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SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[_]Confidential, for Use of the
Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-12
Prudential Diversified Bond Fund, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PRUDENTIAL DIVERSIFIED BOND FUND, INC.
Gateway Center Three
Newark, New Jersey 07102
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
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To Our Shareholders:
Notice is hereby given that a Special Meeting of Shareholders (the Meeting)
of Prudential Diversified Bond Fund, Inc. (the Fund) will be held on April 19,
2000, at 10:00 a.m. at 100 Mulberry Street, Gateway Center Two, Newark, New
Jersey 07102, for the following purposes:
1. To amend the investment objective of the Fund.
2. To approve amendments to the Fund's fundamental investment restrictions
relating to:
(a) borrowing transactions;
(b) the making of loans; and
(c) investments in securities of other investment companies.
3. To consider and act upon any other business as may properly come before
the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on February 18, 2000
as the record date for the determination of shareholders entitled to vote at
the Meeting or any adjournment thereof.
Deborah A. Docs
Secretary
Dated: March 2, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING IN YOUR PROXY PROMPTLY. SHAREHOLDERS CAN ALSO VOTE
THROUGH THE INTERNET OR BY TELEPHONE USING THE 12-DIGIT "CONTROL" NUMBER THAT
APPEARS ON THE ENCLOSED PROXY.
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PRUDENTIAL DIVERSIFIED BOND FUND, INC.
Gateway Center Three
Newark, New Jersey 07102
----------------------
PROXY STATEMENT
----------------------
Special Meeting of Shareholders
April 19, 2000, at 10:00 a.m.
This Proxy Statement is furnished by the Board of Directors of Prudential
Diversified Bond Fund, Inc. (the Fund) in connection with the solicitation of
proxies for use at the Special Meeting of Shareholders (the Meeting) to be
held on April 19, 2000 at 10:00 a.m at 100 Mulberry Street, Gateway Center
Two, Newark, New Jersey 07102. The Fund's principal executive office is
located at 100 Mulberry Street, Gateway Center Three, Newark, New Jersey
07102. The purpose of the Meeting is to consider proposals to change (1) the
Fund's investment objective and (2) fundamental investment restrictions
relating to (a) borrowing transactions, (b) the making of loans, and (c)
investments in securities of other investment companies.
It is expected that the Notice of Special Meeting, Proxy Statement and
accompanying form of proxy will first be mailed to shareholders of record on
or about March 2, 2000. The most recent annual report for the Fund is being
mailed to shareholders together with this Proxy Statement.
If the accompanying form of proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. However, if no instructions are specified, shares
will be voted FOR the proposals. A proxy may be revoked at any time prior to
the time it is voted by written notice to the Secretary of the Fund or by
attendance at the Meeting. In addition, a shareholder can revoke a prior proxy
simply by voting again--using the original proxy card, by toll-free telephone
call, or at the Fund's Web site listed below. If sufficient votes to approve
one or more of the proposed items are not received or if a quorum is not
present, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares present at the
Meeting or represented by proxy and will not require notice other than
announcement at the Meeting. When voting on a proposed adjournment, the
persons named as proxies will vote for the proposed adjournment all shares
that they are entitled to vote with respect to each item, unless directed to
disapprove the item, in which case such shares will be voted against the
proposed adjournment. In the event that a meeting is adjourned, the same
procedures will apply at a later meeting date.
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The close of business on February 18, 2000 has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at,
the Meeting. On that date, the Fund had 5,000,081.956 Class A shares,
13,467,187.315 Class B shares, 723,377.451 Class C shares and 3,952,153.032
Class Z shares, of Common Stock outstanding and entitled to vote. Each share
will be entitled to one vote at the Meeting (and such shareholders of record
holding fractional shares, if any, shall have proportionate voting rights).
