UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a14A INFORMATION
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:
| x | Preliminary Proxy Statement |
| ¨ | Confidential, |
| ¨ | Definitive Proxy Statement |
| ¨ | Definitive Additional Materials |
| ¨ | Soliciting Material |
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL INVESTMENT PORTFOLIOS 2
PRUDENTIAL INVESTMENT PORTFOLIOS 3
PRUDENTIAL INVESTMENT PORTFOLIOS 4
PRUDENTIAL INVESTMENT PORTFOLIOS 5
PRUDENTIAL INVESTMENT PORTFOLIOS 6
PRUDENTIAL INVESTMENT PORTFOLIOS 7
PRUDENTIAL INVESTMENT PORTFOLIOS 8
PRUDENTIAL INVESTMENT PORTFOLIOS 9
PRUDENTIAL INVESTMENT PORTFOLIOS, INC. 10
PRUDENTIAL INVESTMENT PORTFOLIOS 12
PRUDENTIAL INVESTMENT PORTFOLIOS, INC. 14
PRUDENTIAL INVESTMENT PORTFOLIOS, INC. 15
PRUDENTIAL INVESTMENT PORTFOLIOS 16
PRUDENTIAL INVESTMENT PORTFOLIOS, INC. 17
RPDUDENTIAL INVESTMENT PORTFOLIOS 18
PRUDENTIAL MONEYMART ASSETS, INC.
PRUDENTIAL NATIONAL MUNI FUND, INC.
PRUDENTIAL JENNISON BLEND FUND, INC.
PRUDENTIAL JENNISON MID-CAP GROWTH FUND, INC.
PRUDENTIAL JENNISON SMALL COMPANY FUND, INC.
PRUDENTIAL WORLD FUND, INC.
PRUDENTIAL JENNISON NATURAL RESOURCES FUND, INC.
PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC.
PRUDENTIAL SECTOR FUNDS, INC.
PRUDENTIAL SHORT-TERM CORPORATE BOND FUND, INC.
THE TARGET PORTFOLIO TRUST
(Name of Registrant as Specified In Its Charter)
N/A
(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: | |||
| (2) | Aggregate number of securities to which transaction applies: | |||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
| (4) | Proposed maximum aggregate value of transaction: | |||
| (5) | Total fee paid: | |||
| ¨ | Fee paid previously with preliminary | |||
| ¨ | Check box if any part of the fee is offset as provided by | |||
| (1) | Amount | |||
| (2) | Form, Schedule or Registration Statement No.: | |||
| (3) | Filing Party: | |||
| (4) | Date Filed: | |||
| The Prudential Investment Portfolios, Inc. | Prudential Investment Portfolios, Inc. 17 | |
| Prudential Investment Portfolios 2 | Prudential Investment Portfolios 18 | |
| Prudential Investment Portfolios 3 | Prudential MoneyMart Assets, Inc. | |
| Prudential Investment Portfolios 4 | Prudential National Muni Fund, Inc. | |
| Prudential Investment Portfolios 5 | Prudential Jennison Blend Fund, Inc. | |
| Prudential Investment Portfolios 6 | Prudential Jennison Mid-Cap Growth Fund, Inc. | |
| Prudential Investment Portfolios 7 | Prudential Jennison Small Company Fund, Inc. | |
| Prudential Investment Portfolios 8 | Prudential World Fund, Inc. | |
| Prudential Investment Portfolios 9 | Prudential Jennison Natural Resources Fund, Inc. | |
| Prudential Investment Portfolios, Inc. 10 | Prudential Global Total Return Fund, Inc. | |
| Prudential Investment Portfolios 12 | Prudential Sector Funds, Inc. | |
| Prudential Investment Portfolios, Inc. 14 | Prudential Short-Term Corporate Bond Fund, Inc. | |
| Prudential Investment Portfolios, Inc. 15 | The Target Portfolio Trust | |
| Prudential Investment Portfolios 16 |
Gateway Center Three 100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
------------------------
Mulberry Street Newark, New Jersey 07102
IMPORTANT PROXY MATERIALS PLEASE VOTE NOW!
MAY , 2003
------------------------
October 1, 2014
Dear Shareholder:
I am inviting you to vote on several important proposals relating to the management and operation of your Fund. A shareholder meeting of each of the Funds identified above is scheduled for July 17, 2003.November 26, 2014. This package contains information about each of the proposals and includes materials you will need to vote.
The BoardBoards of Directors/Trustees of each Fund hashave reviewed the proposals and hashave recommended that the proposalsthey be presented to you for consideration. Although
the Trustees have determined that approval of the proposals is in your best
interest,consideration: the final decision is yours. Shareholders of each Fund are being asked to approve many of the same proposals, so in order to save money for your Fund, one proxy statement has been prepared for all of the Funds listed above.Funds. To help you understand the proposals, we are including a section that answers commonly asked questions. The
Please read the enclosed materials carefully and cast your vote. Remember, your vote is extremely important, no matter how large or small your holdings. By voting now, you can help avoid additional costs that are incurred with follow-up letters and calls.
TO VOTE, YOU MAY USE ANY OF THE FOLLOWING METHODS:
- BY MAIL.calls from a proxy solicitor.
To vote, you may use any of the following methods:
If you have any questions before you vote, please call usD.F. King & Co. Inc. at 1-866-665-7684.
We're glad866-828-6929 toll free. They will be happy to help you understand the proposalsproposal and assist you in voting. Thank you for your participation.
/s/ Judy A. Rice
Judy A. Rice
PRESIDENT
[PARKER SIGNATURE GRAPHIC HERE]
Stuart Parker
President
IMPORTANT INFORMATION TO HELP YOU UNDERSTAND
AND VOTE ON THE PROPOSALS
Please read the enclosed proxy statement for a complete description of the proposals. However, as a quick reference, the following questions and answers provide a brief overview of the proposals.
Q. WILL THE PROPOSED CHANGES RESULT IN HIGHER FUND FEES OR EXPENSES?
A. No. The rate of the management fees and other expenses incurred by each Fund will not change.
Q. WILL THE PROPOSED CHANGES RESULT IN HIGHER DIRECTORS’ OR TRUSTEES’ FEES?
A. No.
Q. WHAT PROPOSALS AM I BEING ASKED TO VOTE ON?
A. The purpose of the proxy is to ask you to vote on five primarythree issues:
- to elect a new
| – | to elect 12 Board Members, |
| – | for certain Funds, to approve a policy to permit the Fund’s manager to enter into or make material changes to your Fund’s subadvisory agreement(s) with wholly-owned subadvisers without shareholder approval, and |
| – | for certain Funds, to designate the Fund’s investment objective(s) as a non-fundamental policy, so that it may be changed by the Fund’s Board without a shareholder vote. |
Q. ARE YOU RECOMMENDING A NEW BOARD FOR THE FUNDS?
A. No. All but one of Trustees,
- to permit the Manager of Strategic Partners Focused Growth Fund, a series
of Strategic Partners Opportunity Funds, to enter into or make material
changes to its subadvisory agreements without shareholder approval,
- to approve a new management agreementindividuals nominated for Strategic Partners Focused
Growth Fund,
- to approve changeselection currently serve on the existing Boards (except with respect to the fundamental investment restrictionstwo Funds noted under Proposal No. 1 below). Nine of each Fundthe individual Board nominees are independent of Strategic Partners Opportunity Funds, Strategic Partners Style Specific
Funds, and The Target Portfolio Trust, and
- to approve amendments to the declaration of trust for your Fund.
Prudential.
Q. WHY AM I RECEIVING PROXY INFORMATION FORON A FUND THAT I DO NOT OWN?
A. Shareholders of all of the Funds are being asked to approve many of the same proposals, so most of the information that must be included in a proxy statement for your Fund needs to be included in a proxy statement for the other Funds as well. Therefore, in order to save money for your Fund, one proxy statement has been prepared.
Q. WHY AM I RECEIVING MORE THAN ONETWO PROXY STATEMENTSTATEMENTS OR MAILING?
TWO MAILINGS?
A. You maywill receive a separate proxy statement for each Fund that you own. Also, if you hold shares in more than one account--foraccount—for example, in an individual account and in an IRA--you mayIRA—you will receive multiple proxy statements. Each proxy card should be voted and returned.
Q. ARE YOU RECOMMENDING A NEW BOARD FORWHY IS THE FUNDS?
FUNDS’ MANAGER SEEKING AUTHORITY TO ENTER INTO OR MAKE MATERIAL CHANGES TO SUBADVISORY AGREEMENTS WITH WHOLLY-OWNED SUBADVISERS?
A. Yes.Currently, the Funds’ Manager, with Board approval, can enter into and amend subadvisory agreements with subadvisers that are not affiliated with the Manager without obtaining shareholder approval, thereby avoiding the expense and delay entailed in seeking shareholder approval and permitting the Funds to more quickly and efficiently respond to changes in market conditions and other factors. The Manager and
the Board of eachbelieve that it is in the best interests of the Funds has nominated for election Independent
and Interested Trustees. Most oftheir shareholders to similarly permit the nominees already serve as Trustees on
some,Manager to enter into subadvisory agreements with wholly-owned subadvisers, subject to Board approval, but not all, of the Fund Boards in the Prudential mutual fund complex.
without shareholder approval.
Q. DOES DESIGNATING THE INVESTMENT OBJECTIVE FOR CERTAIN FUNDS AS NON-FUNDAMENTAL MEAN THAT THE FUNDS’ INVESTMENT OBJECTIVES WILL THE PROPOSED CHANGES RESULT IN HIGHER MANAGEMENT FEES?
BE CHANGED?
A. No. The rate ofThere is no present intention to change the management fees charged to each Fund will notinvestment objective for any Fund. Although designating an investment objective as non-fundamental means that shareholder approval would no longer be required before a change asin a result of any of the proposed changes.
Q. WILL THE PROPOSED CHANGES RESULT IN HIGHER TRUSTEES' FEES FOR A FUND?
A. No. Although the number of Independent Trustees will increase, the aggregate
amount of fees paid by each Fund will not increase, because the same
Independent Trustees have been elected to the American Skandia Funds, which
will share in paying the fees.
Q. WHAT ARE "FUNDAMENTAL" INVESTMENT RESTRICTIONS, AND WHY ARE THEY PROPOSED TO
BE CHANGED?
A. "Fundamental"Fund’s investment restrictions are limitations placed on a Fund's
investment policies that can be changed only by aobjective, Board approval and shareholder vote--even if
the changes are minor. The law requires certain investment policiesnotification would continue to be designated as fundamental. Each Fund adopted a number of fundamentalrequired before any Fund’s investment restrictions, and some of those fundamental restrictions reflect
regulatory, business or industry conditions, practices or requirements that
are no longer in effect. Others reflect regulatory requirements that, while
still in effect, do not need toobjective could be classified as fundamental restrictions.
The Boards believe that certain fundamental investment restrictions that are
not legally required should be eliminated. The Boards also believe that
other fundamental restrictions should be modernized and made more uniform.
The reason for these changes is to provide greater investment flexibility
for the Funds.
Q. DO THE PROPOSED CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS MEAN THAT MY
FUND'S INVESTMENT OBJECTIVE IS BEING CHANGED?
A. No.
Q. WHAT WILL BE THE EFFECT OF THE PROPOSED CHANGES TO MY FUND'S FUNDAMENTAL
RESTRICTIONS?
A. The Boards do not believe that the proposed changes to fundamental
investment restrictions will result in a major restructuring of any Fund's
investment portfolio. The changes will allow each Fund greater flexibility
to respond to investment opportunities and permit the Boards to make changes
in the future that they consider desirable without the necessity of a
shareholder vote and the related additional expenses. A shareholder vote is
not necessary for changes to non-fundamental investment policies or
restrictions.
changed.
Q. HOW MANY VOTES DO YOU NEED TO APPROVE THESE PROPOSALS?
A. The numberDepending on the Fund, we need a plurality, or a majority of the votes neededcast, to approve each Proposal differs, due to
different requirements imposed by federalNo. 1. For Proposals No. 2 and state laws. The descriptions3, we need the affirmative vote of a majority of each Proposal inapplicable Fund’s outstanding voting securities, as defined by the enclosed proxy statement identifyInvestment Company Act of 1940.
Q. DOES MY VOTE MAKE A DIFFERENCE?
A. Yes. Even if you have very few shares, you help the numberFunds receive enough votes to act on the proposals by casting your vote as soon as possible. By voting early, you help avoid the expense of votes required for each Fundsending additional mailings to approve each Proposal.
try to get shareholders to cast more votes.
Q. WHAT IF YOUWE DO NOT HAVE ENOUGH VOTES TO MAKE THIS DECISION BY THE SCHEDULED SHAREHOLDER MEETING DATE?
A. If we do not receive sufficient votes to hold the meeting, we or Georgeson
Shareholder CommunicationsD.F. King & Co, Inc., a proxy solicitation firm, may contact you by mail or telephone to encourage you to vote. Shareholders should review the proxy materials and cast their vote to avoid additional mailings or telephone calls. If we do not have enough votes to approve the proposals by the time of the joint shareholder meeting at 11:10:00 a.m. on July 17, 2003,November 26, 2014, the meeting may be adjourned to permit further solicitation of proxy votes.
Q. HAS EACH FUND'SFUND’S BOARD APPROVED THE PROPOSALS?
A. Yes. Your Fund'sFund’s Board has approved the proposals and recommends that you vote to approve them.
Q. HOW MANY VOTES AM I ENTITLED TO CAST?
A. As a shareholder, you are entitled to one vote for each share you own of your Fund on the record date. The record date is May 16, 2003.
September 12, 2014.
Q. HOW DO I VOTE MY SHARES?
A. You may vote in any of several different ways. You may vote by attending the
Meeting scheduled for July 17, 2003, or you can vote your shares 24 hours a day, 7 days week by completing and signingtelephone, by mail via the enclosed proxy ballot card, and mailing it inby Internet. If you hold the Fund within a brokerage account and receive statements directly from your bank or broker, please follow the instructions provided on your proxy card. You can also vote your shares by attending the Meeting. Please see the enclosed postage paid envelope.proxy materials for complete details. If you need any assistance, or have any questions regarding a proposal or how tobefore you vote, your shares, please call PrudentialD. F. King & Co., Inc., at 1-866-665-7684.
You may also vote via866-828-6929toll-free. They will be happy to help you understand the Internet. To do so, have your proxy card availableproposals and go to the web site: www.proxyvote.com. Enter your 12-digit control
number from your proxy card and follow the instructions found on the web
site.
Finally,assist you can vote by telephone. If your Fund shares are held in your own
name, call 1-800-690-6903 toll free. If your Fund shares are held on your
behalf in a brokerage account with Prudential Securities Incorporated or
another broker, call 1-800-454-8683 toll free. Enter your 12-digit control
number from your proxy card and follow the simple instructions given.
Q. HOW DO I SIGN THE PROXY CARD?
A. INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names appear on the account registration shown on the card.
JOINT ACCOUNTS: Both owners must sign and the signatures should conform exactly to the names shown on the account registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her capacity. For example, a trustee for a trust should include his or her title when he or she signs, such as "Jane“Jane Doe, Trustee"Trustee”; or an authorized officer of a company should indicate his or her position with the company, such as "John“John Smith, President" underneath the name of the company.
President.”
The attached proxy statement contains more detailed information about each of the proposals relating to your Fund. Please read it carefully.
STRATEGIC PARTNERS ASSET ALLOCATION FUNDS
STRATEGIC PARTNERS CONSERVATIVE GROWTH FUND
STRATEGIC PARTNERS MODERATE GROWTH FUND
STRATEGIC PARTNERS HIGH GROWTH FUND
STRATEGIC PARTNERS OPPORTUNITY FUNDS
STRATEGIC PARTNERS FOCUSED GROWTH FUND
STRATEGIC PARTNERS NEW ERA GROWTH FUND
STRATEGIC PARTNERS FOCUSED VALUE FUND
STRATEGIC PARTNERS MID-CAP VALUE FUND
STRATEGIC PARTNERS STYLE SPECIFIC FUNDS
STRATEGIC PARTNERS LARGE CAP GROWTH FUND
STRATEGIC PARTNERS LARGE CAP VALUE FUND
STRATEGIC PARTNERS SMALL CAP GROWTH FUND
STRATEGIC PARTNERS SMALL CAP VALUE FUND
STRATEGIC PARTNERS INTERNATIONAL EQUITY FUND
STRATEGIC PARTNERS TOTAL RETURN BOND FUND
THE TARGET PORTFOLIO TRUST
LARGE CAPITALIZATION GROWTH PORTFOLIO
LARGE CAPITALIZATION VALUE PORTFOLIO
SMALL CAPITALIZATION GROWTH PORTFOLIO
SMALL CAPITALIZATION VALUE PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
INTERNATIONAL BOND PORTFOLIO
TOTAL RETURN BOND PORTFOLIO
INTERMEDIATE-TERM BOND PORTFOLIO
MORTGAGE BACKED SECURITIES PORTFOLIO
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
GATEWAY CENTER THREE
| The Prudential Investment Portfolios, Inc. | Prudential Investment Portfolios, Inc. 17 | |
| Prudential Investment Portfolios 2 | Prudential Investment Portfolios 18 | |
| Prudential Investment Portfolios 3 | Prudential MoneyMart Assets, Inc. | |
| Prudential Investment Portfolios 4 | Prudential National Muni Fund, Inc. | |
| Prudential Investment Portfolios 5 | Prudential Jennison Blend Fund, Inc. | |
| Prudential Investment Portfolios 6 | Prudential Jennison Mid-Cap Growth Fund, Inc. | |
| Prudential Investment Portfolios 7 | Prudential Jennison Small Company Fund, Inc. | |
| Prudential Investment Portfolios 8 | Prudential World Fund, Inc. | |
| Prudential Investment Portfolios 9 | Prudential Jennison Natural Resources Fund, Inc. | |
| Prudential Investment Portfolios, Inc. 10 | Prudential Global Total Return Fund, Inc. | |
| Prudential Investment Portfolios 12 | Prudential Sector Funds, Inc. | |
| Prudential Investment Portfolios, Inc. 14 | Prudential Short-Term Corporate Bond Fund, Inc. | |
| Prudential Investment Portfolios, Inc. 15 | The Target Portfolio Trust | |
| Prudential Investment Portfolios 16 |
Gateway Center Three 100 MULBERRY STREET
NEWARK, NEW JERSEYMulberry Street Newark, New Jersey 07102
------------------------
NOTICE OF JOINT SPECIAL MEETINGS OF SHAREHOLDERS TO BE HELD ON JULY 17, 2003
------------------------
TO OUR SHAREHOLDERS:
November 26, 2014
To our Shareholders:
Joint meetings of the shareholders of each of the above-listed Funds (each,
a(the Meeting) will be held at the offices of Prudential Investments LLC (PI), 100 Mulberry Street, Gateway Center Three, 14th4th Floor, Newark, New Jersey on July 17, 2003November 26, 2014 at 11:10:00 a.m. Eastern Daylight Time.The purpose of the MeetingsMeeting is to consider and act upon the following proposals:
1. For each Fund, to elect 10 Trustees.
2. For Strategic Partners Focused Growth Fund, a series of Strategic
Partners Opportunity Funds, to permit PI to enter into or make material
changes to subadvisory agreements without shareholder approval.
3. For Strategic Partners Focused Growth Fund, a series of Strategic
Partners Opportunity Funds, to approve a new management agreement between
Strategic Partners Opportunity Funds, on behalf of Focused Growth Fund,
and PI.
4. For each Fund, except Strategic Partners Asset Allocation Funds, to
approve changes to fundamental investment restrictions or policies,
relating to the following:
(a) fund diversification;
(b) issuing senior securities, borrowing money or pledging assets;
(c) buying and selling real estate;
(d) buying and selling commodities and commodity contracts;
(e) fund concentration;
(f) making loans; and
(g) other investment restrictions, including investing in securities of
other investment companies.
5. For each Fund, to approve amendments to the declaration of trust.
| 1. | For all Funds, to elect twelve Directors or Trustees. |
| 2. | For certain of the Funds, to approve a policy to permit PI to enter into or make material changes to the Fund’s subadvisory agreements with subadvisers that are wholly-owned subsidiaries of PI or a sister company of PI (wholly-owned subadvisers) without shareholder approval. |
| 3. | For certain of the Funds, to designate the Fund’s investment objective as a non-fundamental policy of the Fund, meaning that the Fund’s investment objective could be changed with the approval of the Fund’s Board of Directors/Trustees, but without shareholder approval. |
The Meeting will be a Special Meeting of shareholders offor each Fund.
You are entitled to vote at the Meeting, and at any adjournments thereof, of each Fund in which you owned shares at the close of business on May 16, 2003.September 12, 2014. If you attend athe Meeting, you may vote your shares in person. IF YOU DO NOT EXPECT
TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN EACH ENCLOSED
PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE OR VOTE BY INTERNET OR
TELEPHONE.
If you do not expect to attend the Meeting, please complete, date, sign and return each enclosed proxy card in the enclosed postage paid envelope or vote by internet or telephone.
By order of the Boards,
/s/ Lori E. Bostrom
Lori E. Bostrom
SECRETARY
Strategic Partners Asset Allocation Funds
Strategic Partners Conservative Growth Fund
Strategic Partners Moderate Growth Fund
Strategic Partners High Growth Fund
Strategic Partners Opportunity Funds
Strategic Partners Focused Growth Fund
Strategic Partners New Era Growth Fund
Strategic Partners Focused Value Fund
Strategic Partners Mid-Cap Value Fund
Strategic Partners Style Specific Funds
Strategic Partners Large Cap Growth Fund
Strategic Partners Large Cap Value Fund
Strategic Partners Small Cap Growth Fund
Strategic Partners Small Cap Value Fund
Strategic Partners International Equity Fund
Strategic Partners Total Return Bond Fund
The Target Portfolio Trust
Large Capitalization Growth Portfolio
Large Capitalization Value Portfolio
Small Capitalization Growth Portfolio
Small Capitalization Value Portfolio
International Equity Portfolio
International Bond Portfolio
Total Return Bond Portfolio
Intermediate-Term Bond Portfolio
Mortgage Backed Securities Portfolio
U.S. Government Money Market Portfolio
Deborah A. Docs
Secretary
Dated: May , 2003.October 1, 2014
ONE OR MORE PROXY CARDS FOR YOUR FUNDFUND(S) ARE ENCLOSED ALONG WITH THE PROXY STATEMENT. PLEASE VOTE YOUR SHARES TODAY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARDS IN THE POSTAGE PREPAID ENVELOPE PROVIDED. YOU CAN ALSO VOTE YOUR SHARES THROUGH THE INTERNET OR BY TELEPHONE USING THE 12-DIGIT "CONTROL"“CONTROL” NUMBER THAT APPEARS ON THE ENCLOSED PROXY CARDS AND FOLLOWING THE SIMPLE INSTRUCTIONS.
THE BOARD OF YOUREACH FUND RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEES AND "FOR"“FOR” EACH PROPOSAL.
STRATEGIC PARTNERS ASSET ALLOCATION FUNDS
STRATEGIC PARTNERS CONSERVATIVE GROWTH FUND
STRATEGIC PARTNERS MODERATE GROWTH FUND
STRATEGIC PARTNERS HIGH GROWTH FUND
STRATEGIC PARTNERS OPPORTUNITY FUNDS
STRATEGIC PARTNERS FOCUSED GROWTH FUND
STRATEGIC PARTNERS NEW ERA GROWTH FUND
STRATEGIC PARTNERS FOCUSED VALUE FUND
STRATEGIC PARTNERS MID-CAP VALUE FUND
STRATEGIC PARTNERS STYLE SPECIFIC FUNDS
STRATEGIC PARTNERS LARGE CAP GROWTH FUND
STRATEGIC PARTNERS LARGE CAP VALUE FUND
STRATEGIC PARTNERS SMALL CAP GROWTH FUND
STRATEGIC PARTNERS SMALL CAP VALUE FUND
STRATEGIC PARTNERS INTERNATIONAL EQUITY FUND
STRATEGIC PARTNERS TOTAL RETURN BOND FUND
THE TARGET PORTFOLIO TRUST
LARGE CAPITALIZATION GROWTH PORTFOLIO
LARGE CAPITALIZATION VALUE PORTFOLIO
SMALL CAPITALIZATION GROWTH PORTFOLIO
SMALL CAPITALIZATION VALUE PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
INTERNATIONAL BOND PORTFOLIO
TOTAL RETURN BOND PORTFOLIO
INTERMEDIATE-TERM BOND PORTFOLIO
MORTGAGE BACKED SECURITIES PORTFOLIO
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
GATEWAY CENTER THREE
| The Prudential Investment Portfolios, Inc. | Prudential Investment Portfolios, Inc. 17 | |
| Prudential Investment Portfolios 2 | Prudential Investment Portfolios 18 | |
| Prudential Investment Portfolios 3 | Prudential MoneyMart Assets, Inc. | |
| Prudential Investment Portfolios 4 | Prudential National Muni Fund, Inc. | |
| Prudential Investment Portfolios 5 | Prudential Jennison Blend Fund, Inc. | |
| Prudential Investment Portfolios 6 | Prudential Jennison Mid-Cap Growth Fund, Inc. | |
| Prudential Investment Portfolios 7 | Prudential Jennison Small Company Fund, Inc. | |
| Prudential Investment Portfolios 8 | Prudential World Fund, Inc. | |
| Prudential Investment Portfolios 9 | Prudential Jennison Natural Resources Fund, Inc. | |
| Prudential Investment Portfolios, Inc. 10 | Prudential Global Total Return Fund, Inc. | |
| Prudential Investment Portfolios 12 | Prudential Sector Funds, Inc. | |
| Prudential Investment Portfolios, Inc. 14 | Prudential Short-Term Corporate Bond Fund, Inc. | |
| Prudential Investment Portfolios, Inc. 15 | The Target Portfolio Trust | |
| Prudential Investment Portfolios 16 |
Gateway Center Three 100 MULBERRY STREET
NEWARK, NEW JERSEYMulberry Street Newark, New Jersey 07102
------------------------
PROXY STATEMENT JOINT SPECIAL MEETINGSDATED OCTOBER 1, 2014 Joint Special Meetings of Shareholders to Be Held on November 26, 2014
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF SHAREHOLDERS
TO BE HELD ON JULY 17, 2003
------------------------
PROXY STATEMENT
The proxy statement is available atwww.prudentialfunds.com/fundchanges
This proxy statement is being furnished to holders of shares of eachall of the above-listed investment companies (each, a Trust)Company) and their series (each, a Fund) in connection with the solicitation by their respective Boards of proxies to be used at joint special meetings (Meetings)(the Meeting) of shareholders to be held at Gateway Center Three, 100 Mulberry Street, 14th4th Floor, Newark, New Jersey 07102 on July 17, 2003,November 26, 2014 at 11:10:00 a.m., Eastern Daylight Time, or at any adjournment or adjournments thereof. The Meeting will be a special meeting of shareholders ofSpecial Meeting for each Fund.Company. This proxy statement is being first mailed to shareholders on or about June 5, 2003.
October 1, 2014, and is also available atwww.prudentialfunds.com/fundchanges.
Each TrustCompany is an open-end, management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act). Each TrustThe table below indicates, for each Company, whether the Company is organized as a Maryland corporation, Delaware statutory trust, or Massachusetts business trust.
| Company | State | |
| The Prudential Investment Portfolios, Inc. | Maryland | |
| Prudential Investment Portfolios 2 | Delaware | |
| Prudential Investment Portfolios 3 | Delaware |
1
| Company | State | |
| Prudential Investment Portfolios 4 | Massachusetts | |
| Prudential Investment Portfolios 5 | Delaware | |
| Prudential Investment Portfolios 6 | Massachusetts | |
| Prudential Investment Portfolios 7 | Massachusetts | |
| Prudential Investment Portfolios 8 | Delaware | |
| Prudential Investment Portfolios 9 | Delaware | |
| Prudential Investment Portfolios, Inc. 10 | Maryland | |
| Prudential Investment Portfolios 12 | Delaware | |
| Prudential Investment Portfolios, Inc. 14 | Maryland | |
| Prudential Investment Portfolios, Inc. 15 | Maryland | |
| Prudential Investment Portfolios 16 | Delaware | |
| Prudential Investment Portfolios, Inc. 17 | Maryland | |
| Prudential Investment Portfolios 18 | Delaware | |
| Prudential MoneyMart Assets, Inc. | Maryland | |
| Prudential National Muni Fund, Inc. | Maryland | |
| Prudential Jennison Blend Fund, Inc. | Maryland | |
| Prudential Jennison Mid-Cap Growth Fund, Inc. | Maryland | |
| Prudential Jennison Small Company Fund, Inc. | Maryland | |
| Prudential World Fund, Inc. | Maryland | |
| Prudential Jennison Natural Resources Fund, Inc. | Maryland | |
| Prudential Global Total Return Fund, Inc. | Maryland | |
| Prudential Sector Funds, Inc. | Maryland | |
| Prudential Short-Term Corporate Bond Fund, Inc. | Maryland | |
| The Target Portfolio Trust | Delaware |
Shares of common stock of the Maryland corporations, as well as shares of beneficial interest of each Fundthe Delaware statutory trusts and the Massachusetts business trusts, are referred to as "Shares,"“Shares,” the holders of the Shares are "Shareholders,"referred to as “Shareholders,” each Trust's BoardCompany’s board of Trusteesdirectors or trustees is referred to as a "Board"“Board” and the directors or trustees are "Board Members" or "Trustees" (collectively referred to as Trustees). “Board Members” or may be collectively referred to as “Directors” or “Trustees.”
2
A listing of the formal namenames for each Trust
andCompany and/or Fund and the abbreviated name for each TrustCompany and Fund that is used in this proxy statement isare set forth below.
| Company and Fund Name | Abbreviated Name | |
The Prudential Investment Portfolios, Inc. Prudential Asset Allocation Prudential Jennison Equity Opportunity Fund Prudential Jennison Growth Fund Prudential Conservative Allocation Fund Prudential Moderate Allocation Fund Prudential Growth Allocation Fund | PIP PIP Asset Allocation PIP Equity Opportunity PIP Growth PIP Conservative Allocation PIP Moderate Allocation PIP Growth Allocation | |
Prudential Investment Portfolios 2 Prudential Core Taxable Money Market Fund Prudential Core Short-Term Bond Fund | PIP 2 PIP 2 Taxable Money Market PIP 2 Short-Term Bond | |
Prudential Investment Portfolios 3 Prudential Strategic Prudential Jennison Select Growth Fund Prudential Real Assets Fund Prudential Jennison Market Neutral Fund | PIP 3 PIP 3 Strategic Value PIP 3 Select Growth PIP 3 Real Assets PIP 3 Market Neutral | |
Prudential Investment Portfolios 4 Prudential Muni High Income Fund | PIP 4 PIP 4 Muni High Income | |
Prudential Investment Portfolios 5 Prudential Jennison Conservative Growth Prudential Small-Cap Value Fund Prudential Jennison Rising Dividend Fund | PIP 5 PIP 5 Conservative Growth PIP 5 Small-Cap Value PIP 5 Rising Dividend | |
Prudential Investment Portfolios 6 Prudential California Muni Income Fund | PIP 6 PIP 6 Cal Muni | |
Prudential Investment Portfolios 7 Prudential Jennison Value | PIP 7 PIP 7 Value | |
Prudential Investment Portfolios 8 Prudential Stock Index Fund | PIP 8 PIP 8 Stock Index | |
Prudential Investment Portfolios 9 Prudential Large-Cap Core Equity Fund Prudential International Real Estate Fund Prudential Absolute Return Bond Fund Prudential Select Real Estate Fund | PIP 9 PIP 9 Large-Cap Core PIP 9 International Real Estate PIP 9 Absolute Return Bond PIP 9 Select Real Estate | |
Prudential Investment Portfolios, Inc. 10 Prudential Mid-Cap Value Prudential Jennison Equity Income Fund | PIP 10 PIP 10 Mid-Cap Value PIP 10 Equity |
3
| Company and Fund Name | Abbreviated Name | |
Prudential Investment Portfolios 12 Prudential Global Real Estate Fund Prudential US Real Estate Fund Prudential Long-Short Equity Prudential Short Duration Muni High Income Fund | PIP 12 PIP 12 Global Real Estate PIP 12 US Real Estate PIP 12 Long-Short PIP 12 Short Duration Muni | |
Prudential Investment Portfolios, Inc. 14 Prudential Government Income Fund Prudential Floating Rate Income Fund | PIP 14 PIP 14 Government Income PIP 14 Floating Rate Income | |
Prudential Investment Portfolios, Inc. 15 Prudential High Yield Fund Prudential Short Duration High Yield Income Fund | PIP 15 PIP 15 High Yield PIP 15 Short Duration High Yield | |
Prudential Investment Portfolios 16 Prudential Defensive Equity Fund Prudential Income Builder Fund | PIP 16 PIP 16 Defensive Equity PIP 16 Income Builder | |
Prudential Investment Portfolios, Inc. 17 Prudential Total Return Bond Prudential Short Duration Multi-Sector Bond Fund | PIP 17 PIP 17 Total Return Bond PIP17 Short Duration Multi-Sector | |
Prudential Investment Portfolios 18 Prudential Jennison 20/20 Focus Fund Prudential Jennison MLP Fund | PIP 18 PIP 18 20/20 Focus PIP 18 MLP | |
| Prudential MoneyMart Assets, Inc. | MoneyMart | |
| Prudential National Muni Fund, Inc. | National Muni | |
| Prudential Jennison Blend Fund, Inc. | Blend | |
| Prudential Jennison Mid-Cap Growth Fund, Inc. | Mid-Cap Growth | |
| Prudential Jennison Small Company Fund, Inc. | Small Company | |
Prudential World Fund, Inc. Prudential International Equity Fund Prudential International Value Fund Prudential Emerging Markets Debt Local Currency Fund Prudential Jennison Global Opportunities Fund Prudential Jennison International Opportunities Fund Prudential Jennison Global Infrastructure Fund | World World International Equity World International Value World Emerging Markets Debt World Global Opportunities World International Opportunities World Global Infrastructure | |
| Prudential Jennison Natural Resources Fund, Inc. | Natural Resources | |
| Prudential Global Total Return Fund, Inc. | Global Total Return |
4
| Company and Fund Name | Abbreviated Name | |
Prudential Sector Funds, Inc. Prudential Financial Services Fund Prudential Jennison Health Sciences Fund Prudential Jennison Utility Fund | Sector Sector Financial Services Sector Health Sciences Sector Utility | |
| Prudential Short-Term Corporate Bond Fund, Inc. | Short-Term Corporate Bond | |
The Target Portfolio Small Capitalization Value Portfolio Small Capitalization Growth Portfolio Large Capitalization Value Portfolio Large Capitalization Growth International Equity Portfolio Mortgage-Backed Securities Portfolio Intermediate-Term Bond Portfolio Total Return Bond Portfolio | Target Target Small Cap Value Target Small Cap Growth Target Large Cap Value Target Large Cap Growth Target International Equity Target Mortgage-Backed Target Intermediate-Term Bond Target Total Return Bond |
Each Company has a Board that, in addition to overseeing the actions of each Fund’s Manager and Subadviser(s), decides upon matters of general policy.
Prudential Investments LLC (PI or the Manager), Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102, serves as the Funds'Funds’ Manager under one or morea management agreementsagreement with each Company on behalf of each Fund. Shares of each Fund (each, aare distributed by Prudential Investment Management Agreement).
