<PAGE>
Prudential Allocation Fund
(Class Z Shares)
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PROSPECTUS DATED MARCH 1, 1996
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Prudential Allocation Fund (the Fund) is an open-end, diversified, management
investment company comprised of two separate portfolios--the Balanced Portfolio
(formerly called the Conservatively Managed Portfolio) and the Strategy
Portfolio (the Portfolios). The investment objective of the Balanced Portfolio
is to achieve a high total investment return consistent with moderate risk. The
investment objective of the Strategy Portfolio is to achieve a high total
investment return consistent with relatively higher risk than the Balanced
Portfolio. While each Portfolio will seek to achieve its objective by investing
in a diversified portfolio of money market instruments, debt obligations and
equity securities (including securities convertible into equity securities), the
Portfolios will differ with respect to the proportions of investments in debt
and equity securities, the quality and maturity of debt securities purchased and
the price volatility of equity securities purchased. It is expected that the
Strategy Portfolio will offer investors a higher potential return with a
correspondingly higher risk of loss than the Balanced Portfolio. There can be no
assurance that the Portfolios' investment objectives will be achieved. See "How
the Fund Invests--Investment Objectives and Policies." The Fund's address is One
Seaport Plaza, New York, New York 10292, and its telephone number is (800)
225-1852.
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Class Z shares are offered by the Balanced Portfolio exclusively for sale to
participants in the PSI 401(k) Plan, an employee benefit plan sponsored by
Prudential Securities Incorporated (the PSI 401(k) Plan or the Plan). Only Class
Z shares are offered through this Prospectus. The Fund also offers Class A,
Class B and Class C shares through the attached Prospectus dated September 29,
1995 (the Retail Class Prospectus), which is a part hereof.
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This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Additional information about
the Fund has been filed with the Securities and Exchange Commission in a
Statement of Additional Information, dated September 29, 1995, which information
is incorporated herein by reference (is legally considered to be a part of this
Prospectus) and is available without charge upon request to the Fund at the
address or telephone number noted above.
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INVESTORS ARE ADVISED TO READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE
REFERENCE.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
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FUND EXPENSES
(BALANCED PORTFOLIO)
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS Z SHARES
--------------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).... None
<S> <C>
Maximum Sales Load or Deferred Sales Load
Imposed on Reinvested Dividends........ None
Deferred Sales Load (as a percentage of
original purchase price or redemption
proceeds, whichever is lower).......... None
Redemption Fees.......................... None
Exchange Fee............................. None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES* CLASS Z SHARES
(as a percentage of average net assets) --------------
<S> <C>
Management Fees.......................... .65%
12b-1 Fees............................... None
Other Expenses........................... .32
---
Total Fund Operating Expenses............ .97%
---
---
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------- ------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming: (1) 5% annual return and (2)
redemption at the end of each time period:
Class Z................................................ $10 $31 $54 $119
The above example is based on expenses expected to have been incurred if Class Z shares had been in
existence throughout the fiscal year ended July 31, 1995. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist investors in understanding the various costs and expenses that an
investor in Class Z shares of the Balanced Portfolio will bear, whether directly or indirectly. For more
complete descriptions of the various costs and expenses, see "How the Fund is Managed." "Other Expenses"
includes operating expenses of the Portfolio, such as Trustees' and professional fees, registration fees,
reports to shareholders and transfer agency and custodian fees.
<FN>
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* Estimated based on expenses expected to have been incurred if Class Z
shares had been in existence throughout the fiscal year ended July 31,
1995.
</TABLE>
2
<PAGE>
THE FOLLOWING INFORMATION SUPPLEMENTS "HOW THE FUND IS MANAGED--DISTRIBUTOR" IN
THE RETAIL CLASS PROSPECTUS:
Prudential Securities serves as the Distributor of Class Z shares and incurs
the expenses of distributing the Class Z shares under a Distribution Agreement
with the Fund, none of which is reimbursed by or paid for by the Fund.
THE FOLLOWING INFORMATION SUPPLEMENTS "HOW THE FUND VALUES ITS SHARES" IN THE
RETAIL CLASS PROSPECTUS:
The NAV of Class Z shares will generally be higher than the NAV of Class A,
Class B or Class C shares as a result of the fact that the Class Z shares are
not subject to any distribution and/or service fee. It is expected, however,
that the NAV of the four classes will tend to converge immediately after the
recording of dividends, which will differ by approximately the amount of the
distribution-related expense accrual differential among the classes.