As of February 18, 2000, the beneficial owners, directly or indirectly, of
more than 5% of the outstanding shares of any class of beneficial interests
were: Pru Defined Contribution Svcs, FBO PRU NON Trust Accounts, Attn: John
Surdy, 30 Scranton Office Park, Moosic PA 18507-1755, who held 453,547 Class A
shares of the Fund (9.07% of the outstanding Class A shares); Prudential Trust
Company, FBO PRU-DC Trust Accounts, Attn: John Surdy, 30 Scranton Office, Park
Moosic PA 18507-1796, who held 289,306 Class A shares of the Fund (5.77% of
the outstanding Class A shares); Prudential Trust Company, FBO PRU-DC Trust
Accounts, Attn: John Surdy, 30 Scranton Office Park, Moosic PA 18507-1796, who
held 2,680,794 Class Z shares of the Fund (67.83% of the outstanding Class Z
shares); Marquette Trust Co TTEE, STAT Hawaii Deferred Compensation Plan,
Marquette Trust Company, Attn: Ann Mejia DCA/TR ADMINIS, 13100 Wayzata Blvd,
Minnetonka MN 55305-1842, who held 517,182 Class Z shares of the Fund (13.09%
of the outstanding Class Z shares).
As of February 18, 2000, the Directors and officers of the Fund, as a group,
owned less than 1% of each class of outstanding shares of the Fund.
Both proposals described in this Proxy Statement require approval by "a
majority of the outstanding voting securities" of the Fund, as defined in the
Investment Company Act of 1940, as amended (the Investment Company Act). This
means the lesser of (A) 67% or more of the shares of the Fund present at the
Meeting, if the holders of more than 50% of the outstanding shares of the Fund
are present or represented by proxy, or (B) more than 50% of the outstanding
shares of the Fund. Each "broker non-vote" (that is, a proxy from a broker or
nominee indicating that such person has not received instructions from the
beneficial owner or other person entitled to vote shares on a particular
matter with respect to which the broker or nominee does not have discretionary
power) and abstention will be considered present for purposes of determining
the existence of a quorum for the transaction of business, but will have the
effect of a vote against a proposal. A quorum requires the presence, in person
or by proxy, of the holders of record of one-third of the outstanding shares
of the Fund.
The expenses of solicitation will be borne by the Fund and will include
reimbursement of brokerage firms and others for expenses in forwarding proxy
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solicitation material to beneficial owners. The solicitation of proxies will
be largely by mail but may include, without cost to the Fund, telephonic,
telegraphic, Internet or oral communications by regular employees of
Prudential Securities Incorporated (Prudential Securities). In addition, the
Board of Directors of the Fund has authorized management to retain, at their
discretion, Shareholder Communications Corporation, a proxy solicitation firm,
to assist in the solicitation of proxies for this Meeting. The cost of
solicitation, including specified expenses, is not expected to exceed $55,000
and will be borne by the Fund.
Shareholders can vote in any one of four ways (A) by mail, with the enclosed
proxy card, (B) in person at the Meeting, (C) by telephone, with a toll-free
call to the number listed on the enclosed proxy card, and (D) through the
Internet at www.proxyvote.com. Shareholders are encouraged to vote by Internet
or telephone, using the 12-digit "control" number that appears on the enclosed
proxy card. Subsequent to inputting this number, shareholders will be prompted
to provide their voting instructions on each proposal. Shareholders will have
an opportunity to review their voting instructions and make any necessary
changes before submitting their voting instructions and terminating their
telephone call or Internet link. Shareholders who vote on the Internet, in
addition to confirming their voting instructions prior to submission, will
have the option to receive an e-mail confirming their voting instructions.
These procedures, and certain other procedures that may be used, are designed
to authenticate shareholders' identities, to allow shareholders to authorize
the voting of their shares in accordance with instructions and to confirm that
their instructions have been properly recorded.
Prudential Investments Fund Management LLC (PIFM or the Manager), Gateway
Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077, serves as
the Fund's Manager under a management agreement dated as of January 3, 1995
(the Management Agreement). Investment advisory services are provided to the
Fund by PIFM through its affiliate, The Prudential Investment Corporation,
doing business as Prudential Investments (PI or the Investment Adviser),
Prudential Plaza, 751 Broad Street, Newark, New Jersey 07102, under a
Subadvisory Agreement dated January 3, 1995, as amended November 18, 1999.
Both PIFM and PI are indirect, wholly owned subsidiaries of The Prudential
Insurance Company of America (Prudential). As of December 31, 1999, PIFM
managed and/or administered open-end and closed-end management investment
companies, with assets of approximately $75.6 billion. The Fund has a Board of
Directors which, in addition to overseeing the actions of the Fund's Manager
and Investment Adviser, decides upon matters of general policy.