Services LLC (PIMS), located at 100 Mulberry Street, Newark, New Jersey 07102.
Investment advisorysubadvisory services are also provided to certain of the Funds by PI through its three affiliates: Jennison Associates LLC (Jennison), Prudential Investment Management, Inc. (PIM), and Quantitative Management Associates LLC (QMA). Jennison is located at 466 Lexington Avenue, New York, New York 10017. PIM and QMA are each located at Gateway Center Two, 100 Mulberry Street, Newark, New Jersey 07102. In addition, certain of the following
subadvisers (each, a Subadviser).
Funds receive investment subadvisory services from various unaffiliated subadvisers.
Set forth below are the Subadvisers for each Fund as of the date of this proxy statement:
Funds Receiving Subadvisory Services from Jennison:
| PIP Equity Opportunity | PIP 16 Income Builder** | PIP 18 MLP | World International Opportunities | |||
| PIP Growth | PIP 5 Rising Dividend | Blend | World Global Infrastructure | |||
| PIP 3 Select Growth | PIP 7 Value | Mid-Cap Growth | Natural Resources | |||
| PIP 3 Market Neutral | PIP 10 Equity Income | Small Company | Sector Health Sciences | |||
| PIP 5 Conservative Growth | PIP 18 20/20 Focus | World Global Opportunities | Sector Utility |
5
Funds Receiving Subadvisory Services from PIM:
| PIP Asset Allocation | PIP 6 Cal Muni | PIP 12 Short Duration Muni | PIP 16 Income Builder** | |||
| PIP 2 Taxable Money Market | PIP 9 International Real Estate* | PIP 14 Government Income | PIP 17 Total Return Bond | |||
| PIP 2 Short-Term Bond | PIP 9 Absolute Return Bond | PIP 14 Floating Rate Income | PIP 17 Short Duration Multi-Sector | |||
| PIP 3 Real Assets | PIP 12 Global Real Estate* | PIP 15 High Yield | MoneyMart | |||
| PIP 4 Muni High Income | PIP 12 US Real Estate* | PIP 15 Short Duration High Yield | National Muni | |||
| World Emerging Markets Debt | Global Total Return | Short-Term Corporate Bond | PIP 9 Select Real Estate* |
| * | Subadvisory services are provided by Prudential Real Estate Investors (PREI), which is a business unit of PIM. |
| ** | Subadvisory services are provided by Jennison, PIM and by PREI. |
Funds Receiving Subadvisory Services from QMA:
| PIP Asset Allocation | PIP 3 Real Assets | PIP 12 Long-Short | ||
| PIP Conservative Allocation | PIP 5 Small-Cap Value | PIP 16 Defensive Equity | ||
| PIP Moderate Allocation | PIP 8 Stock Index | PIP 16 Income Builder | ||
| PIP Growth Allocation | PIP 9 Large-Cap Core | World International Equity | ||
| PIP 3 Strategic Value | PIP 10 Mid-Cap Value |
Funds Receiving Subadvisory Services from Unaffiliated Subadvisers:
| Fund | Subadviser | Address | ||
| World International Value | LSV Asset Management | 155 North Wacker Drive, 46th Floor, Chicago, Illinois 60606 | ||
| Thornburg Investment Management, | 2300 North Ridgetop Road, Santa Fe, New | |||
| Sector Financial Services | Wellington Management Company, LLP | 280 Congress Street, Boston, Massachusetts 02210 | ||
| PIP 3 Real Assets | CoreCommodity Management, LLC | 680 Washington Boulevard, 11th Floor, Stamford, Connecticut 06902 | ||
| Target Small Cap Value | EARNEST Partners, LLC | 1180 Peachtree Street, NE, Suite 2300, Atlanta, | ||
| NFJ Investment Group, LLC | 2100 Ross Avenue, Suite 700, Dallas, Texas 75201 |
6
| Fund | Subadviser | Address | ||
| Lee Munder Capital Group, LLC | 200 Clarendon Street, Boston, Massachusetts 02116 | |||
| J.P. Morgan Investment Management, Inc. |
| 270 Park Avenue, New York, New York 10017 | ||||
| Vaughan Nelson Investment Management, | 600 Travis Street, Suite 6300, Houston, Texas 77002 | |||
| Sterling Capital Management LLC | 4064 Colony Road, Suite 300, Charlotte, North Carolina 28211 | |||
| Target Small Cap Growth | Eagle Asset Management, | 880 Carillon Parkway, St. Petersburg, Florida 33716 | ||
| Emerald Mutual Fund Advisers | 3175 Oregon Pike, Leola, Pennsylvania 17540 | |||
| Target Large Cap | Hotchkis and Wiley Capital Management, LLC | 725 South Figueroa Street, 39th Floor, Los Angeles, | ||
| NFJ Investment Group, LLC | 2100 Ross Avenue, Suite 700, Dallas, Texas 75201 | |||
| Epoch Investment Partners, Inc. | 399 Park Avenue, New York, New York 10022 | |||
| Target Large Cap Growth | Massachusetts Financial Services Company | 111 Huntington Avenue, Boston, Massachusetts 02199 | ||
| Brown Advisory, LLC | 901 South Bond Street, Suite 400, Baltimore, Maryland 21231 | |||
| Target International Equity | LSV Asset Management | 155 North Wacker Drive, 46th Floor, Chicago, Illinois 60606 | ||
| Thornburg Investment Management, Inc. | 2300 North Ridgetop Road, Santa Fe, New |
| Target Mortgage-Backed | Wellington Management Company, | 280 Congress Street, Boston, Massachusetts 02210 | ||
| Target Total Return Bond | Pacific Investment Management Company LLC | 840 Newport Center Drive, Newport Beach, California 92660 | ||
| Target | Pacific Investment Management Company LLC | 840 Newport Center Drive, Newport Beach, California 92660 |
7
PROPOSAL No. 1 TO ELECT BOARD MEMBERS
THIS PROPOSAL APPLIES TO ALL FUNDS
The Board of each Company has nominated the twelve individuals identified below for election to each Company’s Board. Pertinent information about each nominee is set forth below. Each of the nominees has consented to being named in this proxy statement, and has indicated a willingness to serve if elected. All of the nominees currently serve as a Board Member for each of the Companies in the Prudential retail mutual fund complex, with the exception of Ms. Torres, who does not currently serve as a Board Member, and Mr. Parker.1
Section 16 of the 1940 Act effectively requires that at least 2/3 of the members of a mutual fund’s board be elected by shareholders immediately after the board’s appointment of a new director. In addition, there must be a majority of shareholder-elected Board Members on the Board. The last time that shareholders of most Companies elected Board Members was in 2010. Since that time, as a result of retirements and subsequent appointments of new Board Members, each Company is near or at its statutory limitations under the 1940 Act and can no longer appoint additional Board Members without a shareholder vote.
To ensure the continuity and uninterrupted functioning of the Board of each Company in compliance with the 1940 Act, and to allow each Board to appoint new members in the future as circumstances and conditions may warrant, each Company’s current Board Members believe that it is prudent and appropriate for shareholders to elect each nominee for each Company covered by this proxy statement. By electing the nominees, the Board Members of each Company will have the flexibility necessary to appoint new members in the future in compliance with the requirements of the 1940 Act.
If elected, all nominees will hold office until the earlier to occur of: (a) the next meeting of shareholders of the Company at which Board Members are elected and until their successors are elected and qualified; or (b) until their terms expire in accordance with each Company’s retirement policy; or (c) until they resign or are removed as permitted by law. Each Company’s retirement policy generally calls for the retirement of Board Members on December 31 of the year in which they reach the age of 75.
Depending on the Company, any Board Member may be removed by the holders of not less than a majority of the Company’s outstanding Shares entitled to vote on the election of Board Members, or by the holders of not less than two-thirds of the Company’s outstanding Shares entitled to vote on the election of Board Members. In the event of a vacancy on the Board, the remaining Board Members intend to fill such vacancy by appointing another Board Member, so long as immediately after such appointment, at least two-thirds of the Board Members have been elected by shareholders.
Board Members who are not “interested persons” of a Company (as defined in the 1940 Act) are referred to as Independent Board Members. Board Members who are interested persons of a Company are referred to as Interested Board Members.
| 1 | Stuart Parker currently serves as a Board Member for all of the funds in the Prudential retail mutual fund complex with the exception of MoneyMart and the Prudential Variable Contract Account-2. |
8
The Board of each Company is currently composed of two Interested Board Members and eleven Independent Board Members.2 The Chair of the Board is Richard Redeker, who is an Independent Board Member. Two current Independent Board Members, Robin B. Smith and Douglas H. McCorkindale, have announced their intention to retire at the end of 2014 in accordance with the Companies’ retirement policy, and therefore have not been nominated for election. If all of the individuals nominated for election are elected by shareholders, the Board of each Company will be comprised of nine Independent Board Members and three Interested Board Members.
It is expected that the Board Members will meet at least four times a year at regularly scheduled meetings. The number of Board and Board committee meetings held during each Company’s most recent fiscal year is set forth in Exhibit E.
None of the nominees is related to another. None of the Independent Board Members of each Company nor persons nominated to become Independent Board Members owns shares of Prudential Financial, Inc. or its affiliates.
The name, age, current Board position, business experience and address of each Independent Board Member nominee and each Interested Board Member nominee (each a Nominee), as well as information regarding their service on the boards of other mutual funds in the Prudential mutual fund complex, is as follows:
PROPOSED INDEPENDENT BOARD MEMBER NOMINEES
Ellen S. Alberding* (56) | Director/Trustee | Since 2013
Principal Occupation(s) During Past 5 Years: President and Board Member, The Joyce Foundation (charitable foundation) (since 2002); Vice Chair, City Colleges of Chicago (community college system) (since 2011); Trustee, Skills for America’s Future (national initiative to connect employers to community colleges) (since 2011); Trustee, National Park Foundation (charitable foundation for national park system) (since 2009); Trustee, Economic Club of Chicago (since 2009).
Number of Portfolios in Fund Complex† Overseen by Nominee: 71
Other Directorships Held by Nominee**: None.
Kevin J. Bannon* (62) | Director/Trustee | Since 2008
Principal Occupation(s) During Past 5 Years: Managing Director (since April 2008) and Chief Investment Officer (October 2008-November 2013) of Highmount Capital LLC (registered investment adviser); formerly Executive Vice President and Chief Investment Officer (April 1993-August 2007) of Bank of New York Company; President (May 2003-May 2007) of BNY Hamilton Family of Mutual Funds.
Number of Portfolios in Fund Complex† Overseen by Nominee: 71
Other Directorships Held by Nominee**: Director of Urstadt Biddle Properties (since September 2008).
Linda W. Bynoe* (62) | Director/Trustee | Since 2005
Principal Occupation(s) During Past 5 Years: President and Chief Executive Officer (since March 1995) and formerly Chief Operating Officer (December 1989-February 1995) of Telemat Ltd. (management consulting); formerly Vice President (January 1985-June 1989) at Morgan Stanley & Co. (broker-dealer).
| 2 | The Board of MoneyMart is currently composed of one Interested Board Member and eleven Independent Board Members. |
9
Number of Portfolios in Fund Complex† Overseen by Nominee: 71
Other Directorships Held by Nominee**: Director of Simon Property Group, Inc. (retail real estate) (May 2003-May 2012); Director of Anixter International, Inc. (communication products distributor) (since January 2006); Director of Northern Trust Corporation (financial services) (since April 2006); Trustee of Equity Residential (residential real estate) (since December 2009).
Keith F. Hartstein* (57) | Director/Trustee | Since 2013
Principal Occupation(s) During Past 5 Years: Retired; Formerly President and Chief Executive Officer (2005-2012), Senior Vice President (2004-2005), Senior Vice President of Sales and Marketing (1997-2004), and various executive management positions (1990-1997), John Hancock Funds, LLC (asset management); Chairman, Investment Company Institute’s Sales Force Marketing Committee (2003-2008).
Number of Portfolios in Fund Complex† Overseen by Nominee: 71
Other Directorships Held by Nominee**: None.
Michael S. Hyland* (68) | Director/Trustee | Since 2008
Principal Occupation(s) During Past 5 Years: Retired (since February 2005); Formerly Senior Managing Director (July 2001-February 2005) of Bear Stearns & Co, Inc.; Global Partner, INVESCO (1999-2001); Managing Director and President of Salomon Brothers Asset Management (1989-1999).
Number of Portfolios in Fund Complex† Overseen by Nominee: 71
Other Directorships Held by Nominee**: None
Stephen P. Munn* (72) | Director/Trustee | Since 2008
Principal Occupation(s) During Past 5 Years: Lead Director (since 2007) and formerly Chairman (1993-2007) of Carlisle Companies Incorporated (manufacturer of industrial products).
Number of Portfolios in Fund Complex† Overseen by Nominee: 71
Other Directorships Held by Nominee**: None.
James E. Quinn* (62) | Director/Trustee | Since 2013
Principal Occupation(s) During Past 5 Years: Retired; Formerly President(2003-2012) and Director (2003-2008), and Vice Chairman and Director (1998-2003), Tiffany & Company (jewelry retailing); Director, Mutual of America Capital Management Corporation (asset management) (since 1996); Director, Hofstra University (since 2008); Vice Chairman, Museum of the City of New York (since 1994).
Number of Portfolios in Fund Complex† Overseen by Nominee: 71
Other Directorships Held by Nominee**: Director of Deckers Outdoor Corporation (footwear manufacturer) (since 2011).
Richard A. Redeker* (71) | Director/Trustee & Independent Chair | Independent Chair Since 2011 |See Note 1
Principal Occupation(s) During Past 5 Years: Retired Mutual Fund Senior Executive (44 years); Management Consultant; Director, Mutual Fund Directors
10
Forum (since 2014); Independent Directors Council (organization of 2,800 Independent Mutual Fund Directors)-Executive Committee, Chair of Policy Steering Committee, Governing Council.
Number of Portfolios in Fund Complex† Overseen by Nominee: 71
Other Directorships Held by Nominee**: None.
Stephen G. Stoneburn* (71) | Director/Trustee | See Note 2
Principal Occupation(s) During Past 5 Years: Chairman, (since July 2011), President and Chief Executive Officer (since June 1996) of Quadrant Media Corp. (publishing company); formerly President (June 1995-June 1996) of Argus Integrated Media, Inc.; Senior Vice President and Managing Director (January 1993-1995) of Cowles Business Media; Senior Vice President of Fairchild Publications, Inc.(1975-1989).
Number of Portfolios in Fund Complex† Overseen by Nominee: 71
Other Directorships Held by Nominee**: None.
PROPOSED INTERESTED BOARD MEMBER NOMINEES
Stuart S. Parker* (51) | Director/Trustee & President | Since 2012 | See Note 3
Principal Occupation(s) During Past 5 Years: President of Prudential Investments LLC (since January 2012); Executive Vice President of Prudential Investment Management Services LLC (PIMS(since December 2012); Executive Vice President of Jennison Associates LLC and Head of Retail Distribution of Prudential Investments LLC (June 2005-December 2011).
Number of Portfolios in Fund Complex† Overseen by Nominee: 65
Other Directorships Held by Nominee**: None.
Scott E. Benjamin* (41) | Director/Trustee & Vice President | Since 2009 | See Note 3
Principal Occupation(s) During Past 5 Years: Executive Vice President (since June 2009) of Prudential Investments LLC; Executive Vice President (June 2009-June 2012) and Vice President (since June 2012) of Prudential Investment Management Services LLC; Executive Vice President (since September 2009) of AST Investment Services, Inc.; Senior Vice President of Product Development and Marketing, Prudential Investments (since February 2006); Vice President of Product Development and Product Management, Prudential Investments (2003-2006).
Number of Portfolios in Fund Complex† Overseen by Nominee: 71
Other Directorships Held by Nominee**: None.
Grace C. Torres* (55) | See Note 3
Principal Occupation(s) During Past 5 Years: Retired; Formerly Treasurer and Principal Financial and Accounting Officer of the Prudential Investments Funds, Target Funds, Advanced Series Trust, Prudential Variable Contract Accounts and The Prudential Series Fund (1998-June 2014); Assistant Treasurer (March 1999-June 2014) and Senior Vice President (September 1999-June 2014) of Prudential Investments LLC; Assistant Treasurer (May 2003-June 2014) and Vice President (June 2005-June 2014) of AST Investment Services, Inc.; Senior Vice President and Assistant Treasurer (May 2003-June 2014) of Prudential Annuities Advisory Services, Inc.
11
Number of Portfolios in Fund Complex† Overseen by Nominee: None.
Other Directorships Held by Nominee**: None.
| * | The address of each Nominee is c/o Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102. |
| ** | Includes only directorships of companies required to register or file reports with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934 (that is, “public companies”) or other investment companies registered under the 1940 Act. |
| † | The Fund Complex consists of all investment companies managed by PI. The Funds for which PI serves as manager include the Prudential Investments Mutual Funds, Target Mutual Funds, The Prudential Variable Contract Accounts 2, 10 and 11, Prudential Short Duration High Yield Fund, Inc., Prudential Global Short Duration High Yield Fund, Inc., The Prudential Series Fund, Advanced Series Trust, and Prudential’s Gibraltar Fund, Inc. |
Note 1: Mr. Redeker has served as a Director/Trustee of the Funds since 2003, with the following exceptions: PIP 6 since 1993; Global Total since 1993; PIP 14 since 1993; PIP 15 since 1995; PIP 8 since 1996; PIP 4 since 1993; National Muni since 1995; Short-Term Corporate Bond since 1993; PIP 9 since 1998; PIP 17 since 1994; PIP since 1995; PIP 18 since 1998; Natural Resources since 2000; Sector since 1993; Small Company since 1996.
Note 2: Mr. Stoneburn has served as a Director/Trustee of the Funds since 2003, with the following exceptions: PIP 2 since 1999; PIP 12 since 2001; World since 1996; PIP 3 since 2000; PIP 5 since 1999; PIP 16 since 1999; Target since 1999.
Note 3: Messrs. Parker and Benjamin are Interested Board Members by virtue of their positions with PI. Prior to her retirement in 2014, Ms. Torres was employed by PI. Due to her prior employment, she is considered to be an “interested person” under the 1940 Act. If elected, Ms. Torres will be a non-management Interested Board Member.
12
The following tables set forth the dollar range of Fund securities held by each Nominee as of December 31, 2013. The tables also include the aggregate dollar range of securities held by each Nominee in all funds in the Fund Complex overseen by that Nominee as of December 31, 2013. The Nominating and Governance Committee encourages each Board Member to maintain investments in one or more Funds that are equal to the aggregate fees for one year that he or she receives for Board-related service to the Funds. Under ordinary circumstances, new Independent Board Members have two years to comply with this policy.
SHARE OWNERSHIP TABLE
INDEPENDENT BOARD MEMBER NOMINEES
Nominee | Fund | Dollar Range of Securities in each Fund | Aggregate Dollar Range of Securities in all Registered Investment Companies in Fund Complex Overseen by Nominee | |||
| Ellen S. Alberding | PIP Growth | Over $100,000 | Over $100,000 | |||
| PIP 8 Stock Index | Over $100,000 | |||||
| PIP 10 Mid-Cap Value | Over $100,000 | |||||
| Kevin J. Bannon | Natural Resources | $10,001-$50,000 | Over $100,000 | |||
| Mid-Cap Growth | Over $100,000 | |||||
| Target Intermediate-Term Bond | $50,001-$100,000 | |||||
| Target Mortgage-Backed | $50,001-$100,000 | |||||
| Sector Health Sciences | Over $100,000 | |||||
| World International Value | $50,001-$100,000 | |||||
| World Emerging Markets Debt | Over $100,000 | |||||
| Small Company | $50,001-$100,000 | |||||
| PIP 3 Market Neutral | $10,001-$50,000 | |||||
| PIP 14 Floating Rate Income | Over $100,000 | |||||
| Linda W. Bynoe | Target Total Return Bond | Over $100,000 | Over $100,000 | |||
| Keith F. Hartstein * | PIP Growth | Over $100,000 | Over $100,000 | |||
| PIP 4 Muni High Income | Over $100,000 | |||||
| PIP 8 Stock Index | $10,001-$50,000 | |||||
| Total Return Bond | $10,001-$50,000 | |||||
| Target International Equity | $10,001-$50,000 | |||||
| Michael S. Hyland | Target Intermediate-Term Bond | Over $100,000 | Over $100,000 | |||
| Target Small Cap Value | $10,001-$50,000 | |||||
| Natural Resources | $10,001-$50,000 | |||||
| Mid-Cap Growth | $10,001-$50,000 | |||||
| Sector Health Sciences | $10,001-$50,000 | |||||
| Stephen P. Munn | PIP 18 20/20 Focus | Over $100,000 | Over $100,000 | |||
| Natural Resources | $50,001-$100,000 | |||||
| Mid-Cap Growth | $10,001-$50,000 | |||||
| PIP 5 Small-Cap Value | $10,001-$50,000 |
13
Nominee | Fund | Dollar Range of Securities in each Fund | Aggregate Dollar Range of Securities in all Registered Investment Companies in Fund Complex Overseen by Nominee | |||
| James E. Quinn | PIP Equity Opportunity | Over $100,000 | Over $100,000 | |||
| Richard A. Redeker | PIP Growth | $50,001-$100,000 | Over $100,000 | |||
| Sector Health Sciences | Over $100,000 | |||||
| Short-Term Corporate Bond | Over $100,000 | |||||
| Total Return Bond | Over $100,000 | |||||
| PIP 3 Market Neutral | $50,001-$100,000 | |||||
| PIP 10 Equity Income | Over $100,000 | |||||
| Stephen G. Stoneburn | Natural Resources | Over $100,000 | Over $100,000 | |||
| World Global Opportunities | Over $100,000 | |||||
| World International Value | Over $100,000 | |||||
| Short-Term Corporate Bond | Over $100,000 | |||||
| Small Company | Over $100,000 | |||||
| PIP 15 High Yield | Over $100,000 | |||||
| PIP Conservative Allocation | Over $100,000 | |||||
| Mid-Cap Growth | Over $100,000 | |||||
| PIP 14 Government Income | Over $100,000 | |||||
| MoneyMart | Over $100,000 | |||||
| PIP 8 Stock Index | Over $100,000 |
| * | As of December 31, 2013, Mr. Hartstein also owned shares in the following closed-end funds, which are part of the Fund Complex: Prudential Global Short Duration High Yield Fund, Inc.: $1-$10,000; Prudential Short Duration High Yield Fund, Inc.: $1-$10,000. |
14
SHARE OWNERSHIP TABLE INTERESTED BOARD MEMBER NOMINEES
Nominee | Fund | Dollar Range of Securities in each Fund | Aggregate Dollar Range of Securities in all Registered Investment Companies in Fund Complex Overseen by Nominee | |||
| Stuart S. Parker | PIP Growth Allocation | Over $100,000 | Over $100,000 | |||
| PIP 10 Equity Income | $10,001-$50,000 | |||||
| Short-Term Corporate Bond | $10,001-$50,000 | |||||
| Sector Health Sciences | Over $100,000 | |||||
| Natural Resources | $10,001-$50,000 | |||||
| PIP 18 20/20 Focus | Over $100,000 | |||||
| PIP Equity Opportunity | $50,001-$100,000 | |||||
| PIP 7 Value | $50,001-$100,000 | |||||
| Scott E. Benjamin | Natural Resources | $50,001-$100,000 | Over $100,000 | |||
| PIP Growth Allocation | $50,001-$100,000 | |||||
| PIP Growth | Over $100,000 | |||||
| Mid-Cap Growth | $50,001-$100,000 | |||||
| PIP 3 Market Neutral | $10,001-$50,000 | |||||
| PIP 3 Real Assets | $10,001-$50,000 | |||||
| Global Total Return | $10,001-$50,000 | |||||
| Short-Term Corporate Bond | $10,001-$50,000 | |||||
| PIP 4 Muni High Income | $10,001-$50,000 | |||||
| PIP 9 Absolute Return Bond | $10,001-$50,000 | |||||
| PIP 12 Global Real Estate | $10,001-$50,000 | |||||
| PIP 14 Floating Rate Income | $10,001-$50,000 | |||||
| Sector Health Sciences | $10,001-$50,000 | |||||
| PIP 18 20/20 Focus | $10,001-$50,000 | |||||
| PIP 10 Equity Income | $10,001-$50,000 | |||||
| PIP 10 Mid-Cap Value | $1-$10,000 | |||||
| PIP 15 High Yield | $1-$10,000 | |||||
| Small Company | $50,001-$100,000 | |||||
| PIP 5 Small-Cap Value | $1-$10,000 | |||||
| Grace C. Torres * | None |
| * | Proposed for election at the Meeting as a non-management Interested Board Member. |
None of the Independent Board Member Nominees, or any member of his/her immediate family, owned beneficially or of record any securities in an investment adviser or principal underwriter of a Fund or a person (other than a registered investment company) directly or indirectly controlling, controlled by, or under common control with an investment adviser or principal underwriter of a Fund as of December 31, 2013.
Information concerning Company officers is set forth in Exhibit C.
15
BOARD MEMBER COMPENSATION
Currently, each Independent Board Member receives an annual retainer of $190,000 from all Companies in the aggregate. The Independent Board Member who serves as the Chair of each Company’s Board receives an additional annual aggregate fee of $75,000. In addition, Independent Board Members who are members of a Company’s Audit Committee receive an annual aggregate fee of $14,000 for their service on the Committee, except that the Chair of the Audit Committee receives an annual aggregate fee of $25,000. Independent Board Members who are members of the Nominating and Governance Committee receive an aggregate annual fee of $14,000 for their service on the Committee, except that the Chair of the Nominating and Governance Committee receives an annual aggregate fee of $25,000. Members of the Audit Committee and the Nominating and Governance Committee also receive meeting fees of $1,000 for their attendance at each committee meeting. Independent Board Members who are the Chair of an Investment Committee annually receive an additional $2,000. Independent Board Members receive reimbursement for any expenses incurred in attending meetings and for other incidental expenses. Board fees are reviewed periodically by each Company’s Board.
Interested Board Members currently do not receive any compensation from the Companies or the Distributor)Fund Complex, and do not receive any pension or retirement benefits for their service as Board Members. If elected as a non-management Interested Board Member, Ms. Torres will receive the same annual retainer as is currently received by Independent Board Members.
Set forth below is information describing the aggregate compensation paid by each Company for each Company’s most recently completed fiscal year and by the Fund Complex for the calendar year ended December 31, 2013 to each of the Independent Board Member Nominees for his/her services. Aggregate compensation numbers shown are for the calendar year ended December 31, 2013, the last full calendar year for which aggregate compensation numbers are available.
COMPENSATION PAID TO
INDEPENDENT BOARD MEMBER NOMINEES
Nominee | Company | Fiscal Year Compensation Paid by Company | Calendar Year Aggregate Compensation Paid by Company & Fund Complex (1) | |||
| Ellen S. Alberding | PIP | $1,100 | $67,834 (32/67)(2) | |||
| PIP 2 | $1,000 | |||||
| PIP 3 | $2,873 | |||||
| PIP 4 | $1,637 | |||||
| PIP 5 | None | |||||
| PIP 6 | None | |||||
| PIP 7 | None | |||||
| PIP 8 | $220 | |||||
| PIP 9 | $1,130 | |||||
| PIP 10 | $1,640 | |||||
| PIP 12 | $4,350 | |||||
| PIP 14 | $1,863 |
16
Nominee | Company | Fiscal Year Compensation Paid by Company | Calendar Year Aggregate Compensation Paid by Company & Fund Complex (1) | |||
| PIP 15 | None | |||||
| PIP 16 | None | |||||
| PIP 17 | $1,247 | |||||
| PIP 18 | $1,397 | |||||
| MoneyMart | None | |||||
| National Muni | $147 | |||||
| Blend | None | |||||
| Mid-Cap Growth | None | |||||
| Small Company | $540 | |||||
| World | $947 | |||||
| Natural Resources | $1,450 | |||||
| Global Total Return | $286 | |||||
| Sector | $3,371 | |||||
| Short-Term Corporate Bond | $6,700 | |||||
| Target | $2,607 | |||||
| Kevin J. Bannon | PIP | $14,480 | $210,000 (32/67)(2) | |||
| PIP 2 | $2,400 | |||||
| PIP 3 | $5,810 | |||||
| PIP 4 | $2,630 | |||||
| PIP 5 | $3,227 | |||||
| PIP 6 | $1,737 | |||||
| PIP 7 | $2,820 | |||||
| PIP 8 | $2,870 | |||||
| PIP 9 | $5,370 | |||||
| PIP 10 | $9,743 | |||||
| PIP 12 | $7,130 | |||||
| PIP 14 | $3,863 | |||||
| PIP 15 | $8,560 | |||||
| PIP 16 | $3,240 | |||||
| PIP 17 | $7,267 | |||||
| PIP 18 | $5,133 | |||||
| MoneyMart | $2,787 | |||||
| National Muni | $3,067 | |||||
| Blend | $3,443 | |||||
| Mid-Cap Growth | $16,600 | |||||
| Small Company | $7,590 | |||||
| World | $5,817 | |||||
| Natural Resources | $10,840 | |||||
| Global Total Return | $1,847 | |||||
| Sector | $13,747 | |||||
| Short-Term Corporate Bond | $22,060 | |||||
| Target | $16,063 |
17
Nominee | Company | Fiscal Year Compensation Paid by Company | Calendar Year Aggregate Compensation Paid by Company & Fund Complex (1) | |||
| Linda W. Bynoe | PIP | $14,340 | $210,000 (32/67)(2) | |||
| PIP 2 | $2,400 | |||||
| PIP 3 | $5,840 | |||||
| PIP 4 | $2,563 | |||||
| PIP 5 | $3,210 | |||||
| PIP 6 | $1,730 | |||||
| PIP 7 | $2,800 | |||||
| PIP 8 | $2,860 | |||||
| PIP 9 | $5,373 | |||||
| PIP 10 | $9,653 | |||||
| PIP 12 | $7,160 | |||||
| PIP 14 | $3,850 | |||||
| PIP 15 | $8,477 | |||||
| PIP 16 | $3,213 | |||||
| PIP 17 | $7,213 | |||||
| PIP 18 | $5,113 | |||||
| MoneyMart | $2,773 | |||||
| National Muni | $3,027 | |||||
| Blend | $3,403 | |||||
| Mid-Cap Growth | $16,347 | |||||
| Small Company | $7,500 | |||||
| World | $5,813 | |||||
| Natural Resources | $10,727 | |||||
| Global Total Return | $1,843 | |||||
| Sector | $13,710 | |||||
| Short-Term Corporate Bond | $22,100 | |||||
| Target | $15,950 | |||||
| Keith F. Hartstein | PIP | $1,100 | $68,834 (32/67)(2) | |||
| PIP 2 | $1,000 | |||||
| PIP 3 | $2,883 | |||||
| PIP 4 | $1,637 | |||||
| PIP 5 | None | |||||
| PIP 6 | None | |||||
| PIP 7 | None | |||||
| PIP 8 | $220 | |||||
| PIP 9 | $1,140 | |||||
| PIP 10 | $1,663 | |||||
| PIP 12 | $4,390 | |||||
| PIP 14 | $1,873 | |||||
| PIP 15 | None | |||||
| PIP 16 | None | |||||
| PIP 17 | $1,267 | |||||
| PIP 18 | $1,417 | |||||
| MoneyMart | None |
18
Nominee | Company | Fiscal Year Compensation Paid by Company | Calendar Year Aggregate Compensation Paid by Company & Fund Complex (1) | |||
| National Muni | $147 | |||||
| Blend | None | |||||
| Mid-Cap Growth | None | |||||
| Small Company | $540 | |||||
| World | $950 | |||||
| Natural Resources | $1,473 | |||||
| Global Total Return | $290 | |||||
| Sector | $3,423 | |||||
| Short-Term Corporate Bond | $6,830 | |||||
| Target | $2,623 | |||||
| Michael S. Hyland | PIP | $14,720 | $216,000 (32/67)(2) | |||
| PIP 2 | $2,400 | |||||
| PIP 3 | $5,880 | |||||
| PIP 4 | $2,657 | |||||
| PIP 5 | $3,243 | |||||
| PIP 6 | $1,757 | |||||
| PIP 7 | $2,883 | |||||
| PIP 8 | $2,930 | |||||
| PIP 9 | $5,467 | |||||
| PIP 10 | $10,000 | |||||
| PIP 12 | $7,440 | |||||
| PIP 14 | $3,930 | |||||
| PIP 15 | $8,763 | |||||
| PIP 16 | $3,253 | |||||
| PIP 17 | $7,503 | |||||
| PIP 18 | $5,313 | |||||
| MoneyMart | $2,847 | |||||
| National Muni | $3,127 | |||||
| Blend | $3,493 | |||||
| Mid-Cap Growth | $17,110 | |||||
| Small Company | $7,800 | |||||
| World | $5,853 | |||||
| Natural Resources | $11,193 | |||||
| Global Total Return | $1,883 | |||||
| Sector | $14,187 | |||||
| Short-Term Corporate Bond | $22,970 | |||||
| Target | $16,277 | |||||
| Stephen P. Munn | PIP | $14,720 | $214,000 (32/67)(2) | |||
| PIP 2 | $2,400 | |||||
| PIP 3 | $5,850 | |||||
| PIP 4 | $2,677 | |||||
| PIP 5 | $3,243 | |||||
| PIP 6 | $1,757 |
19
Nominee | Company | Fiscal Year Compensation Paid by Company | Calendar Year Aggregate Compensation Paid by Company & Fund Complex (1) | |||
| PIP 7 | $2,883 | |||||
| PIP 8 | $2,930 | |||||
| PIP 9 | $5,450 | |||||
| PIP 10 | $9,957 | |||||
| PIP 12 | $7,360 | |||||
| PIP 14 | $3,910 | |||||
| PIP 15 | $8,763 | |||||
| PIP 16 | $3,253 | |||||
| PIP 17 | $7,463 | |||||
| PIP 18 | $5,267 | |||||
| MoneyMart | $2,847 | |||||
| National Muni | $3,127 | |||||
| Blend | $3,493 | |||||
| Mid-Cap Growth | $17,110 | |||||
| Small Company | $7,800 | |||||
| World | $5,850 | |||||
| Natural Resources | $11,153 | |||||
| Global Total Return | $1,880 | |||||
| Sector | $14,073 | |||||
| Short-Term Corporate Bond | $22,630 | |||||
| Target | $16,250 | |||||
| James E. Quinn | PIP | $1,100 | $68,834 (32/67)(2) | |||
| PIP 2 | $1,000 | |||||
| PIP 3 | $2,883 | |||||
| PIP 4 | $1,633 | |||||
| PIP 5 | None | |||||
| PIP 6 | None | |||||
| PIP 7 | None | |||||
| PIP 8 | $220 | |||||
| PIP 9 | $1,140 | |||||
| PIP 10 | $1,663 | |||||
| PIP 12 | $4,360 | |||||
| PIP 14 | $1,867 | |||||
| PIP 15 | None | |||||
| PIP 16 | None | |||||
| PIP 17 | $1,267 | |||||
| PIP 18 | $1,417 | |||||
| MoneyMart | None | |||||
| National Muni | $147 | |||||
| Blend | None | |||||
| Mid-Cap Growth | None | |||||
| Small Company | $540 | |||||
| World | $950 | |||||
| Natural Resources | $1,473 |
20
Nominee | Company | Fiscal Year Compensation Paid by Company | Calendar Year Aggregate Compensation Paid by Company & Fund Complex (1) | |||
| Global Total Return | $290 | |||||
| Sector | $3,423 | |||||
| Short-Term Corporate Bond | $6,830 | |||||
| Target | $2,623 | |||||
| Richard A. Redeker | PIP | $16,670 | $250,000 (32/67)(2) | |||
| PIP 2 | $2,400 | |||||
| PIP 3 | $6,207 | |||||
| PIP 4 | $3,087 | |||||
| PIP 5 | $3,473 | |||||
| PIP 6 | $1,897 | |||||
| PIP 7 | $3,330 | |||||
| PIP 8 | $3,380 | |||||
| PIP 9 | $5,920 | |||||
| PIP 10 | $12,003 | |||||
| PIP 12 | $8,960 | |||||
| PIP 14 | $4,320 | |||||
| PIP 15 | $10,460 | |||||
| PIP 16 | $3,497 | |||||
| PIP 17 | $9,130 | |||||
| PIP 18 | $6,413 | |||||
| MoneyMart | $3,287 | |||||
| National Muni | $3,650 | |||||
| Blend | $4,143 | |||||
| Mid-Cap Growth | $21,273 | |||||
| Small Company | $9,550 | |||||
| World | $6,127 | |||||
| Natural Resources | $13,813 | |||||
| Global Total Return | $2,050 | |||||
| Sector | $16,907 | |||||
| Short-Term Corporate Bond | $28,650 | |||||
| Target | $17,997 | |||||
| Target | $15,923 | |||||
| Stephen G. Stoneburn | PIP | $14,480 | $212,000 (32/67)(2) | |||
| PIP 2 | $2,400 | |||||
| PIP 3 | $5,840 | |||||
| PIP 4 | $2,590 | |||||
| PIP 5 | $3,227 | |||||
| PIP 6 | $1,737 | |||||
| PIP 7 | $2,820 | |||||
| PIP 8 | $2,870 | |||||
| PIP 9 | $5,387 | |||||
| PIP 10 | $9,787 | |||||
| PIP 12 | $7,210 |
21
Nominee | Company | Fiscal Year Compensation Paid by Company | Calendar Year Aggregate Compensation Paid by Company & Fund Complex (1) | |||
| PIP 14 | $3,883 | |||||
| PIP 15 | $8,560 | |||||
| PIP 16 | $3,240 | |||||
| PIP 17 | $7,303 | |||||
| PIP 18 | $5,180 | |||||
| MoneyMart | $2,787 | |||||
| National Muni | $3,067 | |||||
| Blend | $3,443 | |||||
| Mid-Cap Growth | $16,600 | |||||
| Small Company | $7,590 | |||||
| World | $5,820 | |||||
| Natural Resources | $10,880 | |||||
| Global Total Return | $1,850 | |||||
| Sector | $13,860 | |||||
| Short-Term Corporate Bond | $22,390 | |||||
| Target | $16,090 |
| (1) | Although this column shows the total amount paid to Independent Board Members from the PI-managed funds during the most recently completed calendar year, such compensation was deferred at the request of certain Board Members, in total, or in part, under each Fund’s deferred fee agreement. Under the Fund Complex’s deferred fee agreement, certain Board Members have elected to defer all or part of their total compensation. The total amount of deferred compensation accrued during the calendar year ended December 31, 2013, including investment results during the year on cumulative deferred fees, amounted to $(26,698), $1,068, and $409,269 for Ms. Bynoe, Mr. Hartstein, and Mr. Stoneburn, respectively. |
| (2) | Compensation relates to portfolios that were in existence for any period during 2013. Figures in parentheses indicate the number of funds/portfolios in Fund Complex (including the Funds) to which aggregate compensation relates The number of funds/portfolios represent those in existence as of December 31, 2013, and excludes funds that have merged or liquidated during 2013. Additionally, the number of funds/portfolios includes those which were approved as of December 31, 2013; however, certain of those funds/portfolios may have commenced operations after that date. No compensation is paid out from such funds/portfolios. |
LEADERSHIP STRUCTURE AND QUALIFICATIONS OF NOMINEES
The Board is responsible for oversight of the Funds. The Funds have engaged the Manager to manage the Funds on a day-to-day basis. The Board oversees the Manager and certain other principal service providers in the operations of the Funds. The Board is currently composed of thirteen members, eleven of whom are Independent Board Members. If the Nominees are elected at the Meeting, the Board will be composed of twelve members, nine of whom will be Independent Board Members, and three of whom will be Interested Board Members, of whom one, Ms. Torres, will be a non-management Interested Board Member.
