EXHIBIT
SUB-ITEM 77C
SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Special Meeting of Shareholders of Global Utility
Fund, Inc. (the "Fund") held on November 8, 1999,
at Prudential Plaza, 751 Broad Street, 24th Floor,
Newark, New Jersey 07102, for the following
purpose:
To approve changes to certain fundamental
investment restrictions.
A. MODIFICATION OF FUNDAMENTAL RESTRICTION ON
PORTFOLIO DIVERSIFICATION
PROPOSED CHANGE: Upon approval of Proposal 3A, the
existing fundamental restriction on portfolio
diversification would be modified as follows:
"The Fund is a "diversified company" as defined in
the 1940 Act. The Fund may not purchase the
securities of any issuer if, as a result, the Fund
would fail to be a diversified company within the
meaning of the 1940 Act, and the rules and
regulations promulgated thereunder, as such
statute, rules, and regulations are amended from
time to time or are interpreted from time to time
by the SEC staff (collectively, the "1940 Act Laws
and Interpretations") or to the extent that the
Fund may be permitted to do so by exemptive order
or similar relief(collectively, with the 1940 Act
Laws and Interpretations, the "1940 Act Laws,
Interpretations and Exemptions")."
DISCUSSION: The Fund's current fundamental
restriction on portfolio diversification lists the
percentage standards set forth in the 1940 Act for
a diversified fund. In order to qualify as a
diversified investment company under the 1940 Act,
the Fund may not purchase securities of any one
issuer if, as a result, more than 5% of the Fund's
total assets would be invested in securities of
that issuer or the Fund would own or hold more
than 10% of the outstanding voting securities of
that issuer, except that up to 25% of the Fund's
total assets may be invested without regard to
this limitation. This limitation does not apply
to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or
to securities issued by other investment
companies. The proposed restriction adopts the
same 1940 Act standards. However, by not listing
the percentage limitations, the proposed
restriction would change automatically if the 1940
Act Laws, Interpretations and Exemptions change.
B. MODIFICATION AND RECLASSIFICATION OF
FUNDAMENTAL RESTRICTION ON MARGIN TRANSACTIONS
PROPOSED CHANGE: Upon approval of Proposal 3B, the
existing fundamental restriction on engaging in
margin transactions would be eliminated and the
Fund would become subject to the following non-
fundamental restriction:
"The Fund will not purchase securities on margin,
provided that the fund may obtain short-term
credits as may be necessary for the clearance of
purchases and sales of securities, and further
provided that the Fund may make margin deposits in
connection with its use of financial options and
futures, forward and spot currency contracts, swap
transactions and other futures contracts or
derivative instruments."
DISCUSSION: The Fund is not required to have a
fundamental restriction with respect to margin
transactions. To maximize the Fund's flexibility
in this area, the Board believes that the existing
fundamental restriction on margin transactions
should be replaced with a non-fundamental
restriction. The proposed non-fundamental
restriction eliminates any possible confusion over
the Fund's ability to use forward and spot
currency contracts, swap transactions and other
financial contracts or derivative instruments, as
the Fund intends to do from time to time.
C. ELIMINATION OF FUNDAMENTAL RESTRICTION ON
PURCHASING SECURITIES OF COMPANIESWITH LESS THAN
THREE YEARS OF CONTINUOUS OPERATIONS
PROPOSED CHANGE: Upon approval of Proposal 3C, the
existing fundamental restriction on purchasing the
securities of companies having a record of less
than three years of continuous operations would be
eliminated.
DISCUSSION: This fundamental restriction is based
on blue sky regulations by state securities
commissions that are no longer applicable to the
Fund. Elimination of this restriction, which
currently prohibits the Fund from investing more
than 5% of its total assets in securities of
companies with less than three years of continuous
operations, would provide the Fund with greater
flexibility with respect to investment
opportunities in startup companies and emerging
markets. Investments in startup companies and
companies with less than three years of continuous
operations may be riskier than investments in more
established companies. It is not currently
expected that this change would materially affect
the Fund.
D. MODIFICATION OF FUNDAMENTAL RESTRICTION ON
ISSUING SENIOR SECURITIES AND BORROWING MONEY
PROPOSED CHANGE: Upon approval of Proposal 3D, the
existing fundamental restriction on issuing senior
securities would be modified as follows:
"The Fund may not issue senior securities or
borrow money, except as permitted by the 1940 Act
Laws, Interpretations and Exemptions."
