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Prudential Mutual Funds
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Prudential Diversified Funds
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED OCTOBER 13, 1999
Investment Restrictions
The section entitled 'Investment Restrictions' is amended to read in its
entirety as follows:
The following restrictions are fundamental policies. Fundamental policies are
those which cannot be changed without the approval of the holders of a majority
of a Fund's outstanding voting securities. The term 'majority of the outstanding
voting securities' of either the Trust or a particular Fund means, with respect
to the approval of an investment advisory agreement, a distribution plan or a
change in a fundamental investment policy, the vote of the lesser of (i) 67% or
more of the shares of the Trust or such Fund present at a meeting, if the
holders of more than 50% of the outstanding shares of the Trust or such Fund are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
of the Trust or such Fund.
Each 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 such statute,
rules and regulations are amended from time to time or are interpreted
from time to time by the SEC staff (collectively, the '1940 Act Laws
and Interpretations') or to the extent that the Fund may be permitted
to do so by exemptive order or similar relief (collectively, with the
1940 Act Laws and Interpretations, the '1940 Act Laws, Interpretations
and Exemptions'). Each Fund is a 'diversified company' as defined in
the 1940 Act.
(2) Issue senior securities or borrow money or pledge its assets, except
as permitted by the 1940 Act Laws, Interpretations and Exemptions.
MF186C1 (12/10/99)
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(3) Buy or sell real estate, except that investments in securities of
issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and
except that the Fund may exercise rights under agreements relating to
such securities, including the right to enforce security interests and
to hold real estate acquired by reason of such enforcement until that
real estate can be liquidated in an orderly manner.
(4) Make loans, except through loans of assets of the Fund or through
repurchase agreements, provided that for purposes of this limitation,
the acquisition of bonds, debentures, other debt securities or
instruments, or participations or other interests therein and
investments in government obligations, commercial paper, certificates
of deposit, bankers' acceptances or similar instruments will not be
considered the making of a loan.
(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. Each Fund may
purchase restricted securities without limit.
The foregoing restrictions are fundamental policies that may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
Whenever any fundamental investment policy or investment restriction states a
maximum percentage of a 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 or net asset values will not be
considered a violation of such policy. However, in the event that any Fund's
asset coverage for borrowings falls below 300%, the Fund will take prompt action
to reduce its borrowings, as required by applicable law.
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The Funds are also subject to the following non-fundamental restrictions.
Non-fundamental restrictions may be changed without shareholder approval, in
compliance with applicable law and regulatory policy.
(1) Each Fund may not purchase rights if as a result the Fund would then
have more than 5% of its assets (determined at the time of investment)
invested in rights.
(2) Each Fund may not purchase securities on margin, provided that the
Fund may obtain short-term credits as may be necessary for the
clearance of purchases and sales of securities, and further provided
that the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative
instruments.
(3) Each Fund may not mortgage, pledge, or hypothecate any of its assets,
provided that this shall not apply to the transfer of securities in
connection with any permissible borrowing or to collateral
arrangements in connection with permissible activities.
Management of the Trust
The table identifying the Trustees and officers of the Trust in the section
entitled 'Management of the Trust' is revised to read in its entirety as
follows:
<TABLE>
<CAPTION>
Name, Address(D) Position(s) Held Principal Occupations
and Age with the Trust During Past Five Years
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<S> <C> <C>
Eugene C. Dorsey (72) Trustee Retired President, Chief
Executive Officer and Trustee
of the Gannett Foundation
(now Freedom Forum); former
Publisher of four Gannett
Newspapers and Vice President
of Gannett Co., Inc.; past
Chairman, Independent Sector,
Washington, D.C. (largest
national coalition of
philanthropic organizations);
former Chairman of the
American Council for the
Arts; Director of the
Advisory Board of Chase
Manhattan Bank of Rochester,
First Financial
</TABLE>
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<TABLE>
<CAPTION>
Name, Address(D) Position(s) Held Principal Occupations
and Age with the Trust During Past Five Years
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<S> <C> <C>
Fund, Inc., The High Yield
Plus Fund, Inc., Global
Utility Fund, Inc. and The
High Yield Income Fund, Inc.;
Trustee of The Target
Portfolio Trust, Target Funds
and Prudential Diversified
Funds.