22
The Board meets in-person at regularly scheduled meetings four times throughout the year. In addition, the Board Members may meet in-person or by telephone at special meetings or on an informal basis at other times. The Board has established three standing committees—Audit, Nominating and Governance, and Investment—and may establish ad hoc committees or working groups from time to time, to assist the Board in fulfilling its oversight responsibilities. The Independent Board Members have also engaged independent legal counsel to assist them in fulfilling their responsibilities.
The Board is chaired by an Independent Board Member. As Chair, this Independent Board Member leads the Board in its activities. Also, the Chair acts as a member or as an ex-officio member of each standing committee and any ad hoc committee of the Board. The Board Members have determined that the Board’s leadership and committee structure is appropriate because the Board believes it sets the proper tone to the relationships between the Funds, on the one hand, and the Manager, the subadviser(s) and certain other principal service providers, on the other, and facilitates the exercise of the Board’s independent judgment in evaluating and managing the relationships. In addition, the structure efficiently allocates responsibility among committees.
The Board has concluded that, based on each Board Member’s experience, qualifications, attributes or skills on an individual basis and in combination with those of the other Board Members, each Board Member should serve as a Board Member. Among other attributes common to all Board Members are their ability to review critically, evaluate, question and discuss information provided to them, to interact effectively with the various service providers to the Funds, and to exercise reasonable business judgment in the performance of their duties as Board Members. In addition, the Board has taken into account the actual service and commitment of the Board Members during their tenure in concluding that each should continue to serve. A Board Member’s ability to perform his or her duties effectively may have been attained through a Board Member’s educational background or professional training; business, consulting, public service or academic positions; experience from service as a Board Member of the Funds, other funds in the Fund Complex, public companies, or non-profit entities or other organizations; or other experiences. Set forth below is a brief discussion of the specific experience, qualifications, attributes or skills of each Board Member that led the Board to conclude that he or she should serve as a Board Member.
Messrs. Redeker and Stoneburn have each served as a Board Member of mutual funds in the Fund Complex for more than 14 years, including as members and/or Chairs of various Board committees. In addition, Mr. Stoneburn has more than 30 years of experience as senior executive officers of operating companies and/or as directors of public companies. Mr. Redeker has more than 44 years of experience as a senior executive in the mutual fund industry. Ms. Bynoe has been a Board Member of the Funds since 2005, having served on the boards of other mutual fund complexes since 1993. She has worked in the financial services industry over 11 years, has approximately 20 years experience as a management consultant and serves as a Director of financial services and other complex global corporations. Mr. Munn joined the Board of the Funds in 2008. He previously served as a Board Member of funds managed by PI or its affiliates from 1991 until 2003. In addition, he is the lead director and was the Chairman of an operating business for 14 years. Messrs. Bannon and Hyland joined the Board of the Funds in 2008. Each has held senior executive positions in the financial services industry, including serving as senior executives of
23
asset management firms, for over 17 years. Ms. Alberding and Messrs. Hartstein and Quinn joined the Board of the Funds in 2013. Ms. Alberding has 30 years of experience in the non-profit sector, including over 20 years as the president of a charitable foundation, where she oversees multiple investment managers. Ms. Alberding also served as a Trustee of the Aon Funds from 2000 to 2003. Mr. Hartstein has worked in the asset management industry for almost 30 years and served as a senior executive in an asset management firm. Mr. Quinn has over 20 years of experience as a senior executive officer and a director of a public company. Mr. Parker, who has served as an Interested Board Member and President of the Funds since 2012, is President, Chief Operating Officer and Officer-in-Charge of PI and several of its affiliates that provide services to the Fund and has held senior positions in PI since 2005. Mr. Benjamin, an Interested Board Member of the Funds since 2010, has served as a Vice President of the Funds and other funds in the Fund Complex since 2009 and has held senior positions in PI since 2003. Ms. Torres served as Treasurer and Principal Financial and Accounting Officer of the Funds and other funds in the Fund Complex for 16 years and held senior positions in PI from 1999 to 2014. Specific details about each Board Member’s professional experience appear in the professional biography tables, above.
Risk Oversight. Investing in general and the operation of a mutual fund involve a variety of risks, such as investment risk, compliance risk, and operational risk, among others. The Board oversees risk as part of its oversight of the Funds. Risk oversight is addressed as part of various regular Board and committee activities. The Board, directly or through its committees, reviews reports from among others, the Manager, subadvisers, the Funds’ Chief Compliance Officer, the Funds’ independent registered public accounting firm, counsel, and internal auditors of the Manager or its affiliates, as appropriate, regarding risks faced by the Funds and the risk management programs of the Manager and certain service providers. The actual day-to-day risk management with respect to the Funds resides with the Manager and other service providers to the Funds. Although the risk management policies of the Manager and the service providers are designed to be effective, those policies and their implementation vary among service providers and over time, and there is no guarantee that they will be effective. Not all risks that may affect the Funds can be identified or processes and controls developed to eliminate or mitigate their occurrence or effects, and some risks are simply beyond any control of the Funds or the Manager, its affiliates or other service providers.
STANDING BOARD COMMITTEES
Audit Committee. Each Company has an Audit Committee, which is composed entirely of Independent Board Members, and normally meets four times a year, or as required, in conjunction with the meetings of the Boards of Directors/Trustees. The Audit Committee consists of Messrs. Munn (Chair), McCorkindale, Bannon, and Quinn, Ms. Alberding, Ms. Smith and Mr. Redeker (ex-officio). The Board has determined that the Audit Committee has at least one audit committee financial expert. The number of Audit Committee meetings held during each Fund’s most recent fiscal year is set forth in Exhibit E.
The Board of each Company has determined that each member of the Audit Committee is not an “interested person” as defined in the 1940 Act. The responsibilities of the Audit Committee are to assist the Board in overseeing the Fund’s
24
independent registered public accounting firm, accounting policies and procedures and other areas relating to the Funds’ auditing processes. The Audit Committee is responsible for pre-approving all audit services and any permitted non-audit services to be provided by the independent registered public accounting firm directly to each Fund.
The Audit Committee is also responsible for pre-approving permitted non-audit services to be provided by the independent registered public accounting firm to (1) the Manager and (2) any entity in a control relationship with the Manager that provides ongoing services to the Funds, provided that the engagement of the independent registered public accounting firm relates directly to the operation and financial reporting of the Fund. The scope of the Audit Committee’s responsibilities is oversight. It is management’s responsibility to maintain appropriate systems for accounting and internal control and the independent registered public accounting firm’s responsibility to plan and carry out an audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). The Audit Committee charter is attached as Exhibit D.
The firm of KPMG LLP (KPMG), 345 Park Avenue, New York, New York 10154 is the independent registered public accounting firm for each Company. Each Company’s Audit Committee recommended, and the Board of each Company (including a majority of the Independent Board Members) approved, the selection of KPMG as each Company’s independent accountant for the Company’s current fiscal year. Representatives of KPMG are not expected to be present at the Meeting and will not be available to respond to questions during the Meeting; however, they will have the opportunity to make a statement if they so desire.
Investment Committees. The Prudential Investment Committee reviews the performance of each Fund whose subadvisers are affiliates of the Manager, while the Target Investment Committee reviews the performance of each Fund whose subadvisers are not affiliates of the Manager. Each Committee meets at least four times per year and reports the results of its review to the full Board of each Fund at each regularly scheduled Board meeting. Every Independent Board Member sits on one of the two Committees.
The Prudential Investment Committee consists of Mr. Hartstein (Chair), Mr. Redeker, Mr. Hyland, Mr. Quinn, Mr. Stoneburn and Ms. Bynoe. The Target Investment Committee consists of Ms. Alberding (Chair), Mr. Bannon, Mr. McCorkindale, Mr. Munn and Ms. Smith. The number of Prudential and Target Investment Committee meetings held during each Fund’s most recent fiscal year is set forth in Exhibit E.
Nominating & Governance Committee. Each Company has a Nominating and Governance Committee, which is composed entirely of Independent Board Members. The Nominating and Governance Committee is responsible for nominating Board Members and making recommendations to the Board concerning Board composition, committee structure and governance, director education, and governance practices. The members of the Nominating and Governance Committee are Mr. Hyland (Chair), Mr. Stoneburn, Mr. Hartstein, Ms. Bynoe and Mr. Redeker (ex-officio). The Board of each Company has determined that each member of the Nominating and Governance Committee is not an “interested person” of each Company as defined in the 1940 Act. The number of Nominating and Governance Committee meetings held during each
25
Fund’s most recent fiscal year is set forth in Exhibit E. The Nominating and Governance Committee charter is attached as Exhibit F.
Selection of Board Member Nominees. The Nominating and Governance Committee is responsible for considering nominees for Board Members at such times as it considers electing new members to the Board. The Nominating and Governance Committee may consider recommendations by business and personal contacts of current Board Members, and by executive search firms which the Committee may engage from time to time and will also consider shareholder recommendations. The Nominating and Governance Committee has not established specific, minimum qualifications that it believes must be met by a nominee. In evaluating nominees, the Nominating and Governance Committee considers, among other things, an individual’s background, skills, and experience; whether the individual is an “interested person” as defined in the 1940 Act; and whether the individual would be deemed an “audit committee financial expert” within the meaning of applicable SEC rules. The Nominating and Governance Committee also considers whether the individual’s background, skills, and experience will complement the background, skills, and experience of other nominees and will contribute to the diversity of the Board. There are no differences in the manner in which the Nominating and Governance Committee evaluates nominees for the Board based on whether the nominee is recommended by a shareholder.
A shareholder who wishes to recommend a board member for nomination should submit his or her recommendation in writing to the Chair of the Board (Richard Redeker) or the Chair of the Nominating and Governance Committee (Michael Hyland), in either case in care of the specified Fund(s), at Gateway Center Three, 100 Mulberry Street, 4th Floor, Newark, New Jersey 07102, serves as07102-4077. At a minimum, the distributorrecommendation should include: the name, address and business, educational and/or other pertinent background of the Funds' shares.person being recommended; a statement concerning whether the person is an “interested person” as defined in the 1940 Act; any other information that the Funds would be required to include in a proxy statement concerning the person if he or she was nominated; and the name and address of the person submitting the recommendation, together with the number of Fund shares held by such person and the period for which the shares have been held. The Funds' transfer agentrecommendation also can include any additional information which the person submitting it believes would assist the Nominating and Governance Committee in evaluating the recommendation.
Shareholders should note that a person who owns securities issued by Prudential Financial, Inc. (the parent company of the Funds’ Manager) would be deemed an “interested person” under the 1940 Act. In addition, certain other relationships with Prudential Financial, Inc. or its subsidiaries, with registered broker-dealers, or with the Funds’ outside legal counsel may cause a person to be deemed an “interested person.” Before the Nominating and Governance Committee decides to nominate an individual to the Board, Committee members and other Board Members customarily interview the individual in person. In addition, the individual customarily is Prudential
Mutualasked to complete a detailed questionnaire which is designed to elicit information which must be disclosed under SEC and stock exchange rules and to determine whether the individual is subject to any statutory disqualification from serving on the board of a registered investment company.
26
AUDIT FEES
The following aggregate fees were billed by KPMG for professional services rendered for the audit of each Fund’s annual financial statements for each of their two most recently completed fiscal years as indicated below:
| Fund | Fiscal Year-End | Aggregate Fees | Fiscal Year-End | Aggregate Fees | ||||
| PIP Asset Allocation | 9/30/2013 | $37,000 | 9/30/2012 | $37,000 | ||||
| PIP Equity Opportunity | 9/30/2013 | 22,000 | 9/30/2012 | 22,000 | ||||
| PIP Growth | 9/30/2013 | 22,000 | 9/30/2012 | 22,000 | ||||
| PIP Conservative Allocation | 9/30/2013 | 22,000 | 9/30/2012 | 22,000 | ||||
| PIP Moderate Allocation | 9/30/2013 | 22,000 | 9/30/2012 | 22,000 | ||||
| PIP Growth Allocation | 9/30/2013 | 22,000 | 9/30/2012 | 22,000 | ||||
| PIP 2 Taxable Money Market | 1/31/2014 | 23,175 | 1/31/2013 | 22,500 | ||||
| PIP 2 Short-Term Bond | 1/31/2014 | 36,000 | 1/31/2013 | 32,000 | ||||
| PIP 3 Strategic Value | 2/28/2014 | 22,440 | 2/28/2013 | 22,000 | ||||
| PIP 3 Select Growth | 2/28/2014 | 22,440 | 2/28/2013 | 22,000 | ||||
| PIP 3 Real Assets | 2/28/2014 | 46,350 | 2/28/2013 | 45,000 | ||||
| PIP 3 Market Neutral | 2/28/2014 | 30,600 | 2/28/2013 | 30,020 | ||||
| PIP 4 Muni High Income | 4/30/2014 | 33,475 | 4/30/2013 | 32,500 | ||||
| PIP 5 Conservative Growth | 7/31/ 2013 | 22,000 | 7/31/2012 | 22,000 | ||||
| PIP 5 Small-Cap Value | 7/31/ 2013 | 29,250 | 7/31/2012 | 29,250 | ||||
| PIP 5 Rising Dividend | N/A | N/A | N/A | N/A | ||||
| PIP 6 Cal Muni | 8/31/2013 | 32,500 | 8/31/2012 | 32,500 | ||||
| PIP 7 Value | 8/31/2013 | 22,000 | 8/31/2012 | 22,000 | ||||
| PIP 8 Stock Index | 9/30/2013 | 22,500 | 9/30/2012 | 22,500 | ||||
| PIP 9 Large-Cap Core | 10/31/2013 | 22,500 | 10/31/2012 | 22,500 | ||||
| PIP 9 International Real Estate | 10/31/2013 | 29,500 | 10/31/2012 | 29,500 | ||||
| PIP 9 Absolute Return Bond | 10/31/2013 | 55,000 | 10/31/2012 | 60,000 | ||||
| PIP 9 Select Real Estate Fund | N/A | N/A | N/A | N/A | ||||
| PIP 10 Mid-Cap Value | 10/31/2013 | 22,000 | 10/31/2012 | 22,000 | ||||
| PIP 10 Equity Income | 10/31/2013 | 25,000 | 10/31/2012 | 35,000 | ||||
| PIP 12 Global Real Estate | 3/31/2014 | 25,750 | 3/31/2013 | 25,000 | ||||
| PIP 12 US Real Estate | 3/31/2014 | 23,970 | 3/31/2013 | 23,500 | ||||
| PIP 12 Long-Short | N/A | N/A | N/A | N/A | ||||
| PIP 12 Short Duration Muni | N/A | N/A | N/A | N/A | ||||
| PIP 14 Government Income | 2/28/2014 | 34,505 | 2/28/2013 | 33,500 | ||||
| PIP 14 Floating Rate | 2/28/2014 | 52,500 | 2/28/2013 | 50,000 | ||||
| PIP 15 High Yield | 8/31/2013 | 32,500 | 8/31/2012 | 32,500 | ||||
| PIP 15 Short Duration High Yield | 8/31/2013 | 37,000 | 8/31/2012 | N/A |
27
| Fund | Fiscal Year-End | Aggregate Fees | Fiscal Year-End | Aggregate Fees | ||||
| PIP 16 Defensive Equity | 7/31/ 2013 | 48,000 | 7/31/2012 | 73,000 | ||||
| PIP 16 Income Builder | 7/31/ 2013 | 68,000 | 7/31/2012 | 68,000 | ||||
| PIP 17 Total Return Bond | 10/31/2013 | 46,500 | 10/31/2012 | 51,500 | ||||
| PIP 17 Short Duration Multi-Sector | N/A | N/A | N/A | N/A | ||||
| PIP 18 20/20 Focus | 11/30/2013* | 22,000 | 1/31/2013 | 22,000 | ||||
| PIP 18 MLP | N/A | N/A | N/A | N/A | ||||
| MoneyMart | 7/31/ 2013 | 22,500 | 7/31/2012 | 22,500 | ||||
| National Muni | 8/31/2013 | 32,500 | 8/31/2012 | 32,500 | ||||
| Blend | 8/31/2013 | 22,000 | 8/31/2012 | 22,000 | ||||
| Mid-Cap Growth | 8/31/2013 | 22,000 | 8/31/2012 | 22,000 | ||||
| Small Company | 9/30/2013 | 22,000 | 9/30/2012 | 22,000 | ||||
| World International Equity | 10/31/2013 | 29,250 | 10/31/2012 | 29,250 | ||||
| World International Value | 10/31/2013 | 29,250 | 10/31/2012 | 29,250 | ||||
| World Emerging Markets Debt | 10/31/2013 | 55,000 | 10/31/2012 | 60,000 | ||||
| World Global Opportunities | 10/31/2013 | 25,500 | 10/31/2012 | 30,000 | ||||
| World International Opportunities | 10/31/2013 | 25,500 | 10/31/2012 | 30,000 | ||||
| World Global Infrastructure | 10/31/2013 | 16,500 | N/A | N/A | ||||
| World Emerging Markets Equity | N/A | N/A | N/A | N/A | ||||
| Natural Resources | 10/31/2013 | 22,500 | 10/31/2012 | 32,500 | ||||
| Global Total Return | 10/31/2013 | 55,000 | 10/31/2012 | 60,000 | ||||
| Sector Financial Services | 11/30/2013 | 22,000 | 11/30/2012 | 22,000 | ||||
| Sector Health Sciences | 11/30/2013 | 22,000 | 11/30/2012 | 22,000 | ||||
| Sector Utility | 11/30/2013 | 22,000 | 11/30/2012 | 22,000 | ||||
| Short-Term Corporate Bond | 12/31/2013 | 32,500 | 12/31/2012 | 32,500 | ||||
| Target Small-Cap Value | 10/31/2013 | 32,500 | 10/31/2012 | 32,500 | ||||
| Target Small-Cap Growth | 10/31/2013 | 25,000 | 10/31/2012 | 25,000 | ||||
| Target Large-Cap Value | 10/31/2013 | 25,000 | 10/31/2012 | 25,000 | ||||
| Target Large-Cap Growth | 10/31/2013 | 25,000 | 10/31/2012 | 25,000 | ||||
| Target International Equity | 10/31/2013 | 32,500 | 10/31/2012 | 32,500 | ||||
| Target Mortgage-Backed | 10/31/2013 | 33,000 | 10/31/2012 | 33,000 | ||||
| Target Intermediate-Term Bond | 10/31/2013 | 56,500 | 10/31/2012 | 61,500 | ||||
| Target Total Return Bond | 10/31/2013 | 61,000 | 10/31/2012 | 66,000 |
| * | During 2013, the Fund changed its fiscal year-end to November 30, requiring the Fund to issue new financial statements as of 11/30/2013. |
28
AUDIT-RELATED FEES
For each Fund’s two most recent fiscal years, KPMG did not bill any fees related to the performance of the audit or review of financial statements, that are not reported above under “Audit Fees,” including accounting consultations, agreed-upon procedure reports, attestation reports, comfort letters, out-of-pocket expenses and internal control reviews not required by regulators.
TAX FEES
For the fiscal year ended 2013, KPMG billed PIP $3,202 and Natural Resources $3,429 in fees associated with tax compliance, tax advice and tax planning, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews, tax distribution and analysis reviews and miscellaneous tax advice. For the fiscal year ended 2012, KPMG billed PIP 3 Real Assets, PIP 12 Global Real Estate and World $3,250, $7,250 and $13,024, respectively, in fees associated with tax compliance, tax advice and tax planning, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews, tax distribution and analysis reviews and miscellaneous tax advice. None of the other Funds were billed by KPMG during the two most recent fiscal years for fees associated with tax compliance, tax advice and tax planning, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews, tax distribution and analysis reviews and miscellaneous tax advice.
ALL OTHER FEES
With the exception of Small Company, for each Fund’s two most recent fiscal years, KPMG did not bill any fees for products and services provided to the Fund Services LLC (PMFS)other than those reported above under “Audit Fees,” “Audit-Related Fees” and “Tax Fees.” With respect to Small Company, KPMG billed $19,000 for products and services other than those reported above under “Audit Fees,” “Audit-Related Fees” and “Tax Fees” for the fiscal year ended September 30, 2012.
The charter of each Audit Committee requires that the Audit Committee approve all audit services and any permitted non-audit services to be provided by KPMG directly to the Fund. Each Audit Committee is also responsible for pre-approving permitted non-audit services to be provided by KPMG to (1) the Manager and (2) any entity in a control relationship with the Manager that provides ongoing services to the Funds (Affiliated Service Providers), 194 Wood Avenue South, Iselin, New Jersey
08830.provided that the engagement of KPMG relates directly to the operation and financial reporting of the Fund.
The Audit Committee of each Fund has adopted policies and procedures with regard to the pre-approval of services. The Audit Committee is charged with the responsibility to monitor the independence of the Fund’s independent accountants. As part of December 31, 2002,this responsibility, the Audit Committee must pre-approve any independent accounting firm’s engagement to render audit and/or permissible non-audit services, as required by law. In evaluating a proposed engagement of the independent accountants,
29
the Audit Committee will assess the effect that the engagement might reasonably be expected to have on the accountant’s independence. The Committee’s evaluation will be based on:
For each Fund’s two most recent fiscal years, there were no fees paid for non-audit services to the Fund’s Manager and Affiliated Service Providers for which pre-approval by the Audit Committee was required, or for which pre-approval was not required.
Each Audit Committee has considered whether the provision of non-audit services that were rendered by KPMG to the Manager and Affiliated Service Providers that were not pre-approved is compatible with maintaining KPMG’s independence. All services provided by KPMG to each Fund, the Manager or Affiliated Service Providers that were required to be pre-approved were pre-approved as required.
REQUIRED VOTE
The nominees receiving the affirmative vote of a plurality, in the case of each Company other than PIP 6 Cal Muni, PIP 7 Value and PIP 4 Muni High Income, of the votes cast will be elected, provided a quorum is present. With respect to PIP 6 Cal Muni, PIP 7 Value and PIP 4 Muni High Income, the nominees receiving the affirmative vote of a majority of the votes cast will be elected, provided a quorum is present.
EACH BOARD, INCLUDING ALL OF ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE NOMINEES.
30
PROPOSAL No. 2
TO APPROVE A POLICY TO PERMIT PI served as the investment manager toTO ENTER INTO OR MATERIALLY AMEND SUBADVISORY AGREEMENTS WITHWHOLLY-OWNED SUBADVISERS
WITHOUT SHAREHOLDER APPROVAL
THIS PROPOSAL APPLIES TO ALL FUNDS (except PIP 16 Income Builder, PIP 5 Rising Dividend, PIP 12 Short Duration Muni, PIP 9 Select Real Estate, PIP 12 Long-Short, PIP 14 Floating Rate Income, PIP 15 Short Duration High Yield, PIP 17 Short Duration Multi-Sector, PIP 18 MLP, MoneyMart, and World Global Infrastructure)
The Board of each Fund, including all of the Prudential U.S.Independent Board Members, has approved, and offshore open-endrecommends that shareholders approve, a policy which would permit PI to enter into subadvisory agreements with subadvisers that are direct or indirect “wholly-owned subadvisers” (as that term is defined in the 1940 Act) of PI or a sister company of PI that is a direct or indirect “wholly-owned” subsidiary (as that term is defined in the 1940 Act) of the same company that directly or indirectly owns PI (“Wholly-Owned Subadvisers”) with respect to a Fund, or make material amendments to subadvisory agreements with existing Wholly-Owned Subadvisers to a Fund, with prior Board approval but without obtaining shareholder approval (such policy, the “Modified Manager-of-Managers Policy”).
PI and the Funds currently operate in a “manager of managers” structure pursuant to an existing exemptive order from the SEC that generally permits Pl to enter into or amend agreements with subadvisers that are not “affiliated persons” (as defined in the 1940 Act) of PI, other than by reason of serving as a subadviser to a fund managed by PI (“Non-Affiliated Subadvisers”), with Board approval and without shareholder vote (the “Existing Relief”). The Funds and PI have filed an application with the SEC for a new exemptive order which would extend the relief to apply to Wholly-Owned Subadvisers as well as Non-Affiliated Subadvisers (the “New Relief”). Pursuant to the conditions proposed in the New Relief, shareholders must approve the Modified Manager-of-Managers Policy before the Funds can be permitted to rely on the New Relief. The Funds’ exemptive application is currently pending with the SEC, and there is no guarantee that the SEC will grant the requested exemptive order.
Why Shareholder Approval is Being Sought
Section 15 of the 1940 Act makes it unlawful for any person to act as investment companies,adviser to an investment company, except pursuant to a written contract that has been approved by shareholders. For purposes of Section 15, the term “investment adviser” includes any subadviser to an investment company. Section 15 also requires that an investment advisory agreement provide that it will terminate automatically upon its assignment. As a result, in the absence of exemptive relief, shareholder approval is required in the following circumstances:
31
The 1940 Act does not require shareholder approval for the termination of a subadvisory agreement if such termination is approved by a fund’s Board of Directors/Trustees, including its independent directors/trustees, although shareholders of the fund may terminate a subadvisory agreement at any time by a vote of a majority of its outstanding voting securities, as defined in the 1940 Act.
In conformity with Section 15 of the 1940 Act, each Fund is currently required to obtain shareholder approval of subadvisory agreements with any subadviser that is affiliated with PI. As noted above, each Fund currently is operating under the Existing Relief, which permits it to enter into and amend, with prior Board approval but without shareholder approval, subadvisory agreements with Non-Affiliated Subadvisers. The Existing Relief does not apply to subadvisory agreements with Wholly-Owned Subadvisers, and as a result, each Fund is currently required to obtain shareholder approval of any new subadvisory agreement with Wholly-Owned Subadvisers.
Shareholders are now being asked to approve the administratorModified Manager-of-Managers Policy under the New Relief, in which PI would be permitted to closed-endselect and manage both Non-Affiliated Subadvisers and Wholly-Owned Subadvisers pursuant to similar conditions. If shareholders approve the Modified Manager-of-Managers Policy, PI will no longer be required to obtain shareholder approval of subadvisory agreements with Wholly-Owned Subadvisers or material amendments thereto. The kinds of changes to agreements with Wholly-Owned Subadvisers that could be effected without further shareholder approval if the Modified Manager-of-Managers Policy is approved include: (1) reallocating Fund assets among existing subadvisers; (2) allocating a portion of the Fund’s assets to one or more additional subadvisers; (3) continuing a subadvisory agreement where a change in control of the subadviser automatically otherwise causes that agreement to terminate; and (4) replacing an existing subadviser with a new subadviser when PI and the Board determine that the new subadviser’s investment companies,philosophy and style, past performance, security selection experience and preferences, personnel, facilities, financial strength, quality of service and client communication are more consistent with aggregatethe best interests of a Fund and its shareholders. Currently, under the Existing Relief, these kinds of changes can be effected without shareholder approval to agreements with Non-Affiliated Subadvisers.
PI believes that the Modified Manager-of-Managers Policy is in the best interests of the Funds and their shareholders. The Modified Manager-of Managers Policy, if approved, would give PI greater flexibility to select, supervise, and evaluate Wholly-Owned Subadvisers without incurring the expense and potential delay of seeking specific shareholder approval, permitting the Funds to more quickly and efficiently respond to changes in market conditions and other factors. Under current applicable law, while a change in investment management arrangements involving one or more Wholly-Owned Subadvisers may be put into place promptly on a temporary basis, a Fund must still call and hold a meeting of the Fund’s shareholders, create and distribute proxy materials, and arrange for the solicitation of voting instructions from shareholders. This process is time-intensive, slow, and costly. Under the New Relief, the Board would be able to act more quickly and with less expense to appoint a Wholly-Owned Subadviser or materially amend an agreement with a Wholly-Owned Subadviser.
Under the terms of the New Relief, PI and the Funds would continue to be subject to several conditions imposed by the SEC currently applicable under the Existing Relief. The Funds would continue to obtain shareholder approval to enter into or materially modify a subadvisory agreement with any subadviser other than a Wholly-Owned Subadviser or a Non-Affiliated Subadviser. In addition, as is the case with the
32
Existing Relief, under the conditions of the New Relief, within 90 days of entering in a new subadvisory arrangement, shareholders would be required to be provided with an information statement that contains information about the subadviser and subadvisory agreement.
As with the Existing Relief, in order to rely on the New Relief, a majority of the Board must consist of Independent Board Members and the nomination of new or additional Independent Board Members must be at the discretion of the then-existing Independent Board Members. The prospectuses of the Funds relying on the New Relief must prominently discuss the Modified Manager-of-Managers Policy, including the fact that PI has ultimate responsibility (subject to oversight by the Board) to oversee the subadvisers and recommend their hiring, termination, and replacement.
Fund shareholders have previously approved each Fund’s operation under a multi-manager structure whereby PI may select one or more Non-Affiliated Subadvisers to invest the assets of approximately $86.1 billion. Eachthe Fund, hassubject to the review and approval of the Board. PI reviews each subadviser’s performance on an ongoing basis and is responsible for communicating performance expectations and evaluations to subadvisers and for recommending to the Board whether a subadviser’s contract should be renewed, modified or terminated.
If the Modified Manager-of-Managers Policy is approved by shareholders of a Fund and the SEC grants the requested exemptive order, PI may determine to rely on the exemptive order to seek the termination of a Fund’s unaffiliated subadviser and its replacement with a Wholly-Owned Subadviser soon after PI obtains the ability to do so. Any such termination and replacement of a subadviser would be subject to Board approval.
If the Modified Manager-of-Managers Policy is not approved by shareholders of a Fund, it will not be implemented, the Fund will continue to obtain shareholder approval to enter into or materially amend subadvisory agreements with Wholly-Owned Subadvisers unless otherwise permitted under the 1940 Act, and those Funds that currently operate pursuant to the Existing Relief will rely only on the portion of the New Relief that relates to entering into or materially amending subadvisory agreements with Non-Affiliated Subadvisers. In the event that the SEC does not issue the New Relief, those Funds that currently operate pursuant to the Existing Relief would continue to rely on the Existing Relief with respect to Non-Affiliated Subadvisers.
REQUIRED VOTE
Approval of Proposal No. 2 requires the affirmative vote of a majority of the outstanding voting securities of each Fund, as defined by the 1940 Act. For purposes of the 1940 Act, a majority of a Fund’s outstanding voting securities is the lesser of (i) 67% of the Fund’s outstanding voting securities represented at a meeting at which more than 50% of the Fund’s outstanding voting securities are present in person or represented by proxy, or (ii) more than 50% of the Fund’s outstanding voting securities.
EACH BOARD, INCLUDING ALL OF ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE MODIFIED MANAGER-OF-MANAGERS POLICY.