DISCUSSION: The proposed changes would make the
Fund's fundamental restriction on issuing senior
securities or borrowing money no more limiting
than required by the 1940 Act. Generally, under
the 1940 Act, funds may borrow money in an amount
not exceeding 33-1/3% of fund total assets
(including the amounts borrowed). The Board
believes that changing the Fund's fundamental
restrictions in this manner will provide
flexibility for future contingencies. However,
the Board does not currently intend to change the
Fund's operations, under which the Fund does not
borrow or use leverage for investment purposes.
E. MODIFICATION OF FUNDAMENTAL RESTRICTION ON
INVESTING IN COMMODITIES
PROPOSED CHANGE: Upon approval of Proposal 3E, the
existing fundamental restriction on investing in
commodities for the Fund would be modified as
follows:
"The Fund may not purchase or sell physical
commodities, but the Fund may purchase, sell or
enter into financial options and futures, forward
and spot currency contracts, swap transactions and
other financial contracts or derivative
instruments."
DISCUSSION: The proposed changes to this
fundamental restriction are intended to ensure
that the Fund will have the maximum flexibility to
enter into hedging and speculative transactions
utilizing financial contracts and derivative
products when doing so is permitted by the Fund's
other investment policies. Thus, the proposed
restriction would allow the Fund to respond to the
rapid and continuing development of derivative
products. The proposed restriction broadens the
exception to the prohibition on buying and selling
physical commodities to include all financial
derivative instruments rather than only financial
futures and currency instruments. The Fund, and
thus shareholders, may lose money through any
unsuccessful use of these strategies. However,
the Fund currently engages in hedging and other
portfolio strategies such as the use of
derivatives to reduce certain risks of its
investments and to attempt to enhance return. The
Fund would continue this policy with respect to
the transactions authorized by the proposed
changes to this fundamental restriction. In
addition, it is expected that any proposed changed
policy would not materially affect Fund
operations.
F. MODIFICATION OF FUNDAMENTAL RESTRICTION ON REAL
ESTATE INVESTMENTS
PROPOSED CHANGE: If Proposal 3E is approved, the
existing fundamental restriction on real estate
investments for the Fund would be removed from the
Fund's proposed fundamental restriction on
investing in commodities, discussed above, and
would be modified as a separate fundamental
restriction to read as follows:
"The Fund may not purchase or sell real estate,
except that investments insecurities of issuers
that invest in real estate and investments in
mortgage-backed securities, mortgage
participations or other instruments supported by
interests in real estate are not subject to this
limitation, and except that the Fund may exercise
rights under agreements relating to such
securities, including the right to enforce
security interests and to hold real estate
acquired by reason of such enforcement until that
real estate can be liquidated in an orderly
manner."
DISCUSSION: The proposed changes to this
fundamental restriction would provide more detail
regarding the types of real estate-related
securities that are permissible investments for
the Fund, such as mortgage participations, and
would permit the Fund to exercise rights under
agreements relating to real estate-related
securities. In addition, the proposed restriction
includes an exception that permits the Fund to
hold real estate acquired as a result of ownership
of securities or other interests. Acquisition of
real estate would subject the Fund to risks
associated with real estate, such as liquidity
risks, environmental risks and changes in tax and
regulatory requirements. It is expected that the
proposed changed policy would not materially
affect Fund operations.
G. ELIMINATION OF FUNDAMENTAL RESTRICTION ON
PURCHASING SECURITIES ISSUED BYOTHER INVESTMENT
COMPANIES
PROPOSED CHANGE: Upon approval of Proposal 3G, the
existing fundamental restriction on purchasing
securities issued by other investment companies,
which prohibits the Fund from investing in
securities of other investment companies, except
in certain instances, would be eliminated.
DISCUSSION: There is no legal requirement that the
Fund have a fundamental restriction on this
subject. This change would offer the Fund the
ability to use alternative investment structures,
although the Board does not currently intend to
materially change the structure of the Fund. In
addition, the ability of the Fund to invest in
other investment companies already is subject to
certain percentage limitations in the 1940 Act.
In general, a fund may not invest more than 10% of
its assets in shares of other funds, more than 5%
of its assets in the shares of a single fund, or
acquire more than 3% of the outstanding voting
stock of another fund.
H. MODIFICATION OF FUNDAMENTAL RESTRICTION ON
CONCENTRATION
PROPOSED CHANGE: Upon approval of Proposal 3H, the
existing fundamental restriction on concentration
would be modified as follows:
"The Fund may not purchase any security if, as a
result thereof, 25% or more of its total assets
would be invested in the securities of issuers
having their principal business activities in the
same industry, other than the utility industries,
except for temporary emergency purposes, and
except that this limitation does not apply to
securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities."
