certain other Prudential Mutual Funds and shares of
Prudential Special Money Market Fund, Inc., a money market fund. No CDSC will be
payable upon such exchange, but a CDSC may be payable upon the redemption of
Class B and Class C shares acquired as a result of the exchange. The applicable
sales charge will be that imposed by the Fund in which shares were initially
purchased and the purchase date will be deemed to be the first day of the month
after the initial purchase, rather than the date of the exchange.
Class B and Class C shares of the Fund may also be exchanged for shares of
Prudential Special Money Market Fund without imposition of any CDSC at the time
of exchange. Upon subsequent redemption from such money market fund or after
re-exchange into the Fund, such shares will be subject to the CDSC calculated by
excluding the time such shares were held in the money market fund. In order to
minimize the period of time in which shares are subject to a CDSC, shares
exchanged out of the money market fund will be exchanged on the basis of their
remaining holding periods, with the longest remaining holding periods being
transferred first. In measuring the time period shares are held in a money
market fund and "tolled" for purposes of calculating the CDSC holding period,
exchanges are deemed to have been made on the last day of the month. Thus, if
shares are exchanged into the Fund from a money market fund during the month
(and are held in the Fund at the end of the month), the entire month will be
included in the CDSC holding period. Conversely, if shares are exchanged into a
money market fund prior to the last day of the month (and are held in the money
market fund on the last day of the month), the entire month will be excluded
from the CDSC holding period. For purposes of calculating the seven year holding
period applicable to the Class B conversion feature, the time period during
which Class B shares were held in a money market fund will be excluded.
At any time after acquiring shares of other funds participating in the Class
B or Class C exchange privilege, a shareholder may again exchange those shares
(and any reinvested dividends and distributions) for Class B or Class C shares
of the Fund, respectively, without subjecting such shares to any CDSC. Shares of
any Fund participating in the Class B or Class C exchange privilege that were
acquired through reinvestment of dividends or distributions may be exchanged for
Class B or Class C shares of other funds, respectively, without being subject to
any CDSC.
Class Z. Class Z shares may be exchanged for Class Z shares of other
Prudential Mutual Funds.
Additional details about the Exchange Privilege and prospectuses for each of
the Prudential Mutual Funds are available from the Transfer Agent, PSI or
Prusec. The Exchange Privilege is not a right and may be modified, suspended or
terminated upon 60 day's notice to shareholders.
Dollar Cost Averaging
Dollar cost averaging is a method of accumulating shares by investing a
fixed amount of dollars in shares at set intervals. An investor buys more shares
when the price is low and fewer shares when the price is high. The average cost
per share is lower than it would be if a constant number of shares were bought
at set intervals.
Dollar cost averaging may be used, for example, to plan for retirement, to
save for a major expenditure, such as the purchase of a home, or to finance a
college education. The cost of a year's education at a four-year college today
averages around $14,000 at a private college and around $6,000 at a public
university. Assuming these costs increase at a rate of 7% a year, as has been
projected, for the freshman class of 2011, the cost of four years at a private
college could reach $210,000 and over $90,000 at a public university.1
The following chart shows how much you would need in monthly investments to
achieve specified lump sums to finance your investment goals.2
Period of
Monthly investments: $100,000 $150,000 $200,000 $250,000
-------------------- -------- -------- -------- --------
25 years ...................... $ 110 $ 165 $ 220 $ 275
20 years ...................... 176 264 352 440
15 years ...................... 296 444 592 740
10 years ...................... 555 833 1,110 1,388
5 years ...................... 1,371 2,057 2,742 3,428
See "Automatic Savings Accumulation Plan"
_______
1Some information concerning the costs of education at public and private
universities is available from The College Board Annual Survey of Colleges,
1993. Average costs for private institutions include tuition, fees, room and
board.
2The chart assumes an effective rate of return of 8% (assuming monthly
compounding). This example is for illustrative purposes only and is not intended
to reflect the performance of an investment in shares of the Fund. The
investment return and principal value of an investment will fluctuate so that an
investor's shares when redeemed may be worth more or less than their original
cost.
B-27
<PAGE>
Automatic Savings Accumulation Plan (ASAP)
Under ASAP, an investor may arrange to have a fixed amount automatically
invested in shares of the Fund monthly by authorizing his or her bank account or
Prudential Securities securities account (including a Command Account) to be
debited to invest specified dollar amounts in shares of the Fund. The investor's
bank must be a member of the Automatic Clearing House System. Stock certificates
are not issued to ASAP participants.
Further information about these programs and an application form can be
obtained from the Fund's Transfer Agent, Prudential Securities or Prusec.
Systematic Withdrawal Plan
A systematic withdrawal plan is available to shareholders through Prudential
Securities or the Transfer Agent. The plan provides for monthly or quarterly
checks in any amount, except as provided below, up to the value of the shares in
the shareholder's account. Withdrawals of Class B or Class C shares may be
subject to a CDSC. See "Shareholder Guide-How to Sell Your Shares-Contingent
Deferred Sales Charges" in the Prospectus.
In the case of shares held through the Transfer Agent (i) a $10,000 minimum
account value applies, (ii) withdrawals may not be for less than $100 and (iii)
the shareholder must elect to have all dividends and/or distributions
automaticially reinvested in additional full and fractional shares at net asset
value on shares held under this plan. See "Shareholder Investment
Account-Automatic Reinvestment of Dividends and/or Distributions" above.
Prudential Securities and the Transfer Agent act as agents for the
shareholder in redeeming sufficient full and fractional shares to provide the
amount of the periodic withdrawal payment. The plan may be terminated at any
time, and the Distributor reserves the right to initiate a fee of up to $5 per
withdrawal, upon 30 days' written notice to the shareholder.
Withdrawal payments should not be considered as dividends, yield or income.
If periodic withdrawals continuously exceed reinvested dividends and
distributions, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted.
Furthermore, each withdrawal constitutes a redemption of shares, and any
gain or loss realized must generally be recognized for federal income tax
purposes. In addition, withdrawals made concurrently with purchases of
additional shares are inadvisable because of the applicable sales charges to (i)
the purchase of Class A shares and (ii) the withdrawal of Class B and Class C
shares. Each shareholder should consult his or her own tax adviser with regard
to the tax consequences of the plan, particularly if used in connection with a
retirement plan.
Tax-Deferred Retirement Plans
Various tax-deferred retirement plans, including a 401(k) Plan,
self-directed individual retirement accounts and "tax-sheltered accounts" under
Section 403(b)(7) of the Code are available through the Distributor. These plans
are for use by both self-employed individuals and corporate employers. These
plans permit either self-direction of accounts by participants, or a pooled
account arrangement. Information regarding the establishment of these plans, the
administration, custodial fees and other details are available from Prudential
Securities or the Transfer Agent.
Investors who are considering the adoption of such a plan should consult
with their own legal counsel or tax adviser with respect to the establishment
and maintenance of any such plan.
Tax-Deferred Retirement Accounts
Individual Retirement Accounts. An individual retirement account (IRA)
permits the deferral of federal income tax on income earned in the account until
the earnings are withdrawn. The following chart represents a comparsion of the
earnings in a personal savings account with those in an IRA, assuming a $2,000
annual contribution, an 8% rate of return and a 39.6% federal income tax bracket
and shows how much more retirement income can accumulate within an IRA as
opposed to a taxable individual savings account.
B-28
<PAGE>
Tax-Deferred Compounding1
Contributions Personal
Made Over: Savings IRA
------------- -------- ---
10 years $ 26,165 $ 31,291
15 years 44,675 58,649
20 years 68,109 98,846
25 years 97,780 157,909
30 years 135,346 244,692
1 The chart is for illustrative purposes only and does not represent the
performance of the Fund or any specific investment. It shows taxable versus
tax-deferred compounding for the periods and on the terms indicated. Earnings in
the IRA account will be subject to tax when withdrawn from the account.
Mutual Fund Programs
From time to time, the Fund may be included in a mutual fund program with
other Prudential Mutual Funds. Under such a program, a group of portfolios will
be selected and thereafter marketed collectively. Typically, these programs are
created with an investment theme, e.g., to seek greater diversification,
protection from interest rate movements or access to different management
styles. In the event such a program is instituted, there may be a minimum
investment requirement for the program as a whole. The Fund may waive or reduce
the minimum initial investment requirements in connection with such a program.
The mutual funds in the program may be purchased individually or as a part
of a program. Since the allocation of portfolios included in the program may not
be appropriate for all investors, investors should consult their Prudential
Securities Financial Advisor or Prudential/Pruco Securities Representative
concerning the appropriate blend of portfolios for them. If investors elect to
purchase the individual mutual funds that constitute the program in an
investment ratio different from that offered by the program, the standard
minimum investment requirements for the individual mutual funds will apply.
NET ASSET VALUE
Under the 1940 Act, the Board of Directors of the Fund is responsible for
determining in good faith the fair value of securities and other assets of the
Fund. In accordance with procedures adopted by the Board of Directors, the value
of the Fund's portfolio will be determined as described below.
Net asset value per share will be determined daily as of 4:15 p.m. on each
day the New York Stock Exchange (NYSE) is open for trading by dividing the value
of the net assets of the Fund by the total number of common shares outstanding.
Net asset value is calculated separately for each class. For purposes of
determining the net asset value per share, the value of the Fund's net assets
shall be deemed to equal the value of the Fund's assets less the Fund's
liabilities (including the outstanding principal amount of borrowings, if any,
and the unpaid interest on borrowings, if any). The Fund will compute its net
asset value on each day the NYSE is open for trading except on days on which no
orders to purchase, sell or redeem Fund shares have been received or days on
which changes in the value of the Fund's portfolio securities do not affect net
asset value. In the event the NYSE closes early on any business day, the net
asset value of the Fund's shares shall be determined at a time between such
closing and 4:15 P.M., New York time.
In valuing the Fund's assets, any security for which the primary market is
an exchange is valued at the last sale price on such exchange on the day of
valuation or, if there was no sale on such day, the last bid price quoted on
such day. The value of each U.S. Government security and corporate debt security
for which quotations are available will be based on the valuation provided by an
independent pricing service. Pricing services consider such factors as security
prices, yields, maturities, call features, ratings and developments relating to
specific securities in arriving at securities valuations. Other portfolio
securities that are actively traded in the OTC market, including listed
securities for which the primary market is believed to be OTC, will be valued at
the average of the quoted bid and asked prices provided by an independent
pricing service or by principal market makers. Exchange-traded options are
valued at their last sale price as of the close of options trading on the
applicable exchange. If there is no sale on the applicable options exchange on a
given day, options are valued at the average of the quoted bid and asked prices
as of the close of the applicable exchange. The Fund may engage pricing services
to obtain such prices. Futures contracts are marked to market daily, and options
thereon are valued at their last sale price, as of the close of the applicable
commodities exchanges. Forward currency contracts will be valued at the current
cost of covering or offsetting the contract. Securities and assets for which
market quotations are not readily available (including OTC options) are valued
at fair value as determined in good faith by or under the direction of the Board
of Directors of the Fund, which determination shall be based in part on the
valuation of other securities for which market quotations are available that are
considered to be comparable in quality, interest rate and maturity.
Quotations of foreign securities in a foreign currency will be converted to
U.S. dollar equivalents at the closing rates of exchange. Foreign currency
exchange rates are generally determined prior to the close of the NYSE.
Occasionally, events affecting
B-29
<PAGE>
the value of foreign securities and such exchange rates occur between the time
at which they are determined and the close of the NYSE, which events will not be
reflected in a computation of the Fund's net asset value. If events materially
affecting the value of such securities or currency exchange rates were to occur
during such time period, the securities would be valued at their fair value as
determined in good faith by or under the direction of the Board of Directors.
Short-term investments that mature in less than 60 days are valued at
amortized cost if their term to maturity from date of purchase was less than 60
days or by amortizing their value on the 61st day prior to maturity if their
term to maturity from date of acquisition by the Fund was more than 60 days,
unless this is determined by the Board of Directors not to represent fair value.
Repurchase agreements will be valued at cost plus accrued interest.
The net asset value of Class B and Class C shares will generally be lower
than the net asset value of Class A shares as a result of the larger
distribution-related fee to which Class B and Class C shares are subject. The
net asset value of Class A shares will generally be lower than the net asset
value of Class Z shares as a result of the service fee to which the Class A
shares are subject. It is expected, however, that the net asset value per share
of each class will tend to converge immediately after the recording of dividends
(if any) which will differ by approximately the amount of the distribution or
service fee expense accrual differential among the classes.
TAXES
General. The Fund is qualified and intends to remain qualified as a
regulated investment company (RIC) under the Internal Revenue Code. As a RIC,
the Fund will not be subject to federal income tax on that part of its
investment company taxable income (consisting generally of interest and dividend
income, net short-term capital gain and net realized gains from certain foreign
currency transactions) and net capital gain (the excess of net long-term capital
gain over net short-term capital loss) that it distributes to its shareholders
if at least 90% of its investment company taxable income for the taxable year
(determined without regard to the deduction for dividends paid) is distributed
(Distribution Requirement). To qualify for treatment as a RIC, the Fund must,
among other things, (1) derive at least 90% of its gross income each taxable
year from dividends, interest, payments with respect to securities loans and
gains from the sale or other disposition of securities or foreign currencies, or
other income (including gains from options, futures or forward contracts)
derived from its business of investing in securities or such currencies (Income
Requirement); (2) derive less than 30% of its gross income each taxable year
from the sale or other disposition of any of the following that were held for
less than three months - securities, options, futures or forward contracts
(other than those on foreign currencies), or foreign currencies (or options,
futures or forward contracts thereon) that are not directly related to the
Fund's principal business of investing in securities (or options and futures
with respect to securities); (3) diversify its holdings so that, at the end of
each quarter of its taxable year, (A) at least 50% of the value of its total
assets is represented by cash and cash items, U.S. Government securities,
securities of other RICs and other securities, with such other securities
limited, in respect of any one issuer, to an amount not greater than 5% of the
Fund's total assets and to not more than 10% of the outstanding voting
securities of such issuer, and (B) not more than 25% of the value of its total
assets is invested in the securities (other than U.S. Government securities or
the securities of other RICs) of any one issuer; and (4) distribute to its
shareholders at least 90% of its net investment income and net short-term gains
(i.e., the excess of net short-term capital gains over net long-term capital
losses) in each year.
Distribution Requirements. The Fund will be subject to a nondeductible 4%
excise tax to the extent it fails to distribute during each calendar year
substantially all of its ordinary income for that year (except for certain
foreign currency gains or losses from transactions after October 31 of that
year, which are treated for these purposes as arising in the following year) and
capital gain net income for the twelve-month period ending on October 31 of that
year, plus certain other amounts. The Fund intends to make distributions in
accordance with this requirement. In general, for these purposes dividends and
other distributions will be treated as paid when actually distributed, except
that distributions declared in October, November or December of any year,
payable to shareholders of record on a specified date in such a month and paid
in January of the following year will be treated as having been paid by the Fund
(and received by the shareholders) on December 31 of the year in which they were
declared.
Original Issue Discount. The Fund may purchase debt securities issued with
original issue discount. Original issue discount that accrues in a taxable year
will be treated as income earned by the Fund and therefore will be subject to
the distribution requirements described above. Because the original issue
discount earned by the Fund in a taxable year may not be represented by cash
income, the Fund may have to dispose of other securities and use the proceeds
thereof to make distributions in amounts necessary to satisfy the Distribution
Requirement. The Fund may realize capital gains or losses from such
dispositions, which would increase or decrease the Fund's investment company
taxable income and/or net capital gain. In addition, any such gains may be
realized on the disposition of securities held for less than three months.
Because of the 30% Limitation, any such gains would reduce the Fund's ability to
sell other securities (and certain options, futures, foreign currencies and
forward contracts) held for less than three months that it might wish to sell in
the ordinary course of its portfolio management.
Passive Foreign Investment Companies. A "passive foreign investment company"
(PFIC) is a foreign corporation that, in general, meets either of the following
tests: (a) at least 75% of its gross income is passive or (b) an average of at
least 50% of its assets produce, or are held for the production of, passive
income. If the Fund acquires and holds stock in a PFIC beyond the end of
B-30
<PAGE>
the year of its acquisition, the Fund will be subject to federal income tax on a
portion of any "excess distribution" received on the stock or of any gain from
disposition of the stock (collectively, PFIC income), plus interest thereon,
even if the Fund distributes the PFIC income as a taxable dividend to its
shareholders. The balance of the PFIC income will be included in the Fund's
investment company taxable income and, accordingly, will not be taxable to it to
the extent that income is distributed to its shareholders. If the Fund elects to
treat any PFIC in which it invests as a "qualified electing fund," then in lieu
of the foregoing tax and interest obligation, the Fund will be required to
include in income each year its pro rata share of the qualified electing fund's
annual ordinary earnings and net capital gain, even if they are not distributed
to the Fund; those amounts would be subject to the distribution requirements
described above. It may be very difficult, if not impossible, to make this
election because of certain requirements thereof.
Hedging Transactions. The use of hedging strategies, such as writing and
purchasing options and futures contracts and entering into forward contracts,
involves complex rules that will determine for income tax purposes the character
and timing of recognition of certain gains and losses the Fund realizes in
connection therewith. Income from foreign currencies (except certain gains
therefrom that may be excluded by future regulations), and income from
transactions in options, futures and forward contracts derived by the Fund with
respect to its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement. However, income from
the disposition of options and futures contracts (other than those on foreign
currencies) will be subject to the 30% Limitation if they are held for less than
three months. Income from the disposition of foreign currencies, and options,
futures and forward contracts on foreign currencies, that are not directly
related to the Fund's principal business of investing in securities (or options
and futures with respect to securities) also will be subject to the 30%
Limitation if they are held for less than three months.
The 30% Limitation and the asset diversification requirements described
above may limit the extent to which the Fund will be able to engage in
transactions in options, futures and forward contracts. If the Fund satisfies
certain requirements, then for purposes of determining whether the Fund
satisfies the 30% Limitation, any increase in value of a position that is part
of a "designated hedge" will be offset by any decrease in value (whether
realized or not) of the offsetting hedging position during the period of the
hedge; thus, only the net gain, if any, from the designated hedge will be
included in gross income for purposes of that limitation.
Distributions. A portion of the dividends from the Fund's investment company
taxable income may qualify for the deduction for dividends received allowable to
corporations. The eligible portion may not exceed the aggregate dividends
received by the Fund from U.S. corporations. However, dividends received by a
corporate shareholder and deducted by it pursuant to the dividends-received
deduction are subject indirectly to the alternative minimum tax. Distributions
of net capital gain, if any, will not be eligible for the dividends-received
deduction.
If the net asset value of Fund shares is reduced below a shareholder's cost
as a result of a distribution by the Fund, the distribution nevertheless will be
taxable. Investors should be careful to consider the tax implications of buying
Fund shares just prior to a distribution. Those purchasing shares at that time
will receive a distribution that nevertheless will be taxable to them.
A redemption of Fund shares may result in taxable gain or loss to the
redeeming shareholder, depending on whether the redemption proceeds are more or
less than the shareholder's adjusted basis for the redeemed shares (which
normally includes any sales charge paid). An exchange of Fund shares for shares
of any other Prudential Mutual Fund generally will have similar tax
consequences. See "Shareholder Investment Account-Exchange Privilege" above.
Special rules apply, however, when a shareholder (1) disposes of Fund shares
through a redemption or exchange within 90 days after purchase thereof and (2)
subsequently acquires shares of the Fund or any other Prudential Mutual Fund on
which a sales charge normally is imposed (load fund) without paying any sales
charge because of the exchange privilege or the repurchase privilege (see
"Shareholder Guide" in the Prospectus). In these cases, any gain on the
disposition of the original fund shares will be increased, or loss thereon
decreased, by the amount of the sales charge paid when those shares were
acquired; and that amount will increase the adjusted basis of the load fund
shares subsequently acquired. In addition, if Fund shares are purchased within
30 days before or after redeeming Fund shares (whether pursuant to the
repurchase privilege or otherwise), all or a portion of any loss on the
redemption will not be deductible and instead will increase the basis of the
newly purchased shares.
Foreign Currency Gains and Losses. Gains or losses attributable to
fluctuations in exchange rates that occur between the time the Fund accrues
interest or other receivables or accrues expenses or other liabilities
denominated in a foreign currency and the time the Fund actually collects such
receivables or pays such liabilities, are treated as ordinary income or loss.
Similarly, gains or losses on disposition of debt securities denominated in a
foreign currency attributable to fluctuations in the value of the foreign
currency between the date of acquisition of the security and the date of
disposition, also are treated as ordinary income or loss. This income or loss,
referred to as "section 988" gain or loss, increases or decreases the amount of
the Fund's investment company taxable income available to be distributed to its
shareholders rather than increasing or decreasing the amount of its net capital
gain. If section 988 losses exceed other investment company taxable income and
net capital gain during a taxable year, the Fund would not be able to make any
taxable distributions for that year, or distributions made during that year
before the losses
B-31
<PAGE>
were realized would be recharacterized as a return of capital to shareholders,
rather than as taxable distributions, reducing each shareholder's basis in his
or her shares.
Foreign Taxes. Dividends and interest received, and gains in respect of
foreign securities realized, by the Fund may be subject to income, withholding
or other taxes imposed by foreign countries and U.S. possessions that would
reduce the yield on the Fund's securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, it will be eligible to, and may, file an election with
the Internal Revenue Service that would enable Fund shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to certain foreign
and U.S. possessions income taxes that may be paid by the Fund. Pursuant to the
election, the Fund would treat those taxes as dividends paid to its shareholders
and each shareholder would be required to (1) include in gross income, and treat
as paid by him, his proportionate share of those taxes, (2) treat his share of
those taxes and of any dividend paid by the Fund that represents income from
foreign or U.S. possessions sources as his own income from those sources and (3)
either deduct the taxes deemed paid by him in computing his taxable income or,
alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. If the Fund makes this election, it will
report to its shareholders shortly after each taxable year their respective
shares of the Fund's income from sources within, and taxes paid to, foreign
countries and U.S. possessions. The Fund was not eligible to make such an
election with respect to its fiscal year ended September 30, 1996, because the
percentage of its assets invested in securities of U.S. issuers exceeded 50% at
the end of that period.
Other Taxation
The foregoing is only a summary of some, but not all, of the important
federal tax considerations generally affecting the Fund and its shareholders. In
addition to the federal tax considerations described above, there may be other
federal, state, local or foreign tax considerations applicable to particular
investors. Prospective investors are therefore advised to consult their own
taxadvisers with respect to the tax consequences to them of an investment in the
Fund.
PERFORMANCE INFORMATION
Average Annual Total Return. The Fund may from time to time advertise its
average annual total return. Average annual total return is determined
separately for Class A, Class B, Class C and Class Z shares. Because the Fund
commenced offering Class Z shares on November 29, 1996, performance information
for those shares is not shown. See "How the Fund Calculates Performance" in the
Prospectus.
Average annual total return is computed according to the following formula:
P (1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value at the end of the 1, 5 or 10 year
periods (or fractional portion thereof) of a hypothetical $1,000
investment made at the beginning of the 1, 5 or 10 year periods.
Average annual total return takes into account any applicable initial or
contingent deferred sales charges but does not take into account any federal or
state income taxes that may be payable upon redemption.
The average annual total return for Class A shares for the one-year,
five-year and since inception periods ended September 30, 1996 was 3.22%, 10.02%
and 10.88%, respectively. The average annual total return for the Class B shares
for the one-year, five-year and since inception periods ended September 30, 1996
was 2.90%, 10.17% and 10.57%, respectively. The average annual total return for
Class C shares for the one year and since inception periods ended September 30,
1996 was 6.90% and 9.06%, respectively.
Aggregate Total Return. The Fund may also advertise its aggregate total
return. Aggregate total return is determined separately for Class A and Class B
shares. See "How the Fund Calculates Peformance" in the Prospectus.
Aggregate total return represents the cumulative change in the value of an
investment in the Fund and is computed by the following formula:
ERV - P
---------
P
Where: P = a hypothetical initial payment of $1000.
ERV = Ending Redeemable Value at the end of the 1, 5, or 10 year
periods (or fractional portion thereof) of a hypothetical $1000
investment made at the beginning of the 1, 5 or 10 year periods.
B-32
<PAGE>
Aggregate total return does not take into account any federal or state
income taxes that may be payable upon redemption or any applicable initial or
contingent deferred sales charges.
The aggregate total return for Class A shares for the one-year, five-year
and since inception periods ended on September 30, 1996 was 8.65%, 69.73% and
111.18%, respectively. The aggregate total return for the Class B shares for the
one-year, five-year and since inception periods ended September 30, 1996 was
7.90%, 63.30% and 75.44%, respectively. The aggregate total return for Class C
shares for the one year and since inception periods ended September 30, 1996 was
7.90% and 20.65%, respectively.
Yield. The Fund may from time to time advertise its yield as calculated over
a 30-day period. Yield is calculated separately for Class A, Class B and Class C
shares. This yield will be computed by dividing the Fund's net investment income
per share earned during this 30-day period by the maximum offering price per
share on the last day of this period. Yield is calculated according to the
following formula:
a - b
IELD = 2 [ ( ------+ 1) 6 - 1 ]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
Yield fluctuates and an annualized yield quotation is not a representation
by the Fund as to what an investment in the Fund will actually yield for any
given period.
The Fund's 30-day yields for the period ended September 30, 1996, were
3.28%, 2.72% and 2.72% for Class A shares, Class B shares and Class C shares,
respectively.
From time to time, the performance of the Fund may be measured against
various indices. Set forth below is a chart which compares the performance of
different types of investments over the long term and the rate of inflation.(1)
CHART
- -----------
(1)Source: Ibbotson Associates Stocks, Bonds, Bills and Inflation-1995
Yearbook (annually updates the work of Roger G. Ibbotson
and Rex A. Sinquefield). Used with permission. All rights
reserved. Common stock returns are based on the Standard &
Poor's 500 Stock Index, a market-weighted, unmanaged index of
500 common stocks in a variety of industry sectors. It is a
commonly used indicator of broad stock price movements. This
chart is for illustrative purposes only and is not intended to
represent the performance of any particular investment or fund.
Investors cannot invest directly in an index. Past performance
is not a guarantee of future results.
B-33
<PAGE>
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
AND INDEPENDENT ACCOUNTANTS
State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for the Fund's portfolio securities and
cash and, in that capacity, maintains certain financial and accounting books and
records pursuant to an agreement with the Fund.
Prudential Mutual Fund Services, Inc. ("PMFS"), Raritan Plaza One, Edison,
New Jersey 08837, serves as the transfer and dividend disbursing agent of the
Fund. It is a wholly-owned subsidiary of the Manager. PMFS provides customary
transfer agency services to the Fund, including the handling of shareholder
communications, the processing of shareholder transactions, the maintenance of
shareholder account records, payment of dividends and distributions, and related
functions. For these services, PMFS receives an annual fee per shareholder
account of $10, a new account set-up fee of $2.00 for each manually-established
account and a monthly inactive zero balance account fee of $.20 per account.
PMFS is also reimbursed for its out-of-pocket expenses, including but not
limited to postage, stationery, printing, allocable communications expenses and
other costs. For the fiscal year ended September 30, 1996, the Fund incurred
fees of approximately $458,900 for the services of PMFS.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281
serves as the Fund's independent accountants and in that capacity audits the
Fund's annual financial statements.
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Washington,
D.C. 20036, serves as counsel to the Fund (except with respect to the opinions
of counsel referred to in "Taxes, Dividends and Distributions" in the
Prospectus).
B-34
<PAGE>
Portfolio of Investments as of GLOBAL UTILITY FUND, INC.
September 30, 1996
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
US$ Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Electric Utilities--25.2%
528,000 China Light & Power Co., Ltd. (Hong
Kong) $ 2,458,005
175,000 CMS Energy Corp. 5,271,875
200,000 DPL, Inc. 4,675,000
187,500 DQE, Inc. 5,226,562
100,000 DTE Energy Co. 2,800,000
100,000 Empresa Nacional de Electricidad
S.A.
(ADR) (Spain) 5,937,500
190,000 Espoon Sahko
(ADS) (Finland) 4,075,558
150,000 Huaneng Power International, Inc.*
(ADR) (China) 2,493,750
600,000 Iberdrola S.A. (Spain) 5,816,851
75,000 Korea Electric Power Corp.
(ADR) (Korea) 1,415,625
220,000 Pacific Gas & Electric Co. 4,785,000
100,000 Pinnacle West Capital Corp. 2,962,500
140,000 Public Service Co. of Colorado 4,970,000
80,000 RWE A.G. (Germany) 3,020,055
1,300,000 ScottishPower PLC (United Kingdom) 6,207,409
280,000 Shandong Huaneng Power
Co. Ltd. (ADR) (China) 2,520,000
100,000 Texas Utilities Co. 3,962,500
140,000 VEBA A.G. (Germany) 7,331,236
-------------
75,929,426
- ------------------------------------------------------------
Gas Utilities--8.9%
618,705 Australian Gas Light Co. (Australia) 3,331,375
100,000 Burlington Resources, Inc. 4,437,500
120,000 Equitable Resources, Inc. 3,420,000
60,000 Sonat, Inc. 2,655,000
330,000 TransCanada Pipelines Ltd. (Canada) 5,293,664
470,000 Westcoast Energy, Inc. (Canada) $ 7,556,714
-------------
26,694,253
Telecommunications--33.2%
106,300 AirTouch Communications, Inc.* 2,936,538
175,000 AT&T Corp. 9,143,750
150,000 BCE, Inc. (Canada) 6,412,500
153,200 BC Telecom, Inc. (Canada) 3,064,900
100,000 Comsat Corp. 2,262,500
43,000 Empresas Telex-Chile S.A.(ADR)
(Chile) 258,000
50,000 GTE Corp. 1,925,000
210,000 MCI Communications Corp. 5,368,125
369 Nippon Telegraph & Telephone Corp.
(Japan) 2,716,036
125,000 NYNEX Corp. 5,437,500
100,000 Hellenic Telecom, Inc.* (Greece) 1,682,573
106,300 Pacific Telesis Group 3,574,338
87,600 Portugal Telecom S.A.
(ADS) (Portugal) 2,255,700
120,000 Royal PTT Nederland NV (Netherlands) 4,129,228
180,000 SBC Communications Inc. 8,662,500
70,000 Sprint Corp. 2,721,250
2,300,000 STET-Societa Finanziaria Telefonica
P.A. (Italy) 6,217,358
165,500 Tele Danmark (ADR) (Denmark) 3,909,937
20,000 Telecom Corp. of New Zealand Ltd.