*Robert F. Gunia (52) Trustee Chief Administrative Officer
(since June 1999) of
Prudential Investments; Vice
President (since September
1997) of The Prudential
Insurance Company of America
(Prudential); Executive Vice
President and Treasurer
(since December 1996) of
Prudential Investments Fund
Management LLC (PIFM); Senior
Vice President (since March
1987) of Prudential
Securities Incorporated
(Prudential Securities);
formerly Chief Administrative
Officer (July 1990-September
1996), Director (January
1989-September 1996) and
Executive Vice President,
Treasurer and Chief Financial
Officer (June 1987-September
1996) of Prudential Mutual
Fund Management, Inc.; Vice
President and Director of The
Asia Pacific Fund, Inc.
(since May 1989); Director of
The High Yield Income Fund,
Inc.; Director or Trustee of
45 funds within the
Prudential mutual funds.
Robert E. LaBlanc (65) Trustee President of Robert E.
LaBlanc Associates, Inc.
(telecommunications) since
1981; formerly General
Partner at Salomon Brothers;
formerly Vice Chairman of
Continental Telecom; Director
of Salient 3 Communications;
</TABLE>
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<TABLE>
<CAPTION>
Name, Address(D) Position(s) Held Principal Occupations
and Age with the Trust During Past Five Years
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<S> <C> <C>
Storage Technology
Corporation, Titan
Corporation,
TIE/Communications, Inc., The
Tribune Company, Chartered
Semiconductor Manufacturing,
Ltd., Prudential Europe
Growth Fund, Inc., Prudential
Global Genesis Fund, Inc.,
Prudential Institutional
Liquidity Portfolio, Inc.,
Prudential MoneyMart Assets,
Inc., Prudential Natural
Resources Fund, Inc.,
Prudential Pacific Growth
Fund, Inc., Prudential
Special Money Market Fund,
Inc., Prudential Tax-Free
Money Fund, Inc., Global
Utility Fund, Inc. and
Prudential World Fund, Inc.;
Trustee of Cash Accumulation
Trust, Command Government
Fund, Command Money Fund,
Command Tax-Free Fund,
Prudential Developing Markets
Fund, The Target Portfolio
Trust, Prudential Diversified
Funds, Target Funds and
Manhattan College.
Douglas H. McCorkindale Trustee President (since September
(60) 1997) and Vice Chairman
(since March 1984) of Gannett
Co., Inc.; Director of
Continental Airlines, Inc.,
Gannett Co., Inc., Frontier
Corporation, First Financial
Fund, Inc., Global Utility
Fund, Inc. and The High Yield
Plus Fund, Inc.; Trustee of
The Target Portfolio Trust,
Target Funds and Prudential
Diversified Funds.
Thomas T. Mooney (58) Trustee President of the Greater
Rochester Metro Chamber of
Commerce; former Rochester
City Manager; Trustee of
</TABLE>
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<TABLE>
<CAPTION>
Name, Address(D) Position(s) Held Principal Occupations
and Age with the Trust During Past Five Years
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<S> <C> <C>
Center for Governmental
Research Inc.; Director of
Blue Cross of Rochester, The
Business Council of New York
State, Executive Service
Corps of Rochester, Monroe
County Water Authority,
Rochester Jobs, Inc.,
Northeast-Midwest Institute,
Monroe County Industrial
Development Corporation and
The High Yield Income Fund,
Inc.; President, Director and
Treasurer of First Financial
Fund, Inc., Global Utility
Fund, Inc. and The High Yield
Plus Fund, Inc.; Trustee of
The Target Portfolio Trust,
Target Funds and Prudential
Diversified Funds.