THE FOLLOWING INFORMATION SUPPLEMENTS "TAXES, DIVIDENDS AND
DISTRIBUTIONS--TAXATION OF SHAREHOLDERS" IN THE RETAIL CLASS PROSPECTUS:
As a qualified plan, the PSI 401(k) Plan generally pays no federal income tax.
Individual participants in the Plan should consult Plan documents and their own
tax advisers for information on the tax consequences associated with
participating in the PSI 401(k) Plan.
The per share dividends on Class Z shares will generally be higher than the
per share dividends on Class A, Class B or Class C shares as a result of the
fact that Class Z shares are not subject to any distribution or service fee.
THE FOLLOWING INFORMATION REPLACES THE INFORMATION UNDER "SHAREHOLDER GUIDE--HOW
TO BUY SHARES OF THE FUND" AND "SHAREHOLDER GUIDE-- HOW TO SELL YOUR SHARES" IN
THE RETAIL CLASS PROSPECTUS:
Class Z shares are offered exclusively for sale by the Balanced Portfolio to
participants in the PSI 401(k) Plan. Such shares may be purchased or redeemed
only by the Plan on behalf of individual Plan participants at NAV without any
sales or redemption charge. Class Z shares are not subject to any minimum
investment requirements. The Plan purchases and redeems shares to implement the
investment choices of individual Plan participants with respect to contributions
in the Plan. All purchases through the Plan will be for Class Z shares.
Effective as of March 1, 1996, Class A shares of the Balanced Portfolio held
through the PSI 401(k) Plan on behalf of participants will be automatically
exchanged for Class Z shares. Individual Plan participants should contact the
Prudential Securities Benefits Department for information on making or changing
investment choices. The Prudential Securities Benefits Department is located at
One Seaport Plaza, 33rd Floor, New York, New York 10292 and may be reached by
calling (212) 214-7194.
The average net asset value per share at which shares of the Balanced
Portfolio are purchased or redeemed by the Plan for the accounts of individual
Plan participants might be more or less than the net asset value per share
prevailing at the time that such participants made their investment choices or
made their contributions to the Plan.
THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER GUIDE--HOW TO EXCHANGE YOUR
SHARES" IN THE RETAIL CLASS PROSPECTUS:
Class Z shareholders of the Balanced Portfolio may exchange their Class Z
shares for Class Z shares of certain other Prudential Mutual Funds on the basis
of the relative net asset value. You should contact the Prudential Securities
Benefits Department about how to exchange your Class Z shares. See "How to Buy
Shares of the Fund" above. Participants who wish to transfer their Class Z
shares out of the PSI 401(k) Plan following separation from service (I.E.,
voluntary or involuntary termination of employment or retirement) will have
their Class Z shares exchanged for Class A shares at net asset value.
THE INFORMATION ABOVE ALSO SUPPLEMENTS THE INFORMATION UNDER "FUND HIGHLIGHTS"
IN THE RETAIL CLASS PROSPECTUS AS APPROPRIATE.
3
<PAGE>
PRUDENTIAL ALLOCATION FUND
SUPPLEMENT DATED MARCH 1, 1996 TO
PROSPECTUS DATED SEPTEMBER 29, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS "GENERAL INFORMATION--DESCRIPTION OF
SHARES" IN THE PROSPECTUS:
The Fund is authorized to offer an unlimited number of shares of beneficial
interest, $.01 par value per share, of separate series or portfolios, one of
which is the Balanced Portfolio which is divided into four classes of shares,
designated Class A, Class B, Class C and Class Z shares. Each class represents
an interest in the same assets of the Portfolio and is identical in all respects
except that (i) each class is subject to different sales charges and
distribution and/or service fees which may affect performance, (ii) each class
has exclusive voting rights on any matter submitted to shareholders that relates
solely to its arrangement and has separate voting rights on any matter submitted
to shareholders in which the interests of one class differ from the interests of
any other class, (iii) each class has a different exchange privilege, (iv) only
Class B shares have a conversion feature and (v) Class Z shares are offered
exclusively for sale to participants in the PSI 401(k) Plan, an employee benefit
plan sponsored by Prudential Securities. Since Class B and Class C shares
generally bear higher distribution expenses than Class A shares, the liquidation
proceeds to shareholders of those classes are likely to be lower than to Class A
shareholders and to Class Z shareholders, whose shares are not subject to any
distribution and/or service fee. In accordance with the Fund's Declaration of
Trust, the Trustees may authorize the creation of additional series and classes
within such series, with such preferences, privileges, limitations and voting
and dividend rights as the Trustees may determine. Currently, the Balanced
Portfolio is offering four classes, designated Class A, Class B, Class C and
Class Z shares, and the Strategy Portfolio is offering three classes, designated
Class A, Class B and Class C shares.