(ADR) (New Zealand) 1,515,000
900,000 Telecom Italia S.P.A. (Italy) 1,998,858
900,000 Telecom Italia Mobile (Italy) 1,995,906
40,000 Telefonica de Argentina S.A.
(ADR) (Argentina) 995,000
150,000 Telefonica de Espana S.A.
(ADR) (Spain) 8,343,750
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
B-35
<PAGE>
Portfolio of Investments as of GLOBAL UTILITY FUND, INC.
September 30, 1996
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
US$ Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------
Telecommunications (cont'd)
120,000 Telefonos de Mexico S.A. (ADR-Class
L Shares) (Mexico) $ 3,855,000
200,000 U.S. West Communications Group 5,950,000
75,000 Vodafone Group PLC
(ADR) (United Kingdom) 2,559,375
-------------
99,890,622
- ------------------------------------------------------------
Water Utilities & Other--4.9%
30,968 Alcatel Alsthom (France) 2,612,258
167,800 American Water Works Co., Inc. 3,628,675
400,000 Anglian Water PLC (United Kingdom) 3,360,425
25,600 Lucent Technologies, Inc. 1,174,400
6,300 Technip S.A. (France) 575,844
200,000 U.S. West Media Group* 3,375,000
-------------
14,726,602
Total common stocks
(cost $176,304,563) 217,240,903
-------------
------------------------------------------------------------
PREFERRED STOCKS--1.8%
Philippine Long Distance Telephone
Co., (The Philippines)
43,700 $3.50 Conv. Ser. III (GDS) 2,540,063
80,000 5.75% Conv. Ser. II (GDS) 2,920,000
-------------
Total preferred stocks (cost
$4,185,000) 5,460,063
-------------
- ------------------------------------------------------------
<CAPTION>
Moody's Principal
Rating Amount
(Unaudited) (000)
<S> <C> <C> <C>
DEBT OBLIGATIONS--23.0%
CORPORATE BONDS--21.3%
- ------------------------------------------------------------
Electrical Utilities--12.8%
A1 $ 1,500 Alabama Power Co.,
6.375%, 8/1/99 1,491,450
Baa2 1,000D CSW Investments,
7.45%, 8/1/06
(United Kingdom) 994,400
Aa2 1,750 Central Illinois Light
Co.,
8.20%, 1/15/22 1,798,755
</TABLE>
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount US$ Value
(Unaudited) (000) Description (Note 1)
<S> <C> <C> <C>
Baa1 $ 1,000D Chilgener S.A.,
6.50%, 1/15/06 (Chile) $ 933,510
Aaa 2,000D Chubu Electric Power Co.
Inc., (Japan)
6.25%, 8/5/03
(Eurobonds) 1,935,000
A3 1,500 Cincinnati Gas & Elec.
Co.,
5.80%, 2/15/99 1,475,445
A1 1,000 Consolidated Edison Co., Inc.,
7.625%, 3/1/04 1,024,780
Aa2 2,000 Duke Power Co.,
5.875%, 6/1/01 1,903,360
Ba3 1,000 El Paso Electric Co.,
8.25%, 2/1/03, Ser. C 990,000
Baa1 1,000D Empresa Electrica
Pehuenche S.A.,
7.30%, 5/1/03 (Chile) 996,920
Baa1 1,000D Empresa Electrica del
Norte Grande S.A.,
7.75%, 3/15/06 (Chile) 994,840
Aa3 500 Florida Power & Light
Co.,
6.00%, 7/1/03 472,850
A2 1,000 GTE Florida, Inc.,
7.25%, 10/15/25 929,210
A2 1,000D Hydro-Quebec
7.50%, 4/1/16 (Canada) 971,350
A2 1,000 Iowa-Illinois Gas & Elec. Co.,
6.95%, 10/15/25 893,650
Baa2 1,000 Louisiana Power & Light
Co.,
6.00%, 3/1/00 967,570
A1 1,500 Monongahela Power Co.,
7.375%, 7/1/02 1,514,925
A1 1,000 Northern States Power
Co.,
5.75%, 12/1/00 957,410
A2 1,000 Pacificorp.,
8.75%, 2/12/98 1,032,850
Baa1 2,000 Philadelphia Electric
Co.,
7.50%, 1/15/99 2,036,580
A1 2,000 Potomac Edison Co.,
8.875%, 8/1/21 2,123,220
Aa2 2,000 Southwestern Elec. Power Co.,
5.25%, 4/1/00 1,906,100
Aa2 1,000 Southwestern Public Serv. Co.,
7.25%, 7/15/04 999,420
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-36
<PAGE>
Portfolio of Investments as of GLOBAL UTILITY FUND, INC.
September 30, 1996
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount US$ Value
(Unaudited) (000) Description (Note 1)
<S> <C> <C> <C>
- ------------------------------------------------------------
Electrical Utilities (cont'd)
Baa3 $ 1,000 System Energy Resources, Inc.,
7.71%, 8/1/01 $ 1,008,090
Aa2 1,000 Tampa Electric Co.,
7.75%, 11/1/22 966,520
Baa2 2,000 Texas Utilities Electric
Co.,
9.27%, 1/14/00 2,148,360
B1 1,000 Texas-New Mexico Power
Co.,
Deb.
10.75%, 9/15/03 1,052,500
Aa3 2,000D Tokyo Electric Power
Co.,
6.125%, 7/29/03
(Eurobonds) (Japan) 1,935,000
A2 2,000 Virginia Electric & Power Co.,
6.625%, 4/1/03 1,950,420
-------------
38,404,485
- ------------------------------------------------------------
Gas Distribution & Other Industries--3.5%
A2 2,000D Alcan Aluminum Ltd.,
9.625%, 7/15/19
(Canada) 2,229,280
Baa2 1,000 Enron Corp.,
7.00%, 8/15/23 885,420
B1 1,000D Metrogas S.A.,
10.875%, 5/15/01
Ser. B (Argentina) 1,020,000
A2 1,600 Michigan Con. Gas Co.,
8.25%, 5/1/14 1,688,416
Northern Illinois Gas
Co.,
Aa1 500 5.875%, 5/1/00 484,435
Aa1 1,000 7.26%, 10/15/25 920,840
A2 2,000 Southern California Gas
Co.,
6.875%, 11/1/25 1,767,000
B1 1,500D Transportadora de Gas
del Sur S.A.
(Argentina)
7.75%, 12/23/98 1,479,375
-------------
10,474,766
- ------------------------------------------------------------
Telecommunications, Media & Related Industries--5.0%
Ba2 1,500 360 Communications Co.,
7.50%, 3/1/06 1,458,105
Aaa $ 2,000D BellSouth
Telecommunications,
6.125%, 9/23/08
(Eurobonds) $ 1,845,000
Aaa 2,000D British Telecom Finance BV,
9.375%, 11/16/98
(Eurobonds) (United
Kingdom) 2,117,500
B1 1,000 Comcast Corp.,
Sr. Sub. Notes,
9.125%, 10/15/06 995,000
NR 1,000D Comtel Brasileira Ltda.,
10.75%, 9/26/04
(Brazil) 1,023,750
A1 1,550 Pacific Bell, Inc.,
8.70%, 6/15/01 1,665,258
Ba2 1,000D Philippine Long Distance
Telephone Co.,
9.25%, 6/30/06
(The Philippines) 1,021,800
Aa3 1,000 Southwestern Bell
Telephone Co.,
5.875%, 6/1/03 932,880
Ba1 1,000 TCI Communications Inc.,
Sr. Deb.
9.25%, 1/15/23 973,210
B1 1,500D Telecom Argentina S.A.,
8.375%, 10/18/00,
(Argentina) 1,462,500
Aa1 NZD1,000 Telecom Corp. New
Zealand Finance,
7.50%, 7/14/03
(Eurobonds) (New
Zealand) 668,753
B1 1,000D Telefonica de Argentina
S.A.,
11.875%, 11/1/04
(Argentina) 1,065,000
-------------
15,228,756
-------------
Total corporate bonds
(cost $64,901,125) 64,108,007
-------------
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
B-37
<PAGE>
Portfolio of Investments as of GLOBAL UTILITY FUND, INC.
September 30, 1996
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount US$ Value
(Unaudited) (000) Description (Note 1)
<S> <C> <C> <C>
- -----------------------------------------------------------
CONVERTIBLE BONDS--0.7%
Baa2 $ 500D Compania de Telefonos de
Chile S.A.,
4.50%, 1/15/03 (Chile) $ 610,625
Caa 1,500D International Cabletel,
Inc.,
7.25%, 4/15/05
(Eurobonds) 1,635,000
-------------
Total convertible bonds
(cost $2,000,000) 2,245,625
-------------
- ------------------------------------------------------------
U.S. GOVERNMENT SECURITIES--1.0%
United States Treasury
Notes,
2,000 6.125%, 7/31/00 1,981,560
1,000 7.50%, 11/15/01 1,043,280
-------------
Total U.S. Government
Securities
(cost $3,133,750) 3,024,840
-------------
Total debt obligations
(cost $70,034,875) 69,378,472
-------------
Total long-term
investments
(cost $250,524,438) 292,079,438
-------------
SHORT-TERM INVESTMENTS--1.8%
CORPORATE BOND--0.5%
$ 1,500D Ericsson (L.M.)
Telephone Co.
7.875%, 10/21/96
(Eurobonds) (Sweden) $ 1,501,875
- ------------------------------------------------------------
REPURCHASE AGREEMENT--1.3%
3,716 Lanston (Aubrey) & Co.
Inc., 5.70%, dated
9/30/96, due 10/1/96
in the amount of
$3,716,588 (cost
$3,716,000; value of
collateral including
accrued
interest--$3,808,521) 3,716,000
-------------
Total short-term
investments
(cost $5,320,115) 5,217,875
-------------
- ------------------------------------------------------------
Total Investments--98.8%
(cost $255,844,553; Note
4) 297,297,313
Other assets in excess
of liabilities--1.2% 3,720,830
-------------
Net Assets--100% $ 301,018,143
-------------
-------------
</TABLE>
- ---------------
*--Non-income producing security.
D--US$ Denominated Bonds.
ADR--American Depository Receipts.
ADS--American Depository Shares.
GDS--Global Depository Shares.
The Fund's current Statement of Additional Information contains a description
of Moody's ratings.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-38
<PAGE>
Statement of Assets and Liabilities GLOBAL UTILITY FUND, INC.
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets September 30, 1996
Investments, at value (cost $255,844,553).................................................................. $297,297,313
Foreign currency, at value (cost $136,056)................................................................. 136,058
Cash....................................................................................................... 39,024
Receivable for investments sold............................................................................ 3,260,923
Dividend and interest receivable........................................................................... 2,844,116
Receivable for Fund shares sold............................................................................ 83,375
Deferred expenses and other assets......................................................................... 9,080
--------------
Total assets............................................................................................ 303,669,889
--------------
Liabilities
Payable for Fund shares reacquired......................................................................... 1,161,760
Payable for investments purchased.......................................................................... 541,800
Accrued expenses........................................................................................... 504,560
Distribution fee payable................................................................................... 178,156
Management fee payable..................................................................................... 166,779
Withholding taxes payable.................................................................................. 98,691
--------------
Total liabilities....................................................................................... 2,651,746
--------------
Net Assets................................................................................................. $301,018,143
--------------
--------------
Net assets were comprised of:
Common stock, at par.................................................................................... $ 20,028
Paid-in capital in excess of par........................................................................ 243,967,457
--------------
243,987,485
Undistributed net investment income..................................................................... 347,667
Accumulated net realized gains on investments and foreign currency transactions......................... 15,225,749
Net unrealized appreciation on investments and foreign currencies....................................... 41,457,242
--------------
Net assets, September 30, 1996............................................................................. $301,018,143
--------------
--------------
Class A:
Net asset value and redemption price per share
($112,800,432 / 7,504,953 shares of common stock issued and outstanding)............................. $15.03
Maximum sales charge (5.00% of offering price).......................................................... 0.79
--------------
Maximum offering price to public........................................................................ $15.82
--------------
--------------
Class B:
Net asset value, offering price and redemption price per share
($187,556,665 / 12,478,843 shares of common stock issued and outstanding)............................ $15.03
--------------
--------------
Class C:
Net asset value, offering price and redemption price per share
($661,046 / 43,982 shares of common stock issued and outstanding).................................... $15.03
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-39
<PAGE>
GLOBAL UTILITY FUND, INC.
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income September 30, 1996
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $679,951)................. $ 9,232,590
Interest and discount earned.......... 6,222,613
------------------
Total income....................... 15,455,203
------------------
Expenses
Management fee........................ 2,195,690
Distribution fee--Class A............. 300,305
Distribution fee--Class B............. 2,103,048
Distribution fee--Class C............. 6,078
Transfer agent's fees and expenses.... 537,000
Custodian's fees and expenses......... 284,000
Reports to shareholders............... 270,000
Audit fee and expenses................ 43,000
Directors' fees and expenses.......... 43,000
Registration fees..................... 35,000
Legal fees and expenses............... 32,000
Insurance............................. 7,000
Miscellaneous......................... 12,171
------------------
Total expenses..................... 5,868,292
------------------
Net investment income.................... 9,586,911
------------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions
Net realized gain on:
Investment transactions............... 17,775,022
Foreign currency transactions......... 351,243
------------------
18,126,265
------------------
Net change in unrealized
appreciation/depreciation on:
Investments........................... (1,999,856)
Foreign currencies.................... 822,976
------------------
(1,176,880)
------------------
Net gain on investments and foreign
currencies............................ 16,949,385
------------------
Net Increase in Net Assets
Resulting from Operations................ $ 26,536,296
------------------
------------------
</TABLE>
GLOBAL UTILITY FUND, INC.
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended September 30,
in Net Assets 1996 1995
<S> <C> <C>
Operations
Net investment income.......... $ 9,586,911 $ 11,147,737
Net realized gain on investment
and foreign currency
transactions................ 18,126,265 7,315,262
Net change in unrealized
appreciation/depreciation on
investments and foreign
currencies.................. (1,176,880) 25,829,844
------------ ------------
Net increase in net assets
resulting from operations... 26,536,296 44,292,843
------------ ------------
Net equalization debits........ -- (312,052)
------------ ------------
Dividends and distributions (Note
1)
Dividends from net investment
income
Class A..................... (4,066,553) (4,310,107)
Class B..................... (5,504,314) (6,511,221)
Class C..................... (16,044) (11,932)
------------ ------------
(9,586,911) (10,833,260)
------------ ------------
Distributions in excess of net
investment income
Class A..................... (8,056) --
Class B..................... (10,902) --
Class C..................... (32) --
------------ ------------
(18,990) --
------------ ------------
Distributions from net realized
gains
Class A..................... (3,456,002) (2,642,246)
Class B..................... (6,126,168) (5,681,058)
Class C..................... (16,333) (6,975)
------------ ------------
(9,598,503) (8,330,279)
------------ ------------
Fund share transactions (net of
share conversions ) (Note 5)
Net proceeds form shares
sold........................ 28,413,113 25,935,458
Net asset value of shares
issued in reinvestment of
dividends and
distributions............... 15,648,910 15,601,479
Cost of shares reacquired...... (102,550,920) (113,332,033)
------------ ------------
Net decrease in net assets from
Fund share transactions........ (58,488,897) (71,795,096)
------------ ------------
Total decrease.................... (51,157,005) (46,977,844)
Net Assets
Beginning of year................. 352,175,148 399,152,992
------------ ------------
End of year....................... $301,018,143 $352,175,148
------------ ------------
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-40
<PAGE>
Notes to Financial Statements GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
Global Utility Fund, Inc. (the ``Fund'') is an open-end diversified management
investment company. The Fund was organized in Maryland on November 18, 1988 as a
closed-end, diversified management investment company and on December 15, 1989,
sold 9,000 shares of common stock for $100,440 to Wellington Management Company,
LLP (``Wellington''). Investment operations commenced on January 2, 1990. On
February 1, 1991, the Fund concluded operations as a closed-end investment
company and subsequently commenced operations as an open-end, diversified
management investment company.
The Fund seeks to achieve its investment objective of obtaining a high total
return, without incurring undue risk, by investing primarily in common stocks,
debt securities and preferred stocks of domestic and foreign companies in the
utility industries. Debt securities in which the Fund invests are generally
within the four highest ratings categories by a nationally recognized
statistical rating organization or, if not rated, are of comparable quality. The
ability of the issuers of the debt securities held by the Fund to meet their
obligations may be affected by economic developments in a specific country or
industry.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation: In valuing the Fund's assets, quotations of foreign
securities in a foreign currency are converted to U.S. dollar equivalents at the
then current exchange rate. Any security for which the primary market is on an
exchange is valued at the last sale price on such exchange on the day of
valuation or, if there was no sale on such day, the last bid price quoted on
such day. Portfolio securities that are actively traded in the over-the-counter
market, including listed securities for which the primary market is believed to
be over-the-counter, are valued at the mean between the most recently quoted bid
and asked prices provided by an independent pricing service or by principal
market makers. Securities for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the direction
of the Board of Directors of the Fund.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian takes possession of the
underlying collateral securities, the value of which exceeds the principal
amount of the repurchase transaction including accrued interest. If the seller
defaults and the value of the collateral declines or if bankruptcy proceedings
are commenced with respect to the seller of the security, realization of the
collateral by the Fund may be delayed or limited.
Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and liabilities--at the
closing rates of exchange.
(ii) purchases and sales of investment securities, income and expenses--at the
rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the fiscal year, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of the securities held at fiscal year end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of long-term securities sold during
the fiscal year. Accordingly, realized foreign currency gains (losses) are
included in the reported net realized gain on investment transactions.
The Fund recognizes foreign currency gains and losses from the holding of
foreign currencies, the sales and maturities of short-term securities and
forward currency contracts, and the difference between the amounts of dividends,
interest and foreign taxes recorded on the Fund's books and the U.S. dollar
equivalent of amounts actually received or paid.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the possibility of political and economic instability and
the level of governmental supervision and regulation of foreign securities
markets.
Forward Currency Contracts: A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Fund enters into forward currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings or on specific receivables and payables denominated in a foreign
currency. The contracts are valued daily at current
- --------------------------------------------------------------------------------
B-41
<PAGE>
Notes to Financial Statements GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
exchange rates and any unrealized gain or loss is included in net unrealized
appreciation or depreciation on investments. Gain or loss is realized on the
settlement date of the contract equal to the difference between the settlement
value of the original and renegotiated forward contracts. This gain or loss, if
any, is included in net realized gain (loss) on foreign currency transactions.
Risks may arise upon entering into these contracts from the potential inability
of the counterparties to meet the terms of their contracts.
Securities Transactions and Net Investment Income: Security transactions are
recorded on the trade date. Realized gains and losses from security and currency
transactions are calculated on the identified cost basis. Interest income is
recorded on the accrual basis and dividend income is recorded on the ex-dividend
date. Expenses are recorded on the accrual basis which may require the use of
certain estimates by management.
Net investment income (other than distribution fees) and unrealized and realized
gains or losses are allocated daily to each class of shares based upon the
relative proportion of net assets of each class at the beginning of the day.
Equalization: During the fiscal year ended September 30, 1996, the Fund
discontinued the accounting practice of equalization. Equalization is a practice
whereby a portion of the proceeds from sales and costs of repurchases of capital
shares, equivalent on a per-share basis to the amount of distributable net
investment income on the date of the transaction, is credited or charged to
undistributed net investment income. The undistributed net investment income
balance of $220,108 at September 30, 1995, resulting from equalization, was
transferred to paid-in capital in excess of par.
Federal Income Taxes: It is the Fund's policy to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to shareholders.
Therefore, no federal income tax provision is required.
Withholding taxes on foreign dividends and interest are provided in accordance
with the Fund's understanding of the applicable country's tax rules and rates.
Dividends and Distributions: Dividends from net investment income are declared
and paid quarterly. The Fund will distribute at least annually any net capital
gains in excess of loss carryforwards. Dividends and distributions are recorded
on the ex-dividend date.
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for wash
sales and foreign currency transactions.
Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with American Institute of Certified
Public Accountants (AICPA) Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. The effect of applying
this statement was to increase undistributed net investment income and decrease
accumulated net realized gains on investments by $78,798 relating to net
realized foreign currency gains. Net investment income, net realized gains and
net assets were not affected by this change.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Mutual Fund Management LLC
(``PMF''). Pursuant to this agreement, PMF has responsibility for all investment
advisory services and supervises the subadviser's performance of such services.
PMF has entered into a subadvisory agreement with Wellington; Wellington
furnishes investment advisory services in connection with the management of the
Fund. PMF pays for the cost of the subadviser's services, the compensation of
officers of the Fund, occupancy and certain clerical and bookkeeping costs of
the Fund. The Fund bears all other costs and expenses.
The management fee paid PMF is computed daily and payable monthly at an annual
rate of .70% of the Fund's average daily net assets up to and including $250
million, .55% of the Fund's average daily net assets of the next $250 million,
.50% of the Fund's average daily net assets of the next $500 million and .45% of
the Fund's average daily net assets in excess of $1 billion. Pursuant to the
subadvisory agreement, PMF compensates Wellington for its services at an annual
rate of .50% of the Fund's average daily net assets up to and including $250
million, .35% of the Fund's average daily net assets of the next $250 million,
.30% of the Fund's average daily net assets of the next $500 million and .25% of
the Fund's average daily net assets in excess of $1 billion.
The Fund had a distribution agreement with Prudential Mutual Fund Distributors,
Inc. (``PMFD''), which acted as the distributor of the Class A shares of the
Fund through January 1, 1996. Effective January 2, 1996, Prudential Securities
Incorporated (``PSI''), became the distributor of the Class A shares of the Fund
and is serving the Fund under the same terms and conditions as under the
arrangement with PMFD. PSI is also the distributor of the Class B and Class C
shares of the Fund. The Fund
- --------------------------------------------------------------------------------
B-42
<PAGE>
Notes to Financial Statements GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
compensated PMFD and PSI for distributing and servicing the Fund's Class A,
Class B and Class C shares, pursuant to plans of distribution (the ``Class A, B
and C Plans''), regardless of expenses actually incurred by them. The
distribution fees are accrued daily and payable monthly.
Pursuant to the Class A, B and C Plans, the Fund compensates PSI, and PMFD for
the period September 1, 1995 through January 1, 1996 with respect to Class A
shares, for distribution-related activities at an annual rate of up to .30 of
1%, 1% and 1%, of the average daily net assets of the Class A, B and C shares,
respectively. Such expenses under the Plans were .25 of 1%, 1% and 1%, of the
average daily net assets of the Class A, B and C shares, respectively, for the
fiscal year ended September 30, 1996.
PMFD and PSI has advised the Fund that it has received approximately $68,100 in
front-end sales charges resulting from sales of Class A shares during the fiscal
year ended September 30, 1996. From these fees, PMFD and PSI paid such sales
charges to affiliated broker-dealers which in turn paid commissions to
salespersons and incurred other distribution costs.
PSI has advised the Fund that for the fiscal year ended September 30, 1996, it
received approximately $728,700 and $700 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
PMFD is a wholly-owned subsidiary of PMF; PSI and PMF are indirect, wholly-owned
subsidiaries of The Prudential Insurance Company of America.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent and during the fiscal year ended
September 30, 1996, the Fund incurred fees of approximately $458,900 for the
services of PMFS. As of September 30, 1996, approximately $37,000 of such fees
were due to PMFS. Transfer agent fees and expenses in the Statement of
Operations include certain out-of-pocket expenses paid to non-affiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the fiscal year ended September 30, 1996 were $41,795,046 and $113,701,639,
respectively.
The United States federal income tax basis of the Fund's investments at
September 30, 1996 was $255,871,260 and accordingly, net unrealized appreciation
of investments, for United States federal income tax purposes was $41,426,053
(gross unrealized appreciation--$52,314,897; gross unrealized
depreciation--$10,888,844).
- ------------------------------------------------------------
Note 5. Capital
The Fund offers Class A, Class B and Class C shares. Class A shares are sold
with an initial sales charge of up to 5.00%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending upon
the period of time the shares are held. Class C shares are sold with a
contingent deferred sales charge of 1% during the first year. Class B shares
will automatically convert to Class A shares on a quarterly basis approximately
seven years after purchase. A special exchange privilege is also available for
shareholders who qualified to purchase Class A shares at net asset value.
The Fund has authorized 2 billion shares of common stock at $.001 par value per
share equally divided into Class A, B and C shares. Of the 20,027,778 shares of
common stock issued and outstanding at September 30, 1996, Wellington owned
9,000 Class A shares.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ----------------------------------- ---------- ------------
<S> <C> <C>
Year ended September 30, 1996:
Shares sold........................ 1,266,739 $ 18,863,411
Shares issued in reinvestment of
dividends and distributions...... 339,649 5,017,345
Shares reacquired.................. (2,883,880) (43,010,724)
---------- ------------
Net decrease in shares outstanding
before conversion................ (1,277,492) (19,129,968)
Shares issued upon conversion from
Class B.......................... 327,144 4,874,396
---------- ------------
Net decrease in shares
outstanding...................... (950,348) $(14,255,572)
---------- ------------
---------- ------------
Year ended September 30, 1995:
Shares sold........................ 932,622 $ 12,467,912
Shares issued in reinvestment of
dividends and distributions...... 332,880 4,408,412
Shares reacquired.................. (3,154,244) (42,676,531)
---------- ------------
Net decrease in shares outstanding
before conversion................ (1,888,742) (25,800,207)
Shares issued upon conversion from
Class B.......................... 1,102,435 14,545,652
---------- ------------
Net decrease in shares
outstanding...................... (786,307) $(11,254,555)
---------- ------------
---------- ------------
</TABLE>
- --------------------------------------------------------------------------------
B-43
<PAGE>
Notes to Financial Statements GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Shares Amount
- ----------------------------------- ---------- ------------
Year ended September 30, 1996:
<S> <C> <C>
Shares sold........................ 623,845 $ 9,314,099
Shares issued in reinvestment of
dividends and distributions...... 718,862 10,600,234
Shares reacquired.................. (3,977,624) (59,359,780)
---------- ------------
Net decrease in shares outstanding
before conversion................ (2,634,917) (39,445,447)
Shares reacquired upon conversion
into Class A..................... (327,061) (4,874,396)
---------- ------------
Net decrease in shares
outstanding...................... (2,961,978) $(44,319,843)
---------- ------------
---------- ------------
Year ended September 30, 1995:
Shares sold........................ 976,906 $ 13,147,835
Shares issued in reinvestment of
dividends and distributions...... 849,891 11,174,827
Shares reacquired.................. (5,242,255) (70,606,948)
---------- ------------
Net decrease in shares outstanding
before conversion................ (3,415,458) (46,284,286)
Shares reacquired upon conversion
into Class A..................... (1,103,158) (14,545,349)
---------- ------------
Net decrease in shares
outstanding...................... (4,518,616) $(60,829,635)
---------- ------------
---------- ------------
<CAPTION>
Class C Shares Amount
- ----------------------------------- ---------- ------------
<S> <C> <C>
Year ended September 30, 1996:
Shares sold........................ 15,751 $ 235,603
Shares issued in reinvestment of
dividends and distributions...... 2,124 31,331
Shares reacquired.................. (12,124) (180,416)
---------- ------------
Net increase in shares
outstanding...................... 5,751 $ 86,518
---------- ------------
---------- ------------
Year ended September 30, 1995:
Shares sold........................ 23,879 $ 319,711
Shares issued in reinvestment of
dividends and distributions...... 1,372 18,240
Shares reacquired.................. (3,578) (48,857)
---------- ------------
Net increase in shares
outstanding...................... 21,673 $ 289,094
---------- ------------
---------- ------------
</TABLE>
- --------------------------------------------------------------------------------
B-44
<PAGE>
Financial Highlights GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------
Year Ended September 30,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year..... $ 14.72 $ 13.66 $ 14.63 $ 12.96 $ 12.62
---------- -------- -------- -------- --------
Income from investment operations
Net investment income.................. .51 .49 .47 .44 .53
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions........................ .73 1.35 (.82) 2.46 1.01
---------- -------- -------- -------- --------
Total from investment operations.... 1.24 1.84 (.35) 2.90 1.54
---------- -------- -------- -------- --------
Less distributions
Dividends from net investment income... (.51) (.48) (.42) (.47) (.53)
Distributions in excess of net
investment income................... -- -- -- (.01) --
Distributions from net realized
gains............................... (.42) (.30) (.20) (.75) (.67)
---------- -------- -------- -------- --------
Total distributions................. (.93) (.78) (.62) (1.23) (1.20)
---------- -------- -------- -------- --------
Net asset value, end of year........... $ 15.03 $ 14.72 $ 13.66 $ 14.63 $ 12.96
---------- -------- -------- -------- --------
---------- -------- -------- -------- --------
TOTAL RETURN(a)........................ 8.65% 14.23% (2.49)% 23.87% 13.15%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000).......... $112,800 $124,423 $126,254 $138,714 $114,654
Average net assets (000)............... $120,122 $122,837 $139,166 $119,001 $120,708
Ratios to average net assets:
Expenses, including distribution
fees............................. 1.30% 1.31% 1.25% 1.30% 1.39%
Expenses, excluding distribution
fees............................. 1.05% 1.06% 1.02% 1.10% 1.19%
Net investment income............... 3.38% 3.58% 3.39% 3.37% 4.16%
For Class A, B and C shares:
Portfolio turnover rate............. 13% 15% 19% 14% 57%
Average commission rate paid per
share............................ $ 0.0542 -- -- -- --
</TABLE>
- ---------------
(a) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each year reported and includes reinvestment of dividends and
distributions.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-45
<PAGE>
Financial Highlights GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Class C
-------------------------------------------------------------- ----------
Year Ended
September
Year Ended September 30, 30,
-------------------------------------------------------------- ----------
1996 1995 1994 1993 1992 1996
<CAPTION>
---------- -------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period... $ 14.71 $ 13.66 $ 14.63 $ 12.97 $ 12.63 $ 14.71
---------- -------- -------- -------- ------- ----------
Income from investment operations
Net investment income.................. .40 .39 .37 .34 .43 .40
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions........................ .74 1.34 (.82) 2.45 1.01 .74
---------- -------- -------- -------- ------- ----------
Total from investment operations.... 1.14 1.73 (.45) 2.79 1.44 1.14
---------- -------- -------- -------- ------- ----------
Less distributions
Dividends from net investment income... (.40) (.38) (.32) (.37) (.43) (.40)
Distributions in excess of net
investment income................... -- -- -- (.01) -- --
Distributions from net realized
gains............................... (.42) (.30) (.20) (.75) (.67) (.42)
---------- -------- -------- -------- ------- ----------
Total distributions................. (.82) (.68) (.52) (1.13) (1.10) (.82)
---------- -------- -------- -------- ------- ----------
Net asset value, end of period......... $ 15.03 $ 14.71 $ 13.66 $ 14.63 $ 12.97 $ 15.03
---------- -------- -------- -------- ------- ----------
---------- -------- -------- -------- ------- ----------
TOTAL RETURN(b)........................ 7.90% 13.32% (3.22)% 22.87% 12.23% 7.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........ $187,557 $227,189 $272,673 $185,259 $60,432 $ 661
Average net assets (000)............... $210,305 $237,983 $270,466 $ 90,254 $45,661 $ 608
Ratios to average net assets:
Expenses, including distribution
fees............................. 2.05% 2.06% 2.02% 2.10% 2.19% 2.05%
Expenses, excluding distribution
fees............................. 1.05% 1.06% 1.02% 1.10% 1.19% 1.05%
Net investment income............... 2.62% 2.83% 2.68% 2.59% 3.43% 2.66%
<CAPTION>
August 1,
1994(a)
through
September 30,
1995 1994
------------- -------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period... $ 13.66 $ 13.93
----- -----
Income from investment operations
Net investment income.................. .39 .06
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions........................ 1.34 (.24)
----- -----
Total from investment operations.... 1.73 (.18)
----- -----
Less distributions
Dividends from net investment income... (.38) (.07)
Distributions in excess of net
investment income................... -- --
Distributions from net realized
gains............................... (.30) (.02)
----- -----
Total distributions................. (.68) (.09)
----- -----
Net asset value, end of period......... $ 14.71 $ 13.66
----- -----
----- -----
TOTAL RETURN(b)........................ 13.32% (1.32)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........ $ 563 $ 226
Average net assets (000)............... $ 410 $ 131
Ratios to average net assets:
Expenses, including distribution
fees............................. 2.06% 2.06%(c)
Expenses, excluding distribution
fees............................. 1.06% 1.06%(c)
Net investment income............... 2.83% 2.46%(c)
</TABLE>
- ---------------
(a) Commencement of offering of Class C shares.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions.