*David R. Odenath, Jr. Trustee Officer in Charge, President,
(42) Chief Executive Officer and
Chief Operating Officer
(since June 1999), PIFM;
Senior Vice President (since
June 1999), Prudential;
Senior Vice President (August
1993-May 1999), PaineWebber
Group, Inc.; Director or
Trustee of 44 funds within
the Prudential mutual funds.
Stephen Stoneburn (56) Trustee President and Chief Executive
Officer, Quadrant Media Corp.
(publishing) (since June
1996); formerly Senior Vice
President and Managing
Director, Cowles Business
Media (January 1993-1995);
prior thereto, Senior Vice
President (January 1991-1992)
and Publishing Vice President
(May 1989-December 1990) of
Gralla Publications (a
division of United
Newspapers, U.K.); formerly
Senior Vice President of
Fairchild Publications, Inc.;
</TABLE>
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<TABLE>
<CAPTION>
Name, Address(D) Position(s) Held Principal Occupations
and Age with the Trust During Past Five Years
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<S> <C> <C>
Director of Prudential Europe
Growth Fund, Inc., Prudential
Global Genesis Fund, Inc.,
Prudential Institutional
Liquidity Portfolio, Inc.,
Prudential MoneyMart Assets,
Inc., Prudential Natural
Resources Fund, Inc.,
Prudential Pacific Growth
Fund, Inc., Prudential
Special Money Market Fund,
Inc.; Prudential Tax-Free
Money Fund, Inc., Global
Utility Fund, Inc. and
Prudential World Fund, Inc.;
Trustee of Cash Accumulation
Trust, Command Government
Fund, Command Money Fund,
Command Tax-Free Fund,
Prudential Developing Markets
Fund, The Target Portfolio
Trust, Prudential Diversified
Funds and Target Funds.
*John R. Strangfeld, Trustee and Chief Executive Officer,
Jr. (45) President Chairman, President and
Director of The Prudential
Investment Corporation (since
January 1990); Executive Vice
President of Prudential
Global Asset Management Group
of Prudential (since February
1998); Chairman of Pricoa
Capital Group (since August
1989); Chief Executive
Officer of Private Asset
Management Group of
Prudential (November
1994-December 1998);
President and Director or
Trustee of 45 funds within
the Prudential mutual funds.
Clay T. Whitehead (61) Trustee President of National
Exchange Inc. (new business
development firm) (since May
1983); Director or Trustee of
33 funds within the
Prudential mutual funds.
</TABLE>
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<TABLE>
<CAPTION>
Name, Address(D) Position(s) Held Principal Occupations
and Age with the Trust During Past Five Years
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<S> <C> <C>
David F. Connor (36) Secretary Assistant General Counsel
(since March 1998) of
Prudential Investment Fund
Management LLC (PIFM);
Associate Attorney, Drinker
Biddle & Reath LLP prior
thereto.
Grace C. Torres (40) Treasurer and First Vice President (since
Principal December 1996) of PIFM; First
Financial and Vice President (since March
Accounting 1994) of Prudential
Officer Securities; formerly First
Vice President (March
1994-September 1996) of
Prudential Mutual Fund
Management, Inc.
Stephen M. Ungerman Assistant Tax Director (since March
(46) Treasurer 1996) of Prudential
Investments and the Private
Asset Group of The Prudential
Insurance Company of America
(Prudential); formerly First
Vice President (February
1993-September 1996) and
Senior Tax Manager
(1981-January 1993) of Price
Waterhouse LLP.
</TABLE>
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* Indicates those Trustees that are 'interested persons' of the Trust as defined
in the 1940 Act.
(D) Unless otherwise indicated, the address of the Trustees and Officers is c/o
Prudential Investments Fund Management, LLC, Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102-4077.
The date of this Supplement is December 10, 1999.