Prudential Investment Management Services LLC (PIMS), Gateway Center Three,
100 Mulberry Street, Newark, New Jersey 07102-4077, acts as the distributor of
the shares of the Fund.
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Upon request, the Fund will reimburse nominees for their reasonable expenses
in forwarding proxy materials to beneficial owners of the Fund's shares.
Please let the Fund know the number of copies needed and submit expense
invoices for the Fund's review to 100 Mulberry Street, Gateway Center Three,
Newark, New Jersey 07102.
PROPOSAL NO. 1
TO
AMEND THE INVESTMENT
OBJECTIVE OF THE FUND
The Board of Directors is submitting for approval by shareholders of the
Fund the following proposal to amend the investment objective of the Fund. The
Board of Directors approved this proposal at a meeting held on February 7,
2000. For the reasons described below, the Board of Directors believes that
the proposed changes are in the best interests of shareholders and recommends
that shareholders approve the proposed amendment. The Fund's investment
objective is a fundamental policy that cannot be changed without shareholder
approval.
The current investment objective for the Fund is high current income
consistent with an appropriate balance between risk and reward. The Board of
Directors has approved, and recommends that the shareholders of the Fund
approve, an amendment to change the Fund's investment objective to total
return. To reflect the change, the Fund's prospectus will state: "The Fund's
investment objective is total return. The Fund will seek to achieve its
objective through a mix of current income and capital appreciation as
determined by the Fund's investment adviser."
The Manager and Investment Adviser have proposed the change in investment
objective to allow the Fund to take advantage of capital appreciation
opportunities. The Manager and Investment Adviser believe that it would be
beneficial to shareholders for the Fund to seek both income and capital
appreciation, or total return. The Fund presently seeks high current income
consistent with an appropriate balance between risk and reward. Capital
appreciation is not currently an objective. Therefore, if the Investment
Adviser does not believe that a particular security offers enough of an income
premium to justify the credit and other risks involved, the Fund will, in
accord with its present investment objective, invest in a different income-
producing security which may be lower yielding. If the proposed new investment
objective is approved by shareholders, the Fund might invest instead in a
security that has the potential for capital appreciation, even if it yields
little or no income. Thus, while the Fund will continue to invest in bonds and
other fixed-income securities in different sectors of the fixed-income
securities markets, if the proposed change in the investment objective is
approved, the Fund's current yield may be lower than it would be under the
existing objective. On the other hand, the Manager and Investment Adviser
believe that the Fund's potential for total return, i.e., yield plus capital
appreciation, may be increased if the change is approved.
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If the change in investment objective is approved by shareholders, the
Investment Adviser has indicated that a primary difference in how it may
manage the Fund would be in the percentage of Fund assets permitted to be
invested in below investment-grade securities, also known as high-yield or
"junk" bonds. Currently, the Fund may invest up to 35% of its net assets in
high-yield securities. If the investment objective is changed, this limit
would be increased to 50% of total assets. As a result of this change, the
Investment Adviser may, depending on market conditions and the available price
and yield of other types of securities, invest a greater percentage of the
Fund's assets in high-yield or "junk" bonds to take advantage of total return
opportunities. As discussed in the Fund's current prospectus, the risks
related to investment in below investment-grade securities include greater
market and credit risks than higher-grade debt securities, and potentially
greater illiquidity (they may be harder to sell), in which case valuation
would depend more on the Investment Adviser's judgment than is generally the
case with higher-rated securities. Therefore, if the change is approved, the
Fund will be subject to greater risks.
The Investment Adviser has indicated that if the change in investment
objective is approved by shareholders, the Fund will have an increased ability
to invest in asset-backed securities from the current limit, which is 25% of
total assets, up to 35% of total assets. As discussed in the Fund's current
prospectus, the risks related to investment in asset-backed securities include
prepayment, credit and market risks, as well as the risk that the security
interest in the underlying collateral may not be as great as with certain
collateralized securities in which the Fund currently invests (although
prepayment risk with respect to asset-backed securities is generally lower
than that of certain collateralized securities in which the Fund currently
invests). Therefore, if the change is approved, the Fund will be subject to
greater risks. Despite the investment risks, investment in asset-backed
securities may provide the Fund with regular interest income and some
diversification opportunities.