Total return for periods of less than a full year are not annualized.
(c) Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-46
<PAGE>
Independent Auditors' Report GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors
Global Utility Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Global Utility Fund, Inc. as of September 30,
1996, the related statements of operations for the year then ended and of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
September 30, 1996 by correspondence with the custodian and brokers. 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 audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Global Utility Fund,
Inc. as of September 30, 1996, the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
November 14, 1996
Federal Income Tax Information GLOBAL UTILITY FUND, INC.
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days of the
Fund's fiscal year end (September 30, 1996) as to the federal tax status of
dividends paid by the Fund during such fiscal year. Accordingly, we are advising
you that during the fiscal year, the Fund paid distributions for Class A shares
totaling $0.93 per share, comprised of $0.51 per share ordinary income and
short-term capital gains which are taxable as ordinary income and $0.42 per
share long-term capital gains which are taxable as such. The Fund paid
distributions for Class B and Class C shares totaling $0.82 per share, comprised
of $0.40 per share ordinary income and short-term capital gains which are
taxable as ordinary income and $0.42 per share long-term capital gains which are
taxable as such. Further, we wish to advise you that 33% of the ordinary income
dividends paid in 1996 qualified for the corporate dividend received deduction
available to corporate taxpayers.
In January 1997, you will be advised on IRS Form 1099 DIV or substitute 1099 DIV
as to the federal tax status of the distributions received by you in calendar
year 1996.
- --------------------------------------------------------------------------------
B-47
<PAGE>
APPENDIX A
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude, or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Absence of Rating: Where no rating has been assigned or where a rating has
been suspended or withdrawn, it may be for reasons unrelated to the quality of
the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not rated
as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgement to be formed; if a
bond is called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic ratings
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
A-1
<PAGE>
STANDARD & POOR'S
AAA: Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A: Debt rated "A" has a very strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in the highest rated
categories.
BBB: Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C: Debt rated "BB," "B," "CCC," "CC," and "C" are regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of this obligation.
"BB" indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB: Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.
B: Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.
CCC: Debt rated "CCC" has a currently indefinable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The "CCC" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"B" or "B\'96" rating.
CC: The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C: The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
CI: The rating "CI" is reserved for income bonds on which no interest is
being paid.
D: Debt rated "D" is in payment default. The "D" rating is used when
interest payments are not made on the date due even if the applicable grace
period has not expired, unless Standard & Poor's believes that such payments
will be made during such grace period. The "D" rating also will be used upon the
filing of a bankruptcy petition, if debt service payments are jeopardized.
Plus (+) or Minus (\'96): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF PREFERRED STOCK RATINGS
MOODY'S INVESTORS SERVICE, INC.
aaa: considered to be a top-quality preferred stock. This rating indicates
good asset protection and the least risk of dividend impairment within the
universe of preferred stocks.
aa: considered a high-grade preferred stock. This rating indicates that
there is reasonable assurance that earnings and asset protection will remain
relatively well maintained in the foreseeable future.
A-2
<PAGE>
a: considered to be an upper-medium-grade preferred stock. While risks are
judged to be somewhat greater than in the aaa and aa classifications, earnings
and asset protection are, nevertheless, expected to be maintained at adequate
levels.
baa: considered to be medium-grade, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but may be
questionable over any great length of time.
ba: considered to have speculative elements and its future cannot be
considered well assured. Earnings and asset protection may be very moderate and
not well safeguarded during adverse periods. Uncertainty of position
characterizes preferred stocks in this class.
b: generally lacks the characteristics of a desirable investment. Assurance
of dividend payments and maintenance of other terms of the issue over any long
period of time may be small.
caa: likely to be in arrears on dividend payments. This rating designation
does not purport to indicate the future status of payments.
ca: speculative in a high degree and is likely to be in arrears on dividends
with little likelihood of eventual payments.
c: lowest rated class of preferred or preference stock. Issues so rated can
be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification; the modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
STANDARD & POOR'S
AAA: This is the highest rating that may be assigned by Standard & Poor's to
a preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
AA: A preferred stock issue rated "AA" also qualifies as a high-quality
fixed income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated "AAA."
A: An issue rated "A" is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
BBB: An issue rated "BBB" is regarded as backed by an adequate capacity to
pay the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for preferred stock
in this category than for issues in the "A" catagory.
BB, B, CCC: Preferred stock rated "BB," "B," and "CCC" are regarded, on
balance, as predominantly speculative with regard to the issuer's capacity to
pay preferred stock obligations. "BB" indicates the lowest degree of speculation
and "CCC" the highest degree of speculation. While such issues will likely have
some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposure to adverse conditions.
CC: The rating "CC" is reserved for a preferred stock issue in arrears on
dividends or sinking fund payments, but that is currently paying.
C: A preferred stock rated "C" is a non-paying issue.
D: A preferred stock rated "D" is a non-paying issue with the issuer in
default on debt instruments.
NR: indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
Plus (+) or Minus (-): To provide more detailed indications of preferred
stock quality, the ratings from "AA" to "CCC" may be modified by the addition of
a plus or minus sign to show relative standing within the major rating
categories.
A-3
<PAGE>
APPENDIX--HISTORICAL PERFORMANCE DATA
The historical performance data contained in this Appendix relies on data
obtained from statistical services, reports and other services believed by the
Manager to be reliable. The information has not been independently verified by
the Manager.
This chart shows the long-term performance of various asset classes and the
rate of inflation.
Value of $1000.00 Invested on 1/1/26 through 6/30/96
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SMALL-SIZED MID-SIZED LARGE SIZE TREASURY
STOCKS STOCKS STOCKS LONG-TERM BONDS BILLS INFLATION
<S> <C> <C> <C> <C> <C> <C>
Index Index Index Index Index Value
Dec-25 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Jan-26 $1,069.86 $1,004.11 $1,000.00 $1,013.76 $1,003.38 $1,000.00
Feb-26 $1,001.49 $951.38 $961.54 $1,020.16 $1,006.07 $996.28
Mar-26 $894.01 $868.88 $906.28 $1,024.37 $1,009.09 $990.69
Apr-26 $910.02 $901.74 $929.21 $1,032.14 $1,012.54 $1,000.00
May-26 $904.00 $911.61 $945.86 $1,033.60 $1,012.67 $994.41
Jun-26 $938.16 $958.70 $989.11 $1,037.54 $1,016.18 $986.96
Jul-26 $948.66 $975.36 $1,036.48 $1,037.99 $1,018.46 $977.65
Aug-26 $972.96 $992.95 $1,062.23 $1,038.00 $1,021.04 $972.07
Sep-26 $972.91 $992.70 $1,088.99 $1,041.90 $1,023.36 $977.65
Oct-26 $950.83 $958.20 $1,058.11 $1,052.50 $1,026.63 $981.38
Nov-26 $970.56 $993.80 $1,094.79 $1,069.34 $1,029.80 $985.10
Dec-26 $1,002.77 $1,021.68 $1,116.24 $1,077.69 $1,032.66 $985.10
Jan-27 $1,032.42 $1,031.79 $1,094.73 $1,085.75 $1,035.21 $977.65
Feb-27 $1,088.92 $1,084.22 $1,153.56 $1,095.28 $1,037.87 $970.21
Mar-27 $1,029.28 $1,069.51 $1,163.57 $1,123.02 $1,040.94 $964.62
Apr-27 $1,088.30 $1,072.34 $1,186.95 $1,122.47 $1,043.59 $964.62
May-27 $1,168.16 $1,145.53 $1,258.99 $1,134.66 $1,046.73 $972.07
Jun-27 $1,132.77 $1,126.85 $1,250.55 $1,126.84 $1,049.43 $981.38
Jul-27 $1,191.20 $1,200.10 $1,334.37 $1,132.44 $1,052.57 $962.76
Aug-27 $1,169.96 $1,207.15 $1,403.08 $1,141.05 $1,055.47 $957.17
Sep-27 $1,175.52 $1,270.63 $1,466.28 $1,143.10 $1,057.69 $962.76
Oct-27 $1,098.05 $1,229.85 $1,392.71 $1,154.37 $1,060.35 $968.34
Nov-27 $1,186.80 $1,329.15 $1,493.11 $1,165.57 $1,062.56 $966.48
Dec-27 $1,224.35 $1,376.35 $1,534.70 $1,173.91 $1,064.93 $964.62
Jan-28 $1,283.32 $1,388.37 $1,528.62 $1,169.68 $1,067.63 $962.76
Feb-28 $1,253.01 $1,348.14 $1,509.48 $1,176.84 $1,071.15 $953.45
Mar-28 $1,319.48 $1,454.99 $1,675.64 $1,182.19 $1,074.30 $953.45
Apr-28 $1,439.54 $1,544.56 $1,733.45 $1,181.76 $1,076.70 $955.31
May-28 $1,502.57 $1,576.15 $1,767.68 $1,172.65 $1,080.18 $960.90
Jun-28 $1,376.02 $1,490.25 $1,699.63 $1,177.50 $1,083.56 $953.45
Jul-28 $1,384.08 $1,502.63 $1,723.54 $1,151.90 $1,087.05 $953.45
Aug-28 $1,445.23 $1,619.08 $1,861.92 $1,160.71 $1,090.55 $955.31
Sep-28 $1,573.85 $1,706.73 $1,910.10 $1,156.00 $1,093.47 $962.76
Oct-28 $1,617.34 $1,716.54 $1,942.28 $1,174.22 $1,097.93 $960.90
Nov-28 $1,802.87 $1,917.92 $2,193.12 $1,174.61 $1,102.16 $959.03
Dec-28 $1,710.34 $1,940.60 $2,203.96 $1,175.13 $1,102.82 $955.31
Jan-29 $1,716.28 $2,007.86 $2,332.49 $1,164.56 $1,106.61 $953.45
Feb-29 $1,711.77 $2,020.81 $2,327.95 $1,146.29 $1,110.57 $951.58
Mar-29 $1,677.49 $1,952.04 $2,325.23 $1,129.82 $1,114.38 $947.86
Apr-29 $1,728.82 $1,972.60 $2,366.21 $1,160.90 $1,118.35 $944.14
May-29 $1,497.77 $1,816.92 $2,280.47 $1,142.13 $1,123.26 $949.72
Jun-29 $1,577.63 $1,981.21 $2,540.38 $1,154.68 $1,129.09 $953.45
Jul-29 $1,595.54 $2,028.63 $2,659.95 $1,154.65 $1,132.87 $962.76
Aug-29 $1,569.44 $2,110.64 $2,933.50 $1,150.71 $1,137.44 $966.48
Sep-29 $1,424.75 $2,047.13 $2,793.81 $1,153.87 $1,141.44 $964.62
Oct-29 $1,030.36 $1,620.02 $2,242.64 $1,197.95 $1,146.67 $964.62
Nov-29 $875.78 $1,427.38 $1,963.12 $1,226.27 $1,150.97 $962.76
Dec-29 $831.92 $1,413.97 $2,018.49 $1,215.33 $1,155.18 $957.17
Jan-30 $939.50 $1,507.32 $2,147.41 $1,208.42 $1,156.79 $953.45
Feb-30 $999.90 $1,537.67 $2,203.00 $1,223.99 $1,160.22 $949.72
Mar-30 $1,100.57 $1,676.08 $2,381.86 $1,234.19 $1,164.25 $944.14
Apr-30 $1,023.75 $1,605.29 $2,362.91 $1,232.23 $1,166.70 $949.72
May-30 $968.22 $1,552.53 $2,340.13 $1,249.42 $1,169.71 $944.14
Jun-30 $758.30 $1,283.05 $1,959.83 $1,255.77 $1,172.86 $938.55
Jul-30 $781.15 $1,335.97 $2,035.50 $1,260.09 $1,175.19 $925.52
Aug-30 $768.15 $1,325.32 $2,064.29 $1,261.74 $1,176.23 $919.93
Sep-30 $656.08 $1,139.77 $1,799.61 $1,271.03 $1,178.81 $925.52
Oct-30 $584.13 $1,042.35 $1,645.69 $1,275.53 $1,179.83 $919.93
Nov-30 $582.51 $1,024.30 $1,631.12 $1,280.93 $1,181.38 $912.48
Dec-30 $514.57 $922.48 $1,515.95 $1,271.95 $1,183.03 $899.44
Jan-31 $622.80 $1,001.04 $1,592.04 $1,256.51 $1,184.74 $886.41
Feb-31 $782.61 $1,123.38 $1,782.02 $1,267.22 $1,185.23 $873.37
Mar-31 $727.22 $1,045.32 $1,661.76 $1,280.45 $1,186.76 $867.79
Apr-31 $569.88 $906.02 $1,506.44 $1,291.42 $1,187.66 $862.20
May-31 $491.31 $770.91 $1,313.76 $1,310.16 $1,188.70 $852.89
Jun-31 $580.70 $898.07 $1,500.43 $1,310.66 $1,189.60 $843.58
Jul-31 $548.34 $839.20 $1,392.18 $1,305.11 $1,190.30 $841.72
Aug-31 $506.52 $836.83 $1,417.53 $1,306.73 $1,190.71 $839.85
Sep-31 $342.10 $577.49 $996.15 $1,270.05 $1,191.02 $836.13
Oct-31 $368.42 $636.03 $1,085.41 $1,228.13 $1,192.24 $830.54
Nov-31 $331.27 $579.44 $998.82 $1,231.47 $1,194.23 $821.23
Dec-31 $258.55 $494.68 $858.99 $1,204.42 $1,195.72 $813.78
Jan-32 $284.90 $509.01 $835.71 $1,208.49 $1,198.49 $797.02
Feb-32 $293.18 $516.03 $883.38 $1,258.44 $1,201.24 $785.85
Mar-32 $254.74 $457.40 $781.08 $1,256.13 $1,203.20 $782.12
Apr-32 $198.20 $373.85 $625.08 $1,331.97 $1,204.58 $776.54
May-32 $174.55 $276.12 $487.84 $1,306.93 $1,205.31 $765.36
Jun-32 $175.12 $291.66 $486.75 $1,315.43 $1,205.58 $759.78
Jul-32 $236.81 $408.13 $672.44 $1,378.73 $1,205.88 $759.78
Aug-32 $410.77 $622.27 $932.60 $1,379.11 $1,206.28 $750.47
Sep-32 $356.55 $585.06 $900.36 $1,386.98 $1,206.65 $746.74
Oct-32 $293.26 $486.85 $778.90 $1,384.62 $1,206.87 $741.16
Nov-32 $257.27 $458.47 $746.45 $1,389.07 $1,207.09 $737.43
Dec-32 $244.62 $462.38 $788.61 $1,407.27 $1,207.22 $729.98
Jan-33 $242.60 $474.99 $795.48 $1,428.15 $1,207.35 $718.81
Feb-33 $211.60 $412.75 $654.49 $1,391.24 $1,207.03 $707.64
Mar-33 $235.25 $435.84 $677.62 $1,404.72 $1,207.54 $702.05
Apr-33 $353.76 $672.24 $966.05 $1,400.21 $1,208.72 $700.19
May-33 $578.02 $911.85 $1,128.60 $1,442.58 $1,209.24 $702.05
Jun-33 $729.27 $1,055.34 $1,279.63 $1,449.76 $1,209.53 $709.50
Jul-33 $689.13 $937.86 $1,169.38 $1,447.31 $1,209.76 $729.98
Aug-33 $752.83 $1,085.67 $1,310.41 $1,453.70 $1,210.06 $737.43
Sep-33 $632.78 $945.40 $1,163.89 $1,457.05 $1,210.25 $737.43
Oct-33 $554.57 $845.33 $1,064.43 $1,443.79 $1,210.35 $737.43
Nov-33 $590.84 $914.73 $1,184.42 $1,422.24 $1,210.57 $737.43
Dec-33 $594.10 $943.96 $1,214.39 $1,406.22 $1,210.81 $733.71
Jan-34 $825.25 $1,141.21 $1,344.24 $1,442.39 $1,211.38 $737.43
Feb-34 $838.95 $1,125.43 $1,300.92 $1,454.10 $1,211.68 $743.02
Mar-34 $837.96 $1,139.23 $1,300.92 $1,482.74 $1,211.94 $743.02
Apr-34 $858.04 $1,120.16 $1,268.24 $1,501.36 $1,212.01 $741.16
May-34 $748.61 $1,019.94 $1,174.88 $1,521.05 $1,212.09 $743.02
Jun-34 $746.79 $1,047.37 $1,201.78 $1,531.26 $1,212.17 $744.88
Jul-34 $578.09 $880.11 $1,065.80 $1,537.38 $1,212.25 $744.88
Aug-34 $667.46 $947.33 $1,130.88 $1,519.19 $1,212.33 $746.74
Sep-34 $656.33 $943.77 $1,127.17 $1,497.04 $1,212.40 $757.92
Oct-34 $662.68 $927.71 $1,094.96 $1,524.34 $1,212.54 $752.33
Nov-34 $725.51 $1,035.54 $1,198.12 $1,530.01 $1,212.64 $750.47
Dec-34 $738.00 $1,051.25 $1,196.87 $1,547.21 $1,212.78 $748.61
Jan-35 $713.80 $999.67 $1,147.73 $1,575.33 $1,212.94 $759.78
Feb-35 $671.53 $968.33 $1,108.63 $1,589.78 $1,213.15 $765.37
Mar-35 $591.72 $916.92 $1,076.92 $1,596.38 $1,213.30 $763.50
Apr-35 $638.53 $988.91 $1,182.45 $1,608.94 $1,213.46 $770.95
May-35 $636.98 $1,011.22 $1,230.87 $1,599.84 $1,213.61 $767.23
Jun-35 $656.40 $1,078.84 $1,316.95 $1,614.56 $1,213.76 $765.37
Jul-35 $712.53 $1,163.72 $1,428.95 $1,621.95 $1,213.92 $761.64
Aug-35 $751.33 $1,197.17 $1,468.93 $1,600.33 $1,214.08 $761.64
Sep-35 $778.12 $1,227.20 $1,506.56 $1,601.71 $1,214.23 $765.37
Oct-35 $855.43 $1,303.50 $1,623.55 $1,611.45 $1,214.38 $765.37
Nov-35 $976.21 $1,383.13 $1,700.43 $1,613.00 $1,214.67 $769.09
Dec-35 $1,034.63 $1,488.92 $1,767.40 $1,624.33 $1,214.83 $770.95
Jan-36 $1,345.97 $1,601.93 $1,885.84 $1,633.30 $1,214.99 $770.95
Feb-36 $1,427.01 $1,649.04 $1,928.01 $1,646.55 $1,215.13 $767.23
Mar-36 $1,436.40 $1,655.55 $1,979.69 $1,664.06 $1,215.34 $763.50
Apr-36 $1,178.63 $1,493.48 $1,831.08 $1,669.93 $1,215.54 $763.50
May-36 $1,210.71 $1,561.43 $1,930.81 $1,676.69 $1,215.74 $763.50
Jun-36 $1,182.71 $1,556.60 $1,995.17 $1,680.26 $1,216.11 $770.95
Jul-36 $1,285.91 $1,691.43 $2,134.99 $1,690.34 $1,216.27 $774.68
Aug-36 $1,312.97 $1,735.39 $2,167.32 $1,709.09 $1,216.48 $780.26
Sep-36 $1,384.08 $1,775.44 $2,174.10 $1,703.77 $1,216.61 $782.13
Oct-36 $1,472.02 $1,877.39 $2,342.49 $1,704.75 $1,216.85 $780.26
Nov-36 $1,678.15 $1,991.19 $2,373.79 $1,739.74 $1,216.95 $780.26
Dec-36 $1,705.07 $2,031.04 $2,366.92 $1,746.40 $1,216.98 $780.26
Jan-37 $1,921.01 $2,131.18 $2,459.23 $1,744.15 $1,217.12 $785.85
Feb-37 $2,047.32 $2,189.11 $2,506.12 $1,759.21 $1,217.33 $787.71
Mar-37 $2,071.81 $2,197.54 $2,486.73 $1,686.82 $1,217.50 $793.30
Apr-37 $1,723.91 $2,007.84 $2,285.52 $1,693.38 $1,217.92 $797.02
May-37 $1,653.55 $1,967.76 $2,279.95 $1,702.30 $1,218.69 $800.75
Jun-37 $1,457.96 $1,853.17 $2,164.97 $1,699.29 $1,219.09 $802.61
Jul-37 $1,638.04 $2,016.16 $2,391.31 $1,722.77 $1,219.48 $806.33
Aug-37 $1,517.45 $1,918.33 $2,275.83 $1,704.81 $1,219.78 $808.20
Sep-37 $1,132.24 $1,575.54 $1,956.59 $1,712.45 $1,220.23 $815.65
Oct-37 $1,008.49 $1,417.30 $1,764.63 $1,719.70 $1,220.43 $811.92
Nov-37 $861.98 $1,271.11 $1,611.86 $1,736.14 $1,220.68 $806.33
Dec-37 $716.00 $1,176.66 $1,537.87 $1,750.45 $1,220.73 $804.47
Jan-38 $754.25 $1,199.89 $1,561.19 $1,760.50 $1,220.77 $793.30
Feb-38 $780.10 $1,275.59 $1,666.35 $1,769.61 $1,220.83 $785.85
Mar-38 $499.26 $926.87 $1,251.96 $1,763.13 $1,220.75 $785.85
Apr-38 $637.87 $1,102.88 $1,433.13 $1,800.11 $1,220.90 $789.57
May-38 $583.68 $1,030.97 $1,385.85 $1,808.08 $1,220.92 $785.85
Jun-38 $787.83 $1,324.78 $1,732.69 $1,808.89 $1,220.93 $785.85
Jul-38 $905.93 $1,478.37 $1,861.59 $1,816.71 $1,220.87 $787.71
Aug-38 $815.22 $1,411.60 $1,819.55 $1,816.71 $1,220.92 $785.85
Sep-38 $802.41 $1,395.86 $1,849.73 $1,820.80 $1,221.14 $785.85
Oct-38 $973.76 $1,585.76 $1,993.29 $1,836.60 $1,221.27 $782.13
Nov-38 $906.72 $1,548.89 $1,938.81 $1,832.58 $1,220.51 $780.26
Dec-38 $950.83 $1,620.68 $2,016.48 $1,847.29 $1,220.53 $782.13
Jan-39 $870.16 $1,492.03 $1,880.63 $1,858.17 $1,220.47 $778.40
Feb-39 $879.43 $1,563.57 $1,954.01 $1,873.01 $1,220.58 $774.68
Mar-39 $662.57 $1,298.19 $1,692.45 $1,896.44 $1,220.46 $772.82
Apr-39 $671.95 $1,298.44 $1,687.83 $1,918.77 $1,220.42 $770.95
May-39 $745.03 $1,417.67 $1,811.48 $1,951.49 $1,220.49 $770.95
Jun-39 $667.38 $1,316.06 $1,700.61 $1,946.22 $1,220.64 $770.95
Jul-39 $836.57 $1,494.57 $1,888.52 $1,968.27 $1,220.65 $770.95
Aug-39 $703.56 $1,335.06 $1,766.17 $1,928.77 $1,220.59 $770.95
Sep-39 $1,065.52 $1,655.55 $2,061.59 $1,823.69 $1,220.71 $785.85
Oct-39 $1,023.24 $1,663.91 $2,036.25 $1,898.42 $1,220.73 $782.13
Nov-39 $915.48 $1,552.63 $1,955.31 $1,929.12 $1,220.76 $782.13
Dec-39 $954.13 $1,606.86 $2,008.20 $1,957.02 $1,220.78 $778.40
Jan-40 $955.02 $1,572.21 $1,940.67 $1,953.71 $1,220.81 $776.54
Feb-40 $1,033.41 $1,609.62 $1,966.44 $1,958.96 $1,220.83 $782.13
Mar-40 $1,098.70 $1,652.84 $1,990.75 $1,993.58 $1,220.83 $780.26
Apr-40 $1,170.59 $1,668.63 $1,985.88 $1,986.60 $1,220.84 $780.26
May-40 $740.55 $1,224.37 $1,531.36 $1,927.18 $1,220.65 $782.13
Jun-40 $818.35 $1,310.25 $1,655.25 $1,976.91 $1,220.70 $783.99
Jul-40 $837.28 $1,367.01 $1,711.65 $1,987.17 $1,220.84 $782.13
Aug-40 $858.63 $1,397.02 $1,771.53 $1,992.73 $1,220.77 $780.26
Sep-40 $876.89 $1,439.34 $1,793.34 $2,014.71 $1,220.79 $782.13
Oct-40 $924.65 $1,533.39 $1,869.04 $2,020.99 $1,220.81 $782.13
Nov-40 $947.28 $1,520.61 $1,810.00 $2,062.35 $1,220.83 $782.13
Dec-40 $904.94 $1,514.61 $1,811.71 $2,076.14 $1,220.84 $785.85
Jan-41 $907.19 $1,447.98 $1,727.80 $2,034.49 $1,220.76 $785.85
Feb-41 $881.02 $1,425.43 $1,717.51 $2,038.60 $1,220.67 $785.85
Mar-41 $909.16 $1,434.28 $1,729.63 $2,058.13 $1,220.81 $789.58
Apr-41 $848.29 $1,350.23 $1,623.69 $2,084.74 $1,220.72 $797.02
May-41 $852.07 $1,373.34 $1,653.34 $2,090.45 $1,220.78 $802.61
Jun-41 $916.24 $1,455.31 $1,748.83 $2,104.20 $1,220.83 $817.51
Jul-41 $1,114.63 $1,597.06 $1,850.03 $2,108.73 $1,221.18 $821.23
Aug-41 $1,107.91 $1,599.49 $1,851.81 $2,112.53 $1,221.26 $828.68
Sep-41 $1,055.92 $1,582.88 $1,839.23 $2,110.08 $1,221.37 $843.58
Oct-41 $984.96 $1,492.20 $1,718.42 $2,139.64 $1,221.42 $852.89
Nov-41 $936.23 $1,466.01 $1,669.58 $2,133.35 $1,221.48 $860.34
Dec-41 $823.50 $1,386.79 $1,601.69 $2,095.50 $1,221.57 $862.20
Jan-42 $979.47 $1,442.65 $1,627.50 $2,110.03 $1,221.79 $873.38
Feb-42 $972.34 $1,419.37 $1,601.63 $2,112.43 $1,221.92 $880.83
Mar-42 $903.37 $1,350.22 $1,497.22 $2,131.79 $1,222.06 $892.00
Apr-42 $871.51 $1,277.73 $1,437.41 $2,125.56 $1,222.14 $897.58
May-42 $868.75 $1,322.89 $1,551.87 $2,141.55 $1,222.45 $906.90
Jun-42 $897.92 $1,350.12 $1,586.15 $2,142.18 $1,222.76 $908.76
Jul-42 $964.05 $1,409.67 $1,639.66 $2,145.95 $1,223.06 $912.48
Aug-42 $995.40 $1,443.18 $1,666.47 $2,154.01 $1,223.42 $918.07
Sep-42 $1,086.22 $1,486.91 $1,714.80 $2,154.71 $1,223.76 $919.93
Oct-42 $1,204.28 $1,614.53 $1,831.06 $2,159.94 $1,224.15 $929.24
Nov-42 $1,142.78 $1,590.13 $1,827.17 $2,152.38 $1,224.50 $934.83