33
PROPOSAL No. 3
TO APPROVE A PROPOSAL TO DESIGNATE EACH FUND’S
INVESTMENT OBJECTIVE AS NON-FUNDAMENTAL
THIS PROPOSAL APPLIES ONLY TO THE FUNDS LISTED BELOW
The Board of Trustees which, in
addition to overseeing the actionseach Fund listed below, including all of the Fund's ManagerIndependent Board Members, has approved, and Subadviser, decides
upon mattersrecommends that shareholders approve, a proposal which would designate each Fund’s investment objective as non-fundamental.
Under the 1940 Act, a “fundamental” policy is any policy of general policy.
4
VOTING INFORMATIONa Fund that may be changed only with shareholder approval. The 1940 Act requires that a Fund disclose in its registration statement filed with the SEC each policy that is fundamental, and therefore may not be changed without first obtaining shareholder approval. The Funds comply with this requirement by identifying in their registration statements those policies that are fundamental. Currently, some Funds disclose in their registration statements that the Fund’s investment objective is a fundamental policy, while other Funds instead classify their investment objective as non-fundamental. In addition, several Funds do not explicitly disclose in their registration statements whether their investment objectives are fundamental or not. The 1940 Act does not require that a Fund’s investment objective be designated as fundamental. If Proposal No. 3 is approved by shareholders, the caseinvestment objective of Asset Allocation, Opportunityeach Fund currently classified as fundamental (or which is silent) would instead be designated as non-fundamental.
The Board and PI believe that the designation of each Fund’s investment objective as non-fundamental will help to facilitate the compliance programs and policies of the Funds, and Style Specific,enhance the ability of the Funds to promptly respond to future investment and market conditions by avoiding the expense and delay associated with first seeking shareholder approval to change a Fund’s investment objective. There is no present intention to change or modify any Fund’s investment objective, and Board approval and appropriate shareholder notification and disclosure would continue to be required before any Fund’s investment objective could be changed.
The table below sets out each Fund’s current investment objective:
| Fund | Investment Objective | |
| PIP Asset Allocation | Income and long-term growth of capital | |
| PIP Equity Opportunity | Long-term growth of capital | |
| PIP Growth | Long-term growth of capital | |
| PIP Conservative Allocation | Current income and a reasonable level of capital appreciation | |
| PIP Moderate Allocation | Current income and a reasonable level of capital appreciation | |
| PIP Growth Allocation | Long-term capital appreciation | |
| PIP 2 Taxable Money Market | Income consistent with relative stability of principal | |
| PIP 2 Short-Term Bond | Current income consistent with the preservation of capital and the maintenance of liquidity | |
| PIP 3 Strategic Value | Long-term growth of capital |
34
| Fund | Investment Objective | |
| PIP 3 Select Growth | Long-term growth of capital | |
| PIP 4 Muni High Income | To provide the maximum amount of income that is eligible for exclusion from federal income taxes | |
| PIP 5 Conservative Growth | Long-term capital appreciation | |
| PIP 5 Small-Cap Value | Above-average capital appreciation | |
| PIP 6 Cal Muni | To maximize current income that is exempt from California state and federal income taxes, consistent with the preservation of capital | |
| PIP 7 Value | Capital appreciation | |
| PIP 8 Stock Index | To provide investment results that correspond to the price and yield performance of the Standard & Poor’s 500 Composite Stock Price Index | |
| PIP 9 Large-Cap Core | Long-term after-tax growth of capital | |
| PIP 10 Mid-Cap Value | Income and capital appreciation | |
| PIP 10 Equity Income | Capital growth | |
| PIP 14 Government Income | High current return | |
| PIP 15 High Yield | Primary objective: to maximize current income. Secondary objective: capital appreciation | |
| PIP 17 Total Return Bond | Total return | |
| PIP 18 20/20 Focus | Long-term growth of capital | |
| MoneyMart | Maximum current income consistent with stability of capital and the maintenance of liquidity | |
| National Muni | To seek a high level of current income exempt from federal income taxes | |
| Blend | Long-term growth of capital | |
| Mid-Cap Growth | Long-term capital appreciation | |
| Small Company | Capital growth | |
| World International Equity | Long-term growth of capital | |
| World International Value | Long-term growth of capital through investment in equity securities of foreign issuers | |
| Natural Resources | Long-term growth of capital | |
| Global Total Return | Total return, made up of current income and capital appreciation | |
| Sector Financial Services | Long-term capital appreciation | |
| Sector Health Sciences | Long-term capital appreciation |
35
| Fund | Investment Objective | |
| Sector Utility | Total return through a combination of capital appreciation and current income | |
| Short-Term Corporate Bond | High current income consistent with the preservation of principal | |
| Target Small-Cap Value | Above-average capital appreciation | |
| Target Small-Cap Growth | Maximum capital appreciation | |
| Target Large-Cap Value | Total return consisting of capital appreciation and dividend income | |
| Target Large-Cap Growth | Long-term capital appreciation | |
| Target International Equity | Capital appreciation | |
| Target Mortgage-Backed | High current income with a secondary investment objective of capital appreciation, each to the extent consistent with protection of capital | |
| Target Intermediate-Term Bond | Current income and reasonable stability of principal | |
| Target Total Return Bond | Total return consisting of income and capital appreciation. |
If Proposal No. 3 is not approved by shareholders, shareholder approval would continue to be required to change the investment objective(s) of the Funds listed above.
REQUIRED VOTE
Approval of Proposal No. 3 requires the affirmative vote of a majority of the outstanding voting securities of each Fund, as defined by the 1940 Act. For purposes of the 1940 Act, a majority of a Fund’s outstanding voting securities is the lesser of (i) 67% of the Fund’s outstanding voting securities represented at a meeting at which more than 50% of the Fund’s outstanding voting securities are present in person or represented by proxy, or (ii) more than 50% of the Fund’s outstanding voting securities.
EACH BOARD, INCLUDING ALL OF ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU VOTE “FOR” APPROVAL TO DESIGNATE THE FUND’S INVESTMENT OBJECTIVE ASNON-FUNDAMENTAL.
36
VOTING INFORMATION
As set forth in the table below, the presence, in person or by proxy, of forty percent (40%) of the indicated Shares of the
Trust (or of eacha Fund for a Proposal where Funds vote separately) outstanding and entitled to vote will constitute a quorum for the transaction of business at the Meeting. In the caseMeeting of Target, the presence, in person or by proxy, of
one-third (33 1/3%) of the Shares of the Trust (or of a Fund for Proposal
Nos. 4 and 5) outstanding and entitled to vote will constitute a quorum for the
transaction of business at the Meeting.
Shareholders of each Trust vote together on Proposal No. 1. Only
Shareholders of Focused Growth vote on Proposal Nos. 2 and 3. Shareholders of
each Fund vote separately on Proposal Nos. 4 and 5 (except Shareholders of Asset
Allocation, who do not vote on Proposal No. 4).
that Fund.
| Fund Name | Quorum | Fund Name | Quorum | |||
| PIP Asset Allocation | majority | PIP 16 Defensive Equity | one-third | |||
| PIP Equity Opportunity | majority | PIP 16 Income Builder | one-third | |||
| PIP Growth | majority | PIP 17 Total Return Bond | one-third | |||
| PIP Conservative Allocation | majority | PIP 17 Short Duration Multi-Sector | one-third | |||
| PIP Moderate Allocation | majority | PIP 18 20/20 Focus | one-third | |||
| PIP Growth Allocation | majority | PIP 18 MLP | one-third | |||
| PIP 2 Taxable Money Market | one-third | MoneyMart | majority | |||
| PIP 2 Short-Term Bond | one-third | National Muni | one-third | |||
| PIP 3 Strategic Value | one-third | Blend | one-third | |||
| PIP 3 Select Growth | one-third | Mid-Cap Growth | one-third | |||
| PIP 3 Real Assets | one-third | Small Company | one-third | |||
| PIP 3 Market Neutral | one-third | World International Equity | majority | |||
| PIP 4 Muni High Income | one-third | World International Value | majority | |||
| PIP 5 Conservative Growth | one-third | World Emerging Markets Debt | majority | |||
| PIP 5 Small-Cap Value | one-third | World Global Opportunities | majority | |||
| PIP 5 Rising Dividend | one-third | World International Opportunities | majority | |||
| PIP 6 Cal Muni | one-third | World Global Infrastructure | majority | |||
| PIP 7 Value | majority | Natural Resources | majority | |||
| PIP 8 Stock Index | one-third | Global Total Return | one-third | |||
| PIP 9 Large-Cap Core | one-third | Sector Financial Services | majority | |||
| PIP 9 International Real Estate | one-third | Sector Health Sciences | majority | |||
| PIP 9 Absolute Return Bond | one-third | Sector Utility | majority | |||
| PIP 10 Mid-Cap Value | majority | Short-Term Corporate Bond | one-third | |||
| PIP 10 Equity Income | majority | Target Small Cap Value | one-third | |||
| PIP 12 Global Real Estate | one-third | Target Small Cap Growth | one-third | |||
| PIP 12 US Real Estate | one-third | Target Large Cap Value | one-third | |||
| PIP 12 Long-Short | one-third | Target Large Cap Growth | one-third | |||
| PIP 12 Short Duration Muni | one-third | Target International Equity | one-third | |||
| PIP 14 Government Income | majority | Target Mortgage-Backed | one-third | |||
| PIP 14 Floating Rate Income | majority | Target Intermediate-Term Bond | one-third |
37
| Fund Name | Quorum | Fund Name | Quorum | |||
| PIP 15 High Yield | one-third | Target Total Return Bond | one-third | |||
| PIP 15 Short Duration High Yield | one-third |
If a quorum is not present at a Meeting, or if a quorum is present at that Meeting but sufficient votes to approve any of the Proposalsa proposal are not received, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies. Any adjournment will require the affirmative vote of a majority of those Shares present and entitled to vote at the Meeting for the particular Fund in person or by proxy. When voting on a proposed adjournment, the persons named as proxies will vote FOR the proposed adjournment all Sharesshares other than those Sharesshares as to which they have been directed to vote against a Proposal,proposal, in which case, such Sharesshares will be voted AGAINST the proposed adjournment with respect to that Proposal. A shareholder vote may be taken on
one or more of the Proposals in this proxy statement prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
a proposal.
If a proxy that is properly executed and returned is accompanied by instructions to withhold authority to vote (an abstention) or represents a broker "non-vote"“non-vote” (that is, a proxy from a broker or nominee indicating that such person has not received instructions from the beneficial owner or other person entitled to vote Shares on a particular matter with respect to which the broker or nominee does not have discretionary power), the Shares represented thereby, with respect to matters to be determined by a majority or plurality of the votes cast on such matters, will be considered present for purposes of determining the existence of a quorum for the transaction of business, but, not being cast, will have no effect on the outcome of such matters. With respect to matters requiring the affirmative vote of a specified percentage of the total Shares outstanding, an abstention or broker non-vote will be considered present for purposes of determining a quorum but will have the effect of a vote against such matters. Accordingly, abstentions and broker non-votes will have no effect on Proposal No. 1, for which the required vote is a plurality or majority of the votes cast, but effectively will be a vote against adjournment and against the other Proposals, which require approval of either a majority of the outstanding voting securities under the 1940 ActAct.
In the event that sufficient votes to obtain a quorum have not been obtained by a Fund, the Fund may request that one or more brokers submit a majorityspecific number of broker non-votes in order to obtain a quorum. A Fund would only take such actions if it believed that such actions would result in a quorum and the outstanding voted securities.
Fund had already received or expected to receive sufficient shareholder votes to approve Proposal No’s. 2 and 3 at the Meeting. Therefore, shareholders who are against Proposal No.2 and Proposal No. 3 should vote AGAINST the Proposals.
The individuals named as proxies on the enclosed proxy cards will vote in accordance with your direction as indicated thereon if your card is received properly executed by you or by your duly appointed agent or attorney-in-fact. If your card is properly executed and you give no voting instructions, your Shares will be voted FOR the nominees named herein for the Board of the FundCompany to which the proxy card relates and FOR the remaining Proposalsproposals described in this proxy statement and referenced on the proxy card. If any nominee for the Fund Boards should withdraw or otherwise become unavailable for election, your Shares will be voted in favor of such other nominee or nominees as management may recommend.
38
You may revoke any proxy card by giving another proxy or by letter or telegram revoking the initial proxy. To be effective your revocation must be received by the Fund prior to the related Meeting and must indicate your name and account number. In addition, if you attend a Meeting in person you may, if you wish, vote by ballot at that Meeting, thereby canceling any proxy previously given.
5
The close of business on May 16, 2003 has been fixed as the record date for
the determination of Shareholders entitledproposal to notice of, and to vote at, the
Meetings. Information as to the number of outstanding Shares for each Fund as of
the record date is set forth below:
To the knowledge of management, the executive officers and Board Members of each Fund, as a group, owned less than 1% of the outstanding Shares of each Fund and each Company as of May 16, 2003.September 12, 2014. The number of shares of each Fund outstanding as of the close of business on September 12, 2014 is shown in Exhibit A. A listing of persons who owned beneficially more than 5% of any class of the Shares of a Fund as of May 16, 2003September 12, 2014 is contained in Exhibit A.
B.
COPIES OF EACH FUND'SFUND’S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS, INCLUDING FINANCIAL STATEMENTS, HAVE PREVIOUSLY BEEN DELIVERED TO SHAREHOLDERS. SHAREHOLDERS OF A FUND MAY OBTAIN WITHOUT CHARGE ADDITIONAL COPIES OF THE FUND'SFUND’S ANNUAL AND SEMI-ANNUAL REPORTS BY WRITING THE FUND AT GATEWAY CENTER THREE, 100 MULBERRY STREET, 4TH FLOOR, NEWARK, NEW JERSEY 07102, OR BY CALLING 1-800-225-1852 (TOLL FREE).
Each full Share of each Fund outstanding is entitled to one vote, and each fractional Share of each Fund outstanding is entitled to a proportionate share of one vote, with respect to each matter to be voted upon by the Shareholders of that Fund.Company. Information about the vote necessary with respect to eachthe Proposal is discussed below in connection with each Proposal.below. Shareholders voting via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies that must 6
TO ELECT TRUSTEES
PROPOSAL NO. 1
DISCUSSION
ADDITIONAL INFORMATION: PROXY COSTS
The Boardcosts of each Trust has nominated the 10 individuals identified below
for election to each Trust's Board. Pertinent information about each nominee is
set forth in the listing below. Eachsolicitation of the nominees has indicated a willingness
to serve if elected. All but one of the nominees currently serve as Directors or
Trustees on some, but not all of the funds in the Prudential retail mutual fund
complex. The remaining nominee (Mr. Carson), currently does not serve as a
Director or Trustee for any of the funds in the Prudential retail mutual fund
complex, but serves as a Director of the American Skandia Advisor Funds, Inc.
Because many of theshareholder proxies, including printing, postage, voting tabulation and other funds within the Prudential retail mutual fund
complex are also asking shareholders to elect the same individuals, if the
Shareholders of each Trust elect each nominee, most of the funds within the
Prudential retail mutual fund complex will be overseen by a common Board. As
part of the creation of a common Board, certain individuals currently serving as
Trustees of each Trust have not been nominated for election. Each of the current
Trustees of each Trust who have not been nominated have announced their
intention to resign their positions if Shareholders elect the nominees. Each of
the nominees have announced their intention to serve on the Board if elected by
Shareholders.
Each Trust's current Trustees believe that creating a common Board is in the
best interests of each Trust. The principal reasons for adding these individuals
are:
- to bring additional experience and diversity of viewpoints to the Board;
- to bring the benefit of experience derived from service on the boards of
the other Prudential mutual funds;
- to promote continuity on the Board; and
- to achieve efficiencies and coordination in operation, supervision and
oversight of the Funds which may be derived from having the same
individuals serve on the Board of most of the Prudential retail mutual
funds.
If elected, all nominees will hold office until the earlier to occur of
(a) the next meeting of shareholders at which Board Members are elected and
until their successors are elected and qualified or (b) until their terms expire
in accordance with each Trust's retirement policy or (c) until they resign or
are removed as permitted by law. Each Trust's retirement policy generally calls
for the retirement of Trustees on December 31 of the year in which they reach
the age of 75.
Board Members who are not interested persons of a Fund (as defined in the
1940 Act) are referred to as Independent Board Members or Independent Trustees.
Board Members who are interested persons of a Fund are referred to as Interested
Board Members or Interested Trustees.
Currently, each Independent Trustee who serves on the Board of a Trust is
paid annual fees as set forth below for his or her service on the Board of each
Trust. Trustees' fees are allocated among all of the Funds based on their
proportionate net assets. In addition, an Independent Board Member who serves on
the Executive Committee is paid by the Funds an annual aggregate fee of $8,000
and an Independent Board Member who chairs the Audit or Nominating Committee is
paid by the Funds an annual aggregate fee of $2,000 per Committee. Interested
Trustees will continue to receive no compensation from any Fund. Board Members
will continue to be reimbursed for anyproxy-related expenses, incurred in attending meetings
and for other incidental expenses. Board fees are reviewed periodically by each
Trust's Board.
7
None of the nominees is related to another. None of each Trust's Independent
Trustees nor persons nominated to become Independent Trustees owns shares of
Prudential Financial, Inc. or its affiliates. The business experience and
address of each Independent Trustee nominee and each Interested Trustee nominee,
as well as information regarding their service on other mutual funds in the
Prudential mutual fund complex, is as follows:
PROPOSED INDEPENDENT TRUSTEE NOMINEES
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
TERM OF CURRENTLY
POSITION(S) OFFICE AND OVERSEEN BY OTHER DIRECTORSHIPS**
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) NOMINEE FOR HELD BY NOMINEE
NAME, ADDRESS* AND AGE EACH TRUST TIME SERVED DURING PAST FIVE YEARS TRUSTEE FOR TRUSTEE
- ---------------------- ------------- ------------- ------------------------- ------------- -------------------------
David E. A. Carson (68) None -- Director (January 2000 to [--] Director of United
People's Bank May 2000), Chairman Illuminating and UIL
1 Financial Plaza (January 1999 to December Holdings, a utility
Second Floor 1999), Chairman and Chief company, since May 1993.
Hartford, CT 06103 Executive Officer
(January 1998 to December
1998) and President,
Chairman and Chief
Executive Officer (1983
to December 1997) of
People's Bank.
Robert E. La Blanc (69) Trustee Since 1999 President (since 1981) of [--] Director of Storage
(Asset Robert E. La Blanc Technology Corporation
Allocation, Associates, Inc. (technology) (since
Style (telecom- munications); 1979), Chartered
Specific, and formerly General Partner Semiconductor
Target) at Salomon Brothers and Manufacturing, Ltd.
Since 2000 Vice-Chairman of (Singapore) (since 1998),
(Opportunity Continental Telecom. Titan Corporation
Funds) Trustee of Manhattan (electronics, since
College. 1995), Computer
Associates
International, Inc.
(since 2002) (software
company); Director (since
1999) of First Financial
Fund, Inc. and The High
Yield Plus Fund, Inc.
Douglas H. McCorkindale (63) Trustee Since 1996 Chairman (since February [--] Director of Gannett
(Target) 2001), Chief Executive Co., Inc., Director of
Since 1998 Officer (since June 2000) Continental
(Asset and President (since Airlines, Inc. (since
Allocation) September 1997) of May 1993), Director of
Since 1999 Gannett Co. Inc. Lockheed Martin Corp.
(Style (publishing and media); (aerospace and defense)
Specific) formerly Vice Chairman (since May 2001);
Since 2000 (March 1984-May 2000) of Director of The High
(Opportunity Gannett Co. Inc. Yield Plus Fund, Inc.
Funds) (since 1996).
Stephen P. Munn (60) None -- Chairman of the Board [--] Chairman of the Board
(since 1994) and formerly (since January 1994) and
Chief Executive Officer Director (since 1988) of
(1998-2001) and President Carlisle Companies
of Carlisle Companies Incorporated
Incorporated. (manufacturer of
industrial products);
Director of Gannett
Co., Inc. (publishing and
media).
8
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
TERM OF CURRENTLY
POSITION(S) OFFICE AND OVERSEEN BY OTHER DIRECTORSHIPS**
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) NOMINEE FOR HELD BY NOMINEE
NAME, ADDRESS* AND AGE EACH TRUST TIME SERVED DURING PAST FIVE YEARS TRUSTEE FOR TRUSTEE
- ---------------------- ------------- ------------- ------------------------- ------------- -------------------------
Richard A. Redeker (59) None -- Formerly Management [--]
Consultant of
Invesmart, Inc. (August
2001-October 2001);
formerly employee of
Prudential Investments
(October 1996-December
1998).
Robin B. Smith (63) None -- Chairman of the Board [--] Director of BellSouth
(since January 2003) of Corporation (since 1992),
Publishers Clearing House formerly Director of
(direct marketing), Kmart Corporation
formerly Chairman and (retail) (1996-2003).
Chief Executive Officer
(August 1996-January
2003) of Publishers
Clearing House.
Stephen Stoneburn (59) Trustee Since 1999 President and Chief [--] None
(Asset Executive Officer (since
Allocation, June 1996) of Quadrant
Style Media Corp. (a publishing
Specific and company); formerly
Target) Since President (June 1995-June
2000 1996) of Argus Integrated
(Opportunity Media, Inc.; Senior Vice
Funds) President and Managing
Director (January
1993-1995) of Cowles
Business Media and Senior
Vice President of
Fairchild Publications,
Inc. (1975-1989).
Clay T. Whitehead (64) Trustee Since 1999 President (since 1983) of [--] Director (since 2000) of
(Asset National Exchange Inc. First Financial
Allocation, (new business development Fund, Inc. and The High
Style firm). Yield Plus Fund, Inc.
Specific and
Target) Since
2000
(Opportunity
Funds)
9
PROPOSED INTERESTED TRUSTEE NOMINEES
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
TERM OF CURRENTLY
POSITION(S) OFFICE AND OVERSEEN BY OTHER DIRECTORSHIPS**
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) NOMINEE FOR HELD BY NOMINEE
NAME, ADDRESS* AND AGE EACH TRUST TIME SERVED DURING PAST FIVE YEARS TRUSTEE FOR TRUSTEE
- ---------------------------- ------------- ------------- ------------------------- ------------- -------------------------
Judy A. Rice (55) President Since 2003 President, Chief [--] None
(Asset Executive Officer, Chief
Allocation, Operating Officer and
Opportunity Officer-In-Charge (since
Funds, Style 2003) of PI; Executive
Specific and Vice President of PI
Target) (1999-2003); formerly
various positions to
Senior Vice President
(1992-1999) of Prudential
Securities Incorporated
(PSI); and various
positions to Managing
Director (1975-1992) of
Salomon Smith Barney;
Member of Board of
Governors of the Money
Management Institute.
Robert F. Gunia (56) Vice Since 1999 Executive Vice President [--] Vice President and
President and (Asset and Chief Administrative Director (since May 1989)
Trustee Allocation, Officer (since June 1999) of The Asia Pacific Fund,
Style of PI; Executive Vice Inc.
Specific and President and Treasurer
Target) (since January 1996) of
Since 2000 PI; President (since
(Opportunity April 1999) of PIMS;
Funds) Corporate Vice President
(since September 1997) of
The Prudential Insurance
Company of America;
formerly Senior Vice
President (March 1987-May
1999) of PSI; formerly
Chief Administrative
Officer (July
1989-September 1996),
Director (January
1989-September 1996) and
Executive Vice President,
Treasurer and Chief
Financial Officer (June
1987-December 1996) of
Prudential Mutual Fund
Management, Inc. (PMF).
- ------------------------
* Unless otherwise indicated, the address of each nominee is c/o Prudential
Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, NJ
07102.
** This column includes only directorships of companies required to register,
or file reports with the Securities and Exchange Commission (the "SEC")
under the Securities Exchange Act of 1934 (that is, "public companies") or
other investment companies registered under the 1940 Act.
10
The following tables set forth the dollar range of Fund securities held by
each nominee as of December 31, 2002. The tables also include the aggregate
dollar range of securities held by each nominee in all funds in the Fund Complex
overseen by that nominee as of December 31, 2002.
SHARE OWNERSHIP TABLE -- INDEPENDENT TRUSTEE NOMINEES
AGGREGATE DOLLAR RANGE
OF SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES OVERSEEN BY
DOLLAR RANGE OF NOMINEE IN FAMILY
NAME OF NOMINEE SECURITIES IN EACH FUND OF INVESTMENT COMPANIES
- --------------- ----------------------------------- -----------------------
David E. A. Carson................ None None
Robert E. La Blanc................ None Over $100,000
Douglas H. McCorkindale........... High Growth: $10,001-$50,000 Over $100,000
Stephen P. Munn................... None Over $100,000
Richard A. Redeker................ None Over $100,000
Robin B. Smith.................... None Over $100,000
Stephen Stoneburn................. Focused Growth: $10,000-$50,000 Over $100,000
New Era Growth: $10,000-$50,000
Clay T. Whitehead................. None Over $100,000
SHARE OWNERSHIP TABLE -- INTERESTED TRUSTEES NOMINEE
AGGREGATE DOLLAR RANGE
OF SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES OVERSEEN BY
DOLLAR RANGE OF NOMINEE IN FAMILY
NAME OF NOMINEE SECURITIES IN EACH FUND OF INVESTMENT COMPANIES
- --------------- ----------------------------------- -----------------------
Judy A. Rice...................... Focused Growth: $1-$10,000 Over $100,000
Robert F. Gunia................... None Over $100,000
None of the Independent Trustee nominees, or any member of his/her immediate
family, owned beneficially or of record any securities in an investment adviser
or principal underwriter of a Fund or a person (other than a registered
investment company) directly or indirectly controlling, controlled by, or under
common control with an investment adviser or principal underwriter of a Fund as
of December 31, 2002.
The following table sets forth information describing the aggregate
compensation paid by each Trust for each Fund's most recently completed fiscal
year and by the Fund Complex for the calendar year ended December 31, 2002 to
each of the Trustees of the Trust that are up for election, for his/her
services:
COMPENSATION PAID TO INDEPENDENT TRUSTEES
TOTAL 2002
PENSION OR COMPENSATION
RETIREMENT BENEFITS ESTIMATED FROM TRUSTS AND
NAME OF INDEPENDENT AGGREGATE COMPENSATION ACCRUED AS PART OF ANNUAL BENEFITS FUND COMPLEX PAID
TRUSTEE, POSITION(1) FROM EACH TRUST TRUST EXPENSES UPON RETIREMENT TO TRUSTEE
- -------------------- ---------------------------- -------------------- --------------- -------------------
Robert E. La Blanc -- Trustee Asset Allocation: $5,103 None None $137,250 (20/77)(3)
Opportunity Funds: $7,184
Style Specific: $8,389
Target: $17,847
Douglas H. McCorkindale(2) -- Asset Allocation: $4,525 None None $115,000 (18/77)(3)
Trustee Opportunity Funds: $6,400
Style Specific: $7,925
Target: $15,923
11
TOTAL 2002
PENSION OR COMPENSATION
RETIREMENT BENEFITS ESTIMATED FROM TRUSTS AND
NAME OF INDEPENDENT AGGREGATE COMPENSATION ACCRUED AS PART OF ANNUAL BENEFITS FUND COMPLEX PAID
TRUSTEE, POSITION(1) FROM EACH TRUST TRUST EXPENSES UPON RETIREMENT TO TRUSTEE
- -------------------- ---------------------------- -------------------- --------------- -------------------
Stephen Stoneburn -- Trustee Asset Allocation: $5,315 None None $120,250 (18/75)(3)
Opportunity Funds: $6,750
Style Specific: $8,458
Target: $16,800
Clay T. Whitehead -- Trustee Asset Allocation: $4,525 None None $196,750 (32/94)(3)
Opportunity Funds: $6,400
Style Specific: $7,925
Target: $15,925
- ------------------------
(1) Interested Trustees do not receive any compensation from the Trusts or the
Fund Complex.
(2) Although the last column shows the total amount paid to Trustees from the
Fund Complex during the calendar year ended December 31, 2002, such
compensation was deferred at the election of Mr. McCorkindale, in total or
in part, under the Trusts' deferred fee agreements. Including accrued
interest and the selected Prudential Fund's rate of return on amounts
deferred through December 31, 2002, the total amount of compensation for the
year amounted to $58,669 for Mr. McCorkindale.
(3) Indicates number of funds/portfolios in Fund Complex (including Funds) to
which aggregate compensation relates. [The Fund Complex consists of [45]
funds and [117] portfolios.]
If elected, the Trustees will hold office generally without limit except
that (a) any Trustee may resign; (b) any Trustee may be removed at any meeting
of Shareholders by a vote of not less than two-thirds of the outstanding Shares
of the Trust; and (c) each Trust's retirement policy generally calls for the
retirement of Trustees on December 31 of the year in which they reach the age of
75. In the event of a vacancy on the Board, the remaining Trustees will fill
such vacancy by appointing another Trustee, so long as immediately after such
appointment, at least two-thirds of the Trustees have been elected by
Shareholders.
The Boards of the Trusts are currently composed of two Interested Trustees
and seven Independent Trustees. Each Board met four times during the twelve
months ended December 31, 2002. Each incumbent Trustee attended each of these
meetings. It is expected that the Trustees will meet at least four times a year
at regularly scheduled meetings.
Each Trust has an Audit Committee, which is composed entirely of Independent
Trustees, and normally meets four times a year, or as required, in conjunction
with the meetings of the Trustees. Among other things, each Trust's Audit
Committee has the following responsibilities:
- Recommending to the Board of Trustees of each Trust the selection,
retention or termination, as appropriate, of the independent accountants
of a Fund.
- Reviewing the independent accountants' compensation, the proposed terms of
their engagement, and their independence.
- Reviewing audited annual financial statements including any adjustments to
those statements recommended by the independent public accountants, and
any significant issues that arose in connection with the preparation of
those financial statements.
- Reviewing changes in accounting policies or practices that had or are
expected to have a significant impact on the preparation of financial
statements.
- Generally acting as a liaison between the independent accountants and the
Board of Trustees.
Each Trust has a Nominating Committee, which is composed entirely of
Independent Trustees. Nominating Committee members confer periodically and hold
meetings as required. The responsibilities of each Trust's Nominating Committee
include, but are not limited to, recommending to the Board the
12
individuals to be nominated to become Independent Trustees. During the twelve
months ended December 31, 2002, no Trust's Nominating Committee met. The Trusts
do not have compensation committees. A Trust's Nominating Committee generally
will not consider nominees recommended by shareholders.
The current members of each Trust's Audit and Nominating Committees are
Saul K. Fenster, Robert E. La Blanc, Douglas H. McCorkindale, W. Scott McDonald,
Jr., Thomas T. Mooney, Stephen Stoneburn, and Clay T. Whitehead. During the
twelve months ended December 31, 2002, the Audit Committee of each Trust met
four times.
The firm of PricewaterhouseCoopers LLP (PwC), 1177 Avenue of the Americas,
New York, NY 10036, is the independent public accountant for each Fund. Each
Trust's Audit Committee recommended, and the Board of each Trust (including a
majority of the Independent Trustees) approved, the selection of PwC as each
Fund's independent accountant for the Fund's current fiscal year.
Representatives of PwC are not expected to be present at the Meetings, but have
been given the opportunity to make a statement if they so desire and will [not]
be available by telephone during the meeting to respond to appropriate
questions.
In accordance with Independence Standards Board No. 1, PwC, each Fund's
independent accountant for the Fund's most recently completed fiscal year, has
confirmed to the Audit Committee that it is independent with respect to each
Fund.
AUDIT FEES: The following aggregate fees were billed by PwC for professional
services rendered for the audit of each Fund's annual financial statements for
their most recently completed fiscal years as indicated below.
FISCAL YEAR
FUND AUDIT FEES END
- ---- ---------- -----------
Asset Allocation
Conservative Growth....................................... $27,000 7-31-2002
Moderate Growth........................................... $27,000 7-31-2002
High Growth............................................... $27,000 7-31-2002
Opportunity Funds
Focused Growth............................................ $30,000 2-28-2003
New Era Growth............................................ $30,000 2-28-2003
Focused Value............................................. $30,000 2-28-2003
Mid-Cap Value............................................. $30,000 2-28-2003
Style Specific
Large Cap Growth.......................................... $16,000 7-31-2002
Large Cap Value........................................... $16,000 7-31-2002
Small Cap Growth.......................................... $16,000 7-31-2002
Small Cap Value........................................... $16,000 7-31-2002
International Equity...................................... $25,000 7-31-2002
Total Return Bond......................................... $26,000 7-31-2002
13
FISCAL YEAR
FUND AUDIT FEES END
- ---- ---------- -----------
Target
Target Large Cap Growth................................... $17,000 12-31-2002
Target Large Cap Value.................................... $17,000 12-31-2002
Target Small Cap Growth................................... $17,000 12-31-2002
Target Small Cap Value.................................... $17,000 12-31-2002
Target International Equity............................... $25,000 12-31-2002
Target International Bond................................. $17,000 12-31-2002
Target Total Return Bond.................................. $17,000 12-31-2002
Target Intermediate Bond.................................. $17,000 12-31-2002
Target Mortgage........................................... $17,000 12-31-2002
Target U.S. Government.................................... $15,000 12-31-2002
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES: PwC billed no
fees for professional services rendered to the Funds for information technology
services relating to financial information systems design and implementation for
each Fund's most recently completed fiscal year, as indicated above. Similarly,
PwC billed no fees for professional services rendered to the Funds' Manager, and
any entities controlling, controlled by or under common control with the Funds'
Manager that provide services to the Funds, for information technology services
relating to financial information systems design and implementation for each
Fund's most recently completed fiscal year, as indicated above.
ALL OTHER FEES: The aggregate fees billed by PwC for services rendered to
each Fund's Manager and any entity controlling, controlled by or under common
control with each Fund's Manager that provides services to the Funds, amounted
to approximately the following, for each Fund's most recently completed fiscal
years, as indicated above.
FUND ALL OTHER FEES
- ---- --------------------------------
Asset Allocation
Conservative Growth.......................................
Moderate Growth...........................................
High Growth...............................................
Opportunity Funds
Focused Growth............................................ [To be provided]
New Era Growth............................................
Focused Value.............................................
Mid-Cap Value.............................................
Style Specific
Large Cap Growth..........................................
Large Cap Value...........................................
Small Cap Growth..........................................
Small Cap Value...........................................
International Equity......................................
Total Return Bond.........................................
14
FUND ALL OTHER FEES
- ---- --------------------------------
Target
Target Large Cap Growth...................................
Target Large Cap Value....................................
Target Small Cap Growth...................................
Target Small Cap Value....................................
Target International Equity...............................
Target International Bond.................................
Target Total Return Bond..................................
Target Intermediate Bond..................................
Target Mortgage...........................................
Target U.S. Government....................................
The Audit Committee of each Trust has considered whether the services
described above are compatible with PwC's independence.
Information about the number of Board and Committee meetings held during the
most recent fiscal year for each Fund is included in Exhibit B. Information
concerning Fund officers is set forth in Exhibit C.
REQUIRED VOTE
For each Trust, nominees receiving the affirmative vote of a plurality of
the votes cast by Shareholders of the Trust will be elected, provided a quorum
is present.
EACH BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU
VOTE "FOR" EACH OF THE NOMINEES UNDER PROPOSAL NO. 1.