If the proposal to change the Fund's investment objective is approved by the
shareholders, the Fund intends to change its name to Prudential Total Return
Bond Fund, Inc.
REQUIRED VOTE
Approval of this Proposal No. 1 requires the affirmative vote of a majority
of the Fund's outstanding voting securities, as defined in the Investment
Company Act.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL
NO. 1.
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PROPOSAL NO. 2
TO
APPROVE AMENDMENTS TO CERTAIN
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Board of Directors is submitting for approval by shareholders of the
Fund the following proposals to amend three of the Fund's fundamental
investment restrictions relating to (a) borrowing transactions, (b) the making
of loans, and (c) investments in securities of other investment companies. The
Board of Directors approved these proposals at a meeting held on February 7,
2000.
For the reasons described below, the Board of Directors believes that the
proposed changes are in the best interests of the shareholders and recommends
that shareholders approve each of the proposed amendments. Fundamental
investment restrictions may be changed only with shareholder approval.
If the proposed changes to the Fund's fundamental investment restrictions
are approved by shareholders at the Meeting, the Fund's prospectus and
statement of additional information will be revised as appropriate to reflect
the changes. The changes proposed in Proposals No. 2(a), 2(b) and 2(c) will
not result in a change to the investment objective or operating policies of
the Fund.
PROPOSAL NO. 2(a): AMEND FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO
THE FUND'S ABILITY TO ENGAGE IN BORROWING TRANSACTIONS
The Fund's current fundamental investment restriction concerning borrowing
money, which appears as investment restriction number 3 in the Fund's current
statement of additional information, states that the Fund shall not:
Issue senior securities, borrow money or pledge its assets, except
that the Fund may borrow FROM BANKS up to 33 1/3% of the value of its
total assets (calculated when the loan is made) for temporary,
extraordinary or emergency purposes, for the clearance of
transactions or for investment purposes. The Fund may pledge up to 33
1/3% of the value of its total assets to secure such borrowings. For
purposes of this restriction, the purchase or sale of securities on a
when-issued or delayed delivery basis, forward foreign currency
exchange contracts and collateral arrangements relating thereto, and
collateral arrangements with respect to interest rate swap
transactions, reverse repurchase agreements, dollar roll
transactions, options, futures contracts and options thereon and
obligations of the Fund to Directors pursuant to deferred
compensation arrangements are not deemed to be a pledge of assets or
the issuance of a senior security.
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The proposed change would amend the Fund's fundamental investment
restriction relating to borrowing transactions by taking out the italicized
reference to borrowing by taking out the words "from banks."
The proposed change to the Fund's fundamental investment restriction would
allow the Fund to borrow from persons other than banks, to the extent
consistent with applicable law or any exemptive relief granted by the
Securities and Exchange Commission (SEC). The proposed change is designed to
permit the Fund the greatest degree of flexibility permitted by law or any
exemptive relief granted by the SEC in pursuing its investment program.
Current law prohibits the Fund from borrowing other than from banks.
Accordingly, the Fund may not borrow from other mutual funds in the Prudential
Mutual Fund complex (each, a Prudential Fund). If the proposed amendment to
the Fund's fundamental investment restriction on borrowing is approved by
shareholders, then the Fund (and other Prudential Funds) intend to apply to
the SEC for an exemption from this prohibition on interfund borrowing,
pursuant to authorization by the Fund's Board of Directors obtained in
November 1999. There is, of course, no assurance that the SEC would grant such
request. If the SEC did grant the request, the Fund would be allowed to borrow
from other Prudential Funds. The ability to engage in borrowing transactions
with other participating Prudential Funds as part of a program, referred to as
the "interfund lending program," may allow the Fund to obtain lower interest
rates on money borrowed for temporary or emergency purposes.
Approval of this Proposal No. 2(a) will not by itself result in
implementation of the interfund lending program. Among other things, any such
program would be subject to receipt of an SEC exemptive order.
In addition to the proposed change to the fundamental investment restriction
relating to borrowing, shareholders are being asked to vote on an amendment to
the Fund's fundamental investment restriction on lending (in Proposal No.