Dec-42 $1,190.01 $1,667.32 $1,927.48 $2,162.94 $1,224.85 $942.28
Jan-43 $1,443.72 $1,822.18 $2,069.53 $2,170.02 $1,225.21 $942.28
Feb-43 $1,722.51 $1,971.77 $2,190.10 $2,168.83 $1,225.53 $944.14
Mar-43 $1,971.34 $2,161.08 $2,309.56 $2,170.84 $1,225.92 $959.03
Apr-43 $2,155.27 $2,203.45 $2,317.54 $2,181.30 $1,226.28 $970.21
May-43 $2,404.41 $2,339.50 $2,445.51 $2,192.29 $1,226.58 $977.66
Jun-43 $2,384.44 $2,373.03 $2,500.04 $2,196.31 $1,226.96 $975.79
Jul-43 $2,126.21 $2,224.56 $2,368.46 $2,196.14 $1,227.31 $968.35
Aug-43 $2,125.68 $2,257.23 $2,409.01 $2,200.68 $1,227.67 $964.62
Sep-43 $2,216.62 $2,320.33 $2,472.30 $2,203.08 $1,228.02 $968.35
Oct-43 $2,243.89 $2,302.65 $2,445.69 $2,204.17 $1,228.37 $972.07
Nov-43 $1,994.21 $2,123.66 $2,285.66 $2,204.06 $1,228.73 $970.21
Dec-43 $2,241.67 $2,312.41 $2,426.69 $2,208.02 $1,229.10 $972.07
Jan-44 $2,385.26 $2,377.54 $2,468.28 $2,212.67 $1,229.46 $970.21
Feb-44 $2,455.60 $2,402.51 $2,478.70 $2,219.75 $1,229.80 $968.34
Mar-44 $2,639.58 $2,478.52 $2,526.93 $2,224.38 $1,230.11 $968.34
Apr-44 $2,499.03 $2,404.83 $2,501.70 $2,227.35 $1,230.45 $973.93
May-44 $2,683.84 $2,549.56 $2,628.16 $2,233.54 $1,230.76 $977.66
Jun-44 $3,055.40 $2,752.95 $2,770.74 $2,235.29 $1,231.11 $979.52
Jul-44 $2,964.18 $2,715.81 $2,717.38 $2,243.40 $1,231.47 $985.10
Aug-44 $3,058.58 $2,780.75 $2,760.14 $2,249.44 $1,231.84 $988.83
Sep-44 $3,052.52 $2,778.43 $2,757.98 $2,252.60 $1,232.13 $988.83
Oct-44 $3,019.54 $2,773.27 $2,764.46 $2,255.30 $1,232.51 $988.83
Nov-44 $3,170.31 $2,833.12 $2,801.23 $2,260.63 $1,232.86 $988.83
Dec-44 $3,445.94 $3,000.86 $2,906.03 $2,270.17 $1,233.16 $992.55
Jan-45 $3,612.14 $3,097.63 $2,951.98 $2,298.91 $1,233.48 $992.55
Feb-45 $3,976.63 $3,344.41 $3,153.60 $2,316.53 $1,233.75 $990.69
Mar-45 $3,634.21 $3,180.96 $3,014.67 $2,321.29 $1,234.06 $990.69
Apr-45 $4,054.78 $3,469.09 $3,286.52 $2,358.49 $1,234.41 $992.55
May-45 $4,257.44 $3,546.04 $3,350.74 $2,371.76 $1,234.78 $1,000.00
Jun-45 $4,621.49 $3,632.16 $3,348.51 $2,411.79 $1,235.08 $1,009.31
Jul-45 $4,364.40 $3,513.68 $3,288.08 $2,391.07 $1,235.45 $1,011.18
Aug-45 $4,607.31 $3,745.37 $3,498.91 $2,397.26 $1,235.82 $1,011.18
Sep-45 $4,920.18 $3,986.30 $3,652.31 $2,410.26 $1,236.17 $1,007.45
Oct-45 $5,264.92 $4,198.49 $3,769.84 $2,435.40 $1,236.55 $1,007.45
Nov-45 $5,882.19 $4,627.31 $3,919.27 $2,465.95 $1,236.85 $1,011.18
Dec-45 $5,982.52 $4,704.74 $3,964.87 $2,513.86 $1,237.22 $1,014.90
Jan-46 $6,916.84 $5,047.31 $4,248.08 $2,520.20 $1,237.60 $1,014.90
Feb-46 $6,476.45 $4,700.01 $3,975.85 $2,528.22 $1,237.93 $1,011.18
Mar-46 $6,653.45 $5,042.66 $4,166.82 $2,530.79 $1,238.29 $1,018.62
Apr-46 $7,116.59 $5,262.53 $4,330.45 $2,496.54 $1,238.66 $1,024.21
May-46 $7,537.28 $5,558.22 $4,455.11 $2,493.47 $1,239.03 $1,029.80
Jun-46 $7,188.73 $5,254.09 $4,290.19 $2,510.94 $1,239.36 $1,040.97
Jul-46 $6,808.07 $5,041.08 $4,187.76 $2,500.92 $1,239.76 $1,102.42
Aug-46 $6,230.35 $4,678.93 $3,905.62 $2,473.03 $1,240.12 $1,126.63
Sep-46 $5,231.83 $4,077.61 $3,516.23 $2,470.71 $1,240.49 $1,139.67
Oct-46 $5,170.06 $4,023.43 $3,495.08 $2,488.94 $1,240.86 $1,162.01
Nov-46 $5,097.11 $4,026.05 $3,485.66 $2,475.47 $1,241.22 $1,189.95
Dec-46 $5,287.04 $4,246.17 $3,644.85 $2,511.30 $1,241.59 $1,199.26
Jan-47 $5,509.44 $4,311.84 $3,737.76 $2,509.75 $1,241.96 $1,199.26
Feb-47 $5,486.94 $4,280.18 $3,709.12 $2,515.02 $1,242.30 $1,197.39
Mar-47 $5,302.59 $4,190.09 $3,653.83 $2,520.00 $1,242.67 $1,223.46
Apr-47 $4,755.84 $3,878.37 $3,521.36 $2,510.75 $1,243.03 $1,223.46
May-47 $4,502.03 $3,758.94 $3,526.19 $2,519.14 $1,243.38 $1,219.74
Jun-47 $4,750.37 $3,993.12 $3,721.41 $2,521.71 $1,243.76 $1,229.05
Jul-47 $5,125.25 $4,235.82 $3,863.32 $2,537.47 $1,244.13 $1,240.23
Aug-47 $5,106.30 $4,177.01 $3,784.87 $2,558.11 $1,244.47 $1,253.26
Sep-47 $5,165.08 $4,196.73 $3,742.87 $2,546.98 $1,245.28 $1,283.06
Oct-47 $5,310.95 $4,302.58 $3,832.05 $2,537.45 $1,246.08 $1,283.06
Nov-47 $5,150.28 $4,185.73 $3,764.99 $2,493.28 $1,246.86 $1,290.51
Dec-47 $5,335.41 $4,300.31 $3,852.90 $2,445.43 $1,247.84 $1,307.27
Jan-48 $5,253.50 $4,206.60 $3,706.85 $2,450.38 $1,248.75 $1,322.16
Feb-48 $4,842.33 $3,984.74 $3,563.01 $2,461.76 $1,249.65 $1,310.99
Mar-48 $5,319.64 $4,365.28 $3,845.51 $2,470.18 $1,250.76 $1,307.27
Apr-48 $5,515.15 $4,568.31 $3,957.72 $2,481.22 $1,251.78 $1,325.89
May-48 $6,099.32 $4,928.66 $4,305.42 $2,516.26 $1,252.73 $1,335.20
Jun-48 $6,128.48 $4,852.33 $4,328.64 $2,495.12 $1,253.87 $1,344.51
Jul-48 $5,774.14 $4,614.14 $4,108.84 $2,489.83 $1,254.89 $1,361.27
Aug-48 $5,777.66 $4,637.96 $4,173.65 $2,490.18 $1,255.97 $1,366.86
Sep-48 $5,473.89 $4,436.77 $4,058.66 $2,493.66 $1,256.42 $1,366.86
Oct-48 $5,828.11 $4,680.25 $4,346.88 $2,495.51 $1,256.92 $1,361.27
Nov-48 $5,177.41 $4,197.64 $3,929.01 $2,514.42 $1,257.41 $1,351.96
Dec-48 $5,222.73 $4,303.69 $4,064.86 $2,528.54 $1,257.97 $1,342.65
Jan-49 $5,317.90 $4,363.02 $4,080.90 $2,549.21 $1,259.17 $1,340.78
Feb-49 $5,062.01 $4,234.22 $3,960.25 $2,561.66 $1,260.28 $1,325.89
Mar-49 $5,380.23 $4,459.50 $4,090.27 $2,580.74 $1,261.51 $1,329.61
Apr-49 $5,199.36 $4,316.72 $4,016.94 $2,583.71 $1,262.67 $1,331.47
May-49 $4,906.05 $4,195.58 $3,913.38 $2,588.73 $1,263.95 $1,329.61
Jun-49 $4,858.85 $4,172.30 $3,918.90 $2,631.98 $1,265.16 $1,331.47
Jul-49 $5,184.79 $4,435.85 $4,173.51 $2,640.78 $1,266.26 $1,322.16
Aug-49 $5,317.75 $4,534.47 $4,265.08 $2,670.12 $1,267.41 $1,325.89
Sep-49 $5,577.93 $4,736.17 $4,377.18 $2,667.08 $1,268.50 $1,331.47
Oct-49 $5,841.35 $4,871.87 $4,526.08 $2,672.09 $1,269.64 $1,324.03
Nov-49 $5,850.62 $4,966.59 $4,605.09 $2,677.71 $1,270.70 $1,325.89
Dec-49 $6,254.13 $5,281.43 $4,828.75 $2,691.60 $1,271.84 $1,318.44
Jan-50 $6,561.56 $5,432.96 $4,923.82 $2,675.13 $1,273.02 $1,312.85
Feb-50 $6,706.48 $5,522.59 $5,022.01 $2,680.79 $1,274.10 $1,309.13
Mar-50 $6,681.57 $5,523.15 $5,057.01 $2,682.99 $1,275.32 $1,314.71
Apr-50 $6,956.41 $5,747.29 $5,302.69 $2,691.04 $1,276.41 $1,316.58
May-50 $7,133.70 $5,902.94 $5,572.67 $2,699.95 $1,277.73 $1,322.16
Jun-50 $6,579.50 $5,475.03 $5,267.03 $2,693.20 $1,278.97 $1,329.61
Jul-50 $6,968.59 $5,665.12 $5,329.55 $2,708.14 $1,280.23 $1,342.65
Aug-50 $7,337.80 $5,913.12 $5,565.56 $2,711.92 $1,281.47 $1,353.82
Sep-50 $7,720.24 $6,278.31 $5,894.90 $2,692.29 $1,282.77 $1,363.13
Oct-50 $7,674.87 $6,203.99 $5,949.46 $2,679.44 $1,284.26 $1,370.58
Nov-50 $7,922.34 $6,425.10 $6,049.99 $2,688.83 $1,285.62 $1,376.17
Dec-50 $8,677.42 $6,879.51 $6,360.08 $2,693.19 $1,287.04 $1,394.79
Jan-51 $9,398.03 $7,391.97 $6,765.18 $2,708.76 $1,288.66 $1,417.13
Feb-51 $9,455.16 $7,472.68 $6,871.38 $2,688.75 $1,290.01 $1,433.89
Mar-51 $9,003.91 $7,227.83 $6,764.21 $2,646.45 $1,291.39 $1,439.48
Apr-51 $9,334.12 $7,553.25 $7,108.74 $2,629.91 $1,293.05 $1,441.34
May-51 $9,025.61 $7,398.51 $6,896.40 $2,611.74 $1,294.66 $1,446.93
Jun-51 $8,548.47 $7,070.06 $6,739.37 $2,595.65 $1,296.16 $1,445.07
Jul-51 $8,867.34 $7,574.71 $7,218.46 $2,631.56 $1,297.91 $1,446.93
Aug-51 $9,403.43 $7,869.24 $7,563.27 $2,657.50 $1,299.64 $1,446.93
Sep-51 $9,605.66 $8,050.96 $7,573.02 $2,636.37 $1,301.22 $1,456.24
Oct-51 $9,392.15 $7,863.88 $7,494.88 $2,639.06 $1,303.25 $1,463.69
Nov-51 $9,314.04 $8,018.98 $7,566.75 $2,603.17 $1,304.65 $1,471.14
Dec-51 $9,354.57 $8,166.06 $7,887.55 $2,587.32 $1,306.26 $1,476.72
Jan-52 $9,533.32 $8,293.08 $8,030.23 $2,594.61 $1,308.28 $1,476.72
Feb-52 $9,247.79 $8,140.34 $7,804.03 $2,598.23 $1,309.78 $1,467.41
Mar-52 $9,410.00 $8,437.24 $8,196.58 $2,626.99 $1,311.19 $1,467.41
Apr-52 $8,921.53 $8,032.54 $7,866.97 $2,671.84 $1,312.72 $1,473.00
May-52 $8,949.87 $8,253.96 $8,136.85 $2,662.89 $1,314.44 $1,474.86
Jun-52 $9,193.01 $8,535.68 $8,535.84 $2,663.69 $1,316.39 $1,478.59
Jul-52 $9,296.25 $8,657.79 $8,703.41 $2,658.47 $1,318.38 $1,489.76
Aug-52 $9,291.10 $8,635.01 $8,641.73 $2,639.88 $1,320.31 $1,491.62
Sep-52 $9,141.68 $8,480.39 $8,489.82 $2,605.57 $1,322.47 $1,489.76
Oct-52 $9,047.49 $8,412.38 $8,507.11 $2,644.06 $1,324.31 $1,491.62
Nov-52 $9,485.88 $8,879.80 $8,992.83 $2,639.99 $1,325.70 $1,491.62
Dec-52 $9,637.73 $9,128.97 $9,336.29 $2,617.33 $1,327.89 $1,489.76
Jan-53 $10,031.94 $9,251.10 $9,290.61 $2,620.42 $1,330.04 $1,486.04
Feb-53 $10,301.71 $9,314.08 $9,192.00 $2,597.67 $1,331.90 $1,478.59
Mar-53 $10,232.76 $9,222.82 $8,996.79 $2,574.78 $1,334.35 $1,482.31
Apr-53 $9,938.64 $8,993.10 $8,783.34 $2,547.72 $1,336.52 $1,484.17
May-53 $10,079.26 $9,025.92 $8,851.13 $2,510.14 $1,338.82 $1,487.90
Jun-53 $9,589.21 $8,783.14 $8,732.10 $2,566.02 $1,341.28 $1,493.48
Jul-53 $9,734.91 $8,926.88 $8,970.85 $2,576.11 $1,343.23 $1,497.21
Aug-53 $9,123.38 $8,492.99 $8,521.40 $2,574.18 $1,345.47 $1,500.93
Sep-53 $8,884.04 $8,454.98 $8,550.64 $2,651.23 $1,347.65 $1,502.80
Oct-53 $9,143.04 $8,818.08 $9,012.04 $2,670.95 $1,349.34 $1,506.52
Nov-53 $9,258.36 $9,055.16 $9,195.66 $2,657.75 $1,350.38 $1,500.93
Dec-53 $9,012.51 $9,031.92 $9,243.94 $2,712.53 $1,352.10 $1,499.07
Jan-54 $9,694.17 $9,614.79 $9,739.48 $2,736.75 $1,353.58 $1,502.80
Feb-54 $9,785.62 $9,808.39 $9,847.78 $2,802.33 $1,354.54 $1,500.93
Mar-54 $9,964.71 $10,152.14 $10,167.88 $2,818.67 $1,355.59 $1,499.07
Apr-54 $10,104.46 $10,387.65 $10,692.50 $2,847.92 $1,356.80 $1,495.35
May-54 $10,560.58 $10,843.02 $11,138.97 $2,823.14 $1,357.49 $1,500.93
Jun-54 $10,651.22 $11,023.48 $11,173.31 $2,869.05 $1,358.29 $1,502.80
Jul-54 $11,511.62 $11,728.34 $11,831.24 $2,907.62 $1,358.98 $1,502.80
Aug-54 $11,528.22 $11,545.73 $11,505.57 $2,897.16 $1,359.66 $1,500.93
Sep-54 $12,000.47 $12,081.24 $12,485.26 $2,894.35 $1,360.84 $1,497.21
Oct-54 $12,082.27 $12,036.58 $12,276.59 $2,896.16 $1,361.79 $1,493.49
Nov-54 $13,023.69 $13,216.38 $13,392.65 $2,888.95 $1,362.65 $1,495.35
Dec-54 $14,472.54 $14,096.06 $14,108.43 $2,907.48 $1,363.78 $1,491.62
Jan-55 $14,763.65 $14,230.58 $14,386.83 $2,837.38 $1,364.89 $1,491.62
Feb-55 $15,471.44 $14,784.93 $14,528.23 $2,815.17 $1,366.05 $1,491.62
Mar-55 $15,602.39 $14,723.67 $14,484.76 $2,839.75 $1,367.40 $1,491.62
Apr-55 $15,836.67 $15,077.00 $15,058.92 $2,839.99 $1,368.83 $1,491.62
May-55 $15,959.95 $15,192.07 $15,142.22 $2,860.69 $1,370.73 $1,491.62
Jun-55 $16,428.16 $15,765.27 $16,416.40 $2,838.92 $1,372.13 $1,491.62
Jul-55 $16,532.97 $15,811.24 $17,436.68 $2,809.88 $1,373.50 $1,497.21
Aug-55 $16,487.00 $15,967.76 $17,392.60 $2,811.03 $1,375.67 $1,493.48
Sep-55 $16,667.25 $15,726.37 $17,618.16 $2,831.54 $1,377.90 $1,499.07
Oct-55 $16,384.45 $15,424.13 $17,117.89 $2,872.35 $1,380.40 $1,499.07
Nov-55 $17,151.90 $16,408.97 $18,532.93 $2,859.43 $1,382.75 $1,500.93
Dec-55 $17,430.84 $16,747.90 $18,561.43 $2,869.90 $1,385.25 $1,497.21
Jan-56 $17,348.40 $16,232.48 $17,916.59 $2,893.75 $1,388.30 $1,495.35
Feb-56 $17,830.35 $16,832.65 $18,656.63 $2,893.11 $1,390.95 $1,495.35
Mar-56 $18,598.07 $17,749.00 $19,981.61 $2,850.03 $1,393.06 $1,497.21
Apr-56 $18,685.06 $17,812.91 $19,973.36 $2,817.86 $1,395.64 $1,499.07
May-56 $17,941.88 $17,171.26 $18,788.50 $2,881.37 $1,398.85 $1,506.52
Jun-56 $18,041.87 $17,685.33 $19,557.49 $2,889.22 $1,401.62 $1,515.83
Jul-56 $18,552.33 $18,497.56 $20,594.29 $2,828.95 $1,404.65 $1,527.00
Aug-56 $18,303.24 $18,046.94 $19,918.80 $2,776.19 $1,406.98 $1,525.14
Sep-56 $17,826.52 $17,334.29 $19,042.55 $2,789.95 $1,409.57 $1,527.00
Oct-56 $18,012.73 $17,472.01 $19,168.52 $2,774.77 $1,413.06 $1,536.31
Nov-56 $18,108.43 $17,699.20 $19,071.79 $2,758.84 $1,415.95 $1,536.31
Dec-56 $18,177.39 $18,117.87 $19,778.31 $2,709.57 $1,419.31 $1,540.04
Jan-57 $18,606.52 $17,948.81 $18,985.81 $2,803.25 $1,423.10 $1,541.90
Feb-57 $18,234.26 $17,605.52 $18,484.85 $2,810.27 $1,426.50 $1,547.49
Mar-57 $18,539.52 $17,988.55 $18,882.24 $2,803.52 $1,429.79 $1,551.21
Apr-57 $18,999.99 $18,558.99 $19,614.25 $2,741.42 $1,433.39 $1,556.80
May-57 $19,143.25 $19,011.64 $20,471.88 $2,735.17 $1,437.06 $1,560.52
Jun-57 $19,283.36 $18,759.35 $20,480.52 $2,685.83 $1,440.52 $1,569.83
Jul-57 $19,166.90 $18,824.43 $20,748.57 $2,674.85 $1,444.78 $1,577.28
Aug-57 $18,427.37 $17,718.59 $19,700.54 $2,675.32 $1,448.42 $1,579.14
Sep-57 $17,594.67 $16,833.21 $18,515.55 $2,695.66 $1,452.14 $1,581.01
Oct-57 $16,130.60 $15,935.43 $17,956.86 $2,682.13 $1,456.34 $1,581.01
Nov-57 $16,313.52 $16,436.53 $18,372.33 $2,825.04 $1,460.37 $1,586.59
Dec-57 $15,528.92 $15,797.84 $17,645.72 $2,911.66 $1,463.87 $1,586.59
Jan-58 $17,244.89 $17,232.73 $18,431.15 $2,887.09 $1,467.92 $1,595.91
Feb-58 $16,951.71 $17,072.29 $18,170.37 $2,916.09 $1,469.69 $1,597.77
Mar-58 $17,750.17 $17,748.51 $18,766.56 $2,945.87 $1,471.08 $1,608.94
Apr-58 $18,417.61 $18,230.88 $19,399.53 $3,000.77 $1,472.27 $1,612.67
May-58 $19,131.20 $18,883.14 $19,810.40 $3,001.03 $1,473.88 $1,612.67
Jun-58 $19,751.58 $19,466.06 $20,363.05 $2,953.10 $1,474.32 $1,614.53
Jul-58 $20,722.39 $20,452.56 $21,276.78 $2,870.98 $1,475.30 $1,616.39
Aug-58 $21,610.12 $21,045.51 $21,650.99 $2,745.94 $1,475.97 $1,614.53
Sep-58 $22,729.50 $22,049.97 $22,734.67 $2,713.82 $1,478.78 $1,614.53
Oct-58 $23,654.71 $22,740.22 $23,347.78 $2,751.40 $1,481.50 $1,614.53
Nov-58 $24,828.29 $23,702.15 $24,011.86 $2,784.52 $1,483.11 $1,616.39
Dec-58 $25,605.12 $24,646.97 $25,297.55 $2,734.23 $1,486.43 $1,614.53
Jan-59 $27,076.41 $25,315.15 $25,430.44 $2,712.28 $1,489.48 $1,616.39
Feb-59 $27,875.19 $26,097.69 $25,554.33 $2,744.12 $1,492.28 $1,614.53
Mar-59 $27,950.57 $26,298.43 $25,605.06 $2,748.69 $1,495.53 $1,614.53
Apr-59 $28,276.78 $27,158.99 $26,635.00 $2,716.58 $1,498.51 $1,616.39
May-59 $28,315.32 $27,464.48 $27,273.23 $2,715.09 $1,501.79 $1,618.25
Jun-59 $28,196.14 $27,631.22 $27,212.81 $2,717.93 $1,505.47 $1,625.70
Jul-59 $29,118.49 $28,420.42 $28,199.50 $2,734.22 $1,509.27 $1,629.42
Aug-59 $28,862.77 $27,987.43 $27,910.57 $2,722.96 $1,512.08 $1,627.56
Sep-59 $27,618.88 $26,650.95 $26,674.27 $2,707.57 $1,516.74 $1,633.15
Oct-59 $28,245.19 $27,355.76 $27,016.60 $2,748.29 $1,521.31 $1,638.73
Nov-59 $28,873.02 $27,996.95 $27,519.17 $2,715.67 $1,525.20 $1,638.73
Dec-59 $29,803.92 $28,267.43 $28,321.90 $2,672.51 $1,530.31 $1,638.73
Jan-60 $28,890.64 $26,746.13 $26,340.44 $2,702.40 $1,535.39 $1,636.87
Feb-60 $29,034.11 $27,007.66 $26,728.86 $2,757.50 $1,539.78 $1,638.74
Mar-60 $28,119.65 $26,463.78 $26,400.23 $2,835.27 $1,545.12 $1,638.74
Apr-60 $27,594.12 $26,124.25 $25,975.66 $2,787.13 $1,548.13 $1,648.05
May-60 $28,158.42 $26,938.70 $26,821.30 $2,829.42 $1,552.37 $1,648.05
Jun-60 $29,115.98 $27,607.05 $27,388.19 $2,878.25 $1,556.07 $1,651.77
Jul-60 $28,564.61 $27,199.04 $26,748.24 $2,984.04 $1,558.14 $1,651.77
Aug-60 $30,063.51 $28,019.96 $27,596.32 $2,963.96 $1,560.72 $1,651.77
Sep-60 $27,844.01 $26,488.59 $25,968.44 $2,986.26 $1,563.18 $1,653.63
Oct-60 $26,728.13 $25,998.05 $25,949.04 $2,977.87 $1,566.56 $1,661.08
Nov-60 $27,896.26 $27,593.75 $27,154.40 $2,958.21 $1,568.62 $1,662.94
Dec-60 $28,822.97 $28,858.35 $28,454.91 $3,040.75 $1,571.06 $1,662.94
Jan-61 $31,460.21 $31,170.31 $30,291.19 $3,008.21 $1,574.00 $1,662.94
Feb-61 $33,313.91 $32,876.41 $31,257.08 $3,068.39 $1,576.26 $1,662.94
Mar-61 $35,375.95 $34,440.64 $32,099.62 $3,056.89 $1,579.47 $1,662.94
Apr-61 $35,825.15 $34,448.39 $32,262.43 $3,092.08 $1,582.23 $1,662.94
May-61 $37,355.42 $35,742.20 $33,033.05 $3,077.89 $1,585.04 $1,662.94
Jun-61 $35,325.75 $34,344.89 $32,124.84 $3,054.89 $1,588.23 $1,664.81
Jul-61 $35,436.32 $34,885.07 $33,223.15 $3,065.47 $1,591.12 $1,672.25
Aug-61 $35,898.16 $36,051.52 $34,029.35 $3,053.91 $1,593.37 $1,670.39
Sep-61 $34,682.36 $35,143.06 $33,404.46 $3,093.35 $1,596.05 $1,674.12
Oct-61 $35,589.90 $36,202.80 $34,400.65 $3,115.35 $1,599.01 $1,674.12
Nov-61 $37,771.88 $37,603.31 $35,939.70 $3,109.06 $1,601.48 $1,674.12
Dec-61 $38,071.63 $37,242.24 $36,106.00 $3,070.35 $1,604.47 $1,674.12
Jan-62 $38,590.93 $36,434.94 $34,783.87 $3,066.02 $1,608.33 $1,674.12
Feb-62 $39,314.32 $36,985.43 $35,511.48 $3,097.60 $1,611.58 $1,677.84
Mar-62 $39,537.39 $36,644.98 $35,349.05 $3,176.06 $1,614.86 $1,681.57
Apr-62 $36,463.91 $34,305.05 $33,204.21 $3,202.11 $1,618.49 $1,685.29
May-62 $32,785.54 $30,881.79 $30,511.84 $3,216.76 $1,622.38 $1,685.29
Jun-62 $30,212.73 $28,212.06 $28,060.86 $3,192.48 $1,625.55 $1,685.29
Jul-62 $32,517.57 $29,842.49 $29,890.57 $3,157.71 $1,629.88 $1,689.01
Aug-62 $33,457.94 $30,590.13 $30,511.69 $3,216.80 $1,633.70 $1,689.01
Sep-62 $31,253.77 $28,948.54 $29,092.41 $3,236.36 $1,637.07 $1,698.33
Oct-62 $30,087.19 $28,641.60 $29,278.54 $3,263.46 $1,641.25 $1,696.46
Nov-62 $33,841.80 $32,374.78 $32,459.19 $3,270.37 $1,644.53 $1,696.46
Dec-62 $33,540.10 $32,500.33 $32,954.48 $3,281.79 $1,648.33 $1,694.60
Jan-63 $36,579.94 $34,507.58 $34,620.50 $3,281.46 $1,652.46 $1,696.46
Feb-63 $36,705.11 $33,900.56 $33,794.21 $3,283.94 $1,656.21 $1,698.33
Mar-63 $37,251.07 $34,648.33 $35,045.27 $3,286.78 $1,660.00 $1,700.19
Apr-63 $38,412.18 $36,161.39 $36,798.34 $3,282.90 $1,664.21 $1,700.19
May-63 $40,088.18 $37,086.69 $37,510.06 $3,290.30 $1,668.25 $1,700.19
Jun-63 $39,613.50 $36,408.30 $36,805.43 $3,296.66 $1,672.02 $1,707.64
Jul-63 $39,743.63 $35,854.68 $36,725.86 $3,306.87 $1,676.50 $1,715.09
Aug-63 $41,799.21 $37,855.33 $38,691.50 $3,313.97 $1,680.66 $1,715.09
Sep-63 $41,118.30 $37,082.70 $38,317.93 $3,315.43 $1,685.25 $1,715.09
Oct-63 $42,090.09 $37,490.58 $39,616.57 $3,306.87 $1,690.17 $1,716.95
Nov-63 $41,642.25 $37,310.51 $39,434.57 $3,323.67 $1,694.74 $1,718.81
Dec-63 $41,443.95 $37,867.48 $40,468.50 $3,321.61 $1,699.70 $1,722.54
Jan-64 $42,580.55 $38,348.97 $41,612.10 $3,317.09 $1,704.72 $1,724.40
Feb-64 $44,134.02 $39,386.84 $42,222.47 $3,313.47 $1,709.20 $1,722.54
Mar-64 $45,099.18 $40,628.51 $42,917.11 $3,325.70 $1,714.54 $1,724.40
Apr-64 $45,520.14 $40,487.61 $43,237.70 $3,341.24 $1,719.57 $1,726.26
May-64 $46,233.80 $41,130.43 $43,939.67 $3,358.02 $1,723.96 $1,726.26
Jun-64 $46,985.47 $41,895.01 $44,721.49 $3,381.19 $1,729.22 $1,729.99
Jul-64 $48,856.86 $42,858.47 $45,591.95 $3,383.75 $1,734.35 $1,733.71
Aug-64 $48,715.32 $42,740.73 $45,054.78 $3,390.49 $1,739.27 $1,731.85
Sep-64 $50,675.87 $44,257.99 $46,409.22 $3,407.28 $1,744.15 $1,735.57
Oct-64 $51,716.09 $45,139.92 $46,855.77 $3,421.99 $1,749.26 $1,737.44
Nov-64 $51,772.05 $45,238.19 $46,877.84 $3,427.78 $1,754.33 $1,741.16
Dec-64 $51,192.67 $45,060.85 $47,138.81 $3,438.07 $1,759.79 $1,743.02
Jan-65 $53,901.63 $47,461.24 $48,762.93 $3,451.81 $1,764.77 $1,743.02
Feb-65 $56,003.09 $48,870.75 $48,913.31 $3,456.63 $1,770.03 $1,743.02
Mar-65 $57,335.46 $48,899.73 $48,264.33 $3,475.18 $1,776.38 $1,744.89
Apr-65 $60,252.06 $50,534.30 $49,984.04 $3,487.86 $1,781.81 $1,750.47
May-65 $59,781.61 $50,269.96 $49,832.58 $3,494.06 $1,787.35 $1,754.20
Jun-65 $54,397.50 $46,496.99 $47,476.80 $3,510.60 $1,793.67 $1,763.51
Jul-65 $56,837.34 $47,958.95 $48,176.65 $3,518.31 $1,799.23 $1,765.37
Aug-65 $60,219.61 $50,062.14 $49,487.73 $3,513.77 $1,805.17 $1,761.65
Sep-65 $62,310.38 $51,631.49 $51,139.78 $3,501.90 $1,810.81 $1,765.37
Oct-65 $65,875.96 $53,814.37 $52,617.82 $3,511.39 $1,816.51 $1,767.23
Nov-65 $68,319.04 $55,647.99 $52,452.71 $3,489.55 $1,822.87 $1,770.96
Dec-65 $72,567.39 $56,688.71 $53,008.08 $3,462.47 $1,828.90 $1,776.54
Jan-66 $78,050.58 $58,355.59 $53,334.98 $3,426.53 $1,835.83 $1,776.54
Feb-66 $80,479.36 $58,637.39 $52,634.43 $3,340.86 $1,842.21 $1,787.72
Mar-66 $78,934.80 $57,188.63 $51,555.42 $3,439.89 $1,849.30 $1,793.30
Apr-66 $81,644.63 $59,145.23 $52,687.89 $3,418.32 $1,855.62 $1,800.75
May-66 $73,797.11 $55,298.54 $50,095.75 $3,398.02 $1,863.28 $1,802.61
Jun-66 $73,708.56 $55,090.01 $49,362.90 $3,392.68 $1,870.28 $1,808.20
Jul-66 $73,617.01 $54,321.40 $48,768.72 $3,380.16 $1,876.90 $1,813.79
Aug-66 $65,669.10 $49,741.56 $45,233.57 $3,310.46 $1,884.60 $1,823.10
Sep-66 $64,594.88 $49,148.54 $44,993.02 $3,420.45 $1,892.15 $1,826.82
Oct-66 $63,901.91 $50,335.62 $47,214.46 $3,498.48 $1,900.72 $1,834.27
Nov-66 $67,041.28 $52,094.00 $47,661.86 $3,446.53 $1,908.28 $1,834.27
Dec-66 $67,479.13 $53,393.22 $47,673.73 $3,588.91 $1,915.95 $1,836.13
Jan-67 $79,884.02 $59,579.68 $51,477.90 $3,644.23 $1,924.21 $1,836.13
Feb-67 $83,474.81 $60,163.50 $51,846.43 $3,563.77 $1,931.08 $1,837.99
Mar-67 $88,606.34 $63,657.98 $53,967.37 $3,634.32 $1,938.61 $1,841.72
Apr-67 $91,003.40 $66,184.57 $56,324.71 $3,528.49 $1,944.90 $1,845.44
May-67 $90,232.33 $65,230.65 $53,640.62 $3,514.80 $1,951.39 $1,851.03
Jun-67 $99,410.67 $68,071.18 $54,658.29 $3,405.14 $1,956.58 $1,856.61
Jul-67 $108,862.34 $71,990.65 $57,215.09 $3,428.38 $1,962.74 $1,865.93
Aug-67 $109,084.97 $72,150.04 $56,816.53 $3,399.47 $1,968.85 $1,871.51
Sep-67 $115,244.34 $74,213.46 $58,758.12 $3,397.95 $1,975.16 $1,875.24
Oct-67 $111,661.86 $71,356.76 $57,135.93 $3,262.06 $1,982.94 $1,880.82
Nov-67 $112,964.50 $71,876.38 $57,507.08 $3,197.96 $1,989.98 $1,886.41
Dec-67 $123,870.43 $74,622.70 $59,103.82 $3,259.41 $1,996.61 $1,892.00
Jan-68 $125,779.40 $72,803.10 $56,591.91 $3,366.26 $2,004.68 $1,899.44
Feb-68 $116,860.64 $69,288.61 $55,113.34 $3,355.08 $2,012.45 $1,905.03
Mar-68 $115,586.15 $69,409.79 $55,717.76 $3,284.09 $2,020.10 $1,914.34
Apr-68 $132,468.44 $77,068.68 $60,362.95 $3,358.56 $2,028.77 $1,919.93