DISCUSSION: The proposed changes to the Fund's
fundamental restriction on concentration would
make minor changes in wording from the existing
fundamental restriction. Under normal
circumstances, at least 65% of the Fund's total
assets will be invested in the securities of
companies primarily engaged in the ownership or
operation of facilities used in the generation,
transmission or distribution of electricity,
telecommunications, gas or water. It is expected
that the proposed changed policy would not
materially affect Fund operations.
I. MODIFICATION OF FUNDAMENTAL RESTRICTION ON
MAKING LOANS
PROPOSED CHANGE: Upon approval of Proposal 3I, the
existing fundamental restriction on making loans
for the Fund would be modified as follows:
"The Fund may not make loans, except through loans
of assets of the Fund or through repurchase
agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures,
other debt securities or instruments, or
participations or other interests therein and
investments in government obligations, commercial
paper, certificates of deposit, bankers'
acceptances or similar instruments will not be
considered the making of a "loan.""
DISCUSSION: The proposed changes to this
fundamental restriction would more completely
describe various debt instruments the Fund may
purchase that do not constitute the making of a
loan and would permit the Fund to lend Fund
assets. However, it is expected that the proposed
changed policy would not materially affect Fund
operations. -
J. MODIFICATION OF FUNDAMENTAL RESTRICTION ON
UNDERWRITING SECURITIES
PROPOSED CHANGE: Upon approval of Proposal 3J, the
Fund's existing fundamental restriction on
underwriting securities would be modified as
follows:
"The Fund may not act as an underwriter except to
the extent that, in connection with the
disposition of portfolio securities, the Fund may
be deemed to be an underwriter under certain
federal securities laws."
DISCUSSION: The proposed changes to this
fundamental restriction would make minor changes
in wording from the existing fundamental
restriction on underwriting securities. It is
expected that the proposed changed policy would
not materially affect Fund operations.
K. ELIMINATION OF FUNDAMENTAL RESTRICTION ON
SELLING SECURITIES SHORT PROPOSED CHANGE: Upon
approval of Proposal 3K, the Fund's existing
fundamental restriction on selling securities
short under certain circumstances would be
eliminated.
DISCUSSION: The Fund is not required to have a
fundamental restriction with respect to short
sales of securities. A short sale of a security
is a transaction in which a fund sells a security
it does not own in anticipation of a decline in
the market value of that security. To maximize
the Fund's flexibility in this area, the Board
believes that the Fund's restriction on short
sales of securities, which prohibits the Fund from
selling securities short or maintaining a short
position, except in connection with the use of
options, futures contracts, options thereon and
forward currency contracts, should be eliminated.
Although the Fund will not become subject to a
comparable non-fundamental restriction, the Fund
does not currently intend to engage in short sales
of securities.
L. ELIMINATION OF FUNDAMENTAL RESTRICTION ON
INVESTING FOR THE PURPOSE OFEXERCISING CONTROL
PROPOSED CHANGE: Upon approval of Proposal 3L, the
Fund's existing fundamental restriction on
investing for the purpose of exercising control
for the Fund would be eliminated.
DISCUSSION: The Board proposes to eliminate this
fundamental restriction, which prohibits the Fund
from investing in companies for the purpose of
exercising control or management. Elimination of
this restriction would clarify the Fund's ability
to exercise freely its normal rights as a
shareholder of the companies in which it invests.
Although the Fund will not become subject to a
comparable non-fundamental restriction, the Fund
does not currently intend to become involved in
directing or administering the day-to-day
operations of any company.
Approval of certain changes to fundamental
investment restrictions regarding:
Votes for Votes
against Abstentions
a) Diversification 5,943,226 291,152
342,629
b) Margin transactions 5,734,631 459,570
382,751
c) Investments in securities of
companies with less than three
years of continuous operation 5,750,000
489,256 337,751
d) Senior securities and borrowing
money 5,766,398
438,256 371,778
e) Commodities 5,689,979 525,173 361,855
g) Investment in shares of other
investment companies 5,865,066
496,442 340,413
h) Concentration 5,830,996 339,560
406,451
i) Making loans 5,688,465 496,442 392,100
j) Underwriting securities 5,795,631 391,571
389,805
k) Selling securities short 5,673,938 545,511
357,558
l) Investing for the purpose
of taking control 5,762,775
441,368 372,864