2(b)). If only one of the two proposals is adopted, then the Fund's
fundamental investment restrictions will be amended only to the extent of
shareholder approval.
If both Proposal 2(a) and (b) are adopted and the Fund were to participate
in an interfund lending program, there is a risk that a borrowing fund could
have a loan recalled on one day's notice and the borrowing fund might then
have to borrow from a bank at a higher interest rate if money could not be
borrowed from another Prudential Fund. There is also a risk that a lending
fund could experience a delay in obtaining prompt repayment of a loan. A
lending fund would not necessarily have received collateral for its loan,
although it could require that collateral be provided as a condition for
making an interfund loan. A delay in
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obtaining prompt payment could cause a lending fund to miss an investment
opportunity or to incur costs to borrow money to replace the delayed payment.
In determining to recommend this Proposal No. 2(a) to shareholders for
approval, the Board of Directors considered that the benefits to the Fund of
participating in the program outweigh the possible risks of such
participation.
Although the Fund does not currently intend to apply for any other SEC
exemptive order with respect to other potential lenders to the Fund, the
change in the investment restriction, if approved by shareholders, will enable
the Fund to further increase its ability to borrow from persons other than
banks without shareholder approval (but subject to the approval of the Board
of Directors) by applying for other SEC exemptive orders. This may subject the
Fund to additional risks.
PROPOSAL NO. 2(b): AMEND THE FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT
TO THE FUND'S ABILITY TO ENGAGE IN LENDING TRANSACTIONS
The Funds' current fundamental investment restriction concerning making
loans, which appears as investment restriction number 11 in the Fund's current
statement of additional information, states that the Fund shall not:
Make loans, except through (i) repurchase agreements and (ii) loans
of portfolio securities limited to 30% of the Fund's total assets.
The proposed change will amend the restriction relating to lending
transactions by adding a clause (which is bolded for ease of reference) that
will allow for greater flexibility in lending transactions. Under the proposed
amendment, the Fund shall not:
Make loans, except through (i) repurchase agreements and (ii) loans
of portfolio securities limited to 30% of the Fund's total assets AND
(III) AS OTHERWISE PERMITTED BY EXEMPTIVE ORDER OF THE SECURITIES AND
EXCHANGE COMMISSION.
The proposed amendment to the Fund's fundamental investment restriction
would facilitate the future development and adoption of an interfund lending
program with other Prudential Funds, as described above. The nature of such a
program and the risks associated with the Fund's participation therein are set
forth above under Proposal No. 2(a). Shareholders are being asked to consider,
and vote separately, on the Fund's fundamental investment restrictions
relating to borrowing and lending.
In determining to recommend this Proposal No. 2(b) to shareholders for
approval and to facilitate the future development and implementation of an
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interfund lending program, the Board of Directors considered that the
interfund lending program: (i) may benefit the Fund by providing it with
greater flexibility to engage in lending transactions; and (ii) could
facilitate the Fund's ability to earn a higher return on short-term
investments by allowing it to lend cash to other Prudential Funds.
Implementation of interfund lending would be accomplished consistent with
applicable regulatory requirements, including the provisions of any order the
SEC might issue to the Fund and to other Prudential Funds. Although the Fund
has not yet applied for such order, it is anticipated that one of the
conditions of the order will be that the Fund may not lend more than 15% of
its net assets as part of the interfund lending program. There can be no
assurance that any such order would be granted, even if applied for.
Although the Fund does not currently intend to apply for any other SEC
exemptive order with respect to this restriction, the change in the investment
restriction, if approved by shareholders, will enable the Fund to further
amend this restriction without shareholder approval (but subject to the
approval of the Board of Directors) by applying for other SEC exemptive
orders. This may subject the Fund to additional risks. The Fund will continue
to be able to engage in loans of portfolio securities up to 30% of its total
assets whether or not shareholders approve Proposals 2(a) and (b).