May-68 $145,697.66 $80,528.83 $61,334.07 $3,372.95 $2,037.82 $1,925.52
Jun-68 $146,136.79 $81,731.45 $61,980.47 $3,450.53 $2,046.48 $1,936.69
Jul-68 $141,088.06 $78,697.82 $60,916.14 $3,550.30 $2,056.24 $1,946.00
Aug-68 $146,266.41 $80,475.53 $61,913.34 $3,549.27 $2,064.92 $1,951.59
Sep-68 $155,033.92 $85,280.72 $64,387.09 $3,512.96 $2,073.71 $1,957.18
Oct-68 $155,505.37 $86,279.44 $64,945.26 $3,466.49 $2,082.76 $1,968.35
Nov-68 $167,387.54 $92,663.60 $68,393.20 $3,373.27 $2,091.61 $1,975.80
Dec-68 $168,428.52 $90,068.47 $65,641.54 $3,250.92 $2,100.55 $1,981.38
Jan-69 $165,633.62 $89,305.77 $65,192.81 $3,184.09 $2,111.61 $1,986.97
Feb-69 $149,238.05 $83,279.95 $62,414.49 $3,197.35 $2,121.35 $1,994.42
Mar-69 $155,141.90 $84,835.12 $64,653.36 $3,200.65 $2,131.19 $2,011.18
Apr-69 $161,264.89 $85,996.26 $66,131.02 $3,337.18 $2,142.55 $2,024.22
May-69 $164,062.67 $85,993.94 $66,303.22 $3,173.59 $2,152.91 $2,029.80
Jun-69 $144,953.97 $78,521.41 $62,707.99 $3,241.62 $2,163.93 $2,042.84
Jul-69 $129,448.82 $72,910.50 $59,024.21 $3,267.31 $2,175.43 $2,052.15
Aug-69 $138,925.38 $77,050.80 $61,704.50 $3,244.83 $2,186.41 $2,061.46
Sep-69 $135,301.37 $76,235.83 $60,250.87 $3,072.50 $2,200.00 $2,070.77
Oct-69 $143,552.05 $82,457.13 $63,013.67 $3,184.72 $2,213.12 $2,078.22
Nov-69 $135,552.18 $79,262.00 $61,140.91 $3,107.21 $2,224.53 $2,089.39
Dec-69 $126,233.24 $77,439.21 $60,059.02 $3,085.98 $2,238.85 $2,102.43
Jan-70 $118,554.47 $71,743.33 $55,593.75 $3,079.38 $2,252.38 $2,109.88
Feb-70 $123,144.90 $76,296.02 $58,850.10 $3,260.13 $2,266.30 $2,121.05
Mar-70 $119,640.94 $75,932.54 $59,027.65 $3,238.03 $2,279.23 $2,132.22
Apr-70 $98,969.62 $66,256.69 $53,778.85 $3,104.23 $2,290.72 $2,145.26
May-70 $88,762.28 $60,440.41 $50,836.61 $2,958.83 $2,302.79 $2,154.57
Jun-70 $80,518.58 $57,121.56 $48,386.08 $3,102.74 $2,316.17 $2,165.74
Jul-70 $84,975.44 $61,881.56 $52,025.68 $3,201.86 $2,328.29 $2,173.19
Aug-70 $93,037.06 $65,661.60 $54,671.97 $3,195.71 $2,340.72 $2,176.92
Sep-70 $103,140.05 $70,483.98 $56,569.91 $3,268.53 $2,353.29 $2,188.09
Oct-70 $95,856.19 $67,678.37 $56,019.03 $3,233.04 $2,364.11 $2,199.26
Nov-70 $97,170.38 $70,778.92 $59,020.19 $3,488.84 $2,374.88 $2,206.71
Dec-70 $104,225.92 $76,909.57 $62,465.32 $3,459.57 $2,384.93 $2,217.89
Jan-71 $120,819.94 $82,831.30 $65,081.87 $3,634.50 $2,394.05 $2,219.75
Feb-71 $124,647.15 $84,585.92 $65,998.22 $3,575.22 $2,401.99 $2,223.47
Mar-71 $131,675.51 $88,875.36 $68,522.19 $3,763.34 $2,409.14 $2,230.92
Apr-71 $134,922.76 $91,798.55 $71,104.31 $3,656.80 $2,415.79 $2,238.37
May-71 $126,760.20 $88,689.80 $68,491.37 $3,654.64 $2,422.88 $2,249.54
Jun-71 $122,710.47 $88,898.93 $68,635.75 $3,596.65 $2,431.93 $2,262.58
Jul-71 $115,802.24 $84,515.94 $65,895.81 $3,607.30 $2,441.70 $2,268.17
Aug-71 $122,555.36 $88,983.03 $68,612.17 $3,777.15 $2,453.12 $2,273.75
Sep-71 $119,780.46 $88,594.36 $68,231.09 $3,854.03 $2,462.13 $2,275.62
Oct-71 $113,179.72 $84,848.50 $65,476.61 $3,918.32 $2,471.18 $2,279.34
Nov-71 $108,954.49 $83,513.32 $65,650.31 $3,900.02 $2,480.39 $2,283.07
Dec-71 $121,422.81 $92,476.47 $71,405.81 $3,917.26 $2,489.54 $2,292.38
Jan-72 $135,141.77 $95,480.85 $72,790.73 $3,892.39 $2,496.71 $2,294.24
Feb-72 $139,140.61 $98,366.66 $74,968.70 $3,926.66 $2,502.90 $2,305.41
Mar-72 $137,144.08 $99,415.25 $75,510.35 $3,894.54 $2,509.72 $2,309.14
Apr-72 $138,911.87 $99,357.59 $75,940.00 $3,905.10 $2,516.95 $2,314.72
May-72 $136,257.40 $99,481.89 $77,604.53 $4,010.68 $2,524.53 $2,322.17
Jun-72 $132,099.51 $96,070.65 $76,010.38 $3,984.77 $2,531.94 $2,327.76
Jul-72 $126,644.59 $93,923.57 $76,287.06 $4,070.66 $2,539.85 $2,337.07
Aug-72 $129,005.25 $97,029.43 $79,270.64 $4,082.27 $2,547.11 $2,340.79
Sep-72 $124,506.32 $94,999.19 $78,985.19 $4,048.56 $2,555.81 $2,350.11
Oct-72 $122,328.58 $94,994.91 $79,828.28 $4,143.44 $2,565.97 $2,357.56
Nov-72 $129,576.42 $101,508.05 $83,856.17 $4,237.15 $2,575.48 $2,363.14
Dec-72 $126,806.86 $100,224.18 $84,955.86 $4,140.00 $2,585.13 $2,370.59
Jan-73 $121,328.67 $94,000.36 $83,602.94 $4,007.10 $2,596.43 $2,378.04
Feb-73 $111,635.00 $88,167.26 $80,821.72 $4,012.70 $2,607.20 $2,394.80
Mar-73 $109,318.35 $85,821.57 $80,807.26 $4,045.60 $2,619.09 $2,417.15
Apr-73 $102,526.51 $80,438.92 $77,619.00 $4,064.01 $2,632.74 $2,433.91
May-73 $94,210.58 $75,668.65 $76,537.85 $4,021.50 $2,646.10 $2,448.80
Jun-73 $91,476.50 $73,060.81 $76,144.06 $4,013.01 $2,659.71 $2,465.56
Jul-73 $102,397.51 $80,435.28 $79,145.74 $3,839.17 $2,676.72 $2,471.15
Aug-73 $97,836.73 $78,395.76 $76,629.93 $3,989.46 $2,695.45 $2,515.84
Sep-73 $108,242.05 $87,304.97 $79,812.76 $4,116.29 $2,713.83 $2,523.29
Oct-73 $109,155.18 $86,536.25 $79,834.86 $4,204.89 $2,731.53 $2,543.78
Nov-73 $87,736.64 $72,273.34 $71,194.50 $4,128.11 $2,746.77 $2,562.40
Dec-73 $87,617.94 $74,096.58 $72,500.28 $4,094.17 $2,764.29 $2,579.16
Jan-74 $99,238.35 $77,597.20 $71,883.44 $4,060.27 $2,781.61 $2,601.51
Feb-74 $98,393.04 $78,422.45 $72,017.43 $4,050.49 $2,797.77 $2,635.03
Mar-74 $97,661.29 $76,398.60 $70,453.14 $3,932.34 $2,813.37 $2,664.82
Apr-74 $93,129.42 $71,613.14 $67,821.86 $3,832.97 $2,834.59 $2,679.72
May-74 $85,745.19 $67,059.26 $65,974.46 $3,879.99 $2,855.95 $2,709.52
Jun-74 $84,485.16 $64,828.81 $65,126.69 $3,897.31 $2,873.15 $2,735.59
Jul-74 $82,636.96 $62,286.16 $60,182.73 $3,886.00 $2,893.40 $2,756.07
Aug-74 $77,008.81 $56,978.07 $55,197.25 $3,795.73 $2,910.63 $2,791.45
Sep-74 $71,978.13 $52,524.09 $48,740.33 $3,889.60 $2,934.11 $2,824.97
Oct-74 $79,628.61 $59,963.29 $56,817.67 $4,079.89 $2,948.94 $2,849.18
Nov-74 $76,143.03 $58,602.12 $54,272.81 $4,200.45 $2,964.84 $2,873.39
Dec-74 $70,142.43 $56,245.91 $53,310.99 $4,272.46 $2,985.52 $2,893.88
Jan-75 $89,551.12 $69,134.37 $59,982.65 $4,368.47 $3,002.91 $2,906.91
Feb-75 $92,105.21 $72,559.98 $64,026.68 $4,425.90 $3,015.96 $2,927.40
Mar-75 $97,799.15 $77,448.49 $65,541.23 $4,307.68 $3,028.43 $2,938.57
Apr-75 $102,990.23 $81,197.85 $68,772.67 $4,229.33 $3,041.69 $2,953.47
May-75 $109,821.37 $86,138.34 $72,270.38 $4,319.04 $3,054.94 $2,966.51
Jun-75 $118,052.59 $92,213.50 $75,608.40 $4,445.13 $3,067.43 $2,990.72
Jul-75 $115,055.82 $87,109.76 $70,628.23 $4,406.51 $3,082.29 $3,022.37
Aug-75 $108,456.45 $84,179.48 $69,609.56 $4,376.54 $3,097.10 $3,031.68
Sep-75 $106,487.86 $81,058.94 $67,326.09 $4,333.61 $3,113.42 $3,046.58
Oct-75 $105,954.46 $85,745.53 $71,612.74 $4,539.41 $3,130.71 $3,065.20
Nov-75 $109,341.19 $89,288.62 $73,856.65 $4,490.02 $3,143.54 $3,083.82
Dec-75 $107,188.70 $88,838.87 $73,144.31 $4,665.35 $3,158.79 $3,096.86
Jan-76 $135,959.75 $103,215.40 $81,916.14 $4,707.45 $3,173.57 $3,104.31
Feb-76 $154,853.81 $107,034.88 $81,441.02 $4,736.41 $3,184.28 $3,111.76
Mar-76 $154,625.71 $109,076.79 $84,094.70 $4,814.84 $3,197.07 $3,119.21
Apr-76 $149,081.45 $107,647.77 $83,262.50 $4,823.73 $3,210.48 $3,132.24
May-76 $143,698.12 $105,841.66 $82,653.85 $4,747.37 $3,222.50 $3,150.86
Jun-76 $150,298.46 $112,477.19 $86,185.07 $4,845.95 $3,236.51 $3,167.62
Jul-76 $150,975.85 $111,977.79 $85,595.82 $4,883.67 $3,251.58 $3,186.25
Aug-76 $146,591.97 $111,323.95 $85,716.60 $4,986.95 $3,265.26 $3,201.14
Sep-76 $148,123.27 $114,143.90 $87,829.77 $5,059.27 $3,279.52 $3,214.18
Oct-76 $145,028.38 $111,634.45 $86,024.60 $5,101.70 $3,292.92 $3,227.22
Nov-76 $150,881.15 $115,648.49 $85,945.98 $5,274.43 $3,305.96 $3,236.53
Dec-76 $168,690.85 $124,350.80 $90,584.22 $5,447.02 $3,319.33 $3,245.84
Jan-77 $176,275.19 $121,821.51 $86,151.12 $5,235.79 $3,331.26 $3,264.46
Feb-77 $175,587.37 $119,238.65 $84,849.12 $5,210.03 $3,342.97 $3,297.98
Mar-77 $177,879.66 $119,627.49 $83,841.03 $5,257.48 $3,355.55 $3,318.46
Apr-77 $181,941.19 $121,609.12 $83,956.06 $5,294.69 $3,368.15 $3,344.53
May-77 $181,433.94 $120,743.14 $82,698.90 $5,360.91 $3,380.66 $3,363.16
Jun-77 $195,444.81 $127,536.39 $86,625.61 $5,448.97 $3,394.13 $3,385.50
Jul-77 $196,028.21 $125,016.91 $85,316.95 $5,410.77 $3,408.29 $3,400.40
Aug-77 $193,924.44 $122,929.37 $84,185.65 $5,517.94 $3,423.34 $3,413.44
Sep-77 $195,714.55 $123,479.48 $84,187.00 $5,502.21 $3,438.17 $3,426.47
Oct-77 $189,249.12 $119,521.23 $80,690.12 $5,450.99 $3,455.11 $3,435.78
Nov-77 $209,804.23 $127,429.35 $83,675.17 $5,501.86 $3,472.39 $3,452.54
Dec-77 $211,499.66 $128,415.52 $84,076.65 $5,409.54 $3,489.29 $3,465.58
Jan-78 $207,501.68 $122,079.63 $79,062.15 $5,366.10 $3,506.36 $3,484.20
Feb-78 $214,706.55 $121,677.38 $77,785.61 $5,368.30 $3,522.49 $3,508.41
Mar-78 $236,867.70 $128,171.54 $79,933.11 $5,357.18 $3,541.11 $3,532.62
Apr-78 $255,527.90 $137,510.63 $86,887.94 $5,354.61 $3,560.08 $3,564.27
May-78 $276,484.00 $142,893.35 $88,072.39 $5,323.40 $3,578.20 $3,599.66
Jun-78 $271,253.75 $142,291.63 $86,730.08 $5,290.28 $3,597.41 $3,636.90
Jul-78 $289,806.97 $151,427.60 $91,582.71 $5,365.82 $3,617.52 $3,662.97
Aug-78 $317,009.70 $159,887.26 $94,696.44 $5,482.65 $3,637.60 $3,681.59
Sep-78 $316,002.24 $157,544.59 $94,239.90 $5,424.64 $3,660.11 $3,707.66
Oct-78 $239,303.44 $135,703.39 $85,847.09 $5,316.20 $3,685.02 $3,737.46
Nov-78 $256,810.88 $139,940.73 $88,078.25 $5,416.47 $3,710.81 $3,757.94
Dec-78 $261,119.91 $141,555.37 $89,592.23 $5,345.84 $3,739.85 $3,778.43
Jan-79 $295,623.25 $151,371.10 $93,367.65 $5,448.02 $3,768.70 $3,811.95
Feb-79 $287,278.69 $146,157.43 $90,716.94 $5,374.63 $3,796.36 $3,856.64
Mar-79 $319,447.59 $158,316.55 $95,934.07 $5,444.16 $3,827.23 $3,893.88
Apr-79 $331,805.10 $160,382.27 $96,280.39 $5,383.08 $3,857.69 $3,938.58
May-79 $332,955.47 $159,078.20 $94,660.96 $5,523.67 $3,889.17 $3,986.99
Jun-79 $348,676.29 $168,993.86 $98,541.11 $5,695.57 $3,920.68 $4,024.24
Jul-79 $354,641.80 $174,371.08 $99,620.13 $5,647.10 $3,950.71 $4,076.38
Aug-79 $381,457.32 $187,068.78 $105,702.94 $5,627.17 $3,981.01 $4,117.34
Sep-79 $368,351.21 $186,140.92 $105,970.37 $5,558.63 $4,014.02 $4,160.18
Oct-79 $325,826.91 $169,769.45 $99,021.89 $5,091.37 $4,049.04 $4,197.42
Nov-79 $353,795.89 $182,297.25 $104,112.61 $5,249.90 $4,089.01 $4,236.53
Dec-79 $374,613.95 $188,373.22 $106,112.61 $5,279.87 $4,127.90 $4,281.22
Jan-80 $405,926.05 $197,633.65 $112,588.66 $4,888.69 $4,160.79 $4,342.67
Feb-80 $394,410.74 $190,908.17 $112,934.31 $4,660.34 $4,197.65 $4,402.27
Mar-80 $324,303.05 $166,941.18 $101,792.21 $4,513.72 $4,248.25 $4,465.58
Apr-80 $346,794.76 $178,498.35 $106,162.15 $5,201.37 $4,301.59 $4,515.86
May-80 $372,813.73 $192,317.87 $112,129.52 $5,419.18 $4,336.41 $4,560.55
Jun-80 $389,666.41 $200,957.94 $115,445.19 $5,613.48 $4,362.91 $4,610.83
Jul-80 $441,223.56 $218,663.34 $123,249.29 $5,346.28 $4,385.96 $4,614.56
Aug-80 $467,894.20 $223,749.89 $124,865.09 $5,115.48 $4,413.97 $4,644.35
Sep-80 $487,473.23 $230,682.11 $128,368.80 $4,981.66 $4,447.23 $4,687.18
Oct-80 $503,724.61 $233,541.41 $130,762.88 $4,850.69 $4,489.50 $4,728.15
Nov-80 $542,326.04 $251,611.91 $145,085.34 $4,899.28 $4,532.46 $4,770.98
Dec-80 $523,992.16 $246,074.19 $140,513.70 $5,071.50 $4,591.69 $4,811.95
Jan-81 $534,838.80 $242,216.73 $134,359.20 $5,013.07 $4,639.31 $4,851.06
Feb-81 $539,866.29 $248,400.04 $137,153.87 $4,794.75 $4,688.91 $4,901.34
Mar-81 $590,775.68 $269,063.69 $142,365.72 $4,978.98 $4,745.54 $4,936.72
Apr-81 $629,589.64 $269,522.71 $139,333.33 $4,721.32 $4,796.58 $4,968.38
May-81 $656,158.32 $276,433.28 $140,197.19 $5,014.94 $4,851.95 $5,009.35
Jun-81 $661,145.13 $272,431.63 $139,075.62 $4,925.02 $4,917.33 $5,052.18
Jul-81 $640,252.94 $268,528.23 $139,172.97 $4,751.22 $4,978.30 $5,109.91
Aug-81 $596,459.64 $254,070.40 $131,462.79 $4,567.87 $5,042.04 $5,149.01
Sep-81 $552,739.15 $238,454.98 $124,863.36 $4,501.68 $5,104.77 $5,201.16
Oct-81 $593,752.39 $253,224.40 $131,456.14 $4,874.87 $5,166.30 $5,212.33
Nov-81 $610,139.96 $264,781.31 $137,253.36 $5,562.24 $5,221.45 $5,227.23
Dec-81 $596,716.88 $257,891.70 $133,616.14 $5,165.71 $5,267.08 $5,242.13
Jan-82 $585,021.23 $248,913.72 $131,438.20 $5,189.37 $5,308.99 $5,260.75
Feb-82 $567,704.60 $239,928.68 $124,708.56 $5,283.80 $5,358.04 $5,277.51
Mar-82 $562,822.34 $238,960.81 $123,960.31 $5,405.82 $5,410.56 $5,271.92
Apr-82 $584,378.44 $251,047.92 $129,092.27 $5,607.67 $5,471.65 $5,294.27
May-82 $569,885.85 $240,977.14 $125,374.41 $5,626.75 $5,529.58 $5,346.41
Jun-82 $560,824.67 $237,322.23 $123,192.90 $5,501.38 $5,582.51 $5,411.59
Jul-82 $559,983.43 $230,449.38 $120,544.25 $5,777.12 $5,641.17 $5,441.38
Aug-82 $599,070.27 $259,854.72 $135,817.21 $6,228.22 $5,684.17 $5,452.55
Sep-82 $618,659.87 $266,031.47 $137,311.20 $6,613.33 $5,713.26 $5,461.87
Oct-82 $699,394.98 $302,513.70 $152,772.44 $7,032.84 $5,746.98 $5,476.77
Nov-82 $753,877.85 $320,482.41 $159,463.87 $7,031.43 $5,783.42 $5,467.46
Dec-82 $763,829.04 $324,036.23 $162,222.59 $7,250.66 $5,822.39 $5,445.09
Jan-83 $811,792.92 $335,736.86 $167,867.94 $7,026.62 $5,862.36 $5,458.13
Feb-83 $869,616.93 $347,863.00 $172,232.51 $7,372.08 $5,898.62 $5,459.99
Mar-83 $915,267.47 $361,566.37 $178,518.99 $7,302.86 $5,935.94 $5,463.71
Apr-83 $985,448.35 $384,904.39 $192,050.73 $7,558.14 $5,978.32 $5,502.82
May-83 $1,071,149.83 $400,982.62 $191,052.07 $7,266.55 $6,019.61 $5,532.62
Jun-83 $1,108,462.27 $415,459.30 $198,350.26 $7,294.92 $6,059.71 $5,551.24
Jul-83 $1,098,662.35 $403,256.01 $192,141.89 $6,940.09 $6,104.56 $5,573.59
Aug-83 $1,077,053.86 $403,047.93 $195,408.31 $6,953.95 $6,151.05 $5,592.21
Sep-83 $1,091,418.53 $414,779.45 $198,065.86 $7,304.88 $6,197.84 $5,620.14
Oct-83 $1,029,455.43 $402,241.91 $195,411.78 $7,208.75 $6,245.02 $5,635.04
Nov-83 $1,082,532.09 $420,584.54 $199,964.87 $7,341.01 $6,288.95 $5,644.35
Dec-83 $1,066,827.80 $414,793.93 $198,745.09 $7,297.92 $6,334.66 $5,651.80
Jan-84 $1,065,974.33 $402,600.24 $197,453.24 $7,475.67 $6,382.74 $5,683.46
Feb-84 $997,218.99 $381,042.60 $190,976.78 $7,342.61 $6,428.29 $5,709.53
Mar-84 $1,014,570.60 $387,618.26 $194,242.48 $7,227.77 $6,475.09 $5,722.56
Apr-84 $1,005,946.75 $382,893.58 $195,582.75 $7,151.52 $6,527.79 $5,750.49
May-84 $953,536.93 $362,248.72 $185,138.63 $6,782.43 $6,578.95 $5,767.26
Jun-84 $982,143.04 $372,265.62 $189,230.20 $6,883.97 $6,628.51 $5,785.88
Jul-84 $940,893.03 $360,341.96 $186,524.21 $7,361.00 $6,682.77 $5,804.50
Aug-84 $1,034,794.15 $403,719.92 $207,508.18 $7,557.12 $6,738.28 $5,828.71
Sep-84 $1,037,588.10 $406,392.95 $207,549.68 $7,815.95 $6,796.15 $5,856.65
Oct-84 $1,015,072.43 $407,180.54 $208,089.31 $8,254.33 $6,863.82 $5,871.54
Nov-84 $980,966.00 $405,301.40 $205,987.61 $8,351.73 $6,914.16 $5,871.54
Dec-84 $995,680.49 $414,408.12 $211,199.09 $8,427.41 $6,958.59 $5,875.27
Jan-85 $1,101,123.05 $454,735.00 $227,419.19 $8,734.18 $7,003.64 $5,886.44
Feb-85 $1,131,073.60 $460,114.97 $230,534.83 $8,303.67 $7,044.13 $5,910.65
Mar-85 $1,106,868.62 $457,971.76 $230,949.79 $8,558.47 $7,087.52 $5,936.73
Apr-85 $1,087,609.11 $454,417.44 $230,210.75 $8,765.86 $7,138.28 $5,960.93
May-85 $1,117,627.12 $479,285.88 $244,368.71 $9,551.03 $7,185.64 $5,983.28
Jun-85 $1,129,473.97 $490,475.77 $248,254.18 $9,686.43 $7,225.49 $6,001.83
Jul-85 $1,158,840.29 $492,366.07 $247,608.71 $9,512.27 $7,270.62 $6,011.14
Aug-85 $1,150,496.64 $491,075.08 $246,098.30 $9,758.54 $7,310.62 $6,024.18
Sep-85 $1,087,909.62 $468,930.05 $238,198.55 $9,738.15 $7,354.84 $6,042.80
Oct-85 $1,116,304.06 $490,003.30 $248,846.02 $10,066.87 $7,402.56 $6,061.42
Nov-85 $1,185,514.91 $521,864.78 $266,663.40 $10,470.89 $7,447.58 $6,081.90
Dec-85 $1,241,234.11 $543,455.90 $279,116.58 $11,037.11 $7,496.02 $6,096.80
Jan-86 $1,255,135.94 $554,165.78 $280,344.69 $11,009.19 $7,537.93 $6,115.42
Feb-86 $1,345,380.21 $592,859.30 $301,678.92 $12,270.26 $7,577.85 $6,098.66
Mar-86 $1,409,554.85 $622,242.00 $318,391.93 $13,214.73 $7,622.96 $6,070.73
Apr-86 $1,418,576.00 $615,312.71 $314,443.87 $13,109.14 $7,662.67 $6,057.70
May-86 $1,469,644.73 $642,900.26 $331,706.84 $12,446.74 $7,700.47 $6,076.32
Jun-86 $1,473,465.81 $644,909.32 $337,213.18 $13,210.28 $7,740.87 $6,106.11
Jul-86 $1,368,849.73 $606,142.53 $318,025.75 $13,067.61 $7,781.12 $6,107.94
Aug-86 $1,398,690.66 $654,873.36 $341,814.07 $13,720.04 $7,816.92 $6,118.94
Sep-86 $1,320,503.85 $615,140.23 $313,716.96 $13,033.90 $7,852.09 $6,148.92
Oct-86 $1,366,193.28 $650,592.60 $331,159.62 $13,410.50 $7,888.56 $6,154.51
Nov-86 $1,361,958.08 $658,754.94 $339,637.30 $13,768.71 $7,919.36 $6,160.10
Dec-86 $1,326,274.78 $637,734.07 $330,670.88 $13,744.61 $7,957.96 $6,165.69
Jan-87 $1,451,342.50 $718,270.32 $375,079.98 $13,965.53 $7,990.99 $6,202.93
Feb-87 $1,568,756.10 $755,741.04 $390,570.78 $14,247.34 $8,025.47 $6,227.14
Mar-87 $1,605,308.12 $769,692.78 $401,194.30 $13,930.33 $8,063.23 $6,255.08
Apr-87 $1,555,061.97 $754,653.75 $397,663.79 $13,271.43 $8,099.04 $6,288.60
May-87 $1,548,997.23 $760,734.00 $401,759.73 $13,131.68 $8,129.50 $6,307.22
Jun-87 $1,590,200.56 $789,950.75 $421,807.54 $13,260.28 $8,168.67 $6,333.28
Jul-87 $1,648,083.86 $834,583.75 $442,813.56 $13,023.85 $8,206.03 $6,346.32
Aug-87 $1,695,383.87 $857,557.34 $459,861.88 $12,809.61 $8,244.69 $6,381.70
Sep-87 $1,681,651.26 $847,466.46 $449,744.92 $12,337.32 $8,281.96 $6,413.36
Oct-87 $1,190,777.24 $639,914.30 $352,959.81 $13,105.71 $8,331.43 $6,430.12
Nov-87 $1,143,503.38 $610,420.01 $324,052.40 $13,154.08 $8,360.19 $6,439.43
Dec-87 $1,202,965.56 $658,225.05 $347,967.47 $13,371.57 $8,392.91 $6,437.57
Jan-88 $1,269,850.44 $689,811.96 $362,825.68 $14,262.73 $8,417.60 $6,454.30
Feb-88 $1,366,359.07 $743,631.77 $379,878.48 $14,337.17 $8,455.95 $6,471.04
Mar-88 $1,422,106.52 $748,752.42 $368,406.15 $13,897.45 $8,493.22 $6,498.93
Apr-88 $1,451,828.55 $754,907.17 $372,384.94 $13,675.23 $8,532.42 $6,532.40
May-88 $1,425,840.82 $755,802.49 $375,289.54 $13,536.02 $8,575.54 $6,554.71
Jun-88 $1,513,102.28 $805,685.45 $392,702.98 $14,034.71 $8,617.15 $6,582.61
Jul-88 $1,509,319.52 $794,732.96 $391,132.16 $13,796.68 $8,660.86 $6,610.50
Aug-88 $1,472,190.26 $781,236.01 $378,185.69 $13,876.47 $8,712.29 $6,638.39
Sep-88 $1,505,608.98 $800,459.11 $394,220.76 $14,354.90 $8,766.02 $6,683.02
Oct-88 $1,487,089.99 $808,028.25 $404,982.99 $14,796.34 $8,819.50 $6,705.33
Nov-88 $1,422,104.16 $790,724.32 $399,232.23 $14,505.89 $8,869.43 $6,710.91
Dec-88 $1,478,135.07 $810,118.42 $406,458.33 $14,665.01 $8,925.68 $6,722.07
Jan-89 $1,537,851.72 $857,600.27 $435,845.27 $14,963.10 $8,974.89 $6,755.54
Feb-89 $1,550,615.89 $855,396.24 $424,992.72 $14,694.96 $9,029.92 $6,783.43
Mar-89 $1,606,127.94 $865,767.06 $435,022.55 $14,874.80 $9,090.47 $6,822.48
Apr-89 $1,650,938.91 $905,800.13 $457,469.72 $15,111.25 $9,151.81 $6,867.11
May-89 $1,710,702.90 $940,286.66 $475,860.00 $15,717.48 $9,223.87 $6,906.16
Jun-89 $1,676,317.77 $940,831.08 $473,290.36 $16,582.21 $9,289.29 $6,922.89
Jul-89 $1,744,543.90 $1,007,468.27 $515,791.83 $16,976.50 $9,353.90 $6,939.62
Aug-89 $1,765,827.34 $1,038,795.49 $525,746.61 $16,537.49 $9,423.04 $6,950.78
Sep-89 $1,765,827.34 $1,019,288.99 $523,696.20 $16,569.47 $9,484.72 $6,973.09
Oct-89 $1,659,171.37 $967,456.11 $511,494.08 $17,198.12 $9,548.88 $7,006.56
Nov-89 $1,650,709.59 $984,947.71 $522,133.16 $17,332.44 $9,614.44 $7,023.30
Dec-89 $1,628,590.08 $1,002,677.76 $534,455.50 $17,321.52 $9,672.79 $7,034.46
Jan-90 $1,504,165.81 $929,741.97 $498,593.53 $16,727.74 $9,727.64 $7,106.98
Feb-90 $1,532,293.71 $947,302.94 $505,025.39 $16,686.42 $9,782.88 $7,140.45
Mar-90 $1,588,682.12 $969,608.14 $518,307.56 $16,613.33 $9,845.89 $7,179.51
Apr-90 $1,546,423.17 $928,343.55 $505,505.36 $16,277.74 $9,913.56 $7,190.66
May-90 $1,633,177.51 $1,007,446.78 $554,792.13 $16,953.64 $9,980.69 $7,207.40
Jun-90 $1,656,695.27 $996,498.85 $550,908.59 $17,344.41 $10,043.08 $7,246.45
Jul-90 $1,593,409.51 $977,307.28 $549,145.68 $17,529.52 $10,111.08 $7,274.34
Aug-90 $1,386,903.63 $880,832.39 $499,557.82 $16,795.91 $10,177.53 $7,341.28
Sep-90 $1,271,929.32 $823,250.62 $474,979.58 $16,992.14 $10,238.43 $7,402.64
Oct-90 $1,199,174.96 $790,324.71 $473,222.16 $17,357.88 $10,308.24 $7,447.27
Nov-90 $1,253,137.84 $860,249.48 $503,697.66 $18,055.68 $10,366.49 $7,464.01
Dec-90 $1,277,448.71 $895,011.30 $517,498.98 $18,392.42 $10,428.57 $7,464.01
Jan-91 $1,384,882.15 $951,102.55 $540,372.43 $18,632.17 $10,482.56 $7,508.63
Feb-91 $1,539,019.53 $1,039,170.85 $579,063.10 $18,688.81 $10,532.53 $7,519.79
Mar-91 $1,643,672.86 $1,072,685.15 $592,844.80 $18,760.01 $10,578.78 $7,530.95
Apr-91 $1,649,261.35 $1,085,449.03 $594,504.77 $19,023.20 $10,635.22 $7,542.10
May-91 $1,704,346.68 $1,137,165.25 $619,949.57 $19,024.13 $10,685.43 $7,564.42
Jun-91 $1,621,685.86 $1,087,682.64 $591,617.88 $18,903.90 $10,730.00 $7,586.73
Jul-91 $1,687,688.48 $1,135,930.06 $619,305.59 $19,201.54 $10,782.41 $7,597.89
Aug-91 $1,731,737.15 $1,164,687.27 $633,859.27 $19,855.18 $10,832.11 $7,620.21
Sep-91 $1,737,278.71 $1,153,903.43 $623,463.98 $20,457.68 $10,881.49 $7,653.68
Oct-91 $1,792,350.44 $1,170,523.10 $631,818.40 $20,568.93 $10,927.69 $7,664.83
Nov-91 $1,742,881.57 $1,118,567.09 $606,292.94 $20,737.59 $10,970.48 $7,687.15
Dec-91 $1,847,628.75 $1,230,610.60 $675,592.22 $21,942.05 $11,012.08 $7,692.73
Jan-92 $2,056,041.28 $1,266,466.90 $663,026.20 $21,230.91 $11,049.42 $7,703.88
