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Prudential Mutual Funds
Supplement dated August 1, 1995
The following information supplements the Statement of Additional
Information of each of the Funds listed below.
MANAGER
Prudential Mutual Fund Management, Inc. (PMF or the Manager), the Manager of
the Fund, is a subsidiary of Prudential Securities Incorporated and The
Prudential Insurance Company of America (Prudential). PMF has three wholly-owned
subsidiaries: Prudential Mutual Fund Distributors, Inc., Prudential Mutual Fund
Services, Inc. (PMFS or the Transfer Agent) and Prudential Mutual Fund
Investment Management, Inc. PMFS serves as the transfer agent for the Prudential
Mutual Funds and, in addition, provides customer service, record keeping and
management and administration services to qualified plans.
Prudential is one of the largest diversified financial services institutions
in the world and, based on total assets, the largest insurance company in North
America as of December 31, 1994. Its primary business is to offer a full range
of products and services in three areas: insurance, investments and home
ownership for individuals and families; health-care management and other benefit
programs for employees of companies and members of groups; and asset management
for institutional clients and their associates. Prudential (together with its
subsidiaries) employs nearly 100,000 persons worldwide, and maintains a sales
force of approximately 19,000 agents, 3,400 insurance brokers and 6,000
financial advisors. It insures or provides other financial services to more than
50 million people worldwide. Prudential is a major issuer of annuities,
including variable annuities. Prudential seeks to develop innovative products
and services to meet consumer needs in each of its business areas.
Investment advisory services are provided to the Fund by a unit of The
Prudential Investment Corporation (PIC or the Subadviser), a subsidiary of
Prudential.
From time to time, there may be media coverage of portfolio managers and
other investment professionals associated with the Manager and the Subadviser in
national and regional publications, on television and in other media.
Additionally, individual mutual fund portfolios are frequently cited in surveys
conducted by national and regional publications and media organizations such as
The Wall Street Journal, The New York Times, Barron's and USA Today.
SHAREHOLDER INVESTMENT ACCOUNT
Mutual Fund Programs
From time to time, the Fund (or a portfolio of the Fund, if applicable) may
be included in a mutual fund program with other Prudential Mutual Funds. Under
such a program, a group of portfolios will be selected and thereafter promoted
collectively. Typically, these programs are created with an investment theme,
e.g., to seek greater diversification, protection from interest rate movements
or access to different management styles. In the event such a program is
instituted, there may be a minimum investment requirement for the program as a
whole. The Fund may waive or reduce the minimum initial investment requirements
in connection with such a program.
The mutual funds in the program may be purchased individually or as a part
of the program. Since the allocation of portfolios included in the program may
not be appropriate for all investors, investors should consult their Prudential
Securities Financial Advisor or Prudential/Pruco Securities Representative
concerning the appropriate blend of portfolios for them. If investors elect to
purchase the individual mutual funds that constitute the program in an
investment ratio different from that offered by the program, the standard
minimum investment requirements for the individual mutual funds will apply.
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APPENDIX--GENERAL INVESTMENT INFORMATION
The following terms are used in mutual fund investing.
Asset Allocation
Asset allocation is a technique for reducing risk, providing balance. Asset
allocation among different types of securities within an overall investment
portfolio helps to reduce risk and to potentially provide stable returns, while
enabling investors to work toward their financial goal(s). Asset allocation is
also a strategy to gain exposure to better performing asset classes while
maintaining investment in other asset classes.
Diversification
Diversification is a time-honored technique for reducing risk, providing
``balance'' to an overall portfolio and potentially achieving more stable
returns. Owning a portfolio of securities mitigates the individual risks (and
returns) of any one security. Additionally, diversification among types of
securities reduces the risks and (general returns) of any one type of security.
Duration
Debt securities have varying levels of sensitivity to interest rates. As
interest rates fluctuate, the value of a bond (or a bond portfolio) will
increase or decrease. Longer term bonds are generally more sensitive to changes
in interest rates. When interest rates fall, bond prices generally rise.
Conversely, when interest rates rise, bond prices generally fall.
Duration is an approximation of the price sensitivity of a bond (or a bond
portfolio) to interest rate changes. It measures the weighted average maturity
of a bond's (or a bond portfolio's) cash flows, i.e., principal and interest
rate payments. Duration is expressed as a measure of time in years--the longer
the duration of a bond (or a bond portfolio), the greater the impact of interest
rate changes on the bond's (or the bond portfolio's) price. Duration differs
from effective maturity in that duration takes into account call provisions,
coupon rates and other factors. Duration measures interest rate risk only and
not other risks, such as credit risk and, in the case of non-U.S. dollar
denominated securities, currency risk. Effective maturity measures the final
maturity dates of a bond (or a bond portfolio).
Market Timing
Market timing--buying securities when prices are low and selling them when
prices are relatively higher--may not work for many investors because it is
impossible to predict with certainty how the price of a security will fluctuate.
However, owning a security for a long period of time may help investors offset
short-term price volatility and realize positive returns.