PROPOSAL NO. 2(c): AMEND THE FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT
TO THE FUND'S ABILITY TO INVEST IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund's current fundamental investment restriction concerning investments
in securities of other investment companies, which appears as investment
restriction number 9 in the Fund's current statement of additional
information, states that the Fund shall not:
Invest in securities of other investment companies, except BY
PURCHASES IN THE OPEN MARKET INVOLVING ONLY CUSTOMARY BROKERAGE
COMMISSIONS AND AS A RESULT OF WHICH THE FUND WILL NOT HOLD MORE
THAN 3% OF THE OUTSTANDING VOTING SECURIITES OF ANY ONE INVESTMENT
COMPANY, WILL NOT HAVE INVESTED MORE THAN 5% OF ITS TOTAL ASSETS IN
ANY ONE INVESTMENT COMPANY AND WILL NOT HAVE INVESTED MORE THAN 10%
OF ITS TOTAL ASSETS (DETERMINED AT THE TIME OF INVESTMENT) IN SUCH
SECURITIES OF ONE OR MORE INVESTMENT COMPANIES, OR EXCEPT AS PART OF
A MERGER, CONSOLIDATION OR OTHER ACQUISITION.
The proposed change will amend the restriction by deleting the italicized
reference to the circumstances under which the Fund may invest in securities
of other investment companies and replacing it with a clause (which is bolded
for ease of reference) that will allow for greater flexibility in these types
of transactions. The added clause contains a parenthetical at the end which
describes the current
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limitations with respect to these types of transactions. Under the proposed
amendment, the Fund shall not:
Invest in securities of other investment companies, except AS PERMITTED UNDER
THE INVESTMENT COMPANY ACT OF 1940 AND THE RULES THEREUNDER, AS AMENDED FROM
TIME TO TIME, OR BY ANY EXEMPTIVE RELIEF GRANTED BY THE SECURITIES AND EXCHANGE
COMMISSION. (CURRENTLY, UNDER THE INVESTMENT COMPANY ACT OF 1940, THE FUND MAY
INVEST IN SECURITIES OF OTHER INVESTMENT COMPANIES SUBJECT TO THE FOLLOWING
LIMITATIONS: THE FUND MAY HOLD NOT MORE THAN 3% OF THE OUTSTANDING VOTING
SECURITIES OF ANY ONE INVESTMENT COMPANY, MAY NOT HAVE INVESTED MORE THAN 5% OF
ITS TOTAL ASSETS IN ANY ONE INVESTMENT COMPANY AND MAY NOT HAVE INVESTED MORE
THAN 10% OF ITS TOTAL ASSETS IN SECURITIES OF ONE OR MORE INVESTMENT
COMPANIES).
The proposed amendment to the Fund's fundamental investment restriction
would allow the Fund to invest in securities of other investment companies to
the extent consistent with applicable law or any exemptive relief granted by
the SEC. Under current Investment Company Act provisions, the Fund may invest
up to 10% of its total assets in the securities of other registered investment
companies, may invest not more than 5% of its total assets in the securities
of any one registered investment company and may not own more than 3% of an
investment company's outstanding voting securities. The Fund has already
received an exemptive order from the SEC permitting it to invest cash
collateral from securities lending transactions and uninvested cash, in an
amount not to exceed 25% of the Fund's total assets, in other registered open-
end investment companies advised by PIFM (Investment Funds). The Investment
Funds are money market funds or open-end short-term bond funds with a
portfolio maturity of three years or less. Shares of certain Investment Funds
may be offered and sold to the Fund only in private transactions and not
through the open market.
The Board of Directors anticipates that a primary benefit of investing in
Investment Funds will be the ability to obtain higher yields than would be
available from current investment alternatives. It is also anticipated that by
investing in Investment Funds, the Fund would have access to a lower cost
alternative for making short-term liquid investments than is presently
available. The SEC order is subject to a number of conditions designed to
ensure that there will not be duplication of fees and expenses by the Fund and
an Investment Fund or conflicts of interest as a result of any such
investment. One condition of the order is that the Fund may not invest
uninvested cash in an Investment Fund in excess of 25% of the Fund's total
assets.
Although the Fund does not currently intend to apply for any other SEC
exemptive order with respect to this restriction, the change in the investment
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restriction, if approved by shareholders, will enable the Fund to further
amend this restriction without shareholder approval (but subject to the
approval of the Board of Directors) by applying for other SEC exemptive
orders. This may subject the Fund to additional risks.