Feb-92 $2,148,974.35 $1,301,122.50 $671,512.94 $21,339.32 $11,080.67 $7,731.77
Mar-92 $2,095,464.89 $1,273,880.90 $658,351.28 $21,139.73 $11,118.07 $7,770.82
Apr-92 $2,011,017.65 $1,284,615.90 $677,509.31 $21,173.31 $11,154.19 $7,781.98
May-92 $2,008,202.23 $1,284,784.18 $681,167.86 $21,686.96 $11,184.96 $7,793.14
Jun-92 $1,903,976.53 $1,254,568.63 $671,290.92 $22,120.80 $11,220.77 $7,821.03
Jul-92 $1,974,423.67 $1,312,847.10 $698,343.95 $23,000.72 $11,255.30 $7,837.77
Aug-92 $1,929,406.80 $1,289,503.37 $684,237.40 $23,154.56 $11,284.62 $7,860.08
Sep-92 $1,954,682.03 $1,311,038.07 $692,106.13 $23,583.97 $11,313.65 $7,882.39
Oct-92 $2,005,308.30 $1,349,987.70 $694,597.71 $23,116.77 $11,339.51 $7,910.29
Nov-92 $2,182,778.09 $1,417,167.14 $718,005.66 $23,139.83 $11,366.11 $7,921.44
Dec-92 $2,279,038.60 $1,457,549.32 $727,411.53 $23,709.23 $11,398.20 $7,915.86
Jan-93 $2,402,790.40 $1,495,530.14 $732,721.63 $24,373.99 $11,424.81 $7,954.91
Feb-93 $2,359,540.17 $1,500,279.94 $742,613.38 $25,236.55 $11,450.05 $7,982.81
Mar-93 $2,427,730.88 $1,559,932.57 $758,579.57 $25,290.20 $11,479.11 $8,010.70
Apr-93 $2,353,442.32 $1,521,360.12 $739,994.37 $25,472.00 $11,506.33 $8,033.01
May-93 $2,433,930.05 $1,573,878.99 $759,974.21 $25,590.63 $11,531.28 $8,044.17
Jun-93 $2,424,681.11 $1,598,404.75 $762,482.13 $26,738.84 $11,560.54 $8,055.33
Jul-93 $2,464,930.82 $1,594,950.60 $758,898.46 $27,250.88 $11,588.31 $8,055.33
Aug-93 $2,548,491.97 $1,670,332.75 $787,812.50 $28,433.02 $11,617.33 $8,077.64
Sep-93 $2,629,024.31 $1,674,062.60 $781,982.68 $28,447.88 $11,647.10 $8,094.38
Oct-93 $2,752,851.36 $1,685,842.98 $797,856.93 $28,721.97 $11,672.83 $8,127.85
Nov-93 $2,704,676.46 $1,644,253.23 $790,357.08 $27,978.77 $11,701.91 $8,133.42
Dec-93 $2,757,147.19 $1,710,707.37 $800,078.47 $28,033.90 $11,728.40 $8,133.42
Jan-94 $2,927,538.88 $1,762,230.46 $826,881.10 $28,755.26 $11,757.76 $8,155.74
Feb-94 $2,920,805.54 $1,735,025.14 $804,555.31 $27,462.48 $11,782.68 $8,183.64
Mar-94 $2,790,537.62 $1,659,849.97 $769,557.15 $26,377.78 $11,814.43 $8,211.53
Apr-94 $2,807,280.84 $1,676,554.70 $779,561.40 $25,981.13 $11,846.46 $8,222.68
May-94 $2,803,912.10 $1,668,676.57 $792,268.25 $25,767.14 $11,883.78 $8,228.26
Jun-94 $2,730,449.61 $1,627,316.76 $772,699.22 $25,508.25 $11,920.83 $8,256.16
Jul-94 $2,780,689.88 $1,679,316.04 $798,275.56 $26,435.00 $11,953.63 $8,278.47
Aug-94 $2,874,399.13 $1,753,459.52 $830,765.38 $26,208.52 $11,997.71 $8,311.94
Sep-94 $2,904,580.32 $1,712,198.86 $810,743.93 $25,341.70 $12,041.61 $8,334.25
Oct-94 $2,937,982.99 $1,716,534.15 $829,309.97 $25,279.60 $12,087.85 $8,339.83
Nov-94 $2,842,204.75 $1,631,050.75 $798,874.29 $25,446.74 $12,132.47 $8,350.99
Dec-94 $2,842,773.19 $1,655,198.46 $810,537.86 $25,855.55 $12,186.21 $8,350.99
Jan-95 $2,923,223.67 $1,681,231.42 $831,611.84 $26,561.13 $12,236.85 $8,384.46
Feb-95 $2,996,888.91 $1,756,611.11 $863,878.38 $27,322.42 $12,285.59 $8,417.93
Mar-95 $3,040,343.80 $1,804,693.07 $889,449.18 $27,572.32 $12,342.34 $8,445.82
Apr-95 $3,147,363.90 $1,829,507.60 $915,332.15 $28,039.29 $12,397.26 $8,473.72
May-95 $3,241,155.34 $1,876,697.92 $951,487.77 $30,255.19 $12,463.65 $8,490.45
Jun-95 $3,425,252.96 $1,924,236.55 $973,847.74 $30,675.24 $12,522.41 $8,507.19
Jul-95 $3,646,181.78 $2,002,908.96 $1,006,276.87 $30,160.79 $12,579.04 $8,507.19
Aug-95 $3,776,715.09 $2,031,720.81 $1,008,993.81 $30,873.00 $12,637.71 $8,529.50
Sep-95 $3,850,361.03 $2,061,215.30 $1,051,270.66 $31,412.75 $12,692.16 $8,546.24
Oct-95 $3,662,848.45 $2,005,855.18 $1,047,591.21 $32,336.53 $12,751.99 $8,574.13
Nov-95 $3,733,175.14 $2,107,273.22 $1,093,685.22 $33,142.51 $12,805.56 $8,568.55
Dec-95 $3,822,398.03 $2,136,539.03 $1,113,918.40 $34,043.58 $12,868.08 $8,562.97
Jan-96 $3,833,100.74 $2,176,599.14 $1,152,237.19 $34,006.91 $12,923.13 $8,613.18
Feb-96 $3,974,542.16 $2,220,300.90 $1,163,298.67 $32,366.07 $12,973.64 $8,641.07
Mar-96 $4,065,161.72 $2,279,793.86 $1,174,466.33 $31,686.53 $13,024.79 $8,685.70
Apr-96 $4,409,887.43 $2,346,452.75 $1,191,730.99 $31,163.32 $13,084.43 $8,719.17
May-96 $4,740,188.00 $2,378,387.97 $1,222,477.65 $30,993.68 $13,139.81 $8,735.91
Jun-96 $4,464,309 $2,350,480 $1,227,490 $31,622 $13,192 $8,741
</TABLE>
Source: Ibbotson Associates' EnCORR Software, Chicago, Illinois. All rights
reserved. This example is for illustrative purposes only and is not intended to
represent the past, present, or future performance of the Prudential Emerging
Growth Fund. Small-sized stock performance for the period 1926-1980 is based on
a historical series composed of stocks making up the 5th quintile of the New
York Stock Exchange: thereafter, the index reflects the total return achieved by
Dimensional Fund Advisors (DFA) Small Company Fund. Source of mid-sized stock
performance: University of Chicago's Center for Research in Security Prices
(CRSP). Mid-sized stocks are comprised of an index of medium-sized companies
listed on the New York Stock Exchange (NYSE). All eligible comapanies listed on
the NYSE are ranked by market capitalization and then split into ten equally
populated groups, or deciles. The 3-5 decile represents mid-size companies in
this example. Large-sized stock total return is based on the Standard & Poor's
500 Index, a market-weighted index made up of 500 of the largest stocks in the
U.S. based upon their stock market value. Past performance is not indicative of
future results. Investors cannot buy or invest directly in market indices.
Long-term government bond returns are represented by a portfolio that contains
only one bond with a maturity of roughly 20 years. At the beginning of each year
a new bond with a then-current coupon replaces the old bond. Treasury bill
returns are for a one-month bill. Treasuries are guaranteed by the government as
to the timely payment of principal and interest; equities are not. Inflation is
measured by the consumer price index (CPI).
IMPACT OF INFLATION. The "real" rate of investment return is that which exceeds
the rate of inflation, the percentage change in the value of consumer goods and
the general cost of living. A common goal of long-term investors is to outpace
the erosive impact of inflation on investment returns.
A-1
<PAGE>
The chart below shows the growth over 15 years of a $1,000 investment made
in the S&P MidCap 400 Index and the S&P 500 stock index on June 30, 1981 with an
ending value on June 30, 1996.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
S&P 500 S&P Midcap 400
06/30/81 $1,000.00 $1,000.00
$1,002.10 $994.10
$944.28 $949.96
$897.73 $890.21
$946.20 $956.35
$985.28 $1,007.42
$960.06 $979.62
$947.48 $939.45
$894.52 $914.46
$889.87 $906.78
$930.09 $950.13
$898.37 $934.26
$884.90 $909.50
$869.14 $878.30
$974.66 $970.00
$986.84 $1,001.43
$1,100.43 $1,105.28
$1,144.89 $1,170.93
$1,166.98 $1,201.96
$1,210.39 $1,262.18
$1,238.11 $1,303.32
$1,283.80 $1,357.54
$1,384.96 $1,440.62
$1,372.91 $1,497.82
$1,426.32 $1,547.69
$1,384.24 $1,523.86
$1,405.00 $1,499.78
$1,424.39 $1,552.12
$1,407.87 $1,483.99
$1,437.58 $1,534.00
$1,430.10 $1,515.43
$1,422.09 $1,472.09
$1,372.04 $1,401.43
$1,395.77 $1,423.44
$1,409.03 $1,405.64
$1,330.97 $1,346.18
06/30/84 $1,359.85 $1,396.94
$1,342.99 $1,342.18
$1,491.26 $1,499.34
$1,491.56 $1,497.09
$1,497.37 $1,487.36
$1,480.60 $1,482.16
$1,519.54 $1,533.14
$1,637.91 $1,663.92
$1,657.90 $1,678.23
$1,659.06 $1,691.82
$1,657.56 $1,707.22
$1,753.37 $1,791.90
$1,780.90 $1,867.16
$1,778.23 $1,868.65
$1,763.11 $1,855.20
$1,707.93 $1,766.52
$1,786.83 $1,864.38
$1,909.41 $1,980.35
$2,001.83 $2,078.38
$2,013.04 $2,113.09
$2,163.41 $2,268.61
$2,284.13 $2,378.18
$2,258.32 $2,395.78
$2,378.46 $2,490.17
$2,418.66 $2,556.66
$2,283.45 $2,430.36
$2,452.89 $2,563.06
$2,250.03 $2,360.58
$2,379.86 $2,459.72
$2,437.69 $2,458.74
$2,375.53 $2,415.47
$2,695.51 $2,726.09
$2,801.98 $2,853.13
$2,882.96 $2,920.46
$2,857.30 $2,823.51
$2,882.16 $2,794.42
06/30/87 $3,027.71 $2,895.58
$3,181.22 $2,976.95
$3,299.88 $3,085.01
$3,227.61 $3,025.16
$2,532.38 $2,310.32
$2,323.71 $2,196.42
$2,500.55 $2,366.20
$2,605.57 $2,474.81
$2,726.99 $2,631.96
$2,642.73 $2,674.60
$2,672.06 $2,688.24
$2,696.64 $2,632.05
$2,818.80 $2,821.82
$2,808.09 $2,745.92
$2,712.90 $2,681.94
$2,828.47 $2,784.39
$2,907.10 $2,803.60
$2,865.53 $2,748.93
$2,915.39 $2,859.99
$3,128.79 $3,055.04
$3,050.88 $3,064.81
$3,121.97 $3,132.85
$3,284.00 $3,302.34
$3,417.00 $3,461.84
$3,397.53 $3,446.26
$3,704.32 $3,651.32
$3,776.56 $3,780.94
$3,761.07 $3,822.91
$3,673.82 $3,661.96
$3,748.76 $3,742.89
$3,838.73 $3,876.51
$3,581.15 $3,548.56
$3,627.35 $3,675.95
$3,723.47 $3,755.35
$3,630.76 $3,609.27
$3,984.76 $3,961.90
06/30/90 $3,958.06 $3,978.14
$3,945.40 $3,887.04
$3,588.73 $3,484.34
$3,413.96 $3,271.10
$3,399.28 $3,171.33
$3,618.87 $3,476.41
$3,719.84 $3,678.05
$3,881.65 $3,968.61
$4,159.19 $4,324.99
$4,259.84 $4,522.65
$4,270.07 $4,521.29
$4,454.11 $4,729.72
$4,250.11 $4,489.45
$4,448.16 $4,759.72
$4,553.59 $4,932.97
$4,477.54 $4,917.18
$4,537.54 $5,184.19
$4,354.68 $4,937.42
$4,852.85 $5,521.02
$4,762.59 $5,618.75
$4,824.50 $5,708.08
$4,730.91 $5,492.89
$4,870.00 $5,427.52
$4,893.86 $5,479.08
$4,820.94 $5,322.38
$5,018.12 $5,586.37
$4,915.25 $5,452.86
$4,973.25 $5,529.20
$4,990.65 $5,661.35
$5,160.83 $5,977.82
$5,224.31 $6,178.07
$5,268.20 $6,255.30
$5,339.84 $6,167.72
$5,452.51 $6,380.51
$5,320.56 $6,213.34
$5,462.62 $6,496.67
06/30/93 $5,478.46 $6,529.15
$5,456.55 $6,516.75
$5,663.35 $6,785.89
$5,619.75 $6,857.82
$5,736.07 $6,880.45
$5,681.58 $6,728.39
$5,750.33 $7,040.59
$5,945.84 $7,204.64
$5,784.71 $7,102.33
$5,532.49 $6,773.49
$5,603.31 $6,823.62
$5,695.20 $6,758.79
$5,555.67 $6,526.29
$5,737.90 $6,746.88
$5,973.15 $7,100.41
$5,826.81 $6,967.64
$5,957.91 $7,043.58
$5,741.05 $6,725.92
$5,826.01 $6,787.80
$5,976.91 $6,858.39
$6,210.01 $7,218.45
$6,393.20 $7,336.84
$6,581.16 $7,490.91
$6,844.41 $7,671.44
$7,003.20 $7,983.67
$7,235.70 $8,398.82
$7,253.79 $8,555.88
$7,559.90 $8,762.93
$7,532.69 $8,537.72
$7,864.13 $8,910.82
$8,015.12 $8,888.54
$8,287.63 $9,017.43
$8,364.71 $9,323.12
$8,445.01 $9,435.00
$8,569.99 $9,722.76
$8,791.10 $9,854.02
06/30/96 $8,824.51 $9,706.21
<CAPTION>
QTLY
<S> <C>
Value
06/30/81
$890.21
$979.62
$906.78
$909.50
$1,001.43
$1,201.96
$1,357.54
$1,547.69
$1,552.12
$1,515.43
$1,423.44
06/30/84 $1,396.94
$1,497.09
$1,533.14
$1,691.82
$1,867.16
$1,766.52
$2,078.38
$2,378.18
$2,556.66
$2,360.58
$2,415.47
$2,920.46
06/30/87 $2,895.58
$3,025.16
$2,366.20
$2,674.60
$2,821.82
$2,784.39
$2,859.99
$3,132.85
$3,446.26
$3,822.91
$3,876.51
$3,755.35
06/30/90 $3,978.14
$3,271.10
$3,678.05
$4,522.65
$4,489.45
$4,917.18
$5,521.02
$5,492.89
$5,322.38
$5,529.20
$6,178.07
$6,380.51
06/30/93 $6,529.15
$6,857.82
$7,040.59
$6,773.49
$6,526.29
$6,967.64
$6,787.80
$7,336.84
$7,983.67
$8,762.93
$8,888.54
$9,435.00
06/30/96 $9,706.21
</TABLE>
Source: Lipper Analytical Services. Past performance is not indicative of future
returns. This chart is for illustrative purposes only and is not intended to
represent the past, present or future performance of any Prudential Mutual Fund.
The Standard & Poor's MidCap 400 Index consists of 400 domestic stocks chosen
for market size (median market capitalization of $676 million), liquidity and
industry group representation. It is a market-value-weighted index (stock price
times shares outstanding) and with each stock affecting the index in proportion
to its market value. The index is comprised of industrials, utilities,
financials and transportation in size order. The Standard & Poor's 500 Stock
Index, a market-value-weighted index made up of 500 of the largest stocks in the
U.S. based on their stock market value. Investors cannot invest directly in
indices.
A-2
<PAGE>
Set forth below is historical performance data relating to various sectors
of the fixed-income securities markets. The chart shows the historical total
returns of U.S. Treasury bonds, U.S. mortgage securities, U.S. corporate bonds,
U.S. high yield bonds and world government bonds on an annual basis from 1987
through 1995. The total returns of the indices include accrued interest, plus
the price changes (gains or losses) of the underlying securities during the
period mentioned. The data is provided to illustrate the varying historical
total returns and investors should not consider this performance data as an
indication of the future performance of the Fund or of any sector in which the
Fund invests.
All information relies on data obtained from statistical services, reports
and other services believed by the Manager to be reliable. Such information has
not been verified. The figures do not reflect the operating expenses and fees of
a mutual fund. See "Fund Expenses" in the prospectus. The net effect of the
deduction of the operating expenses of a mutual fund on these historical total
returns, including the compounded effect over time, could be substantial.
[CHART]
(1)LEHMAN BROTHERS TREASURY BOND INDEX is an unmanaged index made up of over 150
public issues of the U.S. Treasury having maturities of at least one year.
(2)LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX is an unmanaged index that
includes over 600 15-and 30-year fixed-rate mortgage-backed securities of the
Government National Mortgage Association (GNMA), Federal National Mortgage
Association (FNMA), and the Federal Home Loan Mortgage Corporation (FHLMC).
(3)LEHMAN BROTHERS CORPORATE BOND INDEX includes over 3,000 public fixed-rate,
nonconvertible investment-grade bonds. All bonds are U.S. dollar-denominated
issues and include debt issued or guaranteed by foreign sovereign governments,
municipalities, governmental agencies or international agencies. All bonds in
the index have maturities of at least one year.
(4)LEHMAN BROTHERS HIGH YIELD BOND INDEX is an unmanaged index comprising over
750 public, fixed-rate, nonconvertible bonds that are rated Ba1 or lower by
Moody's Investors Service (or rated BB+ or lower by Standard & Poor's or Fitch
Investors Service). All bonds in the index have maturities of at least one year.
(5)SALOMON BROTHERS WORLD GOVERNMENT INDEX (Non U.S.) includes over 800 bonds
issued by various foreign governments or agencies, excluding those in the U.S.,
but including those in Japan, Germany, France, the U.K., Canada, Italy,
Australia, Belgium, Denmark, the Netherlands, Spain, Sweden, and Austria. All
bonds in the index have maturities of at least one year.
A-3
<PAGE>
This chart illustrates the performance of major world stock markets for the
period from 1986 through 1995. It does not represent the performance of any
Prudential Mutual Fund.
[CHART]
Source: Morgan Stanley Capital International (MSCI) Used with permission. Morgan
Stanley Country indices are unmanaged indices which include those stocks making
up the largest two-thirds of each country's total stock market capitalization.
Returns reflect the reinvestment of all distributions. This chart is for
illustrative purposes only and is not indicative of the past, present or future
performance of any specific investment. Investors cannot invest directly in
stock indices.
This chart shows the growth of a hypothetical $10,000 investment made in the
stocks representing the S&P 500 stock index with and without reinvested
dividends.
[CHART]
Source: Stocks, Bonds, Bills, and Inflation 1995 Yearbook, Ibbotson Associates,
Chicago (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield).
Used with permission. All rights reserved. This chart is used for illustrative
purposes only and is not intended to represent the past, present or future
performance of any Prudential Mutual Fund. Common stock total return is based on
the Standard & Poor's 500 Stock Index, a market-value-weighted index made up of
500 of the largest stocks in the U.S. based upon their stock market value.
Investors cannot invest directly in indices.
A-4
<PAGE>
[CHART]
Source: Morgan Stanley Capital International, December 1995. Used with
permission. This chart represents the capitalization of major world stock
markets as measured by the Morgan Stanley Capital International (MSCI) World
Index. The total market capitalization is based on the value of 1579 companies
in 22 countries (representing approximately 60% of the aggregate market value of
the stock exchanges). This chart is for illustrative purposes only and does not
represent the allocation of any Prudential Mutual Fund.
This chart below shows the historical volatility of general interest rates
as measured by the long U.S. Treasury Bond.
[CHART]
Source: Stocks, Bonds, Bills, and Inflation 1995 Yearbook, Ibbotson Associates,
Chicago (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield).
Used with permission. All rights reserved. The chart illustrates the historical
yield of the long-term U.S. Treasury Bond from 1926-1994. Yields represent that
of an annually renewed one-bond portfolio with a remaining maturity of
approximately 20 years. This chart is for illustrative purposes and should not
be construed to represent the yields of any Prudential Mutual Fund.
The following chart, although not relevant to share ownership in the Fund,
may provide useful information about the effects of a hypothetical investment
diversified over different asset portfolios. The chart shows the range of annual
total returns for major stock and bond indices for the period from December 31,
1975 through December 31, 1995. The horizontal "Best Returns Zone" band shows
that a hypothetical blended portfolio constructed of one-third U.S. stocks (S&P
500), one-third foreign stocks (EAFE Index), and one-third U.S. bonds (Lehman
Index) would have eliminated the "highest highs" and "lowest lows" of any single
asset class.
[CHART]
* Source: Prudential Investment Corporation based on data from Lipper Analytical
New Application (LANA). Past performance is not indicative of future results.
The S&P 500 Index is a weighted, unmanaged index comprised of 500 stocks which
provides a broad indication of stock price movements. The Morgan Stanley EAFE
Index is an unmanaged index comprised of 20 overseas stock markets in Europe,
Australia, New Zealand and the Far East. The Lehman Aggregate Index includes all
publicly-issued investment grade debt with maturities over one year, including
U.S. government and agency issues, 15 and 30 year fixed-rate government agency
mortgage securities, dollar denominated SEC registered corporate and government
securities, as well as asset-backed securities. Investors cannot invest directly
in stock or bond market indices.
A-5
<PAGE>
APPENDIX--GENERAL INVESTMENT INFORMATION
The following terms are used in mutual fund investing.
ASSET ALLOCATION
Asset allocation is a technique for reducing risk, providing balance. Asset
allocation among different types of securities within an overall investment
portfolio helps to reduce risk and to potentially provide stable returns, while
enabling investors to work toward their financial goal(s). Asset allocation is
also a strategy to gain exposure to better performing asset classes while
maintaining investment in other asset classes.
DIVERSIFICATION
Diversification is a time-honored technique for reducing risk, providing
"balance" to an overall portfolio and potentially achieving more stable returns.
Owning a portfolio of securities mitigates the individual risks (and returns) of
any one security. Additionally, diversification among types of securities
reduces the risks and (general returns) of any one type of security.
DURATION
Debt securities have varying levels of sensitivity to interest rates. As
interest rates fluctuate, the value of a bond (or a bond portfolio) will
increase or decrease. Longer term bonds are generally more sensitive to changes
in interest rates. When interest rates fall, bond prices generally rise.
Conversely, when interest rates rise, bond prices generally fall.
Duration is an approximation of the price sensitivity of a bond (or a bond
portfolio) to interest rate changes. It measures the weighted average maturity
of a bond's (or a bond portfolio's) cash flows, i.e., principal and interest
rate payments. Duration is expressed as a measure of time in years--the longer
the duration of a bond (or a bond portfolio), the greater the impact of interest
rate changes on the bond's (or the bond portfolio's) price. Duration differs
from effective maturity in that duration takes into account call provisions,
coupon rates and other factors. Duration measures interest rate risk only and
not other risks, such as credit risk and, in the case of non-U.S. dollar
denominated securities, currency risk. Effective maturity measures the final
maturity dates of a bond (or a bond portfolio).
MARKET TIMING
Market timing--buying securities when prices are low and selling them when
prices are relatively higher--may not work for many investors because it is
impossible to predict with certainty how the price of a security will fluctuate.