TO APPROVE A PROPOSAL TO PERMIT THE MANAGER TO ENTER INTO, OR MAKE
MATERIAL CHANGES TO, SUBADVISORY AGREEMENTS WITHOUT
OBTAINING SHAREHOLDER APPROVAL (FOCUSED GROWTH ONLY)
PROPOSAL NO. 2
The Board of Opportunity Funds, on behalf of Focused Growth (for purposes of
this Proposal, the Fund), has approved, and recommends that Shareholders
approve, Proposal No. 2, which would permit PI to enter into subadvisory
agreements with new subadvisers to the Fund and to make material amendments to
subadvisory agreements with existing subadvisers to the Fund, without obtaining
Shareholder approval. THIS IS CALLED A "MANAGER-OF-MANAGERS" STRUCTURE AND, IN
THE FUTURE, MAY BE USED TO MANAGE THE FUND. THIS STRUCTURE HAS BEEN APPROVED FOR
USE BY [NEARLY] ALL OF THE OTHER STRATEGIC PARTNERS AND TARGET FUNDS. THIS NEW
STRUCTURE WOULD NOT CHANGE THE RATE OF ADVISORY FEES CHARGED TO THE FUND.
Information concerning the Fund's current management arrangements is contained
in Proposal No. 3. If Shareholders approve Proposal No. 2 so that Shareholder
approval of new or amended subadvisory agreements is no longer required, the
Trustees of the Fund, including a majority of the Independent Trustees, must
continue to approve these agreements annually (after an initial two-year term)
in order for them to remain in effect. On March 4, 2003, the Board of the Fund,
including the Independent Trustees, discussed and approved Proposal No. 2 at an
in-person meeting.
Proposal No. 2 is being submitted to Shareholders pursuant to the
requirements of an exemptive order obtained by the Prudential Mutual Funds from
the SEC in September 1996 (the Original Order). The Original Order grants relief
to Target (for which PI acts as a Manager-of-Managers) and other Prudential
Mutual Funds from certain provisions of the 1940 Act and certain rules
thereunder. Specifically, the Original Order permits PI to enter into or amend a
subadvisory agreement with a subadviser that is not otherwise an affiliated
person (as defined in the 1940 Act) of PI. Among other things, the Original
Order permits PI to enter into (1) a new subadvisory agreement that is
necessitated due to an "assignment" (as defined in the 1940 Act), (2) an
amendment to a subadvisory agreement, or (3) a new subadvisory agreement
substituting a new subadviser for an old subadviser.
15
The Fund plans to apply to the SEC for an amended order permitting the Fund
not to disclose the fee rates paid to specific subadvisers when the Fund employs
more than one subadviser, because that may permit PI to hire new subadvisers at
lower fees. There can be no assurance that such an amended order would be
granted by the SEC.
WHY SHAREHOLDER APPROVAL IS BEING SOUGHT
Section 15 of the 1940 Act makes it unlawful for any person to act as
investment adviser to an investment company, except pursuant to a written
contract that has been approved by shareholders. For purposes of Section 15, the
term "investment adviser" includes any subadviser to an investment company.
Section 15 also requires that an investment advisory agreement provide that it
will terminate automatically upon its assignment.
In conformity with Section 15 of the 1940 Act, the Fund currently is
required to obtain Shareholder approval of subadvisory agreements in the
following situations:
- (1) the employment of a new subadviser to replace an existing subadviser
or (2) the allocation of a portion of its assets to an additional
subadviser;
- a material change in the terms of a subadvisory agreement; and
- the continued employment of an existing subadviser on the same terms if
there has been or is expected to be an assignment of a subadvisory
agreement as a result of a change of control of the subadviser.
The 1940 Act does not require Shareholder approval for the termination of a
subadvisory agreement if such termination is approved by the Fund's Board,
including its Independent Trustees, although Shareholders of the Fund may
terminate a subadvisory agreement at any time by a vote of a majority of its
outstanding voting securities, as defined in the 1940 Act.
DISCUSSION
Under the "Manager-of-Managers" structure, the Fund would continue to employ
PI, subject to the supervision of the Board, to manage or provide for the
management of the Fund. PI may select one or more subadvisers to invest the
assets of the Fund, subject to the review and approval of the Board. PI would
review each subadviser's performance on an ongoing basis. PI would continue to
be responsible for communicating performance expectations and evaluations to
subadvisers and for recommending to the Board whether a subadviser's contract
should be renewed, modified or terminated. PI would continue to pay an advisory
fee to each subadviser from the Fund's overall management fee. The Board
believes that requiring the Fund's Shareholders to approve changes in
subadvisers and subadvisory agreements (including continuation of subadvisory
agreements that otherwise would have terminated by virtue of an assignment) not
only results in unnecessary administrative expenses to the Fund, but also may
cause delays in executing changes that PI and the Board have determined are
necessary or desirable. The Board believes that these expenses, and the
possibility of delays, may result in Shareholders receiving less satisfactory
service than would be the case if Proposal No. 2 is implemented.
The kind of changes to subadvisory arrangements that could be effected
without further Shareholder approval if Proposal No. 2 is approved include:
(1) allocating a portion of the Fund's assets to one or more additional
subadvisers; (2) continuing a subadvisory agreement where a change in control of
the subadviser automatically otherwise causes that agreement to terminate; and
(3) replacing an existing subadviser with a new subadviser when PI and the Board
determine that the new subadviser's investment philosophy and style, past
performance, security selection experience and preferences, personnel,
facilities, financial strength, quality of service and client communication are
more consistent with the best interests of the Fund and its Shareholders. The
Board believes that PI can effect the types of subadvisory changes described
above more efficiently, without sacrificing the quality of service to
Shareholders, if the Fund was
16
permitted to operate in the manner described in Proposal No. 2. The Board
further believes that these gains in efficiency would ultimately benefit the
Fund and its Shareholders. Shareholders of [nearly] all of the Strategic
Partners and Target Funds, and of many of the other funds in the Prudential fund
complex, have approved the same Manager-of-Managers structure.
Although a Manager-of-Managers structure will be put into place for the Fund
if Shareholders approve Proposal No. 2, the Fund will not employ new subadvisers
pursuant to this structure unless and until PI and the Board determine that a
change in subadvisory arrangements is appropriate. In making these
determinations, PI intends to evaluate rigorously both affiliated subadvisers
and unaffiliated subadvisers according to objective and disciplined standards.
Following Shareholder approval of Proposal No. 2, PI will continue to be the
Fund's investment manager. In addition, Alliance and PIM will continue to be the
Fund's subadvisers. Additionally, Jennison will continue to serve as subadviser
to the Fund pursuant to authority delegated by PIM. The Board and PI, under the
Board's supervision, will continue to monitor the nature and quality of these
services and may, in the future, recommend additional subadvisers or the
reallocation of assets among these subadvisers and other subadvisers. If one or
more new subadvisers are added to the Fund, PI will be responsible for
determining the allocation of assets among the subadvisers and will have the
flexibility to increase the allocation to any one subadviser to as much as 100%
and decrease the allocation to any one subadviser to as little as 0%, subject to
Board approval. The Manager-of-Managers structure that the Board is asking
Shareholders to approve will give the Board and PI the flexibility to appoint
additional subadvisers without Shareholder approval, but it is possible that no
new subadvisers will be added.
If Proposal No. 2 is approved by the Fund's Shareholders, Shareholders no
longer would be entitled to approve the selection of a new subadviser or a
material amendment to an existing subadvisory agreement. Instead, Shareholders,
within 90 days of the change, would receive an information statement containing
substantially all of the information about the subadviser and the subadvisory
agreement that would otherwise be contained in a proxy statement. The
information statement would include disclosure as to the level of fees to be
paid to PI and each subadviser (unless the SEC permits information as to the
rate of fees to be paid to subadvisers not to be disclosed) and would disclose
subadviser changes or changes in subadvisory agreements.
The Board and PI have concluded that, through the information statement and
adherence to the conditions outlined below, Shareholders of the Fund would
receive adequate disclosure about any new subadvisers or material amendments to
subadvisory agreements. Whether or not Proposal No. 2 is approved, amendments to
the Management Agreement between PI and the Fund would remain subject to the
Shareholder and Board approval requirements of Section 15 of the 1940 Act and
related proxy disclosure requirements. Moreover, although PI and the Board
already generally may change the rate of fees payable by PI to a subadviser
without Shareholder approval, PI and the Board could not increase the rate of
the management fees payable by the Fund to PI or cause the Fund to pay
subadvisory fees directly to a subadviser without first obtaining Shareholder
approval.
For these reasons, the Board believes that approval of Proposal No. 2 to
permit PI and the Board to enter into new subadvisory agreements or make
material changes to existing subadvisory agreements without Shareholder approval
is in the best interests of the Shareholders of the Fund.
CONDITIONS
The Fund will not rely on the Original Order to implement the
Manager-of-Managers structure until all of the conditions set forth below have
been met.
The following are conditions for relief under the Original Order:
1. PI will provide general management and administrative services to
the Fund, including overall supervisory responsibility for the general
management and investment of the Fund's securities
17
portfolio, and, subject to review and approval by the Board, will (a) set
the Fund's overall investment strategies; (b) select subadvisers;
(c) monitor and evaluate the performance of subadvisers; (d) allocate and,
when appropriate, reallocate the Fund's assets among its subadvisers in
those cases where the Fund has more than one subadviser; and (e) implement
procedures reasonably designed to ensure that the subadvisers comply with
the Fund's investment objectives, policies, and restrictions.
2. Before the Fund may operate in the manner described in Proposal
No. 2, the Proposal must be approved by a majority of its outstanding voting
securities, as defined in the 1940 Act. [Approval of this Proposal No. 2
would satisfy this condition.]
3. The Fund will furnish to Shareholders all of the information about a
new subadviser or subadvisory agreement that would be included in a proxy
statement. This information will include any change in the disclosure caused
by the addition of a new subadviser or any material changes in a subadvisory
agreement. The Fund will meet this condition by providing Shareholders with
an information statement complying with certain provisions of the Securities
Exchange Act of 1934, as amended, and the rules promulgated thereunder. With
respect to a newly retained subadviser, or a change in a subadvisory
agreement, the information statement will be provided to Shareholders of the
Fund within a maximum of 90 days after the addition of the new subadviser or
the implementation of any material change in a subadvisory agreement.
4. The Fund will disclose in its prospectus the existence, substance
and effect of the Original Order.
5. No Trustee or officer of the Fund or director or officer of PI will
own directly or indirectly (other than through a pooled investment vehicle
that is not controlled by the Trustee, director or officer) any interest in
any subadviser except for (a) ownership of interests in PI or any entity
that controls, is controlled by or is under common control with PI, or
(ii) ownership of less than 1% of the outstanding securities of any class of
equity or debt of a publicly-traded company that is either a subadviser or
any entity that controls, is controlled by or is under common control with a
subadviser.
6. PI will not enter into a subadvisory agreement with any subadviser
that is an "affiliated person" (as defined in the 1940 Act) of the Fund or
PI other than by reason of serving as a subadviser to the Fund (an
Affiliated Subadviser) without such agreement, including the compensation
payable thereunder, being approved by the Shareholders of the Fund.
7. At all times, a majority of the members of the Board of the Fund
will be persons each of whom is an Independent Trustee of the Fund and the
nomination of new or additional Independent Trustees will be placed within
the discretion of the then existing Independent Trustees.
8. When a subadviser change is proposed for the Fund with an Affiliated
Subadviser, the Board, including a majority of the Independent Trustees,
will make a separate finding, reflected in the Board's minutes, that such
change is in the best interests of the Fund and its Shareholders and does
not involve a conflict of interest from which PI or the Affiliated
Subadviser derives an inappropriate advantage.
MATTERS CONSIDERED BY THE BOARD
At a Board meeting held on March 4, 2003, the Board, including the
Independent Trustees, approved the submission to Shareholders of Proposal No. 2
regarding the Manager-of-Managers structure.
Prior to the meeting, each Trustee received materials discussing this type
of management structure. At the meeting, each Trustee attended a comprehensive
presentation on the proposed structure and had the opportunity to ask questions
and request further information in connection with such consideration. The Board
gave primary consideration to the fact that the rate of the management fee
payable to PI would not change as a result of adopting a Manager-of-Managers
structure and that the new structure would provide the potential for PI to hire
subadvisers and amend subadvisory agreements more efficiently and with less
18
expense. The Board also considered that PI had substantial experience in
evaluating investment advisers and that PI would bring that experience to the
task of evaluating the current subadviser for the Fund and any potential new
subadviser. The Board took into account the fact that PI could not, without the
prior approval of the Board, including a majority of the Independent Trustees:
(1) appoint a new subadviser, (2) materially change the allocation of portfolio
assets among subadvisers, or (3) make material amendments to existing
subadvisory agreements. The Board also took into account the fact that [nearly]
all of the other Strategic Partners and Target Funds, and many other funds
managed by PI, operate within this structure.
REQUIRED VOTE
For the Fund, approval of this Proposal requires the affirmative vote of a
majority of the Fund's outstanding voting securities, as defined in the 1940 Act
to mean the lesser of (1) 67% of the Shares represented at the Meeting if more
than 50% of the outstanding voting Shares are present in person or represented
by proxy or (2) more than 50% of the outstanding voting Shares.
THE BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU VOTE
"FOR" PROPOSAL NO. 2.
TO PERMIT AN AMENDMENT TO THE MANAGEMENT CONTRACT BETWEEN PI AND
OPPORTUNITY FUNDS, ON BEHALF OF FOCUSED GROWTH (FOCUSED GROWTH ONLY)
PROPOSAL NO. 3
The Board of Opportunity Funds, on behalf of Focused Growth (for purposes of
this Proposal, the Fund), including the Independent Trustees, has approved, and
recommends that Shareholders of the Fund approve, a proposal to amend the
management agreement between Opportunity Funds, on behalf of the Fund, and PI
(the Amended Management Agreement). If approved at the Meeting, the Amended
Management Agreement will amend and supersede the existing Management Agreement
(the Existing Management Agreement) between Opportunity Funds, on behalf of the
Fund, and PI. THE RATE OF ADVISORY FEES PAYABLE BY THE FUND TO PI WILL NOT
CHANGE.
Under both the Existing Management Agreement and the Amended Management
Agreement, PI is authorized to manage or delegate the management of the Fund's
investments and determine the composition of the Fund's portfolio, including the
purchase, retention or sale of the securities and cash contained in the
portfolio. The Existing Management Agreement authorizes PI to enter into
advisory agreements with PIM and Alliance. To implement the Manager-of-Managers
structure, described in Proposal No. 2, the Amended Management Agreement states
that PI may manage in a Manager-of-Managers style which contemplates that PI
will, among other things, (i) continually evaluate the performance of the Fund's
subadvisers through qualitative and quantitative analysis and consultations with
each subadviser, (ii) periodically make recommendations to the Fund's Board as
to whether the contract with one or more subadvisers should be renewed, modified
or terminated and (iii) periodically report to the Fund's Board regarding the
results of its evaluation and monitoring functions. Each subadviser will be
responsible for the selection of brokers and dealers to effect all transactions
and is authorized to pay higher commissions under certain circumstances in order
to receive such services. The subadviser is also authorized to keep certain
books and records of the Fund. PI, however, will continue to administer the
Fund's corporate and business affairs and provide the Fund with office
facilities, together with those ordinary clerical and bookkeeping services which
are not provided by the Fund's custodian and the Fund's transfer and dividend
disbursing agent. Officers and employees of PI may continue to serve as officers
and Trustees of the Fund without compensation.
19
A model Amended Management Agreement under which PI would provide management
services to the Fund is attached as Exhibit D to this proxy statement. In brief,
the Amended Management Agreement provides that:
- PI will administer the Fund's business affairs and supervise the Fund's
investments. Subject to Board approval, PI may select and employ one or
more subadvisers for the Fund, who will have primary responsibility for
determining what investments the Fund will purchase, retain and sell;
- Subject to Board approval, PI may reallocate the Fund's assets among
subadvisers;
- PI (or a subadviser, acting under PI's supervision) will select brokers to
effect trades for the Fund, and may pay a higher commission to a broker
that provides bona fide research services;
- PI will pay the salaries and expenses of any employee or officer of the
Fund (other than the fees and expenses of the Fund's Independent
Trustees). Otherwise, the Fund pays its own expenses;
- PI will be paid at the same advisory fee rate as is currently charged to
the Fund under the Existing Management Agreement; and
- The Fund will indemnify PI for all liabilities, costs and expenses
incurred by PI in any action or proceeding arising out of the performance
of its duties under the Amended Management Agreement. But PI will not be
indemnified for any liability to the Fund or its shareholders to which it
would otherwise be subject due to gross negligence in or reckless
disregard of its duties under the Amended Management Agreement.
As discussed above, if the Fund's Shareholders approve this Proposal, the
Existing Management Agreement would be amended to provide that PI may reallocate
Fund assets upon Board approval only and without further Shareholder approval.
This would mean, for example, that if the Fund has allocated 50% of its assets
to subadviser #1 and 50% to subadviser #2, it would be able to change the
allocation to 75% of assets to subadviser #1 and 25% to subadviser #2 without
seeking Shareholder approval.
Reallocations may result in additional costs since sales of securities may
result in higher portfolio turnover. Also, because each subadviser selects
portfolio securities independently, it is possible that a security held by one
portfolio segment of the Fund may also be held by the other portfolio segment of
the Fund or that the two subadvisers may simultaneously favor the same industry.
PI will monitor the Fund's overall portfolio to ensure that any such overlaps do
not create an unintended industry concentration or result in a violation of the
Fund's diversification requirements. In addition, if one subadviser of the Fund
buys a security at the same time that another Fund subadviser sells it, the net
position of the Fund in the security may be approximately the same as it would
have been with an undivided portfolio and no such sale and purchase, but the
Fund will have incurred additional costs. PI will consider these costs in
determining the allocation of assets. PI will consider the timing of
reallocation based upon the best interests of the Fund and its Shareholders. To
maintain the Fund's federal income tax status as a regulated investment company,
PI also may have to sell securities on a periodic basis and the Fund could
realize capital gains that would not have otherwise occurred.
If this Proposal is approved, the Existing Management Agreement will be
amended and will continue without termination, and the subadvisory agreements
with Alliance, Jennison, and PIM will continue in full force and effect until
terminated or amended as permitted by the Manager-of-Managers structure or
otherwise in accordance with the 1940 Act and the rules thereunder.
Below we provide additional information about the Amended Management
Agreement and the Existing Management Agreement.
EXISTING MANAGEMENT AGREEMENT
The Fund is currently managed under an Existing Management Agreement with
PI, dated as of March 15, 2000, and last submitted for Shareholder approval on
May 25, 2000. The Existing Management
20
Agreement was most recently renewed by the Board, including a majority of the
Independent Trustees, on May 28, 2003.
PI serves as manager to the Fund and to almost all of the other investment
companies that comprise the Prudential Mutual Funds. PI is organized in New York
as a limited liability company. As of December 31, 2002, PI managed and/or
administered open-end and closed-end management investment companies with assets
of approximately $86.1 billion.
PI is a wholly-owned subsidiary of PIFM Holdco, Inc., which is a
wholly-owned subsidiary of Prudential Asset Management Holding Company (PAMHCO),
which is a wholly-owned subsidiary of Prudential Financial, Inc. The address of
PI, PIFM HoldCo, Inc. and PAMHCO is Gateway Center Three, 100 Mulberry Street,
Newark, NJ 07102. The address of Prudential Financial, Inc. is 751 Broad Street,
Newark, NJ 07102.
ANNUAL MANAGEMENT FEE APPROXIMATE NET ASSETS
FUND (AS A % OF AVERAGE NET ASSETS) (AS OF 3/31/03)
- ---- ------------------------------ ----------------------
Prudential Value Fund............................ 0.54% $725 million
Strategic Partners Large Cap Value Fund.......... 0.70% $40 million
The table below lists the name and principal occupations of the principal
executive officers of PI. The address of each person is Gateway Center Three,
100 Mulberry Street, Newark, NJ 07102-4077.
NAME POSITION AND PRINCIPAL OCCUPATIONS
- ---- ------------------------------------------------------------
Judy A. Rice..................... Officer-In-Charge, President, Chief Executive Officer and
Chief Operating Officer, PI
Robert F. Gunia.................. Executive Vice President and Chief Administrative Officer,
PI; Vice President, The Prudential Insurance Company of
America; President, PIMS
William V. Healey................ Executive Vice President, Chief Legal Officer and Secretary,
PI; Vice President and Associate General Counsel, The
Prudential Insurance Company of America; Senior Vice
President, Chief Legal Officer and Secretary, PIMS
Kevin B. Osborn.................. Executive Vice President, PI
Philip N. Russo.................. Executive Vice President, Chief Financial Officer and
Treasurer, PI; Director of Jennison
Lynn M. Waldvogel................ Executive Vice President, PI
For its services, PI was paid as compensation .90% of the Fund's average
daily net assets up to and including $1 billion and .85% of average daily net
assets in excess of $1 billion, for a total of $1,376,576 during the Fund's most
recent fiscal year ended February 28, 2003.
AMOUNTS PAID TO AFFILIATES
THE DISTRIBUTOR
PIMS, Gateway Center Three, 100 Mulberry Street, Newark, New Jersey
07102-4077, acts as the distributor of the shares of the Fund. PIMS is a
subsidiary of Prudential. Pursuant to distribution and service plans adopted
under Rule 12b-1 under the 1940 Act, the Fund bears the expense of distribution
and service (12b-1) fees paid to PIMS with respect to the respective Class A,
Class B and Class C shares. For the fiscal year ended February 28, 2003, PIMS
received distribution and service fees from the Fund in the amount of $52,141
for Class A shares, $750,203 for Class B shares, and $494,556 for Class C
shares.
PIMS also receives front-end sales charges resulting from the sales of
Class A and Class C shares. From these fees, PIMS pays sales charges to
affiliated broker-dealers, who in turn pay commissions to
21
salespersons and incur other distribution costs. PIMS has advised the Fund that
it received $39,200 for Class A shares and $23,600 for Class C shares in
front-end sales charges during the fiscal year ended February 28, 2003.
PIMS also received approximately $488,500 for Class B shares and $17,700 for
Class C shares in contingent deferred sales charges (CDSCs) imposed on certain
redemptions by certain Class B and Class C Shareholders of the Fund for the
fiscal year ended February 28, 2003.
THE TRANSFER AGENT
The Fund's transfer agent, Prudential Mutual Fund Services LLC (PMFS), 194
Wood Avenue South, Iselin, New Jersey 08830, is a wholly-owned subsidiary of PI.
PMFS received approximately $390,000 for its services to the Fund for the fiscal
year ended February 28, 2003.
COMMISSIONS PAID TO PRUDENTIAL SECURITIES INCORPORATED
PSI, One Seaport Plaza, New York, New York 10292, is a wholly-owned
subsidiary of Prudential Financial, Inc. The Fund did not pay any commissions to
PSI for its brokerage transactions for the fiscal year ended February 28, 2003.
MATTERS CONSIDERED BY THE BOARD
The proposal to present the Amended Management Agreement to Shareholders was
approved by the Board, including the Independent Trustees, on March 4, 2003. The
Board Members received materials relating to the Amended Management Agreement in
advance of the meeting at which it was considered, and had the opportunity to
ask questions and request further information in connection with such
consideration. The Board gave primary consideration to the fact that the rate of
fees will not change and that the terms of the Amended Management Agreement are
substantially similar to the Existing Management Agreement, except that, under
the Amended Management Agreement, PI would be able to allocate Fund assets among
subadvisers, subject to Board approval. The Board also considered a number of
other factors, including the fact that authorizing PI to change subadvisers
without Shareholder approval would permit the Funds to change subadvisers in the
future without incurring the expense and delay of a Shareholder vote. The Board
gave strong consideration to the fact that PI had substantial experience in
evaluating investment advisers and would bring that experience to the task of
evaluating the subadvisers to the Fund in the future. The Board noted PI's
commitment to the maintenance of effective compliance programs. The Board also
gave weight to the fact that it would be beneficial to conform the advisory
structure of the Fund to the advisory structure already in place for other
mutual funds in the Trust and the Strategic Partners fund family, and would
place the Fund on equal footing with those other funds as to the speed and
efficiency of subadviser changes. After consideration of all these factors, the
Board concluded that adopting Proposal No. 3 is reasonable, fair and in the best
interests of the Fund and its Shareholders.
REQUIRED VOTE
Approval of this Proposal requires the affirmative vote of a majority of the
Fund's outstanding voting securities, as defined in the 1940 Act.
THE BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU VOTE
"FOR" PROPOSAL NO. 3.
22
TO APPROVE CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS
AND POLICIES (STYLE SPECIFIC, OPPORTUNITY FUNDS, AND TARGET ONLY)
PROPOSAL NOS. 4(a) - 4(g)
THIS PROPOSAL APPLIES TO ALL FUNDS OF STYLE SPECIFIC, OPPORTUNITY FUNDS AND
TARGET, EXCEPT AS DESCRIBED BELOW.
BACKGROUND
The Boards of Style Specific, Opportunity Funds, and Target have approved,
and recommend that Shareholders of each Fund approve, the amendment of certain
fundamental investment restrictions and policies of each Fund.
Each Fund has adopted fundamental investment restrictions and policies
regarding the management of the Fund's investments. The designation of these
restrictions and policies as "fundamental" means that they cannot be changed
without Shareholder approval. You are being asked to approve changes to your
Fund's fundamental investment restrictions and policies in order to:
(a) provide the Fund's Manager and subadviser(s) with additional flexibility to
pursue the Fund's investment objective; (b) allow the Fund to implement certain
investment programs that may help the Fund to achieve economies of scale by
participating in transactions with other Prudential Mutual Funds, such as joint
investment in affiliated investment companies and an inter-fund lending program;
and (c) eliminate investment restrictions that were imposed by state regulators
that are no longer required or that were imposed years ago, but do not support
the Manager's and subadviser(s)' strategy to pursue your Fund's investment
objective.
RISKS: The proposed fundamental investment restrictions are intended to
provide each Fund's Manager and subadviser(s) with flexibility in pursuing each
Fund's investment objective to respond to future investment opportunities, as
well as to clarify existing fundamental restrictions or to provide uniformity
among the Funds' policies. Generally, however, the proposed changes are not
expected to modify the way each Fund is currently managed. Certain specific
risks associated with each proposed fundamental investment limitation are
described below, however, the Manager does not anticipate that the proposed
changes, individually or in the aggregate, will materially change either the
level or the nature of risk associated with investing in each Fund. If adopted,
each Fund will interpret the new restrictions in light of exiting and future
exemptive orders, SEC releases, no-action letters or similar relief or
interpretations.
The Funds have similar, although not identical, fundamental investment
restrictions. Some of the differences are due to the Funds' different investment
objectives. Other differences are due to historical evolution. PI would like to
realign the Funds' limits by establishing uniform fundamental investment
restrictions, while achieving the goals described above. Consistency among the
Funds' fundamental investment restrictions should also facilitate the management
of the Funds since it will be easier for the Funds' Manager and subadviser(s) to
monitor compliance issues relating to the Funds if they have uniform investment
restrictions.
The 1940 Act requires a mutual fund to disclose, in its registration
statement, its policy with respect to each of the following:
- diversification
- issuing senior securities
- borrowing money, including the purpose for which the proceeds will be used
- underwriting securities of other issuers
- concentrating investments in a particular industry or group of industries
- purchasing or selling real estate or commodities
23
- making loans
In addition to the above items, a mutual fund is free to designate as
"fundamental" investment policies concerning other investment practices. As
discussed below, the Board of each Fund recommends that some of those
restrictions be amended.
SPECIFIC RECOMMENDATIONS
The Board of each Fund has approved the adoption of a uniform set of
fundamental investment restrictions. Each Fund's current fundamental investment
restrictions appear in that Fund's Statement of Additional Information. In
addition to variations among the Funds arising from their historical
development, there are also, and will continue to be, differences resulting from
a Fund's investment objective or, with respect to certain Funds, its operation
as a non-diversified Fund or its intention to concentrate its investments in a
specific industry or group of industries. The Table appearing at the end of this
Proposal provides a list of your Fund's current fundamental investment
restrictions and the proposed revisions to those restrictions.
The proposed uniform fundamental investment restrictions and policies are as
follows (the information in brackets is explanatory and is not part of the
restrictions):
The following restrictions are fundamental policies. Fundamental
policies are those that cannot be changed without the approval of the
holders of a majority of the Fund's outstanding voting securities. The term
"majority of the Fund's outstanding voting securities" for this purpose
means the vote of the lesser of (i) 67% or more of the voting shares of the
Fund represented at a meeting at which more than 50% of the outstanding
voting shares of the Fund are present in person or represented by proxy, or
(ii) more than 50% of outstanding voting shares of the Fund.
The Fund may not:
(1) 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 each may be amended
from time to time except to the extent that the Fund may be permitted to
do so by exemptive order, SEC release, no-action letter or similar relief
or interpretations (collectively, the "1940 Act Laws, Interpretations and
Exemptions").
(2) Issue senior securities or borrow money or pledge its assets, except as
permitted by the 1940 Act Laws, Interpretations and Exemptions. For
purposes of this restriction, the purchase or sale of securities on a
when-issued or delayed delivery basis, reverse repurchase agreements,
dollar rolls, short sales, derivative and hedging transactions such as
interest rate swap transactions, and collateral arrangements with respect
thereto, and transactions similar to any of the foregoing and collateral
arrangements with respect thereto, and obligations of the Fund to
Trustees pursuant to deferred compensation arrangements are not deemed to
be a pledge of assets or the issuance of a senior security.
(3) Buy or sell real estate, except that investment in securities of issuers
that invest in real estate and investments in mortgage-backed securities,
mortgage participations or other instruments supported or secured by
interests in real estate are not subject to this limitation, and except
that the Fund may exercise rights 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.
(4) Buy or sell physical commodities or contracts involving physical
commodities. The Fund may purchase and sell (i) derivative, hedging and
similar instruments such as financial futures contracts and options
thereon, and (ii) securities or instruments backed by, or the return from
which is linked to, physical commodities or currencies, such as forward
currency exchange contracts, and the Fund may exercise rights relating to
such instruments, including the right to
24
enforce security interests and to hold physical commodities and contracts
involving physical commodities acquired as a result of the Fund's
ownership of instruments supported or secured thereby until they can be
liquidated in an orderly manner.
(5) Purchase any security if as a result 25% or more of the Fund's total
assets would be invested in the securities of issuers having their
principal business activities in the same industry, except for temporary
defensive purposes, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
(6) Act as underwriter except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
(7) The Fund may make loans, including loans of assets of the Fund,
repurchase agreements, trade claims, loan participations or similar
investments, or as permitted by the 1940 Act Laws, Interpretations and
Exemptions. 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 instruments similar to any of the
foregoing will not be considered the making of a loan, and is permitted
if consistent with the Fund's investment objective.
[For purposes of Investment Restriction 1 the Fund will currently not
purchase any security (other than obligations of the U.S. government, its
agencies or instrumentalities) if as a result, with respect to 75% of the
Fund's total assets, (i) more than 5% of the Fund's total assets (determined
at the time of investment) would be invested in securities of a single
issuer and (ii) the Fund would own more than 10% of the outstanding voting
securities of any single issuer.
For purposes of Investment Restriction 5, the Fund relies on The North
American Industry Classification System published by the Bureau of Economic
Analysis, U.S. Department of Commerce, in determining industry
classification. The Fund's reliance on this classification system is not a
fundamental policy of the Fund and, therefore, can be changed without
Shareholder approval.
Whenever any fundamental investment policy or investment restriction
states a maximum percentage of the Fund's assets, it is intended that, if
the percentage limitation is met at the time the investment is made, a later
change in percentage resulting from changing total asset values will not be
considered a violation of such policy. However, if the Fund's asset coverage
for borrowings permitted by Investment Restriction 2 falls below 300%, the
Fund will take prompt action to reduce its borrowings, as required by the
1940 Act Laws, Interpretations and Exemptions.]
PROPOSAL 4(a): FUND DIVERSIFICATION
THIS PROPOSAL APPLIES TO ALL FUNDS EXCEPT FOCUSED GROWTH, FOCUSED VALUE, NEW ERA
GROWTH, MID-CAP VALUE, AND TARGET INTERNATIONAL BOND.
The Funds are operated as diversified investment companies under the 1940
Act. In general, this means that, with respect to 75% of the value of a Fund's
total assets, the Fund invests in cash, cash items, obligations of the U.S.
government, its agencies or instrumentalities, securities of other investment
companies and other securities. The "other securities" are subject to the
additional requirement that not more than 5% of total assets will be invested in
the securities of a single issuer and that the Fund will not hold more than 10%
of an issuer's outstanding voting securities.
The proposed amendment would restrict such a Fund from purchasing the
securities of any issuer if, as a result, the Fund would fail to be a
diversified management company within the meaning of the 1940 Act and the rules
and regulations promulgated thereunder, except to the extent that the Fund may
be permitted to do so by the 1940 Act Laws, Interpretations and Exemptions. The
restriction is accompanied by a note that indicates what the 1940 Act currently
requires for the Fund to be "diversified." The Fund
25
would, however, be free to amend that note if applicable laws are amended or the
Fund receives an exemption from the requirements imposed by applicable law.
RECOMMENDATION: To provide flexibility as laws change or relief is obtained
from the SEC or its Staff, while also requiring these Funds to comply with the
currently applicable definition of a "diversified" investment company, the Board
of each such Fund recommends that Shareholders adopt the following as a
fundamental investment restriction:
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 each may be amended
from time to time, except to the extent that the Fund may be permitted to
do so by exemptive order, SEC release, no-action letter or similar relief
or interpretations (collectively, the "1940 Act Laws, Interpretations and
Exemptions").
The following note accompanies this investment restriction:
For purposes of Investment Restriction 1, the Fund will currently not
purchase any security (other than obligations of the U.S. government, its
agencies or instrumentalities) if as a result, with respect to 75% of the
Fund's total assets, (i) more than 5% of the Fund's total assets
(determined at the time of investment) would be invested in securities of
a single issuer and (ii) the Fund would own more than 10% of the
outstanding voting securities of any single issuer.
PROPOSAL 4(b): ISSUING SENIOR SECURITIES, BORROWING MONEY OR PLEDGING ASSETS
The Funds are permitted to borrow money and pledge assets to secure such
borrowings. However, the amount that may be borrowed, the purposes for which
borrowings may be made, and the amount of securities that may be pledged vary.
The proposed amendment would allow each Fund to borrow money and pledge its
assets to secure such borrowings to the extent permitted by the 1940 Act Laws,
Interpretations and Exemptions. The restriction is accompanied by a note stating
that if asset coverage for a borrowing falls below 300%, the Fund will take
prompt action to reduce its borrowings. This note is to reflect the current
requirement that the Fund limit borrowing to one-third of its total assets.
However, a Fund would be free to amend its borrowing limitations if applicable
law changes or the Fund receives an exemption from the requirements imposed by
applicable law. None of the Funds currently has pending or currently proposes to
file a request for exemptive relief to permit it to borrow with an asset
coverage ratio of less than 300%. Moreover, there can be no assurance that the
SEC Staff would grant exemptive or similar relief if requested.