If the Fund's shareholders do not approve the proposed amendment of the
fundamental investment restriction relating to investment in other investment
companies, the Fund will not be able to take advantage of the exemptive
provisions described above.
REQUIRED VOTE
Approval of each of Proposals No. 2(a), 2(b) and 2(c) requires the
affirmative vote of a majority of the Fund's outstanding voting securities, as
defined in the Investment Company Act.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" PROPOSALS
NO. 2(a), 2(b) AND 2(c).
----------------------
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of shareholders arise,
including any question as to an adjournment of the Meeting, the persons named
in the enclosed proxy will vote thereon according to their best judgment in
the interests of the Fund.
Notwithstanding the approval or disapproval of the proposals described
above, as in the past, the Board of Directors does not intend to hold annual
meetings of shareholders of the Fund. The Board of Directors will call
meetings of shareholders as may be required under the Investment Company Act
or as they may determine in their discretion. The Fund's By-Laws require the
Secretary of the Fund to call a meeting of shareholders of the Fund when
requested to do so, in writing, by shareholders holding in the aggregate not
less than 10% of the outstanding shares having voting rights of the Fund. If a
shareholder wishes to present a proposal to be included in the proxy statement
for the next meeting of shareholders of the Fund, such proposal must be
received by the Fund a reasonable time before the solicitation is to be made.
Deborah A. Docs
Secretary
Dated: March 2, 2000
11
<PAGE>
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. SHAREHOLDERS CAN ALSO VOTE THROUGH THE INTERNET OR BY TELEPHONE
USING THE 12-DIGIT "CONTROL" NUMBER THAT APPEARS ON THE ENCLOSED PROXY.
12
<PAGE>
PRUDENTIAL INVESTMENTS
GATEWAY CENTER THREE
100 MULBERRY STREET, 9TH FLOOR
NEWARK, NJ 07102-4077
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
Gateway Center Three
Newark, New Jersey 07102
PROXY
Special Meeting of Shareholders (Meeting) -
April 19, 2000, 10:00 a.m.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
hereby appoints Robert F. Gunia, Grace C. Torres and Deborah A. Docs as
Proxies, each with the power of substitution, and hereby authorizes each of them
to represent and to vote, as designated below, all the shares of Common Stock of
the Fund held of record by the undersigned on February 18, 2000 at the Meeting
to be held on April 19, 2000 or any adjournment thereof.
THE SHARES REPRESENTED BY THIS PROXY, WHEN THIS PROXY IS PROPERLY EXECUTED, WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. THE PROXY
WILL BE VOTED FOR PROPOSALS NO. 1 AND 2 (a), (b) AND (c) IF YOU DO NOT SPECIFY
OTHERWISE. PLEASE REFER TO THE PROXY STATEMENT DATED MARCH 2, 2000 FOR
DISCUSSION OF THE PROPOSALS.
IF VOTING BY MAIL, PLEASE MARK, SIGN AND DATE THIS PROXY CARD WHERE INDICATED
AND RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the Meeting or any adjournment thereof.
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
TO VOTE BY TELEPHONE
1) Read the Proxy Statement and have this Proxy card at hand.
2) Call 1-800-690-6903 toll free.
3) Enter the 12-digit control number set forth on the right side of this Proxy
card and follow the simple instructions.
TO VOTE BY INTERNET
1) Read the Proxy Statement and have this Proxy card at hand.
2) Go to Web site www.proxyvote.com
3) Enter the 12-digit control number set forth on the right side of this Proxy
card and follow the simple instructions.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
PRUDEN KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
For address changes, please check this box [_]
and write them on the back.
The Board of Directors recommends a vote FOR each of the proposals.
Vote On Proposals For Against Abstain
1. To approve an amendment to the investment [_] [_] [_]
objective of Prudential Diversified Bond
Fund, Inc. (the Fund).
2. To approve amendments to the Funds' For Against Abstain
fundamental investment restrictions relating
to:
(a) borrowing transactions; [_] [_] [_]
(b) the making of loans; and [_] [_] [_]
(c) investments in securities of other
investment companies. [_] [_] [_]
Please be sure to sign and date this Proxy.
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Signature (PLEASE SIGN WITHIN BOX) Date
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Signature (Joint Owners) Date