However, owning a security for a long period of time may help investors offset
short-term price volatility and realize positive returns.
POWER OF COMPOUNDING
Over time, the compounding of returns can significantly impact investment
returns. Compounding is the effect of continuous investment on long-term
investment results, by which the proceeds of capital appreciation (and income
distributions, if elected) are reinvested to contribute to the overall growth of
assets. The long-term investment results of compounding may be greater than that
of an equivalent initial investment in which the proceeds of capital
appreciation and income distributions are taken in cash.
A-6
<PAGE>
APPENDIX--INFORMATION RELATING TO THE PRUDENTIAL
Set forth below is information relating to The Prudential Insurance Company
of America (Prudential) and its subsidiaries as well as information relating to
the Prudential Mutual Funds. See "Management of the Fund--Manager" in the
Prospectus. The data will be used in sales materials relating to the Prudential
Mutual Funds. Unless otherwise indicated, the information is as of December 31,
1995 and is subject to change thereafter. All information relies on data
provided by The Prudential Investment Corporation (PIC) or from other sources
believed by the Manager to be reliable. Such information has not been verified
by the Fund.
INFORMATION ABOUT PRUDENTIAL
The Manager and PIC are subsidiaries of Prudential, which is one of the
largest diversified financial services institutions in the world and, based on
total assets, the largest insurance company in North America as of December 31,
1995. Its primary business is to offer a full range of products and services in
three areas: insurance, investments and home ownership for individuals and
families; health-care management and other benefit programs for employees of
companies and members of groups; and asset management for institutional clients
and their associates. Prudential (together with its subsidiaries) employs more
than 92,000 persons worldwide, and maintains a sales force of approximately
13,000 agents and 5,600 financial advisors. Prudential is a major issuer of
annuities, including variable annuities. Prudential seeks to develop innovative
products and services to meet consumer needs in each of its business areas.
Prudential uses the Rock of Gibraltar as its symbol. The Prudential rock is a
recognized brand name throughout the world.
INSURANCE. Prudential has been engaged in the insurance business since 1875.
It insures or provides financial services to more than 50 million people
worldwide--one of every five people in the United States. Long one of the
largest issuers of individual life insurance, the Prudential has 19 million life
insurance policies in force today with a face value of $1 trillion. Prudential
has the largest capital base ($11.4 billion) of any life insurance company in
the United States. The Prudential provides auto insurance for more than 1.7
million cars and insures more than 1.4 million homes.
MONEY MANAGEMENT. The Prudential is one of the largest pension fund managers
in the country, providing pension services to 1 in 3 Fortune 500 firms. It
manages $36 billion of individual retirement plan assets, such as 401(k) plans.
In July 1995, Institutional Investor ranked Prudential the third largest
institutional money manager of the 300 largest money management organizations in
the United States as of December 31, 1994. As of December 31, 1995, Prudential
had more than $314 billion in assets under management. Prudential Investments
(of which Prudential Mutual Funds is a key part) manages over $190 billion in
assets of institutions and individuals.
REAL ESTATE. The Prudential Real Estate Affiliates, the fourth largest real
estate brokerage network in the United States, has more than 34,000 brokers and
agents and more than 1,100 offices in the United States.(2)
HEALTHCARE. Over two decades ago, the Prudential introduced the first
federally-funded, for-profit HMO in the country. Today, almost 5 million
Americans receive healthcare from a Prudential managed care membership.
FINANCIAL SERVICES. The Prudential Bank, a wholly-owned subsidiary of the
Prudential, has nearly $3 billion in assets and serves nearly 1.5 million
customers across 50 states.
INFORMATION ABOUT THE PRUDENTIAL MUTUAL FUNDS
Prudential Mutual Fund Management is one of the sixteenth largest mutual
fund companies in the country, with over 2.5 million shareholders invested in
more than 50 mutual fund portfolios and variable annuities with more than 3.7
million shareholder accounts.
The Prudential Mutual Funds have over 30 portfolio managers who manage over
$55 billion in mutual fund and variable annuity assets. Some of Prudential's
portfolio managers have over 20 years of experience managing investment
portfolios.
- ---------------
(1)Prudential Mutual Fund Investment Management, a unit of PIC, serves as the
Subadviser to substantially all of the Prudential Mutual Funds. Wellington
Management Company serves as the subadviser to Global Utility Fund, Inc.,
Nicholas-Applegate Capital Management as subadviser to Nicholas-Applegate Fund,
Inc., Jennison Associates Capital Corp. as the subadviser to Prudential Jennison
Fund, Inc. and BlackRock Financial Management, Inc. as subadviser to The
BlackRock Government Income Trust. There are multiple subadvisers for The Target
Portfolio Trust.
(2)As of December 31, 1994.
A-7
<PAGE>
From time to time, there may be media coverage of portfolio managers and
other investment professionals associated with the Manager and the Subadviser in
national and regional publications, on television and in other media.
Additionally, individual mutual fund portfolios are frequently cited in surveys
conducted by national and regional publications and media organizations such as
The Wall Street Journal, The New York Times, Barron's and USA Today.
EQUITY FUNDS. Forbes magazine listed Prudential Equity Fund among twenty
mutual funds on its Honor Roll in its mutual fund issue of August 28, 1995.
Honorees are chosen annually among mutual funds (excluding sector funds) which
are open to new investors and have had the same management for at least five
years. Forbes considers, among other criteria, the total return of a mutual fund
in both bull and bear markets as well as a fund's risk profile. Prudential
Equity Fund is managed with a "value" investment style by PIC. In 1995,
Prudential Securities introduced Prudential Jennison Fund, a growth-style equity
fund managed by Jennison Associates Capital Corp., a premier institutional
equity manager and a subsidiary of Prudential.
HIGH YIELD FUNDS. Investing in high yield bonds is a complex and research
intensive pursuit. A separate team of high yield bond analysts monitor the 167
issues held in the Prudential High Yield Fund (currently the largest fund of its
kind in the country) along with 100 or so other high yield bonds, which may be
considered for purchase.(3) Non-investment grade bonds, also known as junk bonds
or high yield bonds, are subject to a greater risk of loss of principal and
interest including default risk than higher-rated bonds. Prudential high yield
portfolio managers and analysts meet face-to-face with almost every bond issuer
in the High Yield Fund's portfolio annually, and have additional telephone
contact throughout the year.
Prudential's portfolio managers are supported by a large and sophisticated
research organization. Fourteen investment grade bond analysts monitor the
financial viability of approximately 1,750 different bond issuers in the
investment grade corporate and municipal bond markets--from IBM to small
municipalities, such as Rockaway Township, New Jersey. These analysts consider
among other things sinking fund provisions and interest coverage ratios.
Prudential's portfolio managers and analysts receive research services from
almost 200 brokers and market service vendors. They also receive nearly 100
trade publications and newspapers--from Pulp and Paper Forecaster to Women's
Wear Daily--to keep them informed of the industries they follow.
Prudential Mutual Funds' traders scan over 100 computer monitors to collect
detailed information on which to trade. From natural gas prices in the Rocky
Mountains to the results of local municipal elections, a Prudential portfolio
manager or trader is able to monitor it if it's important to a Prudential mutual
fund.
Prudential Mutual Funds trade approximately $31 billion in U.S. and foreign
government securities a year. PIC seeks information from government policy
makers. In 1995, Prudential's portfolio managers met with several senior U.S.
and foreign government officials, on issues ranging from economic conditions in
foreign countries to the viability of index-linked securities in the United
States.
Prudential Mutual Funds' portfolio managers and analysts met with over 1,200
companies in 1995, often with the Chief Executive Officer (CEO) or Chief
Financial Officer (CFO). They also attended over 250 industry conferences.
Prudential Mutual Fund global equity managers conducted many of their visits
overseas, often holding private meetings with a company in a foreign language
(our global equity managers speak 7 different languages, including Mandarin
Chinese).
TRADING DATA.(4) On an average day, Prudential Mutual Funds' U.S. and
foreign equity trading desks traded $77 million in securities representing over
3.8 million shares with nearly 200 different firms. Prudential Mutual Funds'
bond trading desks traded $157 million in government and corporate bonds on an
average day. That represents more in daily trading than most bond funds tracked
by Lipper even have in assets.(5) Prudential Mutual Funds' money market desk
traded $3.2 billion in money market securities on an average day, or over $800
billion a year. They made a trade every 3 minutes of every trading day. In 1994,
the Prudential Mutual Funds effected more than 40,000 trades in money market
securities and held on average $20 billion of money market securities.(6)
- ---------------
(3)As of December 31, 1995. The number of bonds and the size of the Fund are
subject to change.
(4)Trading data represents average daily transactions for portfolios of the
Prudential Mutual Funds for which PIC serves as the subadviser, portfolios of
the Prudential Series Fund and institutional and non-US accounts managed by
Prudential Mutual Fund Investment Management, a division of PIC, for the year
ended December 31, 1995.
(5)Based on 669 funds in Lipper Analytical Services categories of Short U.S.
Treasury, Short U.S. Government, Intermediate U.S. Treasury, Intermediate U.S.
Government, Short Investment Grade Debt, Intermediate Investment Grade Debt,
General U.S. Treasury, General U.S. Government and Mortgage funds.
(6)As of December 31, 1994.
A-8
<PAGE>
Based on complex-wide data, on an average day, over 7,250 shareholders
telephoned Prudential Mutual Fund Services, Inc., the Transfer Agent of the
Prudential Mutual Funds, on the Prudential Mutual Funds' toll-free number. On an
annual basis, that represents approximately 1.8 million telephone calls
answered.
INFORMATION ABOUT PRUDENTIAL SECURITIES
Prudential Securities is the fifth largest retail brokerage firm in the
United States with approximately 5,600 financial advisors. It offers to its
clients a wide range of products, including Prudential Mutual Funds and
annuities. As of December 31, 1995, assets held by Prudential Securities for its
clients approximated $168 billion. During 1994, over 28,000 new customer
accounts were opened each month at PSI.(7)
Prudential Securities has a two-year Financial Advisor training program plus
advanced education programs, including Prudential Securities "university," which
provides advanced education in a wide array of investment areas. In the December
1995 issue of Registered Rep, an industry publication, Prudential Securities'
Financial Advisor training programs received a grade of A-(compared to an
industry average of B+).
In 1995, Prudential Securities' equity research team ranked 8th in
Institutional Investor magazine's 1995 "All America Research Team" survey. Five
Prudential Securities' analysts were ranked as first-team finishers.(8)
In addition to training, Prudential Securities provides its financial
advisors with access to firm economists and market analysts. It has also
developed proprietary tools for use by financial advisors, including the
Financial Architect-SM-, a state-of-the-art asset allocation software program
which helps Financial Advisors to evaluate a client's objectives and overall
financial plan, and a comprehensive mutual fund information and analysis system
that compares different mutual funds.
For more complete information about any of the Prudential Mutual Funds,
including charges and expenses, call your Prudential Securities financial
adviser or Pruco/Prudential representative for a free prospectus. Read it
carefully before you invest or send money.
- ---------------
(7)As of December 31, 1994.
(8)On an annual basis, Institutional Investor magazine surveys more than 700
institutional money managers, chief investment officers and research directors,
asking them to evaluate analysts in 76 industry sectors. Scores are produced by
taking the number of votes awarded to an individual analyst and weighting them
based on the size of the voting institution. In total, the magazine sends its
survey to approximately 2,000 institutions and a group of European and Asian
institutions.
A-9
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
(1) The following financial statement is included in the Prospectus
constituting Part A of this Registration Statement:
Financial Highlights.
(2) Financial statements included in the Statement of Additional
Information constituting Part B of this Registration Statement:
Portfolio of Investments at September 30, 1996.
Statement of Assets and Liabilities at September 30, 1996.
Statement of Operations for the year ended September 30, 1996.
Statement of Changes in Net Assets for the years ended September 30,
1995 and 1996.
Notes to Financial Statements.
Financial Highlights.
(b) Exhibits:
1. (a) Amended and Restated Articles of Incorporation of Registrant.
Incorporated by reference to Post-Effective Amendment No. 8 to
Registration Statement on Form N-1A filed via EDGAR on January 30,
1995 (File No. 33-37356).
(b) Articles of Amendment of Registrant. Incorporated by reference
to Post-Effective Amendment No. 8 to Registration Statement on Form
N-1A filed via EDGAR on January 30, 1995 (File No. 33-37356).
(c) Articles of Amendment of Registrant.*
2. (a) By-Laws of the Registrant. Incorporated by reference to the
Registration Statement on Form N-2, filed on November 22, 1988 (File
No. 33-25553).
(b) Amended By-Laws of the Registrant. Incorporated by reference to
Post-Effective Amendment No. 2 to the Registration Statement on Form
N-1A, filed on October 30, 1991 (File No. 33-25553).
3. Not Applicable.
4. Instruments defining rights of holders of the securities being
offered. Incorporated by reference to Post-Effective Amendment No. 5
to the Registration Statement on Form N-1A, filed via EDGAR on
November 30, 1993 (File No. 33-25553).
5. (a) Management Agreement between the Registrant and Prudential
Mutual Fund Management, Inc. Incorporated by reference to
Post-Effective Amendment No. 2 to Registration Statement on Form
N-1A, filed on October 30, 1991 (File No. 33-25553).
(b) Subadvisory Agreement among Registrant, Prudential Mutual Fund
Management, Inc. and Wellington Management Company. Incorporated by
reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-1A, filed on November 30, 1992.
6. Restated Distribution Agreement.*
7. Not Applicable.
8. (a) Custodian Contract between the Registrant and State Street Bank
and Trust Company. Incorporated by reference to Pre-Effective
Amendment No. 3 to Registration Statement on Form N-2, filed on
December 21, 1989 (File No. 33-25553).
9. Transfer Agency and Service Agreement between the Registrant and
Prudential Mutual Fund Services, Inc. Incorporated by reference to
Post-Effective Amendment No. 2 to Registration Statement on Form
N-1A, filed on October 30, 1991 (File No. 33-37356).
10. Opinion and Consent of Counsel.*
11. Consent of Independent Accountants.*
12. Not Applicable.
13. Subscription Agreement between the Registrant and Wellington
Management Company. Incorporated by reference to Pre-Effective
Amendment No. 3 to Registration Statement on Form N-2, filed on
December 21, 1989 (File No. 33-25553).
C-1
<PAGE>
14. Not Applicable.
15. (a) Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for Class A Shares. Incorporated by
reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-1A filed via EDGAR on January 30, 1995 (File No.
33-37356).
(b) Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for Class B Shares. Incorporated by
reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-1A filed via EDGAR on January 30, 1995 (File No.
33-37356).
(c) Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for Class C Shares. Incorporated by
reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-1A filed via EDGAR on January 30, 1995 (File No.
33-37356).
16. (a) Schedule of Computation of Performance Quotations. Incorporated
by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-1A, filed on January 9, 1991 (File No.
33-37356).
(b) Schedule of Computation of 30-day yield. Incorporated by
reference to Post-Effective Amendment No. 5 to Registration
Statement on Form N-1A, filed via EDGAR on November 30, 1993 (File
No. 33-37356).
17. Financial Data Schedule*.
18. Rule 18f-3 Plan.*
- ----------
*Filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
As of November 3, 1996 there were 15,768, 27,520 and 112 record holders of
Class A, Class B and Class C shares of common stock, respectively, $.001 par
value per share, of the Registrant.
Item 27. Indemnification.
As permitted by Sections 17(h) and (i) of the Investment Company Act of 1940
(the 1940 Act) and pursuant to Article VI of the Fund's Amended and Restated
Articles of Incorporation (Exhibit 1 to the Registration Statement), officers,
directors, employees and agents of the Registrant will not be liable to the
Registrant, any stockholder, officer, director, employee, agent or other person
for any action or failure to act, except for bad faith, willful misfeasance,
gross negligence or reckless disregard of duties, and those individuals may be
indemnified against liabilities in connection with the Registrant, subject to
the same exceptions. Section 2-418 of Maryland General Corporation Law permits
indemnification of directors who acted in good faith and reasonably believed
that the conduct was in the best interests of the Registrant. As permitted by
Section 17(i) of the 1940 Act, pursuant to Section 10 of the Distribution
Agreement (Exhibit 6 to the Registration Statement), the Distributor of the
Registrant may be indemnified against liabilities which it may incur, except
liabilities arising from bad faith, gross negligence, willful misfeasance or
reckless disregard of duties.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (Securities Act) may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1940 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such director,
officer or controlling person in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1940 Act and will be governed by the final adjudication of such
issue.
The Registrant has purchased an insurance policy insuring its officers and
directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers and directors under certain circumstances.
Section 9 of the Management Agreement (Exhibit 5(b) to the Registration
Statement) and Section 5 of the Subadvisory Agreement (Exhibit 5(c) to the
Registration Statement) limit the liability of Prudential Mutual Fund
Management, Inc. (the
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<PAGE>
Manager or PMF) and Wellington Management Company (the Subadviser),
respectively, to liabilities arising from willful misfeasance, bad faith or
gross negligence in the performance of their respective duties or from reckless
disregard by them of their respective obligations and duties under the
agreements.
The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws and the Distribution Agreement in a manner consistent
with Release No. 11330 of the Securities and Exchange Commission under the 1940
Act so long as the interpretation of Sections 17(h) and 17(i) of such Act remain
in effect and are consistently applied.
Item 28. Business and other Connections of Investment Adviser
See "How the Fund Is Managed-Manager" and "How the Fund Is
Managed-Subadviser" in both the Prospectus constituting Part A of this
Registration Statement and in the Statement of Additional Information
constituting Part B of this Registration Statement.
The business and other connections of the officers of PMF are listed in
Schedules A and D of Form ADV of PMF as currently on file with the Securities
and Exchange Commission, the text of which is hereby incorporated by reference
(File No. 801-31104).
The business and other connections of PMF's directors and principal
executive officers are set forth below. Except as otherwise indicated, the
address of each person is Gateway Center Three, Newark, New Jersey 07102.
Name and Address Position with PMF Principal Occupations
- ---------------- ----------------- ---------------------
Stephen P. Fisher Senior Vice President Senior Vice President, PMF;
Senior Vice President,
Prudential Securities
Incorporated (Prudential
Securities); Vice President,
Prudential Mutual Fund
Distributors, Inc. (PMFD)
Frank W. Giordano Executive Vice Executive Vice President,
President, General General Counsel, Secretary and
Counsel, Secretary Director, PMF and PMFD; Senior
and Director Vice President, Prudential
Securities; Director,
Prudential Mutual Fund
Services, Inc. (PMFS)
Robert F. Gunia Executive Vice Executive Vice President, Chief
President, Chief Financial and Administrative
Financial and Officer, Treasurer and
Administrative Director, PMF; Senior Vice
Officer, Treasurer President, Prudential
and Director Securities; Executive Vice
President, Chief Financial
Officer, Treasurer and
Director, PMFD; Director, PMFS
Timothy J. O'Brien Director President, Chief Executive
Officer, Chief Operating
Officer and Director, PMFD;
Chief Executive Officer and
Director, PMFS; Director, PMF
S. Jane Rose Senior Vice Senior Vice President, Senior
President, Senior Counsel and Assistant
Counsel and Secretary, PMF; Senior Vice
Assistant Secretary President and Senior Counsel,
Prudential Securities
Donald Webber Executive Vice Executive Vice President and
President and Director of Sales, PMF.
Director of Sales
Wellington Management Company, the Subadviser, is a Massachusetts
partnership and is a registered investment adviser engaged in the investment
advisory business. Information as to the general partners of the Subadviser is
included in its Form ADV filed with the Securities and Exchange Commission (File
No. 801-15908), as most recently amended in July, 1993, and is incorporated
herein by reference thereto.
Item 29. Principal Underwriter
(a) Prudential Securities Incorporated
Prudential Securities is distributor for The BlackRock Government Income
Trust, The Global Government Plus Fund, Inc., The Global Total Return Fund,
Inc., Global Utility Fund, Inc., Nicholas-Applegate Fund, Inc.
(Nicholas-Applegate Growth Equity Fund), Prudential Allocation Fund, Prudential
California Municipal Fund (California Income Series and California Series),
Prudential Distressed Securities Fund, Inc., Prudential Diversified Bond Fund,
Inc., Prudential Equity Fund, Inc., Prudential Equity Income Fund, Prudential
Europe Growth Fund, Inc., Prudential Global Fund, Inc., Prudential Global
Genesis Fund, Inc., Prudential
C-3
<PAGE>
Global Limited Maturity Fund, Inc., Prudential Government Income Fund, Inc.,
Prudential Government Securities Trust, Prudential High Yield Fund, Inc.,
Prudential Institutional Liquidity Portfolio, Inc., Prudential Intermediate
Global Income Fund, Inc., Prudential-Jennison Series Fund, Inc., Prudential
MoneyMart Assets, Inc., Prudential Mortgage Income Fund, Inc., Prudential
Multi-Sector Fund, Inc., Prudential Municipal Bond Fund, Prudential Municipal
Series Fund, Prudential National Municipals Fund, Inc., Prudential Resources
Fund, Inc., Prudential Pacific Growth Fund, Inc., Prudential Small Companies
Fund, Inc., Prudential Special Money Market Fund, Inc., Prudential Structured
Maturity Fund, Inc., Prudential Tax-Free Money Fund, Inc., Prudential Utility
Fund, Inc., Prudential World Fund, Inc. and the Target Portfolio Trust.
Prudential Securities is also a depositor for the following unit investment
trusts:
Corporate Investment Trust Fund
Prudential Equity Trust Shares
National Equity Trust
Prudential Unit Trusts
Government Securities Equity Trust
National Municipal Trust
(b) Information concerning the officers and directors of Prudential
Securities Incorporated is set forth below.
Positions and Positions and
Offices with Offices with
Name* Underwriter the Fund
- ----- ------------- -------------
Robert C. Golden ....... Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Alan D. Hogan .......... Executive Vice President, None
Chief Administrative
Officer and Director
George A. Murray ....... Executive Vice President and Director None
Leland B. Paton ........ Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Vincent T. Pica, II .... Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Hardwick Simmons ....... Chief Executive Officer, None
President and Director
Lee B. Spencer ......... Executive Vice President, Secretary, None
General Counsel and Director
- --------
*The address of each person named is One Seaport Plaza, New York, NY 10292
unless otherwise indicated.
(c) Registrant has no principal underwriter who is not an affiliated person
of the Registrant.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the Rules thereunder are maintained at the offices of
State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts, 02171, Wellington Management Company, 75 State Street, Boston
Massachusetts 02109, the Registrant, Gateway Center Three, Newark, New Jersey
07102 and Prudential Mutual Fund Services, Inc., Raritan Plaza One, Edison, New
Jersey. Documents required by Rules 31a-1(b)(5), (6), (7), (9), (10) and (11)
and 31a-1(f) will be kept at 75 State Street, documents required by Rules
31a-1(b)(4) and (11) and 31a-1(d) at Gateway Center Three, Newark, New Jersey
07102 and the remaining accounts, books and other documents required by such
other pertinent provisions of Section 31(a) and the Rules promulgated thereunder
will be kept by State Street Bank and Trust Company and Prudential Mutual Fund
Services, Inc.
Item 31. Management Services
Other than as set forth under the captions "How the Fund Is
Managed-Manager", "How the Fund Is Managed-Subadviser" and "How the Fund Is
Managed-Distributor" in the Prospectus and the corresponding sub-captions,
captions
C-4
<PAGE>
"The Manager", "The Subadviser" and "The Distributor" in the Statement of
Additional Information, constituting Parts A and B, respectively, of this
Registration Statement, Registrant is not a party to any management-related
service contract.
Item 32. Undertakings
The Registrant hereby undertakes to furnish each person to whom a Prospectus
is delivered with a copy of Registrant's latest annual report to shareholders
upon request and without charge.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
and State of New York, on the 29th day of November, 1996.
GLOBAL UTILITY FUND, INC.
/s/ Edward D. Beach
----------------------------------
(Edward D. Beach, President)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Eugene C. Dorsey Director November 29, 1996
- -----------------------------
Eugene C. Dorsey
/s/ Douglas H. McCorkindale Director November 29, 1996
- -----------------------------
Douglas H. McCorkindale
/s/ Thomas T. Mooney Director November 29, 1996
- -----------------------------
Thomas T. Mooney
/s/ Richard A. Redeker Director November 29, 1996
- -----------------------------
Richard A. Redeker
/s/ Grace Torres Treasurer and Principal November 29, 1996
- ----------------------------- Financial and Accounting
Grace Torres Officer
<PAGE>
EXHIBIT INDEX
1. (a) Amended and Restated Articles of Incorporation of Registrant.
Incorporated by reference to Post-Effective Amendment No. 8 to
Registration Statement on Form N-1A filed via EDGAR on January 30, 1995
(File No. 33-37356).
(b) Articles of Amendment of Registrant. Incorporated by reference to
Post-Effective Amendment No. 8 to Registration Statement on Form N-1A
filed via EDGAR on January 30, 1995 (File No. 33-37356).
(c) Articles of Amendment of Registrant.
2. (a) By-Laws of the Registrant. Incorporated by reference to the
Registration Statement on Form N-2, filed on November 22, 1988 (File No.
33-25553).
(b) Amended By-Laws of the Registrant. Incorporated by reference to
Post-Effective Amendment No. 2 to the Registration Statement on Form
N-1A, filed on October 30, 1991 (File No. 33-25553).
3. Not Applicable.
4. Instruments defining rights of holders of the securities being offered.
Incorporated by reference to Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A, filed via EDGAR on November 30, 1993
(File No. 33-25553).
5. (a) Management Agreement between the Registrant and Prudential Mutual
Fund Management, Inc. Incorporated by reference to Post-Effective
Amendment No. 2 to Registration Statement on Form N-1A, filed on October
30, 1991 (File No. 33-25553).
(b) Subadvisory Agreement among Registrant, Prudential Mutual Fund
Management, Inc. and Wellington Management Company. Incorporated by
reference to Post-Effective Amendment No. 4 to Registration Statement on
Form N-1A, filed on November 30, 1992.
6. Restated Distribution Agreement.*
7. Not Applicable.
8. (a) Custodian Contract between the Registrant and State Street Bank and
Trust Company. Incorporated by reference to Pre-Effective Amendment No.
3 to Registration Statement on Form N-2, filed on December 21, 1989
(File No. 33-25553).
9. Transfer Agency and Service Agreement between the Registrant and Prudential
Mutual Fund Services, Inc. Incorporated by reference to Post-Effective
Amendment No. 2 to Registration Statement on Form N-1A, filed on October 30,
1991 (File No. 33-37356).
10. Opinion and Consent of Counsel.*
11. Consent of Independent Accountants.*
12. Not Applicable.
13. Subscription Agreement between the Registrant and Wellington Management
Company. Incorporated by reference to Pre-Effective Amendment No. 3 to
Registration Statement on Form N-2, filed on December 21, 1989 (File No.
33-25553).
14. Not Applicable.
15. (a) Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for Class A Shares. Incorporated by
reference to Post-Effective Amendment No. 8 to Registration Statement on
Form N-1A filed via EDGAR on January 30, 1995 (File No. 33-37356).
(b) Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for Class B Shares. Incorporated by
reference to Post-Effective Amendment No. 8 to Registration Statement on
Form N-1A filed via EDGAR on January 30, 1995 (File No. 33-37356).
(c) Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for Class C Shares. Incorporated by
reference to Post-Effective Amendment No. 8 to Registration Statement on
Form N-1A filed via EDGAR on January 30, 1995 (File No. 33-37356).
<PAGE>
16. (a) Schedule of Computation of Performance Quotations. Incorporated by
reference to Pre-Effective Amendment No. 1 to Registration Statement on
Form N-1A, filed on January 9, 1991 (File No. 33-37356).
(b) Schedule of Computation of 30-day yield. Incorporated by reference to
Post-Effective Amendment No. 5 to Registration Statement on Form N-1A,
filed via EDGAR on November 30, 1993 (File No. 33-37356).
17. Financial Data Schedule.*
18. Rule 18f-3 Plan.*
- ---------
*Filed herewith.
FORM OF ARTICLES SUPPLEMENTARY
OF
GLOBAL UTILITY FUND, INC.
* * * * * * *
Pursuant to Section 2-208.1
of the Maryland General Corporation Law
* * * * * * *
Global Utility Fund, Inc., a Maryland corporation having its
principal offices in Baltimore, Maryland and Newark, New Jersey
(the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland, that:
FIRST: The Corporation is registered as an open-end company
under the Investment Company Act of 1940.
SECOND: The total number of shares of all classes of stock
which the Corporation has authority to issue is 2 billion shares of
common stock, par value of $.001 each, having an aggregate par
value of $2,000,000.
THIRD: Heretofore, the number of authorized shares of which
the Corporation has authority to issue was divided into three
classes of shares, consisting of 666,666,666 2/3 shares of Class A
Common Stock, 666,666,666 2/3 shares of Class B Common Stock and
666,666,666 2/3 shares of Class C Common Stock.
FOURTH: In accordance with Section 2-105(c) of the Maryland
General Corporation Law and pursuant to a resolution duly adopted
by the Board of Directors of the Corporation at a meeting held on
May 9, 1996, the number of authorized shares of which the
Corporation has authority to issue is hereby divided into four
classes of shares, consisting of 500,000,000 shares of Class A
Common Stock, 500,000,000 shares of Class B Common Stock,
500,000,000 shares of Class C Common Stock and 500,000,000 shares
of Class Z Common Stock.
FIFTH: The Class Z shares shall represent the same interest
in the Corporation and have identical voting, dividend, liquidation
and other rights as the Class A, Class B and Class C shares 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
<PAGE>
Board of Directors from time to time; (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 and (vi) The Class Z Common Stock shall not be subject
to a front-end sales load, a contingent deferred sales charge nor
a Rule 12b-1 distribution fee. 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.
IN WITNESS WHEREOF, GLOBAL UTILITY FUND, INC., has caused
these presents to be signed in its name and on its behalf by its
Vice President and attested by its Assistant Secretary on
_______________, 1996.
GLOBAL UTILITY FUND, INC.
By
Robert F. Gunia
Vice President
Attest:
S. Jane Rose
Secretary
THE UNDERSIGNED, Vice President of Global Utility Fund, Inc.,
who executed on behalf of the Corporation the foregoing Articles
Supplementary of which this certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the
foregoing Articles Supplementary to be the corporate act of said
Corporation and hereby certifies that to the best of his knowledge,
information and belief the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
Robert F. Gunia
Vice President
guf-art.sup
GLOBAL UTILITY FUND, INC.
Distribution Agreement
Agreement made as of May 9, 1996, between Global Utility
Fund, Inc., a Maryland corporation (the Fund), and Prudential
Securities Incorporated, a Delaware corporation (the Distributor).