Under the proposed investment restriction, the Fund could borrow money for
temporary, extraordinary or emergency purposes or for the clearance of
transactions and to take advantage of investment opportunities. Notwithstanding
the increased flexibility under the proposed restriction, the Fund does not
intend to change its investment practices at this time. In addition, under the
proposed investment restriction, the Fund would not be precluded from lending to
and borrowing from other Prudential Mutual Funds if the SEC staff grants
exemptive relief which would permit borrowing and lending between the Funds and
the Funds adopt such an inter-fund lending program. If the Fund obtains such
relief, the borrowing Fund may be able to reduce the cost of borrowing money and
the lending Fund may be able to generate interest income.
RISKS: If a Fund borrows money to invest in securities and the investment
performance of the additional securities purchased fails to cover their cost
(including any interest paid on the money borrowed), the net asset value of the
Fund's shares will decrease faster than would otherwise be the case. This is the
speculative factor known as "leverage." In order to reduce the risk presented by
leverage, each
26
of the Funds intends to not purchase portfolio securities when borrowings exceed
5% of the value of its total assets. This policy may be changed by the Trustees.
If the Fund's asset coverage should decline as a result of market
fluctuations or other reasons, the Fund may be required to sell portfolio
securities to reduce the debt and restore the 300% asset coverage, even though
it may be disadvantageous from an investment standpoint to sell securities at
that time.
Short sales involve costs and risks. The Fund must pay the lender interest
on the security it borrows, and the Fund will lose money if the price of the
security increases between the time of the short sale and the date when the Fund
replaces the borrowed security.
RECOMMENDATION: To provide flexibility as laws change or relief may be
obtained from the SEC or its Staff, while also requiring the Fund to comply with
currently applicable restrictions on issuing senior securities, borrowing money
and pledging assets, the Board of each Fund recommends that Shareholders adopt
the following as a fundamental investment restriction:
The Fund may not:
Issue senior securities or borrow money or pledge its assets, except as
permitted by the 1940 Act Laws, Interpretations and Exemptions. For
purposes of this restriction, the purchase or sale of securities on a
when-issued or delayed delivery basis, reverse repurchase agreements,
dollar rolls, short sales, derivative and hedging transactions such as
interest rate swap transactions, and collateral arrangements with respect
thereto, and transactions similar to any of the foregoing, and collateral
arrangements with respect thereto, and obligations of the Fund to
Trustees pursuant to deferred compensation arrangements are not deemed to
be a pledge of assets or the issuance of a senior security.
The following note accompanies this investment restriction:
If the Fund's asset coverage for borrowings permitted by Investment
Restriction 2, above, falls below 300%, the Fund will take prompt action
to reduce its borrowings, as required by the 1940 Act Laws,
Interpretations and Exemptions.
PROPOSAL 4(c): BUYING AND SELLING REAL ESTATE
None of the Funds is permitted to buy or sell real estate. However, the
Funds are permitted to invest in the securities of companies that invest in real
estate or to invest in mortgage-backed securities, mortgage participations or
other instruments supported by interests in real estate.
The proposed investment restriction confirms that each Fund may not buy or
sell real estate. The restriction also clarifies that each Fund may make
investments in securities that are real estate-related, as described in the
restriction. In addition, the amended investment restriction allows a Fund that
holds real estate due to the enforcement of rights under an agreement or a
security interest (not through a purchase of the real estate) to hold the real
estate until it can be sold in an orderly manner.
RISKS: The performance of real estate-related securities depends upon the
strength of the real estate market and property management. Thus, investment
performance can be affected by national and regional economic conditions, as
well as other factors. These factors can have a more pronounced impact on
performance than investments in other securities.
27
RECOMMENDATION: To clarify the Fund's investment restriction with respect
to investments in real estate and real estate-related securities, the Board of
each Fund recommends that Shareholders adopt the following as a fundamental
investment restriction:
The Fund may not:
Buy or sell real estate, except that investment in securities of issuers
that invest in real estate and investments in mortgage-backed securities,
mortgage participations or other instruments supported or secured by
interests in real estate are not subject to this limitation, and except
that the Fund may exercise rights 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.
PROPOSAL 4(d): BUYING AND SELLING COMMODITIES AND COMMODITY CONTRACTS
None of the Funds is permitted to buy or sell commodities or commodity
contracts. The Funds are permitted to invest in financial futures contracts,
options on financial futures contracts and forward currency exchange contracts,
and in the securities of companies that sponsor mineral exploration or
development programs, which are not viewed as commodity contracts for purposes
of the fundamental restriction.
The proposed investment restriction confirms that each Fund may not buy or
sell commodities or commodity contracts. The restriction also clarifies that a
Fund's investment in financial futures contracts, options on financial futures
contracts and forward currency exchange contracts is not subject to the
restriction applicable to commodity contracts and similar types of instruments.
If your Fund intends to utilize financial futures contracts, options on
financial futures contracts or formal currency exchange contracts, a description
of these instruments will appear in the Fund's Prospectus or Statement of
Additional Information.
Because the uniform restriction relating to commodities and futures
contracts would not prohibit investment in financial futures contracts and
related investment types, Target U.S. Government will limit its investment
activities to remain in compliance with applicable regulations. However, this
Fund will have the flexibility to change its respective policy in the future in
the event of future changes in regulations.
If the proposed investment restriction is approved as to a Fund, that Fund's
restriction, if any, prohibiting the Fund from investing in interests in oil,
gas or other mineral exploration or development programs, will be eliminated.
RISKS: Financial futures contracts, options on financial futures contracts
and similar types of instruments and forward currency exchange contracts may be
used by a Fund as a hedging device or, in some circumstances, for speculation.
Due to imperfect correlation between the price of futures contracts and
movements in a currency or a group of currencies, the price of a futures
contract may move more or less than the price of the currency or currencies
being hedged. The use of these instruments will hedge only the currency risks
associated with investments in foreign securities, not market risk. In the case
of futures contracts on a securities indices or a security, the correlation
between the price of the futures contract and the movement of the index or
security may not be perfect. Therefore, even correct forecast of currency rates,
market trends or international political trends by your Fund's investment
adviser does not assume a successful hedging transaction.
In addition, a 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 liquid markets. There is no assurance that a
liquid market on an exchange will exist for any futures contract or option on a
particular futures contract. If no liquid market exists for a particular futures
contract or option on a futures contract in which a Fund invests, 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
28
the case of a written option, wait to sell the underlying securities until the
option expires or is exercised or, in the case of a purchased option, exercise
the option.
Successful use of futures contracts, options on futures contracts and
forward currency exchange contracts and similar types of instruments by a Fund
is subject to the ability of an investment adviser to predict correctly
movements in the direction of interest and foreign currency rates and markets
generally. If the investment adviser's expectations are not met, the Fund may be
in a worse position than if the strategy had not been pursued.
RECOMMENDATION: In order to clarify and provide uniformity among the Funds'
restrictions applicable to investments in commodities and commodity contracts,
the Board of each Fund recommends that Shareholders adopt the following as a
fundamental investment restriction:
The Fund may not:
Buy or sell physical commodities or contracts involving physical
commodities. The Fund may purchase and sell (i) derivative, hedging and
similar instruments such as financial futures contracts and options
thereon, and (ii) securities or instruments backed by, or the return from
which is linked to, physical commodities or currencies, such as forward
currency exchange contracts, and the Fund may exercise rights relating to
such instruments, including the right to enforce security interests and
to hold physical commodities and contracts involving physical commodities
acquired as a result of the Fund's ownership of instruments supported or
secured thereby until they can be liquidated in an orderly manner.
PROPOSAL 4(e): FUND CONCENTRATION
All of the Funds invest their portfolios to avoid "concentration" in a
particular industry or group of industries. The 1940 Act requires that a mutual
fund recite in its registration statement its policy regarding concentration. If
a Fund has a policy not to "concentrate", this means that, except for temporary
defensive purposes, less than 25% of the Fund's net assets will be invested in
the securities of issuers in the same industry. This limitation does not apply
to securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
The proposed amendment is not intended to change a Fund's policy regarding
concentration, but to provide uniformity in disclosure of the policy among the
Funds and the other Prudential Mutual Funds having a policy not to concentrate
their investments. The restriction is accompanied by a note that indicates the
manner in which the Fund will determine industry classification. The Fund would,
however, be free to change its classification system.
RISKS: Although the Funds do not concentrate their investment in a
particular industry or group of industries, they may, for temporary defensive
purposes, do so. If this occurs, a Fund would, on a temporary basis, be subject
to risks that may be unique or pronounced relating to a particular industry or
group of industries. These risks could include greater sensitivity to
inflationary pressures or supply and demand for a particular product or service.
RECOMMENDATION: The Board of each Fund recommends that Shareholders adopt
the following as a fundamental investment restriction:
The Fund may not:
Purchase any security if as a result 25% or more of the Fund's total
assets would be invested in the securities of issuers having their
principal business activities in the same industry, except for temporary
defensive purposes, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
29
PROPOSAL 4(f): MAKING LOANS
The Funds currently lend money and assets in limited situations. The Funds
may, for example, purchase certain debt securities of governments, corporate
issuers or banks, as described in each Fund's current registration statement and
the proposed investment restriction.
Each Fund also may engage in repurchase agreement transactions, where the
Fund purchases securities from a broker or bank with an agreement by the seller
to repurchase the securities at an agreed upon price at an agreed upon time.
These transactions allow the Fund to invest its cash to generate income, usually
on a short-term basis, while maintaining liquidity to honor its redemption
obligations. Generating portfolio income through investment in repurchase
agreements is not an integral part of your Fund's investment program. A Fund
would engage in these transactions primarily to keep its cash fully invested,
but available to meet redemption requests.
The Funds have established a securities lending program where they use a
securities lending agent to locate institutions that, on a temporary basis, seek
to hold certain securities that are owned by a Fund. In these transactions, a
Fund transfers its ownership interest in a security with the right to receive
income from the borrower and the right to have the security returned to the Fund
on short notice, for example, to enable the Fund to vote the securities.
Securities lending allows a Fund to generate income on portfolio securities to
enhance the Fund's returns.
In recognition of the fact that the Funds do make loans of assets, the
revised investment policy is intended to eliminate the current investment
restriction. The new disclosure more accurately describes the Funds' lending
activities and plans to make loans of assets in the future. The new policy would
not prevent a Fund's purchase of debt securities, including investments in
government securities, corporate debt securities and certain bank obligations.
The new policy would permit the Funds to lend money to the other Prudential
Mutual Funds, as explained in Proposal 4(b). The new investment policy would
also allow a Fund to engage in repurchase agreement transactions and securities
lending without these activities being deemed prohibited loans.
RISKS: Where a Fund engages in securities lending, it assumes a risk that a
borrower fails to maintain the required amount of collateral. The Fund or its
lending agent would be required to pursue the borrower for any excess
replacement cost over the value of the collateral. As with any extensions of
credit, there are risks of delay in recovery and in some cases loss of rights in
the collateral if the borrower of the securities fails financially. To mitigate
these risks, each Fund's investment adviser makes loans of portfolio securities
only to firms determined to be creditworthy.
In repurchase agreement transactions, a seller of a security agrees to
repurchase that security from a Fund at a mutually agreed-upon time and price.
The repurchase 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 transaction. If a seller fails to repurchase securities as
required by its agreement with the Fund and the value of the collateral securing
the repurchase agreement declines, the Fund may lose money. To address this
risk, each Fund's investment adviser enters into repurchase agreements only with
firms determined to be creditworthy.
30
RECOMMENDATION: In order to provide uniformity among the Funds' policies
applicable to making loans, including allowing the Funds to implement their
securities lending program as described above, the Board of each Fund recommends
that Shareholders adopt the following as a fundamental investment policy:
The Fund may make loans, including loans of assets of the Fund,
repurchase agreements, trade claims, loan participations or similar
investments, or as permitted by the 1940 Act Laws, Interpretations and
Exemptions. 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 instruments similar to any of the
foregoing is not considered the making of a loan, and is permitted if
consistent with the Fund's investment objective.
PROPOSAL 4(g): OTHER INVESTMENT RESTRICTIONS
Certain Funds have adopted additional fundamental investment restrictions
which were required to be designated as fundamental by state securities laws.
These state securities laws have since been repealed or are otherwise no longer
applicable to these Funds.
To provide maximum flexibility in managing the Funds and uniformity in the
restrictions applicable to these Funds, the Board of each such Fund proposes
that all investment restrictions and policies of each such Fund, apart from its
investment objective and other than those listed in Proposals No. 4(a) through
4(f), and each Fund's current fundamental restriction on underwriting, be
designated as non-fundamental or be eliminated. The specific investment
restrictions and policies affected by Proposal No. 4 are identified in the table
below. If Shareholders of a Fund approve Proposal No. 4(g), all of the Fund's
investment restrictions and policies (apart from its investment objective, those
restrictions listed in Proposals No. 4(a) through 4(f) and each Fund's current
fundamental restriction on underwriting) will be non-fundamental or eliminated
as indicated below. If Shareholders of a Fund reject Proposal No. 4(g), the
Fund's additional current fundamental investment restrictions will remain
fundamental.
If designated non-fundamental, such investment restriction or policy could
be changed by the Board of Trustees without Shareholder approval, although
Shareholders would be informed of any material change to any non-fundamental
restriction or policy prior to the implementation of the change. There is no
current intention to change the investment restrictions of each such Fund that
will be designated non-fundamental apart from the restrictions relating to
investing in other investment companies, as described below.
Currently, under the 1940 Act, a Fund may invest in securities of other
investment companies subject to certain limitations. The Funds have obtained an
exemptive order from the SEC that allows each Fund greater flexibility to invest
in securities of other investment companies -- up to 25% of each Fund's assets
in shares of affiliated mutual funds. Such investment would be made to
facilitate your Fund's investment of its cash and short-term investments. The
ability to invest in an affiliated mutual fund should allow each Fund to reduce
the administrative burdens and costs associated with investing in money market
instruments and short-term debt securities. Each Fund would be permitted to
invest in an affiliated mutual fund only if the investment is consistent with
the Fund's investment objective and strategy. If Shareholders approve the
designation of a Fund's investment in mutual funds as a non-fundamental
investment restriction, we anticipate that such Fund's Board will amend the
investment restriction to implement the cash management strategy permitted by
the SEC relief.
31
PROPOSED AMENDMENTS TO FUNDAMENTAL
INVESTMENT RESTRICTIONS AND POLICIES
The following chart compares each Fund's fundamental investment restrictions
and policies as they currently exist to the proposed amended provisions.
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
STRATEGIC PARTNERS OPPORTUNITY FUNDS
STRATEGIC PARTNERS FOCUSED GROWTH FUND
STRATEGIC PARTNERS NEW ERA GROWTH FUND
STRATEGIC PARTNERS FOCUSED VALUE FUND
STRATEGIC PARTNERS MID-CAP VALUE FUND
PURCHASING SECURITIES ON MARGIN The restriction will be eliminated.
The Fund may not: Purchase securities on
margin (but a Fund may obtain short-term
credits as may be necessary for the
clearance of transactions); provided that
the deposit or payment by the Fund of
initial or maintenance margin in connection
with futures or options is not considered
the purchase of a security on margin.
SHORT SALES OF SECURITIES The restriction will be eliminated.
The Fund may not: Make short sales of
securities or maintain a short position if,
when added together, more than 25% of the
value of a Fund's net assets would be
(i) deposited as collateral for the
obligation to replace securities borrowed to
effect short sales and (ii) allocated to
segregated accounts in connection with short
sales. Short sales "against-the-box" are not
subject to this limitation.
ISSUING SENIOR SECURITIES, BORROWING MONEY The Fund may not: Issue senior securities or
OR PLEDGING ASSETS borrow money or pledge its assets, except as
The Fund may not: Issue senior securities, permitted by the Investment Company Act of
borrow money or pledge its assets, except 1940, and the rules and regulations
that the Fund may borrow from banks up to promulgated thereunder, as each may be
33 1/3% of the value of its total assets amended from time to time except to the
(calculated when the loan is made) for extent that the Fund may be permitted to do
temporary, extraordinary or emergency so by exemptive order, SEC release,
purposes or for the clearance of no-action letter or similar relief or
transactions. Each Fund may pledge up to 20% interpretations (collectively, the "1940 Act
of the value of its total assets to secure Laws, Interpretations and Exemptions"). For
such borrowings. For purposes of this purposes of this restriction, the purchase
restriction, the purchase or sale of or sale of securities on a when-issued or
securities on a when-issued or delayed delayed delivery basis, reverse repurchase
delivery basis, forward foreign currency agreements, dollar rolls, short sales,
exchange contracts and collateral derivative and hedging transactions such as
arrangements relating thereto and collateral interest rate swap transactions, and
arrangements with respect to futures collateral arrangements with respect
contracts and options thereon and with thereto, and transactions similar to any
respect to the
32
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
writing of options and obligations of a Fund of the foregoing, and collateral
to Trustees pursuant to deferred arrangements with respect thereto, and
compensation arrangements are not deemed to obligations of the Fund to Trustees pursuant
be a pledge of assets subject to this to deferred compensation arrangements are
restriction. not deemed to be a pledge of assets or the
issuance of a senior security.
PURCHASING SECURITIES OF A SINGLE ISSUER The restriction will be eliminated with
(FOCUSED GROWTH AND NEW ERA GROWTH ONLY) respect to these two Funds. AS
The Fund may not: Purchase more than 10% of NON-DIVERSIFIED FUNDS, THEY DO NOT HAVE
the outstanding voting securities of any one RESTRICTIONS LIMITING INVESTMENT IN A SINGLE
issuer. ISSUER UNDER THE INVESTMENT COMPANY ACT.
PURCHASING SECURITIES OF A SINGLE INDUSTRY The Fund may not: Purchase any security if
The Fund may not: Purchase any security as a result more than 25% of the Fund's
(other than obligations of the U.S. total assets would be invested in the
Government, its agencies and securities of issuers having their principal
instrumentalities) if, as a result 25% or business activities in the same industry,
more of the value of the Fund's total assets except for temporary defensive purposes, and
(determined at the time of investment) would except that this limitation does not apply
be invested in a single industry. to securities issued or guaranteed by the
U.S. government, its agencies or
instrumentalities.
BUYING OR SELLING REAL ESTATE OR INTERESTS The Fund may not: Buy or sell real estate,
IN REAL ESTATE except that investment in securities of
The Fund may not: Buy or sell real estate or issuers that invest in real estate and
interests in real estate, except that each investments in mortgage-backed securities,
Fund may purchase and sell securities which mortgage participations or other instruments
are secured by real estate, securities of supported or secured by interests in real
companies which invest or deal in real estate are not subject to this limitation,
estate and publicly traded securities of and except that the Fund may exercise rights
real estate investment trusts. 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.
BUYING OR SELLING COMMODITIES OR COMMODITY The Fund may not: Buy or sell physical
CONTRACTS commodities or contracts involving physical
The Fund may not: Buy or sell commodities or commodities. The Fund may purchase and sell
commodity contracts, except that each Fund (i) derivative, hedging and similar
may purchase and sell financial futures instruments such as financial futures and
contracts and options thereon, and forward options thereon, and (ii) securities or
foreign currency exchange contracts. instruments backed by, or the return from
which is linked to, physical commodities or
currencies, such as forward currency
exchange contracts, and the Fund may
exercise rights relating to such
instruments, including the right to enforce
security interests and to hold physical
commodities and contracts involving physical
commodities acquired as a result of the
Fund's ownership of instruments supported or
secured thereby until they can be liquidated
in an orderly manner.
33
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
ACTING AS AN UNDERWRITER No change.
The Fund may not: Act as underwriter except
to the extent that, in connection with the
disposition of portfolio securities, it may
be deemed to be an underwriter under certain
federal securities laws.
INVESTING TO EXERCISE CONTROL OR MANAGEMENT This restriction will not change, but will
The Fund may not: Make investments for the become non-fundamental.
purpose of exercising control or management.
INVESTING IN SECURITIES OF OTHER INVESTMENT This restriction will become
COMPANIES non-fundamental, and will be changed as
The Fund may not: Invest in securities of follows:
other non-affiliated investment companies,
except by purchases in the open market The Fund may not: Invest in securities of
involving only customary brokerage other registered investment companies,
commissions and as a result of which the except as permitted under applicable law or
Fund will not hold more than 3% of the by the Securities and Exchange Commission.
outstanding voting securities 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.
MAKING LOANS The Fund may make loans, including loans of
The Fund may not: Make loans, except through assets of the Fund, repurchase agreements,
(a) repurchase agreements and (b) loans of trade claims, loan participations or similar
portfolio securities limited to 33 1/3% of investments, or as permitted by the 1940 Act
the value of the Fund's total assets. Laws, Interpretations and Exemptions. 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 instruments similar to any of
the foregoing will not be considered the
making of a loan, and is permitted if
consistent with the Fund's investment
objective.
STRATEGIC PARTNERS STYLE SPECIFIC FUNDS
STRATEGIC PARTNERS LARGE CAP GROWTH FUND
STRATEGIC PARTNERS LARGE CAP VALUE FUND
STRATEGIC PARTNERS SMALL CAP GROWTH FUND
STRATEGIC PARTNERS SMALL CAP VALUE FUND
STRATEGIC PARTNERS INTERNATIONAL EQUITY
FUND
STRATEGIC PARTNERS TOTAL RETURN BOND
FUND
34
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
PURCHASING SECURITIES ON MARGIN The restriction will be eliminated.
The Fund may not: Purchase securities on
margin (but the Fund may obtain such short-
term credits as may be necessary for the
clearance of transactions); provided that
the deposit or payment by the Fund of
initial or variation margin in connection
with options or futures contracts is not
considered the purchase of a security on
margin.
SHORT SALES OF SECURITIES The restriction will be eliminated.
The Fund may not: Make short sales of
securities or maintain a short position if,
when added together, more than 25% of the
value of a Fund's net assets would be
(1) deposited as collateral for the
obligation to replace securities borrowed to
effect short sales and (2) allocated to
segregated accounts in connection with short
sales. Short sales "against-the-box" are not
subject to this limitation
ISSUING SENIOR SECURITIES, BORROWING MONEY The Fund may not: Issue senior securities or
OR PLEDGING ASSETS borrow money or pledge its assets, except as
The Fund may not: Issue senior securities, permitted by the Investment Company Act of
borrow money or pledge its assets, except 1940, and the rules and regulations
that the Fund may borrow from banks or promulgated thereunder, as each may be
through dollar rolls or reverse repurchase amended from time to time except to the
agreements up to 33 1/3% of the value of its extent that the Fund may be permitted to do
total assets (calculated when the loan is so by exemptive order, SEC release,
made) for temporary, extraordinary or no-action letter or similar relief or
emergency purposes, to take advantage of interpretations (collectively, the "1940 Act
investment opportunities or for the Laws, Interpretations and Exemptions"). For
clearance of transactions and may pledge its purposes of this restriction, the purchase
assets to secure such borrowings. For or sale of securities on a when-issued or
purposes of this restriction, the purchase delayed delivery basis, reverse repurchase
or sale of securities on a when-issued or agreements, dollar rolls, short sales,
delayed delivery basis, forward foreign derivative and hedging transactions such as
currency exchange contracts and collateral interest rate swap transactions, and
arrangements relating thereto, and collateral arrangements with respect
collateral arrangements with respect to thereto, and transactions similar to any of
futures contracts and options thereon and the foregoing, and collateral arrangements
with respect to the writing of options and with respect thereto, and obligations of the
obligations of the Trust to Trustees Fund to Trustees pursuant to deferred
pursuant to deferred compensation compensation arrangements are not deemed to
arrangements are not deemed to be a pledge be a pledge of assets or the issuance of a
of assets or the issuance of a senior senior security.
security subject to this restriction.
PURCHASING SECURITIES OF A SINGLE ISSUER The Fund may not: Purchase the securities of
The Fund may not: Purchase any security any issuer if, as a result, the Fund would
(other than obligations of the U.S. fail to be a diversified company within the
Government, its agencies or meaning of the 1940 Act Laws,
instrumentalities) if as a result with Interpretations and Exemptions.
respect to 75% of its total assets, more
than 5% of the Fund's total assets
(determined at the
35
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
time of investment) would then be invested
in the securities of a single issuer, except
as permitted by Section 5(b)(1) of the 1940
Act or any successor provision on the
requirements applicable to diversified
investment companies.
The Fund may not: Purchase more than 10% of
all outstanding voting securities of any one
issuer.
PURCHASING SECURITIES OF A SINGLE INDUSTRY The Fund may not: Purchase any security if
The Fund may not: Purchase any securities as a result more than 25% of the Fund's
(other than obligations of the U.S. total assets would be invested in the
Government, its agencies and securities of issuers having their principal
instrumentalities) if, as a result 25% or business activities in the same industry,
more of the value of the Fund's total assets except for temporary defensive purposes, and
(determined at the time of investment) would except that this limitation does not apply
be invested in one or more issuers having to securities issued or guaranteed by the
their principal business activities in the U.S. government, its agencies or
same industry. instrumentalities.
BUYING OR SELLING REAL ESTATE OR INTERESTS The Fund may not: Buy or sell real estate,
IN REAL ESTATE except that investment in securities of
The Fund may not: Buy or sell real estate or issuers that invest in real estate and
interests in real estate, except that the investments in mortgage-backed securities,
Fund may purchase and sell mortgage-backed mortgage participations or other instruments
securities, securities collateralized by supported or secured by interests in real
mortgages, securities which are secured by estate are not subject to this limitation,
real estate, securities of companies which and except that the Fund may exercise rights
invest or deal in real estate and publicly relating to such securities, including the
traded securities of real estate investment right to enforce security interests and to
trusts. hold real estate acquired by reason of such
enforcement until that real estate can be
liquidated in an orderly manner.
BUYING OR SELLING COMMODITIES OR COMMODITY A new fundamental restriction will be added
CONTRACTS as follows:
[No current restriction.] The Fund may not: Buy or sell physical
commodities or contracts involving physical
commodities. The Fund may purchase and sell
(i) derivative, hedging and similar
instruments such as financial futures and
options thereon, and (ii) securities or
instruments backed by, or the return from
which is linked to, physical commodities or
currencies, such as forward currency
exchange contracts, and the Fund may
exercise rights relating to such
instruments, including the right to enforce
security interests and to hold physical
commodities and contracts involving physical
commodities acquired as a result of the
Fund's ownership of instruments supported or
secured thereby until they can be liquidated
in an orderly manner.
36
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
ACTING AS AN UNDERWRITER No change.
The Fund may not: Act as underwriter except
to the extent that, in connection with the
disposition of portfolio securities, it may
be deemed to be an underwriter under certain
federal securities laws. Each Fund may
purchase restricted securities without
limit.
INVESTING TO EXERCISE CONTROL OR MANAGEMENT This restriction will not change, but will
The Fund may not: Make investments for the become non-fundamental.
purpose of exercising control or management.
INVESTING IN SECURITIES OF OTHER INVESTMENT A new non-fundamental restriction will be
COMPANIES added as follows:
[No current restriction.] The Fund may not: Invest in securities of
other registered investment companies,
except as permitted under applicable law or
by the Securities and Exchange Commission.
MAKING LOANS The Fund may make loans, including loans of
The Fund may not: Make loans, except through assets of the Fund, repurchase agreements,
(1) repurchase agreements and (2) loans of trade claims, loan participations or similar
portfolio securities limited to 33 1/3% of investments, or as permitted by the 1940 Act
the value of the Fund's total assets. For Laws, Interpretations and Exemptions. The
purposes of this limitation on securities acquisition of bonds, debentures, other debt
lending, the value of the Fund's total securities or instruments, or participations
assets includes the collateral received in or other interests therein and investments
the transactions. in government obligations, commercial paper,
certificates of deposit, bankers'
acceptances or instruments similar to any of
the foregoing will not be considered the
making of a loan, and is permitted if
consistent with the Fund's investment
objective.
THE TARGET PORTFOLIO TRUST
TARGET LARGE CAP GROWTH
TARGET LARGE CAP VALUE
TARGET SMALL CAP GROWTH
TARGET SMALL CAP VALUE
TARGET INTERNATIONAL EQUITY
TARGET INTERNATIONAL BOND
TARGET TOTAL RETURN BOND
TARGET INTERMEDIATE BOND
TARGET MORTGAGE
TARGET U.S. GOVERNMENT
PURCHASING SECURITIES ON MARGIN The restriction will be eliminated.
A Portfolio may not: Purchase securities on
margin (but the Portfolio may obtain
short-term credits as may be necessary for
the clearance of transactions); provided
that the deposit or payment by the Portfolio
of initial or variation
37
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
margin in connection with futures or options
is not considered the purchase of a security
on margin.
SHORT SALES OF SECURITIES The restriction will be eliminated.
A Portfolio may not: Make short sales of
securities, or maintain a short position if,
when added together, more than 25% of the
value of the Portfolio's net assets would be
(i) deposited as collateral for the
obligation to replace securities borrowed to
effect short sales and (ii) allocated to
segregated accounts in connection with short
sales. Short sales "against-the-box" are not
subject to this limitation.
ISSUING SENIOR SECURITIES, BORROWING MONEY A Portfolio may not: Issue senior securities
OR PLEDGING ASSETS or borrow money or pledge its assets, except
A Portfolio may not: Issue senior as permitted by the Investment Company Act
securities, borrow money or pledge its of 1940, and the rules and regulations
assets, except that the Portfolio may borrow promulgated thereunder, as each may be
from banks or through dollar rolls or amended from time to time except to the
reverse repurchase agreements up to 33 1/3% extent that the Portfolio may be permitted
of the value of its total assets (calculated to do so by exemptive order, SEC release,
when the loan is made) for temporary, no-action letter or similar relief or
extraordinary or emergency purposes, to take interpretations (collectively, the "1940 Act
advantage of investment opportunities or for Laws, Interpretations and Exemptions"). For
the clearance of transactions and may pledge purposes of this restriction, the purchase
its assets to secure such borrowings. For or sale of securities on a when-issued or
purposes of this restriction, the purchase delayed delivery basis, reverse repurchase
or sale of securities on a "when-issued" or agreements, dollar rolls, short sales,
delayed delivery basis, forward foreign derivative and hedging transactions such as
currency exchange contracts and collateral interest rate swap transactions, and
arrangements relating thereto, and collateral arrangements with respect
collateral arrangements with respect to thereto, and transactions similar to any of
futures and options thereon and with respect the foregoing, and collateral arrangements
to the writing of options and obligations of with respect thereto, and obligations of the
the Trust to Trustees pursuant to deferred Portfolio to Trustees pursuant to deferred
compensation arrangements are not deemed to compensation arrangements are not deemed to
be a pledge of assets subject to this be a pledge of assets or the issuance of a
restriction and such arrangements are not senior security.
deemed to be the issuance of a senior
security subject to this restriction.
PURCHASING SECURITIES OF A SINGLE ISSUER OR EACH PORTFOLIO OTHER THAN THE INTERNATIONAL
IN A SINGLE INDUSTRY BOND PORTFOLIO:
A Portfolio may not: Purchase any security
(other than obligations of the U.S. A Portfolio may not: Purchase the securities
Government, its agencies or of any issuer if, as a result, the Portfolio
instrumentalities) if as a result would fail to be a diversified company
(i) except with respect to the International within the meaning of the 1940 Act Laws,
Bond Portfolio, with respect to 75% of total Interpretations and Exemptions.
assets, more than 5% of the Portfolio's
total assets (determined at the time of AS A NON-DIVERSIFIED PORTFOLIO, THE
investment) would then be invested in the INTERNATIONAL
securities of a single
38
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
issuer, except as permitted by BOND PORTFOLIO DOES NOT HAVE A RESTRICTION
Section 5(b)(1) of the Investment Company LIMITING INVESTMENT IN A SINGLE ISSUER UNDER
Act of 1940 or any successor provision on THE INVESTMENT COMPANY ACT.
the requirements applicable to diversified
investment companies, or (ii) 25% or more of
the value of the Portfolio's total assets
(determined at the time of investment) would
be invested in one or more issuers having
their principal business activities in the
same industry.
A Portfolio may not: Purchase more than 10%
of all outstanding voting securities of any
one issuer.
PURCHASING SECURITIES OF A SINGLE INDUSTRY A Portfolio may not: Purchase any security
if as a result more than 25% of the
[SEE THE RESTRICTION IMMEDIATELY ABOVE.]. Portfolio's total assets would be invested
in the securities of issuers having their
principal business activities in the same
industry, except for temporary defensive
purposes, and except that this limitation
does not apply to securities issued or
guaranteed by the U.S. government, its
agencies or instrumentalities.
BUYING OR SELLING REAL ESTATE OR INTERESTS A Portfolio may not: Buy or sell real
IN REAL ESTATE estate, except that investment in securities
A Portfolio may not: Buy or sell real estate of issuers that invest in real estate and
or interests in real estate, except that the investments in mortgage-backed securities,
Portfolio may purchase and sell mortgage participations or other instruments
mortgage-backed securities, securities supported or secured by interests in real
collateralized by mortgages, securities estate are not subject to this limitation,
which are secured by real estate, securities and except that the Portfolio may exercise
of companies which invest or deal in real rights relating to such securities,
estate and publicly traded securities of including the right to enforce security
real estate investment trusts. interests and to hold real estate acquired
by reason of such enforcement until that
real estate can be liquidated in an orderly
manner.
BUYING OR SELLING COMMODITIES OR COMMODITY A new fundamental investment restriction
CONTRACTS will be added, as follows:
[No current restriction.] A Portfolio may not: Buy or sell physical
commodities or contracts involving physical
commodities. The Portfolio may purchase and
sell (i) derivative, hedging and similar
instruments such as financial futures and
options thereon, and (ii) securities or
instruments backed by, or the return from
which is linked to, physical commodities or
currencies, such as forward currency
exchange contracts, and the Portfolio may
exercise rights relating to such
instruments, including the right to enforce
security interests and to hold physical
39
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
- -------------------- --------------------------------------------
commodities and contracts involving physical
commodities acquired as a result of the
Portfolio's ownership of instruments
supported or secured thereby until they can
be liquidated in an orderly manner.
ACTING AS AN UNDERWRITER No change.
A Portfolio may not: Act as underwriter
except to the extent that, in connection
with the disposition of portfolio
securities, it may be deemed to be an
underwriter under certain federal securities
laws. The Portfolios may purchase restricted
securities without limit.
INVESTING TO EXERCISE CONTROL OR MANAGEMENT This restriction will not change, but will
A Portfolio may not: Make investments for become non-fundamental.
the purpose of exercising control or
management.
INVESTING IN SECURITIES OF OTHER INVESTMENT A new non-fundamental investment restriction
COMPANIES will be added, as follows:
A Portfolio may not: Invest in securities of
[No current restriction.] other registered investment companies,
except as permitted under applicable law or
by the Securities and Exchange Commission.
MAKING LOANS The Portfolio may make loans, including
A Portfolio may not: Make loans, except loans of assets of the Portfolio, repurchase
through (i) repurchase agreements and agreements, trade claims, loan
(ii) loans of portfolio securities limited participations or similar investments, or as
to 33 1/3% of the value of the Portfolio's permitted by the 1940 Act Laws,
total assets. For purposes of this Interpretations and Exemptions. The
limitation on securities lending, the value acquisition of bonds, debentures, other debt
of the Portfolio's total assets includes the securities or instruments, or participations
collateral received in the transactions. or other interests therein and investments
in government obligations, commercial paper,
certificates of deposit, bankers'
acceptances or instruments similar to any of
the foregoing will not be considered the
making of a loan, and is permitted if
consistent with the Portfolio's investment
objective.
