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Prudential Allocation Fund
(Strategy Portfolio)
Supplement dated February 24, 1997
to Prospectus dated September 27, 1996
The Board of Trustees of Prudential Allocation Fund (the Fund) has recently
approved a proposal to exchange the assets and liabilities of the Strategy
Portfolio for shares of the Balanced Portfolio of the Fund (Balanced
Portfolio), after which the single series fund will change its name to
Prudential Balanced Fund. Class A, Class B, Class C and Class Z shares of the
Strategy Portfolio would be exchanged at net asset value for respective Class
A, Class B, Class C and Class Z shares of equivalent value of the Balanced
Portfolio.
The transfer is subject to approval by the shareholders of the Strategy
Portfolio. It is anticipated that a proxy statement/prospectus relating to the
transaction will be mailed to the Strategy Portfolio's shareholders in late
April 1997.
Under the terms of the proposal, shareholders of the Strategy Portfolio
would become shareholders of the Balanced Portfolio. No sales charges would be
imposed on the proposed transfer. The Fund anticipates obtaining an opinion of
its counsel that no gain or loss for federal income tax purposes would be
recognized by shareholders of the Portfolios as a result of the proposed
transaction.
EFFECTIVE IMMEDIATELY, THE STRATEGY PORTFOLIO WILL NO LONGER ACCEPT ORDERS
TO PURCHASE OR EXCHANGE INTO ITS SHARES OF ANY CLASS, EXCEPT FOR PURCHASES BY
CERTAIN RETIREMENT AND EMPLOYEE PLANS (EXCLUDING IRA ACCOUNTS). Existing
shareholders may continue to acquire shares through dividend reinvestment. The
current exchange privilege of obtaining shares of other Prudential Mutual Funds
and the current redemption rights will remain in effect until the transaction
is consummated.
The Balanced Portfolio's investment objective is to achieve a high total
investment return consistent with moderate risk. Gregory P. Goldberg, managing
director and portfolio manager of Prudential Investments, a business group of
The Prudential Investment Corporation, is the portfolio manager of both the
Strategy Portfolio and the Balanced Portfolio.
MF134C-2 (2/24/97)