THE FOLLOWING INFORMATION FOR THE CLASS Z SHARES SUPPLEMENTS "HOW THE FUND
CALCULATES PERFORMANCE" IN THE PROSPECTUS:
The Fund will include performance data for each class of shares of a Portfolio
offered through the Prospectus in any advertisement or information including
performance data of the Portfolio.
<PAGE>
PRUDENTIAL MUTUAL FUNDS
Supplement dated January 5, 1996
The following information supplements the Prospectus of each of the Funds listed
below.
SHAREHOLDER GUIDE
HOW TO BUY SHARES OF THE FUND
REDUCTION AND WAIVER OF INITIAL SALES CHARGES.
OTHER WAIVERS. In addition, Class A shares may be purchased at NAV, through
Prudential Securities or the Transfer Agent, by the following persons: (a)
officers and current and former Directors/Trustees of the Prudential Mutual
Funds (including the Fund), (b) employees of Prudential Securities and PMF and
their subsidiaries and members of the families of such persons who maintain an
"employee related" account at Prudential Securities or the Transfer Agent, (c)
employees and special agents of Prudential and its subsidiaries and all persons
who have retired directly from active service with Prudential or one of its
subsidiaries, (d) registered representatives and employees of dealers who have
entered into a selected dealer agreement with Prudential Securities provided
that purchases at NAV are permitted by such person's employer and (e) investors
who have a business relationship with a financial adviser who joined Prudential
Securities from another investment firm, provided that (i) the purchase is made
within 180 days of the commencement of the financial adviser's employment at
Prudential Securities, or within one year in the case of Benefit Plans, (ii) the
purchase is made with proceeds of a redemption of shares of any open-end fund
sponsored by the financial adviser's previous employer (other than a money
market fund or other no-load fund which imposes a distribution or service fee of
.25 of 1% or less) and (iii) the financial adviser served as the client's broker
on the previous purchase.
You must notify the Transfer Agent either directly or through Prudential
Securities or Prusec that you are entitled to the reduction or waiver of the
sales charge. The reduction or waiver will be granted subject to confirmation of
your entitlement. No initial sales charges are imposed upon Class A shares
acquired upon the reinvestment of dividends and distributions. See "Purchase and
Redemption of Fund Shares--Reduction and Waiver of Initial Sales Charges--Class
A Shares" in the Statement of Additional Information.
<PAGE>
Listed below are the names of the Prudential Mutual Funds and the dates of
the Prospectuses to which this supplement relates.
<TABLE>
<CAPTION>
NAME OF FUND PROSPECTUS DATE
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<S> <C>
The BlackRock Government Income Trust August 31, 1995
Global Utility Fund, Inc. November 29, 1995
Nicholas-Applegate Fund, Inc. March 6, 1995
Nicholas-Applegate Growth Equity Fund
Prudential Allocation Fund September 29, 1995
Balanced Portfolio
Strategy Portfolio
Prudential California Municipal Fund
California Income Series November 1, 1995
California Series November 1, 1995
Prudential Diversified Bond Fund, Inc. January 3, 1995
(As supplemented on June 20, 1995)
Prudential Equity Fund, Inc. February 28, 1995
Prudential Equity Income Fund January 2, 1996
Prudential Europe Growth Fund, Inc. June 30, 1995
Prudential Global Genesis Fund, Inc. July 31, 1995
Prudential Global Limited Maturity Fund, Inc.