40
REQUIRED VOTE
For each Fund, approval of these Proposals requires the affirmative vote of
a majority of the Fund's outstanding voting securities, as defined in the 1940
Act.
EACH BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU
VOTE "FOR" PROPOSALS NO. 4(a), 4(b), 4(c), 4(d), 4(e), 4(f) AND 4(g), AS
APPLICABLE.
TO APPROVE AMENDMENTS TO THE DECLARATION OF TRUST
PROPOSAL NO. 5
THIS PROPOSAL APPLIES TO EACH TRUST AS DESCRIBED BELOW.
BACKGROUND
The Board of each Trust has approved, submitted for Shareholder approval,
and recommends that Shareholders approve, amendments (collectively, the "Charter
Amendments") to each Trust's declaration of trust (the "Charter"). Each of the
Trusts is organized and operates under a Delaware Charter.
The Charter Amendments are intended to reflect changes to Delaware laws that
have occurred over the years, to eliminate unnecessary or unduly burdensome
provisions that do not optimally protect the interests of Shareholders, to
eliminate potential uncertainty regarding the application of certain Delaware
laws and to achieve consistent Charter provisions for the Funds within Delaware
and, where possible, across jurisdictions for all of the funds in the Prudential
mutual fund complex. The Board of each Trust believes that approval of the
Charter Amendments is in the best interests of the Trust and its Shareholders,
and recommends that Shareholders approve the Charter Amendments for their
respective Trusts.
There are certain material differences between the proposed Charter
Amendments for each Trust and each Trust's current Charter. These are summarized
in the table appearing at the end of this Proposal. The text of the proposed
Charter Amendments is also included in the table appearing at the end of this
Proposal.
Set forth below is a detailed analysis of the proposed Charter Amendments:
1. Charter Amendments. Each Charter would be amended to remove any
provisions that require Shareholder approval for Charter amendments other than
for those amendments for which Shareholder vote is specifically required by the
1940 Act and to give the Board of Trustees the right to amend the Charter
without Shareholder action to the fullest extent permitted by law.
THIS AMENDMENT IS INTENDED TO GIVE EACH TRUST MAXIMUM FLEXIBILITY TO
PERMIT AMENDMENT OF ITS CHARTER BY THE BOARD TO ADDRESS ANY FUTURE
CIRCUMSTANCES WITHOUT THE NECESSITY OF THE TIME AND EXPENSE OF OBTAINING
A SHAREHOLDER VOTE UNLESS SUCH VOTE IS REQUIRED BY THE 1940 ACT.
41
2. Redemption Provisions. The Target Charter would be amended to give the
Board of Trustees the authority to redeem Shares for any reason under terms set
by the Board of Trustees, including the failure by a Shareholder to provide
required information or maintain a minimum required investment. Any such
required redemption would be effected at the redemption price. The other Trusts
already provide for redemption of Shares by the Board for any reason and will
not require amendment.
THIS AMENDMENT IS INTENDED TO ALLOW TARGET TO BE OPERATED MORE
EFFICIENTLY BY PERMITTING REDEMPTION AT THE DISCRETION OF THE BOARD, AND
ALLOCATING REDEMPTION COSTS ONLY TO THE AFFECTED SHARES.
3. Quorum; Action by Stockholders. Each Charter would be amended to
provide that a quorum would be one-third of the outstanding shares of a Trust
entitled to be cast at a meeting, except when a larger requirement is required
by the 1940 Act of the Charter or the By-Laws of each Trust. In addition, the
amendment would provide that one-third of all votes entitled to be cast on a
specific matter would be sufficient to constitute a quorum for that matter, even
if only some of the outstanding classes or series are entitled to vote on that
matter.
THIS AMENDMENT IS INTENDED TO INCREASE THE LIKELIHOOD THAT A QUORUM WILL
BE PRESENT AT ALL SHAREHOLDER MEETINGS TO AVOID THE TIME AND EXPENSE OF
CONTINUED SOLICITATION.
4. Number of Trustees. Each Charter would be amended to provide that the
number of Trustees would be as determined pursuant to a written instrument and
would generally allow the Trustees to establish the number, without setting any
maximum. However, if a maximum is required by applicable law, it would be set at
20 Trustees.
THIS AMENDMENT IS INTENDED TO GIVE EACH TRUST MAXIMUM FLEXIBILITY WITH
RESPECT TO THE NUMBER OF TRUSTEES.
5. Adjournments. The By-laws of each Trust would be amended to clarify
that a meeting of Shareholders may be adjourned by Shareholders holding a
majority of the outstanding Shares present and entitled to vote on a proposal to
adjourn whether or not a quorum is present.
THIS AMENDMENT IS INTENDED TO CLARIFY THE PROCEDURE AND REQUISITE VOTE
FOR ADJOURNING SHAREHOLDER MEETINGS AND TO AVOID HAVING TO RE-NOTICE THE
MEETING WITH ITS ATTENDANT TIME AND EXPENSE TO THE TRUST.
6. Master/Feeder Transactions. The Target Charter would be amended to
permit the Trustees to invest the property of the Trust in cash or securities of
other investment companies.
THIS AMENDMENT IS INTENDED TO GIVE TARGET MAXIMUM FLEXIBILITY REGARDING
IMPLEMENTING A MASTER/ FEEDER STRUCTURE.
7. Shareholder Voting. Each Charter would be amended to limit the
requirement of a Shareholder vote to the election and removal of Trustees and to
additional matters as to which Shareholder approval is required under the 1940
Act. The Target Charter would also be amended to permit dollar-based voting by
the Shareholders and the provision would provide that with respect to each
matter submitted to a Shareholder vote, the Trustees could determine whether the
Shareholder vote would be done on a per Share basis or net asset value basis.
The general effect of the dollar-based voting is that it allocates Shareholder
voting power in proportion to the value of each Shareholder's investment, rather
than the number of shares held. The Trustees believe that this will generally
result in a more fair allocation of voting power by increasing the voting power
of investors holding Shares with higher net asset values so as to match the
level of their investment.
THIS AMENDMENT IS INTENDED TO GIVE EACH TRUST MAXIMUM FLEXIBILITY
REGARDING THE APPLICABILITY OF SHAREHOLDER VOTING, TO MORE FAIRLY
ALLOCATE VOTING POWER FOR TARGET FUNDS AND TO REDUCE THE NEED TO CALL
SHAREHOLDERS' MEETINGS AND THE ATTENDANT EXPENSE TO THE TRUSTS.
42
8. Termination of Trust, Fund or Class. Each Charter would be amended to
provide that the Trustees would have the authority to dissolve the Trust, Fund
or any class without Shareholder approval.
THIS AMENDMENT IS INTENDED TO ALLOW THE TRUSTEES TO LIQUIDATE THE TRUST,
FUND OR ANY CLASS AND TO DISTRIBUTE ANY NET ASSETS TO SHAREHOLDERS
WITHOUT FIRST OBTAINING A SHAREHOLDER VOTE.
9. Election of Trustees. Each Charter would be amended to provide that the
calling of a Shareholders' meeting for the election of Trustees when less than a
majority of Trustees holding office had been elected by the Shareholders would
only be required to the extent that the calling of such a meeting was required
under the 1940 Act.
THIS AMENDMENT IS INTENDED TO REDUCE THE NEED TO CALL SHAREHOLDERS'
MEETINGS FOR THE ELECTION OF TRUSTEES AND THE ATTENDANT EXPENSE TO THE
TRUSTS.
10. Derivative Actions. The Target Charter would be amended to set forth
the requirements for the bringing of a derivative action on behalf of the Trust
by a Shareholder. Such requirements would include the making of a pre-suit
demand upon the Trustees by Shareholders who collectively hold at least 10% of
the outstanding Shares and the consideration of any such pre-suit demand by
Independent Trustees. The other Trusts already include this provision and will
not require amendment.
THIS AMENDMENT IS INTENDED TO ALLOW TARGET TO LIMIT LITIGATION ON BEHALF
OF THE TRUST TO THOSE SITUATIONS WHERE IT IS SUPPORTED BY SHAREHOLDERS
WITH A MATERIAL STAKE IN THE TRUST AND TO ADDRESS THE NEED FOR THE
EVALUATION OF THE MERITS OF A POTENTIAL LAWSUIT BY INDEPENDENT TRUSTEES.
SUMMARY AND TEXT OF CHARTER AMENDMENTS
DECLARATION OF TRUST AMENDMENTS REDEMPTION
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Style Specific A vote of The Trustees Not applicable. None.
Shareholders is would have
required for authority to
amendments that approve all
(i) affect the amendments for
voting rights routine and
of non- routine
Shareholders, matters other
(ii) amend the than those
amendment matters that
provision of are required to
the be approved by
Declaration, Shareholders
(iii) are under the 1940
required to be Act.
approved by
Shareholders
under
applicable law,
and (iv) are
submitted to
the
Shareholders by
the Trustees.
43
QUORUM NUMBER OF TRUSTEES
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Style Specific The quorum The quorum The number of The number of
requirement is requirement Trustees shall Trustees would
40% of the would be one- at all times be be such number
Shares entitled third of the at least one as is
to vote at a Shares entitled and no more determined by
meeting, except to vote at a than 15, as the Trustees
when a larger meeting, except determined by from time to
quorum is when a larger the Trustees time but at
required by quorum is from time to least one.
applicable law, required by the time.
the Declaration 1940 Act, the
or the By-Laws. Declaration or
the By-Laws.
ADJOURNMENTS MASTER/FEEDER TRANSACTIONS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Style Specific The existing Shareholders Not applicable. None.
By-Laws do not holding a
contain an majority of the
express outstanding
provision Shares present
regarding the and entitled to
requirements vote on
for adjournment adjournment of
of a a meeting would
Shareholders' have authority
meeting. to adjourn a
Shareholders
meeting whether
or not a quorum
is present at
the meeting.
TERMINATION OF TRUST, FUND OR
SHAREHOLDER VOTING CLASS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Style Specific Shareholders Shareholders The Trust and The Trust and
have the power would have the any Fund or any Fund or
to vote for the power to vote class of Shares class of Shares
election and for the may be may be
removal of election and dissolved at dissolved at
Trustees and removal of any time by any time by the
such additional Trustees and vote of a Trustees
Fund matters as such additional majority of the without
may be required Fund matters as Shares of each Shareholder
by applicable may be required Fund entitled approval.
law. by the 1940 to vote, voting
Act. separately by
Fund, or by the
Trustees by
written notice
to the
Shareholders.
44
ELECTION OF TRUSTEES DERIVATIVE ACTIONS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Style Specific If less than If less than Not applicable. None.
the majority of the majority of
Trustees Trustees
holding office holding office
have been have been
elected by elected by
Shareholders, a Shareholders, a
Shareholders' Shareholders'
meeting for the meeting for the
election must election of
be called for Trustees would
the election of be called to
Trustees. the extent it
is required by
the 1940 Act.
DECLARATION OF TRUST AMENDMENTS REDEMPTION
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Target Same as Style Same as Style The Trustees The Trustees
Specific above. Specific above. have the would have the
authority to authority to
redeem Shares redeem the
of any person shares of any
at net asset Shareholder or
value to the group of
extent that the Shareholders
direct or (including some
indirect or all of the
ownership of Shareholders of
Shares has or any series or
may become class) for any
concentrated in reason at net
such person to asset value,
an extent that less any
would redemption
disqualify any fees, and upon
series of such other
shares as an terms set by
investment the Trustees.
company.
QUORUM NUMBER OF TRUSTEES
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Target The quorum The quorum Same as Style Same as Style
requirement is requirement Specific above. Specific above.
one-third of would be one-
the Shares third of the
entitled to Shares entitled
vote at a to vote at a
meeting, except meeting except
when a larger when a larger
quorum is quorum is
required by required by the
applicable law, 1940 Act, the
the Declaration Declaration or
or the By-Laws. the By-Laws.
45
ADJOURNMENTS MASTER/FEEDER TRANSACTIONS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Target Same as Style Same as Style The existing The Trustees
Specific above. Specific above. Declaration would be
does not permitted to
contain an invest the
express property of the
provision Trust or any
regarding the Fund in other
Trustees' investment
authority with companies
respect to without
master/feeder Shareholder
transactions. approval unless
such approval
is required by
the 1940 Act.
TERMINATION OF TRUST, FUND OR
SHAREHOLDER VOTING CLASS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Target Shareholders Shareholders Same as Style Same as Style
have the power would have the Specific above. Specific above.
to vote for the power to vote
election and for the
removal of election and
Trustees and removal of
such additional Trustees and
Fund matters as such additional
may be required Fund matters as
by applicable may be required
law. by the 1940
Shareholders Act.
are entitled to Shareholders
vote on a per would be
Share basis as entitled to
determined by vote on a per
the Trustees. Share basis or
net asset value
basis.
ELECTION OF TRUSTEES DERIVATIVE ACTIONS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Target Same as Style Same as Style The existing Shareholders
Specific above. Specific above. Declaration would be
does not permitted to
contain an bring a
express derivative
provision action on
regarding behalf of the
derivative Fund if certain
actions. requirements
are satisfied,
including the
making of a
pre-suit demand
upon the
Trustees by
Shareholders
who
collectively
hold at least
10% of the
outstanding
Shares of the
Fund and the
consideration
of any such
pre-suit demand
by Independent
Trustees.
46
DECLARATION OF TRUST AMENDMENTS REDEMPTION
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Opportunity Funds Same as Style Same as Style Not applicable. None.
Specific above. Specific above.
QUORUM NUMBER OF TRUSTEES
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Opportunity Funds Same as Style Same as Style Same as Style Same as Style
Specific above. Specific above. Specific above. Specific above.
ADJOURNMENTS MASTER/FEEDER TRANSACTIONS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Opportunity Funds Same as Style Same as Style Not Applicable. None.
Specific above. Specific above.
TERMINATION OF TRUST, FUND OR
SHAREHOLDER VOTING CLASS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Opportunity Funds Same as Style Same as Style Same as Style Same as Style
Specific above. Specific above. Specific above. Specific above.
ELECTION OF TRUSTEES DERIVATIVE ACTIONS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Opportunity Funds Same as Style Same as Style Not Applicable. None.
Specific above. Specific above.
DECLARATION OF TRUST AMENDMENTS REDEMPTION
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Asset Allocation Same as Style Same as Style Not applicable. None.
Specific above. Specific above.
QUORUM NUMBER OF TRUSTEES
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Asset Allocation Same as Style Same as Style Same as Style Same as Style
Specific above. Specific above. Specific above. Specific above.
ADJOURNMENTS MASTER/FEEDER TRANSACTIONS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Asset Allocation Same as Style Same as Style Not applicable. None.
Specific above. Specific above.
47
TERMINATION OF TRUST, FUND OR
SHAREHOLDER VOTING CLASS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Asset Allocation Same as Style Same as Style Same as Style Same as Style
Specific above. Specific above. Specific above. Specific above.
ELECTION OF TRUSTEES DERIVATIVE ACTIONS
-------------------------------- --------------------------------
EXISTING PROPOSED EXISTING PROPOSED
FUND PROVISION AMENDMENT PROVISION AMENDMENT
- --------------------- --------------- --------------- --------------- ---------------
Asset Allocation Same as Style Same as Style Not applicable. None.
Specific above. Specific above.
Set out below is the text of the proposed Charter Amendments for all Trusts
summarized in the preceding table:
- Amend Section 2 of Article I of the Declaration to add the following
definition:
"Prior Declaration of Trust" means the original declaration of trust of
the Trust as in effect from time to time up to the effectiveness of this
Declaration of Trust;
- Amend Section 1 of Article IV of the Declaration to delete the first two
sentences thereof in their entirety and replace them with one sentence to
read as follows:
The number of Trustees shall be the number established under or pursuant
to the Prior Declaration of Trust or such number as is determined, from
time to time, by the Trustees pursuant to Section 3 of this Article IV
but shall at all times be at least one.
- Amend the fourth sentence of Section 1 of Article IV of the Declaration in
its entirety to read as follows:
In the event that less than the majority of Trustees holding office have
been elected by the Shareholders, to the extent required by the 1940 Act,
but only to such extent, the Trustees then in office shall call a
Shareholders' meeting for the election of Trustees.
- Amend the first sentence of Section 1 of Article V of the Declaration in
its entirety to read as follows:
The Shareholders shall have power to vote only (i) for the election or
removal of Trustees as and to the extent provided in Article IV,
Section 1, and (ii) with respect to such additional matters relating to
the Trust as may be required by the 1940 Act, this Declaration of Trust,
the By-Laws or any registration of the Trust with the Commission (or any
successor agency) or any state, or as the Trustees may consider necessary
or desirable.
- Amend the first and second sentences of Section 2 of Article V of the
Declaration in their entirety to read as follows:
Except when a larger quorum is required by federal law, including the
1940 Act, by the By-Laws or by this Declaration of Trust, one-third of
the Shares entitled to vote shall constitute a quorum at a Shareholders'
meeting. When any one or more Series (or Classes) is to vote as a single
class separate from any other Shares, one-third of the Shares of all such
Series (or Classes) entitled to vote shall constitute a quorum at a
Shareholders' meeting of such Series (or Classes).
- Amend Section 2 of Article VIII of the Declaration in its entirety to read
as follows:
Section 2. TERMINATION OF THE TRUST OR ANY SERIES OR CLASS.
(a) Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be dissolved at any time by the
Trustees by written notice to the Shareholders. Any
48
Series of Shares may be dissolved at any time by the Trustees by written
notice to the Shareholders of such Series. Any Class of any Series of Shares
may be terminated at any time by the Trustees by written notice to the
Shareholders of such Class. Any action to dissolve the Trust shall be deemed
to also be an action to dissolve each Series and each Class thereof.
(b) Upon the requisite action by the Trustees to dissolve the Trust or
any one or more Series of Shares, after paying or otherwise providing for
all charges, taxes, expenses and liabilities, whether due or accrued or
anticipated, of the Trust or of the particular Series as may be determined
by the Trustees, the Trust shall in accordance with such procedures as the
Trustees consider appropriate reduce the remaining assets of the Trust or of
the affected Series to distributable form in cash or Shares (if any Series
remain) or other securities, or any combination thereof, and distribute the
proceeds to the Shareholders of the Trust or Series involved, ratably
according to the number of Shares of the Trust or such Series held by the
several Shareholders of such Series on the date of distribution. Thereupon,
any affected Series or Class shall terminate and the Trustees and the Trust
shall be discharged of any and all further liabilities and duties relating
thereto or arising therefrom, and the right, title and interest of all
parties with respect to such Series shall be canceled and discharged. Upon
the requisite action by the Trustees to terminate any Class of any Series of
Shares, the Trustees may, to the extent they deem it appropriate, follow the
procedures set forth in this Section 2(b) with respect to such Class that
are specified in connection with the dissolution and winding up of the Trust
or any Series of Shares. Alternatively, in connection with the termination
of any Class of any Series of Shares, the Trustees may treat such
termination as a redemption of the Shareholders of such Class effected
pursuant to Section 2(c) of Article VI of this Declaration of Trust provided
that the costs relating to the termination of such Class shall be included
in the determination of the net asset value of the Shares of such Class for
purposes of determining the redemption price to be paid to the Shareholders
of such Class (to the extent not otherwise included in such determination).
(c) Following completion of winding up of the Trust's business, the
Trustees shall cause a certificate of cancellation of the Trust's
Certificate of Trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee. Upon
termination of the Trust, the Trustees shall be discharged of any and all
further liabilities and duties relating thereto or arising therefrom, and
the right, title and interest of all parties with respect to the Trust shall
be canceled and discharged.
- Amend Section 4 of Article VIII of the Declaration in its entirety to read
as follows:
Section 4. AMENDMENTS. Except as specifically provided in this Section 4,
the Trustees may, without Shareholder vote, restate, amend or otherwise
supplement this Declaration of Trust. Shareholders shall have the right to vote
(i) on any amendment that is required to be approved by Shareholders pursuant to
the 1940 Act and (ii) on any amendment submitted to the Shareholders by the
Trustees at their discretion. Any amendment required or permitted to be
submitted to the Shareholders that, as the Trustees determine, shall only affect
the Shareholders of one or more Series or one or more Classes shall be
authorized by a vote of only the Shareholders of each Series or Class affected
and no vote of Shareholders of a Series or Class not affected shall be required.
Notwithstanding anything else herein, no amendment hereof shall limit the rights
to insurance provided by Article VII, Section 4 of this Declaration of Trust
with respect to any acts or omissions of Persons covered thereby prior to such
amendment nor shall any such amendment limit the rights to indemnification
referenced in Article VII, Section 2 of this Declaration of Trust or as provided
in the By-Laws with respect to any actions or omissions of Persons covered
thereby prior to such amendment. The Trustees may, without Shareholder vote,
restate, amend, or otherwise supplement the Certificate of Trust as the Trustees
deem necessary or desirable.
49
- Amend Section 1 of Article III of the By-Laws to add a sentence at the end
thereof to read as follows:
Any meeting of Shareholders may be adjourned one or more times from time
to time to another time or place by Shareholders holding a majority of
the outstanding Shares present and entitled to vote on a proposal to
adjourn at such meeting, whether or not a quorum is present.
Set out below is the text of the additional proposed Charter Amendments with
respect to Target:
- Amend Section 1 of Article V of the Declaration to delete the second
sentence thereof in its entirety and replace it with two sentences to read
as follows:
As determined by the Trustees without the vote or consent of Shareholders
(except as required by the 1940 Act), on any matter submitted to a vote
of Shareholders, either (i) each whole Share shall be entitled to one
vote as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote or (ii) each
dollar of Net Asset Value (number of Shares owned times Net Asset Value
per share of such Series or Class, as applicable) shall be entitled to
one vote on any matter on which such Shares are entitled to vote and each
fractional dollar amount shall be entitled to a proportionate fractional
vote. Without limiting the power of the Trustees in any way to designate
otherwise in accordance with the preceding sentence, the Trustees hereby
establish that each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote.
- Amend Section 2(c) of Article VI of the Declaration in its entirety to
read as follows:
(c) The Trustees may require any Shareholder or group of Shareholders
(including some or all of the Shareholders of any Series or Class) to redeem
Shares for any reason under terms set by the Trustees, including (i) the
determination of the Trustees that direct or indirect ownership of Shares of
any Series has or may become concentrated in such Shareholder to an extent
that would disqualify any Series as a regulated investment company under the
Internal Revenue Code of 1986, as amended (or any successor statute
thereto), (ii) the failure of a Shareholder to supply a tax identification
number if required to do so, or to have the minimum investment required
(which may vary by Series), or (iii) the failure of a Shareholder to pay
when due for the purchase of Shares issued to him. Any such redemption shall
be effected at the redemption price and in the manner provided in this
Article VI.
- Amend Section 3(c) of Article VIII of the Declaration in its entirety to
read as follows:
(c) Notwithstanding anything else herein, the Trustees may, without
Shareholder approval unless such approval is required by the 1940 Act,
invest all or a portion of the Trust Property of any Series, or dispose of
all or a portion of the Trust Property of any Series, and invest the
proceeds of such disposition in interests issued by one or more other
investment companies registered under the 1940 Act. Any such other
investment company may (but need not) be a trust (formed under the laws of
the State of Delaware or any other state or jurisdiction) (or subtrust
thereof) which is classified as a partnership for federal income tax
purposes. Notwithstanding anything else herein, the Trustees may, without
Shareholder approval unless such approval is required by the 1940 Act, cause
a Series that is organized in the master/feeder fund structure to withdraw
or redeem its Trust Property from the master fund and cause such Series to
invest its Trust Property directly in securities and other financial
instruments or in another master fund.
50
- Amend Article VIII of the Declaration to add a new Section 9 to read as
follows:
Section 9. DERIVATIVE ACTIONS. In addition to the requirements set forth
in Section 3816 of the Delaware Act, a Shareholder may bring a derivative action
on behalf of the Trust only if the following conditions are met:
(a) The Shareholder or Shareholders must make a pre-suit demand upon the
Trustees to bring the subject action unless an effort to cause the Trustees
to bring such an action is not likely to succeed. For purposes of this
Section 9(a), a demand on the Trustees shall only be deemed not likely to
succeed and therefore excused if a majority of the Board of Trustees, or a
majority of any committee established to consider the merits of such action,
is composed of Trustees who are not "independent trustees" (as that term is
defined in the Delaware Act).
(b) Unless a demand is not required under paragraph (a) of this
Section 9, Shareholders eligible to bring such derivative action under the
Delaware Act who collectively hold at least 10% of the outstanding Shares of
the Trust, or who collectively hold at least 10% of the outstanding Shares
of the Series or Class to which such action relates, shall join in the
request for the Trustees to commence such action; and
(c) Unless a demand is not required under paragraph (a) of this
Section 9, the Trustees must be afforded a reasonable amount of time to
consider such Shareholder request and to investigate the basis of such
claim. The Trustees shall be entitled to retain counsel or other advisors in
considering the merits of the request and shall require an undertaking by
the Shareholders making such request to reimburse the Trust for the expense
of any such advisors in the event that the Trustees determine not to bring
such action.
(d) For purposes of this Section 9, the Board of Trustees may designate
a committee of one Trustee to consider a Shareholder demand if necessary to
create a committee with a majority of Trustees who do not have a personal
financial interest in the transaction at issue. The Trustees shall be
entitled to retain counsel or other advisors in considering the merits of
the request and may require an undertaking by the Shareholders making such
request to reimburse the Trust for the expense of any such advisors in the
event that the Trustees determine not to bring such action.
REQUIRED VOTE
For each Trust, approval of this Proposal requires an affirmative vote of a
majority of each Fund's voted securities.
EACH BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL NUMBER 5.
ADDITIONAL INFORMATION
The solicitation of proxies, the cost of which will be borne by the Funds. The costs associated with the inclusion of Proposal No. 2 and Proposal No. 3 in the proxy statement will be borne by PI. Direct costs that can be reasonably attributed to one or more specific Funds will be borne by each specific Fund; costs that cannot reasonably be attributed to one or more specific Funds will be allocated equally among the Funds.
The solicitation of proxies will be made primarily by mail but also may include telephone or oral communications by regular employees of PSI or PI, who will not receive any
compensation therefore from the Funds or by Georgeson Shareholder CommunicationsD.F. King & Co. Inc. (D.F. King), a proxy solicitation firm retained by the Funds. It is estimated that these services will cost approximately $280,000 (including reimbursements for out-of-pocket expenses), to be borne by the Funds whoand PI as described above, although it is anticipated that PI will bear most of this expense, since it is anticipated that the
39
solicitation services furnished by D.F. King will primarily be paid the
approximateutilized for Proposal No. 2 and Proposal No. 3. The fees and expenses for soliciting services set forth below.may vary based on a number of factors, including but not limited to the composition of each Fund’s shareholder base and voting patterns. Proxies may be recorded pursuant to (i) electronically transmitted instructions or (ii) telephone instructions obtained through procedures reasonably designed to verify that the instructions have been authorized. Soliciting fees and expenses
payable to Georgeson Shareholder
51
Communications Inc. by a particular Fund are a function of the number of
shareholders in that Fund. All of the cost of the Meetings will be borne by the
Funds.
ESTIMATED SOLICITATION
FUND FEES AND EXPENSES
- ---- ----------------------
Asset Allocation.......................................
Conservative Growth..................................
Moderate Growth......................................
High Growth..........................................
Opportunity Funds......................................
Focused Growth.......................................
New Era Growth.......................................
Focused Value........................................
Mid-Cap Value........................................
Style Specific.........................................
Large Cap Growth.....................................
Large Cap Value......................................
Small Cap Growth.....................................
Small Cap Value......................................
International Equity.................................
Total Return Bond....................................
Target.................................................
Target Large Cap Growth..............................
Target Large Cap Value...............................
Target Small Cap Growth..............................
Target Small Cap Value...............................
Target International Equity..........................
Target International Bond............................
Target Total Return Bond.............................
Target Intermediate Bond.............................
Target Mortgage......................................
Target U.S. Government...............................
SHAREHOLDER PROPOSALS
The TrustsCompanies will not be required to hold annual meetings of shareholders, ifunless, for example, the election of Board Members is not required to be acted on by shareholders under the 1940 Act.Act, or as otherwise required by the 1940 Act of their governing instruments. It is the present intention of the Board of each TrustCompany not to hold annual meetings of shareholders unless such shareholder action is required.
Any shareholder who wishes to submit a proposal to be considered at a Trust'sCompany’s next meeting of shareholders should send the proposal to that TrustCompany at Gateway Center Three, 100 Mulberry Street, 4th Floor, Newark, New Jersey 07102, so as to be received within a reasonable time before the Board makes the solicitation relating to such meeting, in order to be included in the proxy statement and form of proxy relating to such meeting or be brought before such meeting without being included in the proxy statement.
Shareholder proposals that are submitted in a timely manner will not necessarily be included in the Trust'sCompany’s proxy materials. Inclusion of such proposals is subject to limitations under the federal securities laws.
52
OTHER BUSINESS
Management knows of no business to be presented at the MeetingMeetings other than the matters set forth in this proxy statement, but should any other matter requiring a vote of shareholders arise, the proxies will vote according to their best judgment in the interest of each Fund, respectively.
/s/ Lori E. Bostrom
Lori E. Bostrom
SECRETARY
Strategic Partners
Deborah A. Docs
Secretary
October 1, 2014
IT IS IMPORTANT THAT YOU EXECUTE AND RETURNALLOF YOUR PROXIES PROMPTLY.
40
INDEX TO EXHIBITS TO PROXY STATEMENT
| Exhibit A | Outstanding Shares (as of Record Date) | |
| Exhibit B | Five Percent Shareholders (as of Record Date) | |
| Exhibit C | Officer Information | |
| Exhibit D | Audit Committee Charter | |
| Exhibit E | Board & Board Committee Meetings | |
| Exhibit F | Nominating and Governance Committee Charter | |
41
OUTSTANDING SHARES (AS OF RECORD DATE)
The close of business on September 12, 2014 has been fixed as the record date for the determination of shareholders entitled to notice of, and to vote at, the Meeting. Information as to the number of outstanding Shares for each Fund as of the record date is set forth below.
| Fund | Share Class | Outstanding Shares | ||
PIP Asset Allocation | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
PIP Equity Opportunity | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
PIP Growth | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
PIP Conservative Allocation | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
PIP Moderate Allocation | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
PIP Growth Allocation | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
PIP 2 Taxable Money Market | N/A | |||
PIP 2 Short-Term Bond | N/A | |||
PIP 3 Strategic Value | A | |||
| B | ||||
| C | ||||
| Z | ||||
PIP 3 Select Growth | A | |||
| B | ||||
| C | ||||
| Z | ||||
| Q |
A-1
| Fund | Share Class | Outstanding Shares | ||
PIP 3 Real Assets | A | |||
| B | ||||
| C | ||||
| Z | ||||
PIP 3 Market Neutral | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
PIP 4 Muni High Income | A | |||
| B | ||||
| C | ||||
| Z | ||||
PIP 5 Conservative Growth | A | |||
| B | ||||
| C | ||||
PIP 5 Small-Cap Value | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
PIP 5 Rising Dividend | A | |||
| C | ||||
| Z | ||||
PIP 6 Cal Muni | A | |||
| B | ||||
| C | ||||
| Z | ||||
PIP 7 Value | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
| Q | ||||
PIP 8 Stock Index | A | |||
| B | ||||
| C | ||||
| Z | ||||
PIP 9 Large-Cap Core | A | |||
| B | ||||
| C | ||||
| Z | ||||
PIP 9 International Real Estate | A | |||
| B | ||||
| C | ||||
| Z |
A-2
| Fund | Share Class | Outstanding Shares | ||
PIP 9 Absolute Return Bond | A | |||
| C | ||||
| Z | ||||
| Q | ||||
PIP 9 Select Real Estate Fund | A | |||
| C | ||||
| Q | ||||
| Z | ||||
PIP 10 Mid-Cap Value | A | |||
| B | ||||
| C | ||||
| Z | ||||
| Q | ||||
PIP 10 Equity Income | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
| Q | ||||
PIP 12 Global Real Estate | A | |||
| B | ||||
| C | ||||
| Z | ||||
| Q | ||||
| R | ||||
PIP 12 US Real Estate | A | |||
| B | ||||
| C | ||||
| Z | ||||
PIP 12 Long-Short | A | |||
| C | ||||
| Z | ||||
PIP 12 Short Duration Muni | A | |||
| C | ||||
| Z | ||||
PIP 14 Government Income | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
PIP 14 Floating Rate | A | |||
| C | ||||
| Z | ||||
PIP 15 High Yield | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
| Q |
A-3
| Fund | Share Class | Outstanding Shares | ||
PIP 15 Short Duration High Yield | A | |||
| C | ||||
| Z | ||||
PIP 16 Defensive Equity | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
PIP 16 Income Builder | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
PIP 17 Total Return Bond | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
| Q | ||||
PIP 17 Short Duration Multi-Sector | A | |||
| C | ||||
| Z | ||||
| Q | ||||
PIP 18 20/20 Focus | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
| Q | ||||
PIP 18 MLP | A | |||
| C | ||||
| Z | ||||
MoneyMart | A | |||
| B | ||||
| C | ||||
| Z | ||||
National Muni | A | |||
| B | ||||
| C | ||||
| Z | ||||
Blend | A | |||
| B | ||||
| C | ||||
| Z | ||||
Mid-Cap Growth | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
| Q |
A-4
| Fund | Share Class | Outstanding Shares | ||
Small Company | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
| Q | ||||
World International Equity | A | |||
| B | ||||
| C | ||||
| Z | ||||
World International Value | A | |||
| B | ||||
| C | ||||
| Z | ||||
World Emerging Markets Debt | A | |||
| C | ||||
| Z | ||||
| Q | ||||
World Global Opportunities | A | |||
| C | ||||
| Z | ||||
World International Opportunities | A | |||
| C | ||||
| Z | ||||
World Global Infrastructure | A | |||
| C | ||||
| Z | ||||
Natural Resources | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
| Q | ||||
Global Total Return | A | |||
| B | ||||
| C | ||||
| Z | ||||
| Q | ||||
Sector Financial Services | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
Sector Health Sciences | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R |
A-5
| Fund | Share Class | Outstanding Shares | ||
Sector Utility | A | |||
| B | ||||
| C | ||||
| Z | ||||
| R | ||||
Short-Term Corporate Bond | A | |||
| B | ||||
| C | ||||
| Z | ||||
| Q | ||||
| R | ||||
Target Small-Cap Value | A | |||
| R | ||||
| T | ||||
Target Small-Cap Growth | R | |||
| T | ||||
Target Large-Cap Value | R | |||
| T | ||||
Target Large-Cap Growth | R | |||
| T | ||||
Target International Equity | Q | |||
| R | ||||
| T | ||||
Target Mortgage-Backed | T | |||
Target Intermediate-Term Bond | T | |||
Target Total Return Bond | R | |||
| T |
A-6
FIVE PERCENT SHAREHOLDER REPORT
As of September 12, 2014, the beneficial owners, directly or indirectly, of more than 5% of any class of the outstanding shares of the Funds are listed below.