WITNESSETH
WHEREAS, the Fund is registered under the Investment
Company Act of 1940, as amended (the Investment Company Act), as a
diversified, open-end, management investment company and it is in
the interest of the Fund to offer its shares for sale continuously;
WHEREAS, the shares of the Fund may be divided into
classes and/or series (all such shares being referred to herein as
Shares) and the Fund currently is authorized to offer Class A,
Class B, Class C and Class Z Shares;
WHEREAS, the Distributor is a broker-dealer registered
under the Securities Exchange Act of 1934, as amended, and is
engaged in the business of selling shares of registered investment
companies either directly or through other broker-dealers;
WHEREAS, the Fund and the Distributor wish to enter into
an agreement with each other, with respect to the continuous
offering of the Fund's Shares from and after the date hereof in
order to promote the growth of the Fund and facilitate the
distribution of its Shares; and
WHEREAS, upon approval by the holders of the respective
classes and/or series of Shares of the Fund it is contemplated that
the Fund will adopt a plan (or plans) of distribution pursuant to
Rule 12b-1 under the Investment Company Act with respect to certain
of its classes and/or series of Shares (the Plans) authorizing
payments by the Fund to the Distributor with respect to the
distribution of such classes and/or series of Shares and the
maintenance of related shareholder accounts.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor
The Fund hereby appoints the Distributor as the principal
underwriter and distributor of the Shares of the Fund to sell
Shares to the public on behalf of the Fund and the Distributor
hereby accepts such appointment and agrees to act hereunder. The
Fund hereby agrees during the term of this Agreement to sell Shares
of the Fund through the Distributor on the terms and conditions set
forth below.
1
<PAGE>
Section 2. Exclusive Nature of Duties
The Distributor shall be the exclusive representative of
the Fund to act as principal underwriter and distributor of the
Fund's Shares, except that:
2.1 The exclusive rights granted to the Distributor to
sell Shares of the Fund shall not apply to Shares of the Fund
issued in connection with the merger or consolidation of any other
investment company or personal holding company with the Fund or the
acquisition by purchase or otherwise of all (or substantially all)
the assets or the outstanding shares of any such company by the
Fund.
2.2 Such exclusive rights shall not apply to Shares
issued by the Fund pursuant to reinvestment of dividends or capital
gains distributions or through the exercise of any conversion
feature or exchange privilege.
2.3 Such exclusive rights shall not apply to Shares
issued by the Fund pursuant to the reinstatement privilege afforded
redeeming shareholders.
2.4 Such exclusive rights shall not apply to purchases
made through the Fund's transfer and dividend disbursing agent in
the manner set forth in the currently effective Prospectus of the
Fund. The term "Prospectus" shall mean the Prospectus and
Statement of Additional Information included as part of the Fund's
Registration Statement, as such Prospectus and Statement of
Additional Information may be amended or supplemented from time to
time, and the term "Registration Statement" shall mean the
Registration Statement filed by the Fund with the Securities and
Exchange Commission and effective under the Securities Act of 1933,
as amended (Securities Act), and the Investment Company Act, as
such Registration Statement is amended from time to time.
Section 3. Purchase of Shares from the Fund
3.1 The Distributor shall have the right to buy from the
Fund on behalf of investors the Shares needed, but not more than
the Shares needed (except for clerical errors in transmission) to
fill unconditional orders for Shares placed with the Distributor by
investors or registered and qualified securities dealers and other
financial institutions (selected dealers).
3.2 The Shares shall be sold by the Distributor on
behalf of the Fund and delivered by the Distributor or selected
dealers, as described in Section 6.4 hereof, to investors at the
offering price as set forth in the Prospectus.
3.3 The Fund shall have the right to suspend the sale of
any or all classes and/or series of its Shares at times when
2
<PAGE>
redemption is suspended pursuant to the conditions in Section 4.3
hereof or at such other times as may be determined by the Board of
Directors. The Fund shall also have the right to suspend the sale
of any or all classes and/or series of its Shares if a banking
moratorium shall have been declared by federal or New York
authorities.
3.4 The Fund, or any agent of the Fund designated in
writing by the Fund, shall be promptly advised of all purchase
orders for Shares received by the Distributor. Any order may be
rejected by the Fund; provided, however, that the Fund will not
arbitrarily or without reasonable cause refuse to accept or confirm
orders for the purchase of Shares. The Fund (or its agent) will
confirm orders upon their receipt, will make appropriate book
entries and upon receipt by the Fund (or its agent) of payment
therefor, will deliver deposit receipts for such Shares pursuant to
the instructions of the Distributor. Payment shall be made to the
Fund in New York Clearing House funds or federal funds. The
Distributor agrees to cause such payment and such instructions to
be delivered promptly to the Fund (or its agent).
Section 4. Repurchase or Redemption of Shares by the Fund
4.1 Any of the outstanding Shares may be tendered for
redemption at any time, and the Fund agrees to repurchase or redeem
the Shares so tendered in accordance with its Articles of
Incorporation as amended from time to time, and in accordance with
the applicable provisions of the Prospectus. The price to be paid
to redeem or repurchase the Shares shall be equal to the net asset
value determined as set forth in the Prospectus. All payments by
the Fund hereunder shall be made in the manner set forth in Section
4.2 below.
4.2 The Fund shall pay the total amount of the
redemption price as defined in the above paragraph pursuant to the
instructions of the Distributor on or before the seventh day
subsequent to its having received the notice of redemption in
proper form. The proceeds of any redemption of Shares shall be
paid by the Fund as follows: (i) in the case of Shares subject to
a contingent deferred sales charge, any applicable contingent
deferred sales charge shall be paid to the Distributor, and the
balance shall be paid to or for the account of the redeeming
shareholder, in each case in accordance with applicable provisions
of the Prospectus; and (ii) in the case of all other Shares,
proceeds shall be paid to or for the account of the redeeming
shareholder, in each case in accordance with applicable provisions
of the Prospectus.
4.3 Redemption of any class and/or series of Shares or
payment may be suspended at times when the New York Stock Exchange
is closed for other than customary weekends and holidays, when
trading on said Exchange is restricted, when an emergency exists as
3
<PAGE>
a result of which disposal by the Fund of securities owned by it is
not reasonably practicable or it is not reasonably practicable for
the Fund fairly to determine the value of its net assets, or during
any other period when the Securities and Exchange Commission, by
order, so permits.
Section 5. Duties of the Fund
5.1 Subject to the possible suspension of the sale of
Shares as provided herein, the Fund agrees to sell its Shares so
long as it has Shares of the respective class and/or series
available.
5.2 The Fund shall furnish the Distributor copies of all
information, financial statements and other papers which the
Distributor may reasonably request for use in connection with the
distribution of Shares, and this shall include one certified copy,
upon request by the Distributor, of all financial statements
prepared for the Fund by independent public accountants. The Fund
shall make available to the Distributor such number of copies of
its Prospectus and annual and interim reports as the Distributor
shall reasonably request.
5.3 The Fund shall take, from time to time, but subject
to the necessary approval of the Board of Directors and the
shareholders, all necessary action to fix the number of authorized
Shares and such steps as may be necessary to register the same
under the Securities Act, to the end that there will be available
for sale such number of Shares as the Distributor reasonably may
expect to sell. The Fund agrees to file from time to time such
amendments, reports and other documents as may be necessary in
order that there will be no untrue statement of a material fact in
the Registration Statement, or necessary in order that there will
be no omission to state a material fact in the Registration
Statement which omission would make the statements therein
misleading.
5.4 The Fund shall use its best efforts to qualify and
maintain the qualification of any appropriate number of its Shares
for sales under the securities laws of such states as the
Distributor and the Fund may approve; provided that the Fund shall
not be required to amend its Articles of Incorporation or By-Laws
to comply with the laws of any state, to maintain an office in any
state, to change the terms of the offering of its Shares in any
state from the terms set forth in its Registration Statement, to
qualify as a foreign corporation in any state or to consent to
service of process in any state other than with respect to claims
arising out of the offering of its Shares. Any such qualification
may be withheld, terminated or withdrawn by the Fund at any time in
its discretion. As provided in Section 9 hereof, the expense of
qualification and maintenance of qualification shall be borne by
the Fund. The Distributor shall furnish such information and other
4
<PAGE>
material relating to its affairs and activities as may be required
by the Fund in connection with such qualifications.
Section 6. Duties of the Distributor
6.1 The Distributor shall devote reasonable time and
effort to effect sales of Shares, but shall not be obligated to
sell any specific number of Shares. Sales of the Shares shall be
on the terms described in the Prospectus. The Distributor may
enter into like arrangements with other investment companies. The
Distributor shall compensate the selected dealers as set forth in
the Prospectus.
6.2 In selling the Shares, the Distributor shall use its
best efforts in all respects duly to conform with the requirements
of all federal and state laws relating to the sale of such
securities. Neither the Distributor nor any selected dealer nor
any other person is authorized by the Fund to give any information
or to make any representations, other than those contained in the
Registration Statement or Prospectus and any sales literature
approved by appropriate officers of the Fund.
6.3 The Distributor shall adopt and follow procedures
for the confirmation of sales to investors and selected dealers,
the collection of amounts payable by investors and selected dealers
on such sales and the cancellation of unsettled transactions, as
may be necessary to comply with the requirements of the National
Association of Securities Dealers, Inc. (NASD).
6.4 The Distributor shall have the right to enter into
selected dealer agreements with registered and qualified securities
dealers and other financial institutions of its choice for the sale
of Shares, provided that the Fund shall approve the forms of such
agreements. Within the United States, the Distributor shall offer
and sell Shares only to such selected dealers as are members in
good standing of the NASD. Shares sold to selected dealers shall
be for resale by such dealers only at the offering price determined
as set forth in the Prospectus.
Section 7. Payments to the Distributor
7.1 With respect to classes and/or series of Shares
which impose a front-end sales charge, the Distributor shall
receive and may retain any portion of any front-end sales charge
which is imposed on such sales and not reallocated to selected
dealers as set forth in the Prospectus, subject to the limitations
of Article III, Section 26 of the NASD Rules of Fair Practice.
Payment of these amounts to the Distributor is not contingent upon
the adoption or continuation of any applicable Plans.
7.2 With respect to classes and/or series of Shares
which impose a contingent deferred sales charge, the Distributor
5
<PAGE>
shall receive and may retain any contingent deferred sales charge
which is imposed on such sales as set forth in the Prospectus,
subject to the limitations of Article III, Section 26 of the NASD
Rules of Fair Practice. Payment of these amounts to the
Distributor is not contingent upon the adoption or continuation of
any Plan.
Section 8. Payment of the Distributor under the Plan
8.1 The Fund shall pay to the Distributor as
compensation for services under any Plans adopted by the Fund and
this Agreement a distribution and service fee with respect to the
Fund's classes and/or series of Shares as described in each of the
Fund's respective Plans and this Agreement.
8.2 So long as a Plan or any amendment thereto is in
effect, the Distributor shall inform the Board of Directors of the
commissions and account servicing fees with respect to the relevant
class and/or series of Shares to be paid by the Distributor to
account executives of the Distributor and to broker-dealers and
financial institutions which have dealer agreements with the
Distributor. So long as a Plan (or any amendment thereto) is in
effect, at the request of the Board of Directors or any agent or
representative of the Fund, the Distributor shall provide such
additional information as may reasonably be requested concerning
the activities of the Distributor hereunder and the costs incurred
in performing such activities with respect to the relevant class
and/or series of Shares.
Section 9. Allocation of Expenses
The Fund shall bear all costs and expenses of the
continuous offering of its Shares (except for those costs and
expenses borne by the Distributor pursuant to a Plan and subject to
the requirements of Rule 12b-1 under the Investment Company Act),
including fees and disbursements of its counsel and auditors, in
connection with the preparation and filing of any required
Registration Statements and/or Prospectuses under the Investment
Company Act or the Securities Act, and all amendments and
supplements thereto, and preparing and mailing annual and periodic
reports and proxy materials to shareholders (including but not
limited to the expense of setting in type any such Registration
Statements, Prospectuses, annual or periodic reports or proxy
materials). The Fund shall also bear the cost of expenses of
qualification of the Shares for sale, and, if necessary or
advisable in connection therewith, of qualifying the Fund as a
broker or dealer, in such states of the United States or other
jurisdictions as shall be selected by the Fund and the Distributor
pursuant to Section 5.4 hereof and the cost and expense payable to
each such state for continuing qualification therein until the Fund
decides to discontinue such qualification pursuant to Section 5.4
hereof. As set forth in Section 8 above, the Fund shall also bear
6
<PAGE>
the expenses it assumes pursuant to any Plan, so long as such Plan
is in effect.
Section 10. Indemnification
10.1 The Fund agrees to indemnify, defend and hold the
Distributor, its officers and directors and any person who controls
the Distributor within the meaning of Section 15 of the Securities
Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and
any reasonable counsel fees incurred in connection therewith) which
the Distributor, its officers, directors or any such controlling
person may incur under the Securities Act, or under common law or
otherwise, arising out of or based upon any untrue statement of a
material fact contained in the Registration Statement or Prospectus
or arising out of or based upon any alleged omission to state a
material fact required to be stated in either thereof or necessary
to make the statements in either thereof not misleading, except
insofar as such claims, demands, liabilities or expenses arise out
of or are based upon any such untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in
conformity with information furnished in writing by the Distributor
to the Fund for use in the Registration Statement or Prospectus;
provided, however, that this indemnity agreement shall not inure to
the benefit of any such officer, director, trustee or controlling
person unless a court of competent jurisdiction shall determine in
a final decision on the merits, that the person to be indemnified
was not liable by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations under this Agreement
(disabling conduct), or, in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that
the indemnified person was not liable by reason of disabling
conduct, by (a) a vote of a majority of a quorum of directors or
trustees who are neither "interested persons" of the Fund as
defined in Section 2(a)(19) of the Investment Company Act nor
parties to the proceeding, or (b) an independent legal counsel in
a written opinion. The Fund's agreement to indemnify the
Distributor, its officers and directors or trustees and any such
controlling person as aforesaid is expressly conditioned upon the
Fund's being promptly notified of any action brought against the
Distributor, its officers or directors or trustees, or any such
controlling person, such notification to be given by letter or
telegram addressed to the Fund at its principal business office.
The Fund agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of
its officers or directors in connection with the issue and sale of
any Shares.
10.2 The Distributor agrees to indemnify, defend and hold
the Fund, its officers and Directors and any person who controls
7
<PAGE>
the Fund, if any, within the meaning of Section 15 of the
Securities Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of
investigating or defending against such claims, demands or
liabilities and any reasonable counsel fees incurred in connection
therewith) which the Fund, its officers and Directors or any such
controlling person may incur under the Securities Act or under
common law or otherwise, but only to the extent that such liability
or expense incurred by the Fund, its Directors or officers or such
controlling person resulting from such claims or demands shall
arise out of or be based upon any alleged untrue statement of a
material fact contained in information furnished in writing by the
Distributor to the Fund for use in the Registration Statement or
Prospectus or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such
information required to be stated in the Registration Statement or
Prospectus or necessary to make such information not misleading.
The Distributor's agreement to indemnify the Fund, its officers and
Directors and any such controlling person as aforesaid, is
expressly conditioned upon the Distributor's being promptly
notified of any action brought against the Fund, its officers and
Directors or any such controlling person, such notification being
given to the Distributor at its principal business office.
Section 11. Duration and Termination of this Agreement
11.1 This Agreement shall become effective as of the date
first above written and shall remain in force for two years from
the date hereof and thereafter, but only so long as such
continuance is specifically approved at least annually by (a) the
Board of Directors of the Fund, or by the vote of a majority of the
outstanding voting securities of the applicable class and/or series
of the Fund, and (b) by the vote of a majority of those Directors
who are not parties to this Agreement or interested persons of any
such parties and who have no direct or indirect financial interest
in this Agreement or in the operation of any of the Fund's Plans or
in any agreement related thereto (Independent Directors), cast in
person at a meeting called for the purpose of voting upon such
approval.
11.2 This Agreement may be terminated at any time,
without the payment of any penalty, by a majority of the
Independent Directors or by vote of a majority of the outstanding
voting securities of the applicable class and/or series of the
Fund, or by the Distributor, on sixty (60) days' written notice to
the other party. This Agreement shall automatically terminate in
the event of its assignment.
11.3 The terms "affiliated person," "assignment,"
"interested person" and "vote of a majority of the outstanding
voting securities", when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act.
8
<PAGE>
Section 12. Amendments to this Agreement
This Agreement may be amended by the parties only if such
amendment is specifically approved by (a) the Board of Directors of
the Fund, or by the vote of a majority of the outstanding voting
securities of the applicable class and/or series of the Fund, and
(b) by the vote of a majority of the Independent Directors cast in
person at a meeting called for the purpose of voting on such
amendment.
Section 13. Separate Agreement as to Classes and/or Series
The amendment or termination of this Agreement with
respect to any class and/or series shall not result in the
amendment or termination of this Agreement with respect to any
other class and/or series unless explicitly so provided.
Section 14. Governing Law
The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as
at the time in effect and the applicable provisions of the
Investment Company Act. To the extent that the applicable law of
the State of New York, or any of the provisions herein, conflict
with the applicable provisions of the Investment Company Act, the
latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year above written.
Prudential Securities Incorporated
By: /s/ Robert F. Gunia
Robert F. Gunia
Senior Vice President
Global Utility Fund, Inc.
By: /s/ Richard A. Redeker
Richard A. Redeker
President
GUF-REV.DIS
9
KIRKPATRICK & LOCKHART LLP
1800 M Street, NW
South Lobby, Suite 900
Washington, DC 20036
November 26, 1996
Global Utility Fund, Inc.
One Seaport Plaza
New York, New York 10292
Dear Sir or Madam:
Global Utility Fund, Inc. ("Company") is a corporation organized under
the laws of the State of Maryland. We understand that the Company is about to
file Post-Effective Amendment No. 10 to its Registration Statement on Form N-1A
for the purpose of registering additional shares of common stock under the
Securities Act of 1933, as amended ("1933 Act"), pursuant to Section 24(e)(1) of
the Investment Company Act of 1940, as amended ("1940 Act"), as well as to
update the Company's financial statements and make certain editorial changes.
We have, as counsel, participated in various corporate and other
proceedings relating to the Company. We have examined copies, either certified
or otherwise proved to be genuine, of its Articles of Incorporation and By-Laws,
as now in effect, the minutes of meetings of its board of directors and other
documents relating to its organization and operation, and we are generally
familiar with its corporate affairs. Based on the foregoing, it is our opinion
that the 3,461,326 shares of common stock of the Company currently being
registered pursuant to Section 24(e)(1) of the 1940 Act, as reflected in
Post-Effective Amendment No. 10, may be legally and validly issued from time to
time in accordance with the Company's Articles of Incorporation and By-Laws and,
subject to compliance with the 1933 Act, the 1940 Act and various state laws
regulating the offer and sale of securities; and when so issued, these shares of
common stock will be legally issued, fully paid and non-assessable.
<PAGE>
Global Utility Fund, Inc.
November 26, 1996
Page 2
We hereby consent to the filing of this opinion in connection with
Post-Effective Amendment No. 10 to the Company's Registration Statement on Form
N-1A to be filed with the Securities and Exchange Commission.
Very truly yours,
KIRKPATRICK & LOCKHART LLP
By:
Stephanie A. Djinis
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Post-Effective Amendment No. 10 to Registration
Statement No. 33-37356 of Global Utility Fund, Inc. of our report dated November
14, 1996, appearing in the Statement of Additional Information, which is a part
of such Registration Statement, and to the references to us under the headings
"Financial Highlights" in the Prospectus, which is a part of such Registration
Statement, and "Custodian, Transfer and Dividend Disbursing Agent and
Independent Accountants" in the Statement of Additional Information.
Deloitte & Touche LLP
New York, New York
November 27, 1996
GLOBAL UTILITY FUND,INC.
(the Fund)
PLAN PURSUANT TO RULE 18F-3
The Fund hereby adopts this plan pursuant to Rule 18f-3
under the Investment Company Act of 1940 (the 1940 Act), setting
forth the separate arrangement and expense allocation of each
class of shares. Any material amendment to this plan is subject
to prior approval of the Board of Directors, including a majority
of the independent Directors.
CLASS CHARACTERISTICS
CLASS A SHARES: Class A shares are subject to a high initial
sales charge and a distribution and/or
service fee pursuant to Rule 12b-1 under the
1940 Act (Rule 12b-1 fee) not to exceed .30
of 1% per annum of the average daily net
assets of the class. The initial sales
charge is waived or reduced for certain
eligible investors.
CLASS B SHARES: Class B shares are not subject to an initial
sales charge but are subject to a high
contingent deferred sales charge (declining
by 1% each year) which will be imposed on
certain redemptions and a Rule 12b-1 fee of
not to exceed [.75 of 1%/1%] per annum of the
average daily net assets of the class. The
contingent deferred sales charge is waived
for certain eligible investors. Class B
shares automatically convert to Class A
shares approximately [seven] years after
purchase.
CLASS C SHARES: Class C shares are not subject to an initial
sales charge but are subject to a low
contingent deferred sales charge (declining
by 1% each year) which will be imposed on
certain redemptions and a Rule 12b-1 fee not
to exceed 1% per annum of the average daily
net assets of the class.
Class Z SHARES: Class Z shares are not subject to either an
initial or contingent deferred sales charge
nor are they subject to any Rule 12b-1 fee.
INCOME AND EXPENSE ALLOCATIONS
Income, any realized and unrealized capital gains and
losses, and expenses not allocated to a particular class,
<PAGE>
will be allocated to each class on the basis of the net
asset value of that class in relation to the net asset value
of the Fund.
DIVIDENDS AND DISTRIBUTIONS
Dividends and other distributions paid by the Fund to each
class of shares, to the extent paid, will be paid on the
same day and at the same time, and will be determined in the
same manner and will be in the same amount, except that the
amount of the dividends and other distributions declared and
paid by a particular class may be different from that paid
by another class because of Rule 12b-1 fees and other
expenses borne exclusively by that class.
EXCHANGE PRIVILEGE
Each class of shares is generally exchangeable for the same
class of shares (or the class of shares with similar
characteristics), if any, of the other Prudential Mutual
Funds (subject to certain minimum investment requirements)
at relative net asset value without the imposition of any
sales charge.
Class B and Class C shares (which are not subject to a
contingent deferred sales charge) of shareholders who
qualify to purchase Class A shares at net asset value will
be automatically exchanged for Class A shares on a quarterly
basis, unless the shareholder elects otherwise.
CONVERSION FEATURES
Class B shares will automatically convert to Class A shares
on a quarterly basis approximately seven years after
purchase. Conversions will be effected at relative net
asset value without the imposition of any additional sales
charge.
GENERAL
A. Each class of shares shall have exclusive voting rights on
any matter submitted to shareholders that relates solely to
its arrangement and shall have separate voting rights on any
matter submitted to shareholders in which the interests of
one class differ from the interests of any other class.
B. On an ongoing basis, the Directors, pursuant to their
fiduciary responsibilities under the 1940 Act and otherwise,
will monitor the Fund for the existence of any material
conflicts among the interests of its several classes. The
Directors, including a majority of the independent
<PAGE>
Directors, shall take such action as is reasonably necessary
to eliminate any such conflicts that may develop.
Prudential Mutual Fund Management, Inc., the Fund's Manager,
will be responsible for reporting any potential or existing
conflicts to the Directors.
C. For purposes of expressing an opinion on the financial
statements of the Fund, the methodology and procedures for
calculating the net asset value and dividends/distributions
of the Fund's several classes and the proper allocation of
income and expenses among such classes will be examined
annually by the Fund's independent auditors who, in
performing such examination, shall consider the factors set
forth in the relevant auditing standards adopted, from time
to time, by the American Institute of Certified Public
Accountants.
Dated: March 1, 1996
[ARTICLE] 6
[CIK] 0000843091
[NAME] GLOBAL UTILTY FUND, INC.
[SERIES]
[NUMBER] 001
[NAME] GLOBAL UTILITY FUND, INC. (CLASS A)
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] SEP-30-1995
[PERIOD-END] SEP-30-1996
[INVESTMENTS-AT-COST] 255,844,553
[INVESTMENTS-AT-VALUE] 297,297,313
[RECEIVABLES] 6,188,414
[ASSETS-OTHER] 184,162
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 303,669,889
[PAYABLE-FOR-SECURITIES] 541,800
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2,109,946
[TOTAL-LIABILITIES] 2,651,746
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 243,987,485
[SHARES-COMMON-STOCK] 20,027,778
[SHARES-COMMON-PRIOR] 23,934,353
[ACCUMULATED-NII-CURRENT] 347,667
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 15,225,749
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 41,457,242
[NET-ASSETS] 301,018,143
[DIVIDEND-INCOME] 9,232,590
[INTEREST-INCOME] 6,222,613
[OTHER-INCOME] 0
[EXPENSES-NET] 5,868,292
[NET-INVESTMENT-INCOME] 9,586,911
[REALIZED-GAINS-CURRENT] 18,126,265
[APPREC-INCREASE-CURRENT] (1,176,880)
[NET-CHANGE-FROM-OPS] 26,536,296
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (9,586,911)
[DISTRIBUTIONS-OF-GAINS] (9,598,503)
[DISTRIBUTIONS-OTHER] (18,990)
[NUMBER-OF-SHARES-SOLD] 28,413,113
[NUMBER-OF-SHARES-REDEEMED] (102,550,920)
[SHARES-REINVESTED] 15,648,910
[NET-CHANGE-IN-ASSETS] (51,157,005)
[ACCUMULATED-NII-PRIOR] 67,751
[ACCUMULATED-GAINS-PRIOR] 6,776,785
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,195,690
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 5,868,292
[AVERAGE-NET-ASSETS] 120,122,000
[PER-SHARE-NAV-BEGIN] 14.72
[PER-SHARE-NII] 1.24
[PER-SHARE-GAIN-APPREC] 0.00
[PER-SHARE-DIVIDEND] (0.51)
[PER-SHARE-DISTRIBUTIONS] (0.42)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 15.03
[EXPENSE-RATIO] 1.30
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000843091
[NAME] GLOBAL UTILTY FUND, INC.
[SERIES]
[NUMBER] 002
[NAME] GLOBAL UTILITY FUND, INC. (CLASS B)
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] SEP-30-1995
[PERIOD-END] SEP-30-1996
[INVESTMENTS-AT-COST] 255,844,553
[INVESTMENTS-AT-VALUE] 297,297,313
[RECEIVABLES] 6,188,414
[ASSETS-OTHER] 184,162
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 303,669,889
[PAYABLE-FOR-SECURITIES] 541,800
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2,109,946
[TOTAL-LIABILITIES] 2,651,746
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 243,987,485
[SHARES-COMMON-STOCK] 20,027,778
[SHARES-COMMON-PRIOR] 23,934,353
[ACCUMULATED-NII-CURRENT] 347,667
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 15,225,749
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 41,457,242
[NET-ASSETS] 301,018,143
[DIVIDEND-INCOME] 9,232,590
[INTEREST-INCOME] 6,222,613
[OTHER-INCOME] 0
[EXPENSES-NET] 5,868,292
[NET-INVESTMENT-INCOME] 9,586,911
[REALIZED-GAINS-CURRENT] 18,126,265
[APPREC-INCREASE-CURRENT] (1,176,880)
[NET-CHANGE-FROM-OPS] 26,536,296
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (9,586,911)
[DISTRIBUTIONS-OF-GAINS] (9,598,503)
[DISTRIBUTIONS-OTHER] (18,990)
[NUMBER-OF-SHARES-SOLD] 28,413,113
[NUMBER-OF-SHARES-REDEEMED] (102,550,920)
[SHARES-REINVESTED] 15,648,910
[NET-CHANGE-IN-ASSETS] (51,157,005)
[ACCUMULATED-NII-PRIOR] 67,751
[ACCUMULATED-GAINS-PRIOR] 6,776,785
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,195,690
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 5,868,292
[AVERAGE-NET-ASSETS] 210,305,000
[PER-SHARE-NAV-BEGIN] 14.71
[PER-SHARE-NII] 1.14
[PER-SHARE-GAIN-APPREC] 0.00
[PER-SHARE-DIVIDEND] (0.40)
[PER-SHARE-DISTRIBUTIONS] (0.42)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 15.03
[EXPENSE-RATIO] 2.05
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000843091
[NAME] GLOBAL UTILTY FUND, INC.
[SERIES]
[NUMBER] 003
[NAME] GLOBAL UTILITY FUND, INC. (CLASS C)
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] SEP-30-1995
[PERIOD-END] SEP-30-1996
[INVESTMENTS-AT-COST] 255,844,553
[INVESTMENTS-AT-VALUE] 297,297,313
[RECEIVABLES] 6,188,414
[ASSETS-OTHER] 184,162
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 303,669,889
[PAYABLE-FOR-SECURITIES] 541,800
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2,109,946
[TOTAL-LIABILITIES] 2,651,746
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 243,987,485
[SHARES-COMMON-STOCK] 20,027,778
[SHARES-COMMON-PRIOR] 23,934,353
[ACCUMULATED-NII-CURRENT] 347,667
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 15,225,749
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 41,457,242
[NET-ASSETS] 301,018,143
[DIVIDEND-INCOME] 9,232,590
[INTEREST-INCOME] 6,222,613
[OTHER-INCOME] 0
[EXPENSES-NET] 5,868,292
[NET-INVESTMENT-INCOME] 9,586,911
[REALIZED-GAINS-CURRENT] 18,126,265
[APPREC-INCREASE-CURRENT] (1,176,880)
[NET-CHANGE-FROM-OPS] 26,536,296
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (9,586,911)
[DISTRIBUTIONS-OF-GAINS] (9,598,503)
[DISTRIBUTIONS-OTHER] (18,990)
[NUMBER-OF-SHARES-SOLD] 28,413,113
[NUMBER-OF-SHARES-REDEEMED] (102,550,920)
[SHARES-REINVESTED] 15,648,910
[NET-CHANGE-IN-ASSETS] (51,157,005)
[ACCUMULATED-NII-PRIOR] 67,751
[ACCUMULATED-GAINS-PRIOR] 6,776,785
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,195,690
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 5,868,292
[AVERAGE-NET-ASSETS] 608,000
[PER-SHARE-NAV-BEGIN] 14.71
[PER-SHARE-NII] 1.14
[PER-SHARE-GAIN-APPREC] 0.00
[PER-SHARE-DIVIDEND] (0.40)
[PER-SHARE-DISTRIBUTIONS] (0.42)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 15.03
[EXPENSE-RATIO] 2.05
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