Limited Maturity Portfolio January 3, 1995
Prudential Global Natural Resources Fund, Inc. July 31, 1995
Prudential Government Income Fund, Inc. May 1, 1995
Prudential Growth Opportunity Fund, Inc. November 29, 1995
Prudential High Yield Fund, Inc. February 28, 1995
Prudential Intermediate Global Income Fund, Inc. March 2, 1995
Prudential Jennison Fund, Inc. October 27, 1995
Prudential Mortgage Income Fund, Inc. August 25, 1995
Prudential Multi-Sector Fund, Inc. June 30, 1995
Prudential Municipal Bond Fund June 30, 1995
Insured Series
High Yield Series
Intermediate Series
Prudential Municipal Series Fund
Florida Series November 1, 1995
Hawaii Income Series November 1, 1995
Maryland Series November 1, 1995
Massachusetts Series November 1, 1995
Michigan Series November 1, 1995
New Jersey Series November 1, 1995
New York Series November 1, 1995
North Carolina Series November 1, 1995
Ohio Series November 1, 1995
Pennsylvania Series November 1, 1995
Prudential National Municipals Fund, Inc. February 28, 1995
Prudential Structured Maturity Fund, Inc. March 1, 1995
Income Portfolio
Prudential Utility Fund, Inc. March 1, 1995
</TABLE>
MF950C-17
<PAGE>
The Prospectus is incorporated herein by reference in its entirety from
Post-Effective Amendment No. 17 to Registrant's Registration Statement (File
No. 33-12531) filed on December 15, 1995.
<PAGE>
PRUDENTIAL ALLOCATION FUND
SUPPLEMENT DATED MARCH 1, 1996 TO
STATEMENT OF ADDITIONAL INFORMATION DATED
SEPTEMBER 29, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS "TRUSTEES AND OFFICERS" IN THE STATEMENT
OF ADDITIONAL INFORMATION:
As of October 13, 1995, the Trustees and officers of the Fund, as a group,
owned less than 1% of the outstanding shares of beneficial interest of either
Portfolio of the Fund.
As of October 13, 1995, Prudential Securities was the record holder for other
beneficial owners of 11,725,273 Class A shares (or 51% of the outstanding Class
A shares), 13,183,281 Class B shares (or 35% of the outstanding Class B shares)
and 44,330 Class C shares (or 32% of the outstanding Class C shares) of the
Balanced Portfolio and 2,675,198 Class A shares (or 37% of the outstanding Class
A shares), 10,895,278 Class B shares (or 50% of the outstanding Class B shares)
and 14,936 Class C shares (or 54% of the outstanding Class C shares) of the
Strategy Portfolio. In the event of any meetings of shareholders, Prudential
Securities will forward, or cause the forwarding of, proxy materials to the
beneficial owners for which it is the record holder.
As of October 13, 1995, Prudential Bank & Trust C/F the IRA of Clarence A.
Lukeski, P.O. Box 2, Hamlin, PA 18427-0002 and Marvel Food Stores #3 Inc., 429
W. Lockeford Street, Lodi, CA 95240-2035 were the beneficial owners of 5.2% and
14.5% respectively, of the Class C outstanding voting securities of the Balanced
Portfolio. As of October 13, 1995, Prudential Bank & Trust Co. C/F the IRA of
Henry W. Anthony, RR1 Box 92, Fryeburg, ME 04037-9709, Steven N. Hendel, 7 Brown
Terrace, Cranford, NJ 07016-1501, Prudential Securities C/F Dennis Gushue IRA
DTD 12/29/94, P.O. Box 33418, Las Vegas, NV 89133-3418, Prudential Bank & Trust
C/F the IRA of Homer R. O'Connor, 2 Front Drive, Little Hocking, OH 45742-9710,
Kenzie Ramsey, 4281 Shafer Dr, Hamilton, OH 45011-2336 and Prudential
Securities, Inc. FA Allen C. Bellamy, 10610 Hanging Moss Trail, Charlotte, NC
28227 were the beneficial owners of 11.4%, 7.8%, 8.9%, 6.5%, 5.6% and 5.3%
respectively, of the Class C outstanding voting securities of the Strategy
Portfolio.
THE FOLLOWING INFORMATION SUPPLEMENTS "DISTRIBUTOR" IN THE STATEMENT OF
ADDITIONAL INFORMATION:
Prudential Securities serves as the Distributor of Class Z shares and incurs
the expenses of distributing the Class Z shares of the Balanced Portfolio under
a Distribution Agreement with the Fund, none of which is reimbursed by or paid
for by the Fund.