Fund | Shareholder Name | Registration | Share Class | Shares / Percentage | ||||
PIP Asset Allocation | ||||||||
PIP Equity Opportunity | ||||||||
PIP Growth | ||||||||
PIP Conservative Allocation | ||||||||
PIP Moderate Allocation | ||||||||
PIP Growth Allocation | ||||||||
PIP 2 Taxable Money Market | ||||||||
PIP 2 Short-Term Bond | ||||||||
PIP 3 Strategic Value | ||||||||
PIP 3 Select Growth | ||||||||
PIP 3 Real Assets | ||||||||
PIP 3 Market Neutral | ||||||||
PIP 4 Muni High Income | ||||||||
PIP 5 Conservative Growth | ||||||||
PIP 5 Small-Cap Value | ||||||||
PIP 5 Rising Dividend | ||||||||
PIP 6 Cal Muni | ||||||||
PIP 7 Value | ||||||||
PIP 8 Stock Index | ||||||||
PIP 9 Large-Cap Core | ||||||||
PIP 9 International Real Estate | ||||||||
PIP 9 Absolute Return Bond | ||||||||
PIP 9 Select Real Estate Fund | ||||||||
PIP 10 Mid-Cap Value | ||||||||
PIP 10 Equity Income | ||||||||
PIP 12 Global Real Estate | ||||||||
PIP 12 US Real Estate | ||||||||
PIP 12 Long-Short | ||||||||
PIP 12 Short Duration Muni | ||||||||
PIP 14 Government Income | ||||||||
PIP 14 Floating Rate | ||||||||
PIP 15 High Yield | ||||||||
PIP 15 Short Duration High Yield | ||||||||
PIP 16 Defensive Equity | ||||||||
PIP 16 Income Builder | ||||||||
PIP 17 Total Return Bond | ||||||||
PIP 17 Short Duration Multi-Sector | ||||||||
PIP 18 20/20 Focus | ||||||||
PIP 18 MLP | ||||||||
MoneyMart | ||||||||
National Muni | ||||||||
Blend |
B-1
Fund | Shareholder Name | Registration | Share Class | Shares / Percentage | ||||
Mid-Cap Growth | ||||||||
Small Company | ||||||||
World International Equity | ||||||||
World International Value | ||||||||
World Emerging Markets Debt | ||||||||
World Global Opportunities | ||||||||
World International Opportunities | ||||||||
World Global Infrastructure | ||||||||
Natural Resources | ||||||||
Global Total Return | ||||||||
Sector Financial Services | ||||||||
Sector Health Sciences | ||||||||
Sector Utility | ||||||||
Short-Term Corporate Bond | ||||||||
Target Small-Cap Value | ||||||||
Target Small-Cap Growth | ||||||||
Target Large-Cap Value | ||||||||
Target Large-Cap Growth | ||||||||
Target International Equity | ||||||||
Target Mortgage-Backed | ||||||||
Target Intermediate-Term Bond | ||||||||
Target Total Return Bond |
B-2
OFFICER INFORMATION1
Raymond A. O’Hara* (58) | Chief Legal Officer | Since 2012
Principal Occupation(s) During Past 5 Years: Vice President and Corporate Counsel (since July 2010) of Prudential Insurance Company of America (Prudential); Vice President (March 2011-Present) of Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey; Vice President and Corporate Counsel (March 2011-Present) of Prudential Annuities Life Assurance Corporation; Chief Legal Officer of Prudential Investments LLC (since June 2012); Chief Legal Officer of Prudential Mutual Fund Services LLC (since June 2012) and Corporate Counsel of AST Investment Services, Inc. (since June 2012); formerly Assistant Vice President and Corporate Counsel (September 2008-July 2010) of The Hartford Financial Services Group, Inc.; formerly Associate (September 1980-December 1987) and Partner (January 1988-August 2008) of Blazzard & Hasenauer, P.C. (formerly, Blazzard, Grodd & Hasenauer, P.C.).
Chad A. Earnst* (39) | Chief Compliance Officer | Since 2014
Principal Occupation(s) During Past 5 Years: Chief Compliance Officer (September 2014-Present) of Prudential Investments LLC; Chief Compliance Officer (September 2014-Present) of the Prudential Investments Funds, Target Funds, Advanced Series Trust, The Prudential Series Fund, Prudential’s Gibraltar Fund, Inc., Prudential Global Short Duration High Yield Income Fund, Inc., Prudential Short Duration High Yield Fund, Inc. and Prudential Jennison MLP Income Fund, Inc.; formerly Assistant Director (March 2010-August 2014) of the Asset AllocationManagement Unit, Division of Enforcement, U.S. Securities & Exchange Commission; Assistant Regional Director (January 2010-August 2014), Branch Chief (June 2006-December 2009) and Senior Counsel (April 2003-May 2006) of the Miami Regional Office, Division of Enforcement, U.S. Securities & Exchange Commission.
Deborah A. Docs* (56) | Secretary | Since 2005 (a)
Principal Occupation(s) During Past 5 Years: Vice President and Corporate Counsel (since January 2001) of Prudential; Vice President (since December 1996) and Assistant Secretary (since March 1999) of Prudential Investments LLC; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc.
Jonathan D. Shain* (56) | Assistant Secretary | Since 2005
Principal Occupation(s) During Past 5 Years: Vice President and Corporate Counsel (since August 1998) of Prudential; Vice President and Assistant Secretary (since May 2001) of Prudential Investments LLC; Vice President and Assistant Secretary (since February 2001) of Prudential Mutual Fund Services LLC; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc.
Claudia DiGiacomo* (39) | Assistant Secretary | Since 2005
Principal Occupation(s) During Past 5 Years: Vice President and Corporate Counsel (since January 2005) of Prudential; Vice President and Assistant Secretary of Prudential Investments LLC (since December 2005); Associate at Sidley Austin Brown & Wood LLP (1999-2004).
C-1
Andrew R. French* (51) | Assistant Secretary | Since 2006
Principal Occupation(s) During Past 5 Years: Vice President and Corporate Counsel (since February 2010) of Prudential; formerly Director and Corporate Counsel (2006-2010) of Prudential; Vice President and Assistant Secretary (since January 2007) of Prudential Investments LLC; Vice President and Assistant Secretary (since January 2007) of Prudential Mutual Fund Services LLC.
Amanda S. Ryan (36) | Assistant Secretary | Since 2012
Principal Occupation(s) During Past 5 Years: Director and Corporate Counsel (since March 2012) of Prudential; Director and Assistant Secretary (since June 2012) of Prudential Investments LLC; Associate at Ropes & Gray LLP (2008-2012).
M. Sadiq Peshimam* (50) | Treasurer and Principal Financial & Accounting Officer | Since 2006
Principal Occupation(s) During Past 5 Years: Assistant Treasurer of funds in the Prudential Mutual Fund Complex (2006-2014); Vice President (since 2005) of Prudential Investments LLC.
Peter Parrella* (55) | Assistant Treasurer | Since 2007
Principal Occupation(s) During Past 5 Years: Vice President (since 2007) and Director (2004-2007) within Prudential Mutual Fund Administration; formerly Tax Manager at SSB Citi Fund Management LLC (1997-2004).
Lana Lomuti* (46) | Assistant Treasurer | Since 2014
Principal Occupation(s) During Past 5 Years: Vice President (since 2007) and Director (2005-2007), within Prudential Mutual Fund Administration; formerly Assistant Treasurer (December 2007-February 2014) of The Greater China Fund, Inc.
Linda McMullin* (52) | Assistant Treasurer | Since 2014
Principal Occupation(s) During Past 5 Years: Vice President (since 2011) and Director (2008-2011) within Prudential Mutual Fund Administration.
Theresa C. Thompson* (52) | Deputy Chief Compliance Officer | Since 2008
Principal Occupation(s) During Past 5 Years: Vice President, Compliance, Prudential Investments LLC (since April 2004); and Director, Compliance, Prudential Investments LLC (2001-2004).
Richard W. Kinville* (45) | Anti-Money Laundering Compliance Officer | Since 2011
Principal Occupation(s) During Past 5 Years: Vice President, Corporate Compliance, Anti-Money Laundering Unit (since January 2005) of Prudential; committee member of the American Council of Life Insurers Anti-Money Laundering and Critical Infrastructure Committee (since January 2007); formerly Investigator and Supervisor in the Special Investigations Unit for the New York Central Mutual Fire Insurance Company (August 1994-January 1999); Investigator in AXA Financial’s Internal Audit Department and Manager in AXA’s Anti-Money Laundering Office (January 1999-January 2005); first chair of the American Council of Life Insurers Anti-Money Laundering and Critical Infrastructure Committee (June 2007-December 2009).
C-2
| * | The address for each officer is c/o Prudential Investments LLC, 100 Mulberry Street, Gateway Center Three, Newark, New Jersey 07102. |
| 1 | Excludes Messrs. Parker and Benjamin, interested Board Members who serve as President and Vice President, respectively. Biographical and other information with respect to Messrs. Parker and Benjamin appears in Proposal No. 1. |
| (a) | Ms. Docs has served as Secretary since 2005 for all of the Prudential retail mutual funds, with the following exceptions: PIP 6 since 1998; Global Total Return since 2003; PIP 14 since 1996; PIP 15 since 1996; PIP 4 since 1996; National Muni since 1996; Short-Term Corporate Bond since 1996; PIP 17 since 1996; PIP 3 since 2004; PIP since 2004; PIP 5 since 2003; Target since 2004; PIP 16 since 2004. |
C-3
AUDIT COMMITTEE CHARTER
| I. | Qualifications for Membership on the Audit Committee |
The Audit Committee of each Prudential Retail Mutual Fund (each, a “Fund”) shall consist of a minimum of three Directors of the Fund, appointed by the Board of Directors of the Fund:
(a) no member shall be an “interested person” of the Fund, as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940 (1940 Act) and each member shall meet any applicable independence requirements of any national securities exchange or market quotation system on which Fund shares are or become listed or quoted;
(b) no member shall accept directly or indirectly any consulting, advisory, or other compensatory fee from the Fund (other than in his or her capacity as a member of the Board of Directors or any committee thereof);
(c) at the time of his or her appointment to the Audit Committee, each member shall be financially literate as such qualification is interpreted by the Board of Directors in its business judgment, or must become financially literate within a reasonable period of time after his or her appointment to the Audit Committee; and
(d) at least one member must have accounting or related financial management expertise as the Board of Directors interprets such qualification in its business judgment.
The Board of Directors shall determine (i) annually if simultaneous service on the audit committees of more than three public companies by a member of the Audit Committee would not impair the ability of such member to effectively serve on the Audit Committee and (ii) biennially whether any member of the Audit Committee is an “audit committee financial expert,” as defined in Item 3 of Form N-CSR.
| II. | Purposes of the Audit Committee |
The purposes of the Audit Committee are:
(a)to oversee the accounting and financial reporting processes of the Fund and its internal control over financial reporting;
(b)to oversee the integrity of the Fund’s financial statements and the independent audit thereof;
(c)to oversee, or as appropriate, assist Board oversight of, the Fund’s compliance with legal and regulatory requirements that relate to the Fund’s accounting and financial reporting, internal control over financial reporting and independent audits;
(d)to approve the engagement of the Fund’s independent registered public accounting firm (“independent accountants”) and, in connection therewith and on an ongoing basis, to review and evaluate the qualifications, independence and performance of the Fund’s independent accountants;
D-1
(e)to prepare an Audit Committee report as required by rules promulgated by the Securities and Exchange Commission to be included in a Fund proxy statement; and
(f)to act as a liaison between the Fund’s independent accountants and the full Board.
| III. | Role and Responsibilities of the Audit Committee |
The function of the Audit Committee is oversight; it is management’s responsibility to maintain appropriate systems for accounting and internal control over financial reporting, and the independent accountants’ responsibility to plan and carry out a proper audit. Specifically, Fund management is responsible for: (1) preparation, presentation and integrity of the Fund’s financial statements; (2) maintenance of appropriate accounting and financial reporting principles and policies; (3) maintenance of internal control over financial reporting and other procedures designed to assure compliance with accounting standards and related laws and regulations; and (4) maintenance of procedures for the reporting to the Audit Committee of material findings by the internal audit department of Prudential Financial, Inc. relating to the operations of the Fund and/or its advisers or service providers. The independent accountants are responsible for planning and carrying out an audit consistent with applicable legal and professional standards and terms of their engagement letter. The independent accountants are accountable to the Board of Directors and the Audit Committee, as representatives of the shareholders. The Audit Committee and the Board of Directors have the ultimate authority and responsibility to retain and terminate the Fund’s independent accountants (subject, if applicable, to shareholder ratification). Nothing in this Charter shall be construed to reduce the responsibilities or liabilities of the Fund’s service providers, including the independent accountants.
The review of a Fund’s financial statements by the Audit Committee is not an audit, nor does the Committee’s review substitute for the responsibilities of the Fund’s management for preparing, or the independent accountants for auditing, the financial statements. In fulfilling their responsibilities hereunder, it is recognized that members of the Audit Committee are not full-time employees of the Fund or management and, in serving on this Committee, are not, and do not hold themselves out to be, acting as accountants or auditors. As such, it is not the responsibility of the Committee or its members to conduct audits, to determine that the financial statements are complete and accurate and are in accordance with generally accepted accounting principles, to conduct “field work” or other types of auditing or accounting reviews or procedures.
In discharging their duties, the members of the Audit Committee are entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by: (1) one or more officers of the Fund whom the Director reasonably believes to be reliable and competent in the matters presented; (2) legal counsel, public accountants, or other persons as to matters the Director reasonably believes are within the person’s professional or expert competence; (3) a Board committee of which the Director is not a member; and (4) representations made by management as to any information technology, internal audit and other non-audit services provided by the independent accountants to the Fund. “Management” means the Fund’s investment adviser or administrator, acting through its officers and employees, not the Fund’s officers as such.
D-2
| IV. | Duties and Powers of the Audit Committee |
To carry out its purposes, the Audit Committee shall have the following duties and powers:
(a) to select or retain independent accountants to annually audit and provide their opinion on the Fund’s financial statements, and recommend to those Board members who are not “interested persons” (as that term is defined in Section 2(a)(19) of the 1940 Act) to ratify the selection or retention;
(b) to terminate, as appropriate, the independent accountants;
(c) to monitor the independence and capabilities of the independent accountants;
(d) to review and approve the independent accountants’ compensation and the proposed terms of their engagement, including the fees proposed to be charged to the Fund by the independent accountants for each audit and non-audit service;
(e) to approve prior to appointment, the engagement of the independent accountant or any other independent accounting firms to provide other audit services to the Fund or to provide permissible non-audit services to the Fund, its investment adviser (which throughout this Charter includes the Fund’s subadviser(s), if any), administrator or any entity controlling, controlled by, or under common control with the investment adviser or the administrator (adviser/administrator affiliate) that provides ongoing services to the Fund, if the engagement relates directly to the operations or financial reporting of the Fund and as otherwise required by law;
(f) to discuss with management the independent accountants’ proposals for implementing the rotation of the lead audit partner, the concurring partner and any other active audit engagement team partner and to consider periodically whether to rotate the audit firm itself;
(g) to establish, to the extent deemed appropriate by the Audit Committee, policies and procedures for pre-approval of the engagement of the Fund’s independent accountants to provide any of the services described in the paragraph immediately above;
(h) to consider the controls applied by the independent accountants and any measures taken by management in an effort to assure that all items requiring pre-approval by the Audit Committee are identified and referred to the Committee in a timely fashion;
(i) to consider whether the non-audit services provided by the Fund’s independent accountants to the Fund, the Fund’s investment adviser, administrator or any adviser/administrator affiliate that provides ongoing services to the Fund, are compatible with maintaining the independent accountants’ independence;
(j) to recommend to the Board of Directors the appointment of the Fund’s principal accounting officer and principal financial officer;
(k) to review with the independent accountants the arrangements for and scope of the annual audit and any special audits; the personnel, staffing, qualifications and experience of the independent accountants, including any specialized knowledge or skill needed to perform the audits; any significant changes to the planned audit strategy or identified risks; and any significant issues that the independent accountants discussed with management in connection with their appointment or retention;
D-3
(l) to oversee the work of the Fund’s independent accountants by reviewing, with the independent accountants, (i) the arrangements for, the scope of, and the results of, the audit of annual financial statements, including any significant changes to the planned audit strategy or identified risks; and (ii) the Fund’s accounting and financial reporting policies and practices, its internal controls and, as appropriate, the internal controls of key service providers;
(m) to review and discuss the Fund’s annual audited financial statements, and, to the extent required by applicable law or regulations, the Fund’s semi-annual financial statements, with Fund management and the Fund’s independent accountants, including the significant assumptions underlying highly subjective estimates and any accounting adjustments arising from the audit that were noted or proposed by the independent accountants but were not implemented (as immaterial or otherwise); reviewing the Fund’s specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” to review the independent accountants’ opinion on the Fund’s financial statements; and to review any matters relating to the other information in documents containing the audited financial statements of the Fund;
(n) to review with the independent accountants all matters required to be communicated to the Audit Committee by the independent accountants including, but not limited to: (a) the results of the most recent inspection of the independent accountants by the Public Company Accounting Oversight Board (“PCAOB”), including the independent accountants’ response to any identified accounting deficiencies; (b) the extent to which the independent accountants intend to use the internal auditors of the Funds Strategic Partners Conservative Growthor Management in the audit; (c) any complaints or concerns regarding accounting or auditing matters that have come to the attention of the independent accountants; (d) the detection of fraud or illegal acts; (e) any violations or possible violations of laws or regulations; (f) any significant issues or other contentious matters for which the independent accountants have consulted outside the engagement team; (g) any disagreements or difficulties with management; (h) any significant transactions that are outside the ordinary course of business or otherwise appear to be unusual; (i) any significant accounting policies in controversial areas or areas for which there is a lack of authoritative guidance or diversity in practice; (j) any consultations by management with other accountants, information about other accounting firms or other persons performing audit procedures, and the basis upon which the independent accountants can serve as principal auditor if significant parts of the audit will be performed by other auditors; and (k) any other matters required to be discussed pursuant to all applicable PCAOB or other applicable standards or other matters arising out of the audit that are significant to the oversight of the Fund’s financial reporting process;
(o)[Exchange-listed closed-end funds only] to review major issues regarding accounting principles and financial statement presentations, including any significant changes in the Fund’s selection or application of accounting principles, and major issues as to the adequacy of the Fund’s internal controls and any special audit steps adopted in light of material control deficiencies;
(p) to review, as appropriate and in consultation with management of the Fund Strategic Partners Moderate Growthand/or the independent accountants, reports or other communications submitted by the independent accountants and/or management, whether voluntary or mandated by
D-4
law, including those relating to Fund Strategic Partners High Growthaccounting and financial reporting policies, procedures and internal controls over financial reporting (including the Fund’s critical accounting policies and practices and any judgments made in connection with the preparation of the financial statements), any matters of concern relating to the Fund’s financial statements ([Exchange-listed closed-end funds only] including the effects of alternative generally accepted accounting principles (“GAAP”) methods on financial statements and any adjustments to such statements recommended by the independent accountants), any material problems or difficulties in conducting the audit or reaching an unqualified opinion on the financial statements, any significant disagreements with management and, to the extent the Audit Committee deems necessary or appropriate, any matters to promote improvements in the quality of the Fund’s accounting and financial reporting, as well as any management responses to comments relating to those policies, procedures, controls and other issues;
(q) to review with the Fund’s principal executive officer and/or principal financial officer in connection with required certifications on Form N-CSR any significant deficiencies in the design or operation of internal controls over financial reporting or material weaknesses therein and any reported evidence of fraud involving management or other employees or employees of the investment adviser who have a significant role in the Fund’s internal control over financial reporting;
(r) to consider, in consultation with the independent accountants and management, the adequacy of the Fund’s accounting and financial reporting policies and practices, and their internal controls and procedures for financial reporting;
(s) to establish procedures for (i) the receipt, retention and treatment of complaints received by the Fund Strategic
Partners Opportunityrelating to accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by employees of the Fund and by employees of the Fund’s investment adviser, administrator, principal underwriter, and any other provider of accounting related services for the Fund of concerns about accounting or auditing matters;
(t) to address reports from attorneys (in accordance with any attorney conduct procedures adopted by the Fund or its investment adviser from time to time) or independent accountants of possible violations of federal or state law or fiduciary duty;
(u)[Exchange-listed closed-end funds only] to review the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Fund;
(v) to review, periodically, reports to the Audit Committee regarding findings by the internal audit department of Prudential Financial, Inc. relating to the operations of the Fund and/or its advisers or service providers;
(w) to investigate, or initiate an investigation, when the Committee deems it necessary, of reports (which may be submitted confidentially and anonymously) of potential improprieties or improprieties in connection with the Fund’s accounting or financial reporting Fund operations;
(x) to meet periodically with management of the Fund (outside the presence of the independent accountants) and with the independent accountants of the Fund (outside
D-5
the presence of Fund management) to discuss any issues relating to the Fund’s audited financial statements or otherwise arising from the Committee’s functions;
(y) to resolve disagreements between management and the independent accountants regarding financial reporting or in Fund operations;
(z)[Exchange-listed closed-end Funds Strategic Partners Focused Growthonly] to discuss, as appropriate, the Fund’s earnings press releases (including the type and presentation of information to be included therein, paying particular attention to any use of “pro forma,” or “adjusted non-GAAP, information), as well as financial information and earnings guidance provided to analysts and rating agencies, if any;
(aa) at least annually, to obtain and review a report by the Fund’s independent accountants describing: (i) such independent accountants’ internal quality-control procedures; (ii) any material issues raised by the most recent internal quality-control review, or peer review, of such independent accountants, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by such independent accountants, and any steps taken to deal with any such issues; and (iii) to assess the independence of the Fund’s independent accountants, all relationships between the Fund’s independent accountants and the Fund, Strategic Partners New Era Growththe Fund’s investment adviser, administrator and affiliates thereof;
(bb) to establish hiring policies and procedures for the Fund, Strategic Partners Focused Valueits investment adviser or administrator relating to the hiring of employees or former employees of the Fund’s independent accountants;
(cc)[Exchange-listed closed-end Funds only] to provide assistance to the Fund, Strategic Partners Mid-Cap Valueif appropriate, in preparing any written affirmation or written certification required to be filed with any market quotation system or stock exchange on which Fund Strategic Partners Style Specificshares are or become quoted or listed;
(dd)to report the Committee’s activities and conclusions on a regular basis to the Board of Directors ([Exchange-listed closed-end funds only] including reviewing any issues that arise with respect to the quality or integrity of the Fund’s financial statements, its compliance with legal or regulatory requirements and the performance and independence of the independent accountants)and to make such recommendations as the Committee deems necessary or appropriate;
(ee)[Exchange-listed closed-end funds only] to evaluate the qualifications, independence and performance of the Fund’s independent accountants, including the lead partner of the independent auditor, in light of the opinions of management and internal auditors;
(ff)to annually review the adequacy of, and, as appropriate, implement changes to, its Charter;
(gg)to evaluate annually the performance of the Audit Committee;
(hh)[Exchange-listed closed-end funds only] to discuss with management the Fund’s major financial risk exposures and the steps management has taken (including the guidelines and processes) to monitor and control such exposures, including the Fund’s risk assessment and risk management policies;
D-6
(ii)[Exchange-listed closed-end funds only] to make the statement required by the rules of the Securities and Exchange Commission to be included in the Fund’s annual proxy statement, if any, and determine to its satisfaction that the Audit Committee has: (i) reviewed and discussed the audited financial statements with management; (ii) discussed with the independent accountants the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T; (iii) received the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence; and (iv) made a recommendation to the Board of Directors as to whether the financial statements should be included in the Fund’s annual report for the past fiscal year, for filing with the Securities and Exchange Commission; and
(jj)to perform such other functions and to have such powers as may be necessary or appropriate in the efficient and lawful discharge of the powers provided in this Charter.
To the extent permitted by a Fund’s Articles of Incorporation/Declaration of Trust and bylaws, the Audit Committee may delegate any portion of its authority, including the authority to grant pre-approvals of audit and permitted non-audit services, to a subcommittee of one or more members in accordance with pre-approval policies and procedures developed by the Committee. Any decisions of the subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next regularly scheduled meeting. Pre-approval of the audit required by the Securities and Exchange Act of 1934 may not be delegated.
The Audit Committee shall have the resources and authority appropriate to discharge its responsibilities, including appropriate funding, as determined by the Committee, for payment of compensation to the Fund’s independent accountants or any other accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit review or attest services for the Fund, the authority to retain and compensate independent counsel and other advisers as the Committee deems necessary, and the appropriate resources, as the Committee deems necessary, to pay for ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties.
| V. | Meetings of the Audit Committee |
The Audit Committee shall regularly meet, in separate executive sessions, with representatives of Fund management and the Fund’s independent accountants. The Committee may also request to meet with internal legal counsel and compliance personnel of the Fund’s investment adviser or administrator and with entities that provide significant accounting or administrative services to the Fund to discuss matters relating to the Fund’s accounting and compliance as well as other Fund-related matters.
D-7
BOARD & COMMITTEE MEETINGS1
HELD DURING LAST FISCAL YEAR
Company | Board Meetings | Audit Committee Meetings | Nominating & Governance Committee Meetings | Investment Committee Meetings | ||||
PIP | 6 | 4 | 5 | 4 | ||||
PIP 2 | 8 | 4 | 5 | 4 | ||||
PIP 3 | 8 | 4 | 4 | 4 | ||||
PIP 4 | 6 | 4 | 5 | 4 | ||||
PIP 5 | 5 | 4 | 5 | 4 | ||||
PIP 6 | 5 | 4 | 5 | 4 | ||||
PIP 7 | 5 | 4 | 5 | 4 | ||||
PIP 8 | 6 | 4 | 5 | 4 | ||||
PIP 9 | 6 | 4 | 5 | 4 | ||||
PIP 10 | 6 | 4 | 5 | 4 | ||||
PIP 12 | 8 | 4 | 4 | 4 | ||||
PIP 14 | 8 | 4 | 5 | 4 | ||||
PIP 15 | 5 | 4 | 5 | 4 | ||||
PIP 16 | 6 | 4 | 5 | 4 | ||||
PIP 17 | 6 | 4 | 5 | 4 | ||||
PIP 18 | 6 | 4 | 5 | 4 | ||||
MoneyMart | 5 | 4 | 5 | 4 | ||||
National Muni | 5 | 4 | 5 | 4 | ||||
Blend | 5 | 4 | 5 | 4 | ||||
Mid-Cap Growth | 5 | 4 | 5 | 4 | ||||
Small Company | 6 | 4 | 5 | 4 | ||||
World Fund | 6 | 4 | 5 | 4 | ||||
Natural Resources | 6 | 4 | 5 | 4 | ||||
Global Total Return | 6 | 4 | 5 | 4 | ||||
Sector | 6 | 4 | 5 | 4 | ||||
Short-Term Corporate Bond | 6 | 4 | 5 | 4 | ||||
Target | 6 | 4 | 5 | 4 |
| 1 | During the most recent fiscal year for each Company, no incumbent Board Member attended fewer than 75 percent of the total number of Board and Committee meetings held during the fiscal year. |
E-1
NOMINATING & GOVERNANCE COMMITTEE CHARTER
The responsibilities of the Nominating and Governance Committee of each Fund include:
| • | Reporting biennially to the Board on whether the Audit Committee has at least one Audit Committee Financial Expert.1 |
| 1 | Audit Committee financial experts were last designated in April 2013. The Governance Committee will review this designation every year ending in an odd number. |
F-1
or more Funds in the cluster that are equal to the aggregate fees for one year that he or she receives for Board-related service to the Funds. Under ordinary circumstances, new Independent Directors will have two years to comply with this policy. |
F-2
– annual Director fees;
– supplemental compensation for Committee service;
– supplemental compensation for serving as a Committee Chair;
– Board or Committee meeting attendance fees;
– daily Director service fees or per diem amounts, as contemplated by the Board Compensation Policy; and
– expense reimbursement.
Process for Review of Operating Company Board Service
From time to time, an Independent Director or Non-Management Director may be asked to serve on an operating company Board. Subject to confidentiality considerations, such Director is encouraged to notify the Chair of the Committee and Independent Directors’ counsel as promptly as possible. The Target Portfolio Trust
Large Capitalization Growth Portfolio
Large Capitalization Value Portfolio
Small Capitalization Growth Portfolio
Small Capitalization Value Portfolio
International Equity Portfolio
International Bond Portfolio
Total Return Bond Portfolio
Intermediate-Term Bond Portfolio
Mortgage Backed Securities Portfolio
U.S. Government Money Market Portfolio
May Committee Chair will work with counsel to coordinate appropriate communications with management, the Board Chair and the Committee. At the conclusion of this process (and during the process, as appropriate), 2003
It is important that you execute and return ALL of your proxies promptly.
53
[ ] FUND
the Committee Chair will communicate with the Director.
F-3
PRUDENTIAL INVESTMENTS FUNDS
TARGET FUNDS
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NJNEW JERSEY 07102
PROXY CARD
SPECIAL JOINT MEETING OF SHAREHOLDERS JULY 17, 2003, 11:(MEETING)
NOVEMBER 26, 2014, 10:00 A.M.
THIS PROXY IS SOLICITED ON BEHALF OF TRUSTEES.THE BOARDS OF TRUSTEES/DIRECTORS OF THE PRUDENTIAL INVESTMENTS FUNDS AND TARGET FUNDS LISTED IN THE ACCOMPANYING PROXY STATEMENT (EACH A “FUND” AND TOGETHER, THE “FUNDS”). The undersigned hereby appoints Grace C. Torres, Marguerite E.H. Morrison and Jonathan D. Shain, Claudia DiGiacomo 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 on the reverse side, all of the shares of common stock or beneficial interest, as the case may be, of the Fund held of record by the undersigned on May 16, 2003September 12, 2014, at the Meeting to be held on July 17, 2003November 26, 2014 or any adjournment thereof.
THE SHARES REPRESENTED BY THETHIS 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 THE NOMINEES AND FOR PROPOSALS 2 3, 4, AND 53 IF YOU DO NOT SPECIFY OTHERWISE,OTHERWISE. PLEASE REFER TO THE PROXY STATEMENT DATED _____________OCTOBER 1, 2014 FOR DISCUSSION OF THE PROPOSALS. THE PROXY STATEMENT IS AVAILABLE ON THE FUNDS’ WEBSITE ATWWW.PRUDENTIALFUNDS.COM/FUNDCHANGES.
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. If you simply sign and date the proxy card but give no voting instructions, your shares will be voted in favor of the Proposals and in accordance with the views of management upon any unexpected matters that come before the Meeting or adjournment of the Meeting.
PRUDENTIAL INVESTMENTS LLC
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NJ 07102-4077
TO VOTE BY TELEPHONE
1) Read the Proxy Statement and have the proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions.
TO VOTE BY INTERNET
1) Read the Proxy Statement and have the proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions.
TO VOTE BY MAIL
1) Read the Proxy Statement.
2) Check the appropriate boxes on the proxy card below.
3) Sign and date the proxy card.
4) Return the proxy card in the envelope provided.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
FUND NAME HERE
THE BOARD OF TRUSTEES/DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES AND EACH OF THE PROPOSALS.
VOTE ON TRUSTEES.
1) PROPOSALS
Proposal No. 1
To elect ten Trustees.
twelve Trustees/Directors.
Nominees:
01) David E. A. Carson, Ellen S. Alberding
02) Robert E. La Blanc, Kevin J. Bannon
03) Douglas H.
McCorkindale, Linda W. Bynoe
04) Keith F. Hartstein
05) Michael S. Hyland
06) Stephen P. Munn 05)
07) James E. Quinn
08) Richard A. Redeker 06) Robin B. Smith,
07)
09) Stephen G. Stoneburn 08) Clay T.
Whitehead, 09) Judy A. Rice,
10) Robert
F. Gunia
Grace C. Torres
11) Stuart S. Parker
12) Scott E. Benjamin
| FOR ALL | WITHHOLD ALL | FOR ALL EXCEPT | TO WITHHOLD AUTHORITY TO VOTE, MARK “FOR ALL NUMBER ON THE LINE BELOW. | |||||
| / / | / / | / / |
Proposal No. 2
To approve a policy to permit PI to enter into, or make material changes to, subadvisory agreements with subadvisers that are wholly-owned subsidiaries of Prudential Investments LLC or a sister company without shareholder approval.
FOR | AGAINST | ABSTAIN | ||||
| ¨ | ¨ | ¨ | ||||
Proposal No. 3
To approve a proposal to designate the Fund’s investment objective as a non-fundamental policy of the Fund.
FOR | AGAINST | ABSTAIN | ||||
| ¨ | ¨ | ¨ | ||||
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 full partnership name by authorized person.
- --------------------------------- ----------
SIGNATURE (PLEASE SIGN WITHIN BOX) DATE
- --------------------------------- ----------
SIGNATURE (JOINT OWNERS) DATE
INDEX TO EXHIBITS TO PROXY STATEMENT
Exhibit A Five Percent Shareholder Report
Exhibit B Board and Committee Information
Exhibit C Officer Information
Exhibit D Form of Amended Management Agreement
54
EXHIBIT A
FIVE PERCENT SHAREHOLDER REPORT
As of May 16, 2003, the beneficial owners, directly or indirectly, of more
than 5% of any class of the outstanding shares of the Funds are listed below.
FUND REGISTRATION SHARES/CLASS PERCENT
- ---- ------------------------------------ --------------- --------
Asset Allocation
Conservative Growth Fund................
Moderate Growth Fund....................
High Growth Fund........................
Opportunity Funds
Focused Growth Fund.....................
New Era Growth Fund.....................
Focused Value Fund......................
Market Opportunity Fund.................
Mid-Cap Value Fund......................
Style Specific
Large Cap Growth Fund...................
Large Cap Value Fund....................
Small Cap Growth Fund...................
Small Cap Value Fund....................
International Equity Fund...............
Total Return Bond Fund..................
Target
Target Large Cap Growth.................
Target Large Cap Value..................
Target Small Cap Growth.................
Target Small Cap Value..................
Target International Equity.............
Target International Bond...............
Target Total Return Bond................
Target Intermediate Bond................
Target Mortgage.........................
Target U.S. Government..................
A-1
EXHIBIT B
BOARD AND COMMITTEE INFORMATION(1)
ASSET OPPORTUNITY STYLE
ANNUAL FEE(2) ALLOCATION FUNDS SPECIFIC TARGET
- ------------- ---------- ----------- -------- ------
Fee for Attendance at Board Meetings(2)...... N/A N/A N/A N/A
Fee for Attendance at Committee
Meetings(2)................................ N/A N/A N/A N/A
Number of Board Meetings during the Last
Fiscal Year................................ 4 4 4 4
Number of Audit Committee Meetings during the
Last Fiscal Year*.......................... 4 4 4 4
Number of Nominating Committee Meetings
during the Last Fiscal Year*............... -- -- -- --
Size of Current Board........................ 9 9 9 9
* Only Independent Trustees serve on a Fund's Audit
Please be sure to sign and Nominating Committees.
(1) No fund within the Fund Complex has a bonus, pension, profit sharing or
retirement plan.
(2) While Board and Committee members do not receive attendance fees, they do
receive compensation for Board and Committee membership. See pages 10-11 ofdate this proxy statement. No incumbent Trustee attended fewer than 75% of the
total number of Board and Committee meetings during the last fiscal year of
each Trust.
B-1
EXHIBIT C
OFFICER INFORMATION
Proxy.
SIGNATURE (PLEASE SIGN WITHIN BOX) | DATE | |||||||
SIGNATURE (JOINT OWNERS) | DATE | |||||||