Power of Compounding
Over time, the compounding of returns can significantly impact investment
returns. Compounding is the effect of continuous investment on long-term
investment results, by which the proceeds of capital appreciation (and income
distributions, if elected) are reinvested to contribute to the overall growth of
assets. The long-term investment results of compounding may be greater than that
of an equivalent initial investment in which the proceeds of capital
appreciation and income distributions are taken in cash.
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APPENDIX--PORTFOLIO MANAGERS
The following information supplements only the Statement of Additional
Information of the captioned Fund.
Prudential Allocation Fund (Conservative Portfolio)
Prudential Multi-Sector Fund, Inc.
Gregory Goldberg, serves as the portfolio manager of Prudential Multi-Sector
Fund, Inc. and Prudential Allocation Fund (Conservative Portfolio). In making
equity investments, Mr. Goldberg generally focuses on stocks with a potential
for capital appreciation. He utilizes a ``bottom-up'' approach, selecting stocks
that, in his opinion, have strong fundamentals regardless of industry
performance. He evaluates a company's earnings and balance sheet to find
companies that, in his view, are leaders in their fields and have strong growth
potential. With respect to fixed-income securities, Mr. Goldberg generally
focuses on issues with a potential for total return, selecting securities that,
in his opinion, compare favorably in terms of price and yield relative to
maturity.
Prudential Equity Fund, Inc.
Thomas R. Jackson, has served as the portfolio manager of Prudential Equity
Fund, Inc. (the Fund) since 1990. He utilizes a ``value'' investing style in
managing the Fund. Value investing is a disciplined approach which attempts to
identify strong companies selling at a discount from their perceived true worth.
Mr. Jackson selects stocks for the Fund's portfolio at prices which in his view
are temporarily low relative to the company's earnings, assets, cash flow and
dividends. He may invest in out-of-favor companies as long as they meet his
strict criteria for value: financial soundness and low price relative to
earnings, book value and cash flow.
Prudential Equity Income Fund
Warren Spitz serves as the portfolio manager of Prudential Equity Income
Fund. He utilizes a ``value'' investing style in managing the Fund. Value
investing is a disciplined approach which attempts to identify strong companies
that are selling at a discount from their perceived true worth. Mr. Spitz seeks
to invest in companies that in his view have the potential to produce both
above-average earnings and dividend growth over the long term. These types of
companies are sometimes referred to as ``high dividend stocks.'' He seeks to
invest in securities at prices which in his view are temporarily low relative to
the company's earnings, assets, cash flow and dividends.
Prudential Global Fund, Inc.
Prudential Europe Growth Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Daniel J. Duane, serves as the portfolio manger of Prudential Global Fund,
Inc., Prudential Global Genesis Fund, Inc., Prudential Europe Growth Fund, Inc.,
and Prudential Pacific Growth Fund, Inc. Consistent with the investment
objectives and policies of each Fund, Mr. Duane evaluates the economic climate
in various countries and focuses on growth-oriented global equity investments.
He seeks to identify long-term themes and changing economic conditions that, in
his opinion, will lead to earnings growth. His portfolio management style can be
referred to as ``bottom up'' in that his primary focus is on individual stocks.
He evaluates historical business trends in the United States when looking for
long-term investment opportunities abroad (the ``rear view mirror'' analysis).
In globally-diversified portfolios, the portfolio manager generally maintains
exposure to major world stock markets. Under normal market conditions, the
portfolio manager seeks to keep the portfolios fully invested. Mr. Duane
consults with a team of regional equity analysts who provide research on
existing holdings of each Fund and on potential acquisitions.
Prudential Utility Fund, Inc.
According to data provided by Lipper Analytical Services, Inc., Prudential
Utility Fund, Inc. (the Fund) is among the oldest and largest U.S. mutual funds
in the utility category of mutual funds. David Kiefer, CFA, serves as the
portfolio manager of the Fund and seeks to invest in a broad range of utilities
companies including electric, gas, gas pipeline, telephone communications, water
and cable companies from around the world. Historically, the Fund invested in
traditional types of utility companies--principally, electric, gas and telephone
companies. The portfolio manager seeks to invest in companies that have the
potential for above-average earnings and dividend growth over the long term and
considers such factors as cash flow in selecting portfolio securities.
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APPENDIX--HISTORICAL PERFORMANCE DATA
The historical performance data contained in this Appendix relies on data
obtained from statistical services, reports and other services believed by the
Manager to be reliable. The information has not been independently verified by
the Manager.
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Listed below are the names of the Prudential Mutual Funds and the dates of
the Statements of Additional Information to which this supplement relates.
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Name of Fund Statement Date
Prudential Allocation Fund September 29, 1994
Strategy Portfolio
Conservatively Managed Portfolio
Prudential Equity Fund, Inc. February 28, 1995
Prudential Equity Income Fund December 30, 1994
Prudential Europe Growth Fund, Inc. June 30, 1995
Prudential Global Fund, Inc. January 3, 1995
Prudential Growth Opportunity Fund, Inc. February 1, 1995
Prudential Multi-Sector Fund, Inc. June 30, 1995
Prudential Pacific Growth Fund, Inc. January 3, 1995
Prudential Utility Fund, Inc. March 1, 1995
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MF 950C-11
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