THE FOLLOWING INFORMATION SUPPLEMENTS "PURCHASE AND REDEMPTION OF FUND SHARES"
IN THE STATEMENT OF ADDITIONAL INFORMATION:
Shares of the Fund may be purchased at a price equal to the next determined
net asset value per share plus a sales charge which, at the election of the
investor, may be imposed either (i) at the time of purchase (Class A shares) or
(ii) on a deferred basis (Class B or Class C shares). Class Z shares of the
Balanced Portfolio of the Fund are not subject to any sales or redemption charge
and are offered exclusively for sale to participants in the Prudential
Securities 401(k) Plan, an employee benefit plan sponsored by Prudential
Securities (the PSI 401(k) Plan). See "Shareholder Guide--How to Buy Shares of
the Fund" in the Prospectus.
Each class represents an interest in the same assets of the Portfolio and is
identical in all respects except that (i) each class is subject to different
sales charges and distribution and/or service expenses, which may affect
performance, (ii) each class has exclusive voting rights on any matter submitted
to shareholders that relates solely to its arrangement and has separate voting
rights on any matter submitted to shareholders in which the interests of one
class differ from the interests of any other class, (iii) each class has a
different exchange privilege, (iv) only Class B shares have a conversion feature
and (v) Class Z shares are offered exclusively for sale to participants in the
PSI 401(k) Plan. See "Distributor" and "Shareholder Investment Account--
Exchange Privilege."
1
<PAGE>
SPECIMEN PRICE MAKE-UP
Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold at a maximum sales charge of 5% and Class
B*, Class C* and Class Z** shares are sold at net asset value. Using the
Balanced Portfolio's net asset value at July 31, 1995, the maximum offering
price of the Balanced Portfolio's shares is as follows:
<TABLE>
<S> <C>
CLASS A
Net asset value and redemption price per Class A share................................... $ 12.04
Maximum sales charge (5% of offering price).............................................. .63
---------
Offering price to public................................................................. $ 12.67
---------
---------
CLASS B
Net asset value, offering price and redemption price per Class B share*.................. $ 12.00
---------
---------
CLASS C
Net asset value, offering price and redemption price per Class C share*.................. $ 12.00
---------
---------
CLASS Z
Net asset value, offering price and redemption price per Class Z share**................. $ 12.04
---------
---------
</TABLE>
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* Class B and Class C shares are subject to a contingent deferred sales charge
on certain redemptions. See "Shareholder Guide--How to Sell Your
Shares--Contingent Deferred Sales Charges" in the Prospectus.
** Class Z shares did not exist at July 31, 1995.
THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER INVESTMENT ACCOUNT--EXCHANGE
PRIVILEGE" IN THE STATEMENT OF ADDITIONAL INFORMATION:
CLASS Z. Class Z shares may be exchanged for Class Z shares of the funds
listed below which participate in the PSI 401(k) Plan. No fee or sales load will
be imposed upon the exchange.
Prudential Equity Income Fund
Prudential Equity Fund, Inc.
Prudential Global Fund, Inc.
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
(Money Market Series)
Prudential Growth Opportunity Fund, Inc.
Prudential High Yield Fund, Inc.
Prudential Jennison Fund, Inc. (expected to be available later in 1996)
Prudential MoneyMart Assets, Inc.
Prudential Multi-Sector Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential Utility Fund, Inc.
THE FOLLOWING INFORMATION SUPPLEMENTS "PERFORMANCE INFORMATION" IN THE
STATEMENT OF ADDITIONAL INFORMATION:
AVERAGE ANNUAL TOTAL RETURN. The Balanced Portfolio may from time to time
advertise its average annual total return. Average annual total return is
determined separately for Class A, Class B, Class C and Class Z shares. See "How
the Fund Calculates Performance" in the Prospectus.
AGGREGATE TOTAL RETURN. The Balanced Portfolio may also advertise its
aggregate total return. Aggregate total return is determined separately for
Class A, Class B, Class C and Class Z shares. See "How the Fund Calculates
Performance" in the Prospectus.
YIELD. The Balanced Portfolio may from time to time advertise its yield as
calculated over a 30-day period. Yield is calculated separately for Class A,
Class B, Class C and Class Z shares.
2
