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Prudential Balanced Fund
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Supplement Dated May 8, 2000
Prospectus Dated October 4, 1999
The Board of Trustees of Prudential Balanced Fund (the Fund) has recently
approved a proposal to exchange the assets and liabilities of the Fund for
shares of Prudential Active Balanced Fund, a series of The Prudential Investment
Portfolios, Inc. Class A, Class B, Class C and Class Z shares of the Fund would
be exchanged at net asset value for respective Class A, Class B, Class C and
Class Z shares of equivalent value of Prudential Active Balanced Fund.
The transfer is subject to approval by the shareholders of the Fund. The
shareholders' meeting is scheduled to occur in September 2000. It is anticipated
that a proxy statement/prospectus relating to the transaction will be mailed to
the Fund's shareholders in July 2000.
Under the terms of the proposal, shareholders of the Fund would become
shareholders of Prudential Active Balanced Fund. No sales charges would be
imposed on the proposed transfer.The Fund anticipates obtaining an opinion of
its counsel that the transaction will not result in gain or loss to shareholders
of the Fund for federal income tax purposes.
Effective immediately, the Fund will no longer accept orders to purchase or
exchange into its shares of any class, except for (1) Retirement Programs,
PruArray Association Benefit Plans and PruArray Savings Programs that are
currently shareholders, and successor or related programs and plans, (2)
investors who have executed a Letter of Intent prior to May 5, 2000, (3)
shareholders who have elected to reinvest dividends and/or distributions and (4)
current shareholders participating in automatic investment plans. The current
exchange privilege of obtaining shares of other Prudential Mutual Funds and the
current redemption rights remain in effect until the transaction is consummated.
The investment objective of Prudential Active Balanced Fund is to seek income
and long-term growth of capital by investing in a portfolio
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of equity, fixed-income and money market securities which is actively managed to
capitalize on opportunities created by perceived misvaluation.
The following replaces the information contained in 'How the Fund is
Managed--Portfolio Managers':
In managing the Fund's asset allocation, the portfolio managers use a
quantitative model. They manage the stock portion of the Fund's portfolio using
behavioral finance models to select securities they believe to be underpriced,
while maintaining a risk profile like the Standard & Poor's 500 Composite Stock
Price Index.
James Scott, Ph.D., is a Senior Managing Director of Prudential Investments
Quantitative Management, a unit of Prudential Investments. He has been a
portfolio manager for the Fund since May 2000. Mr. Scott has managed balanced
and equity portfolios for Prudential's pension plans and several institutional
clients since 1987. He received a B.A. from Rice University and an M.S. and a
Ph.D. from Carnegie Mellon University.
Mark Stumpp, Ph.D., is a Senior Managing Director of Prudential Investments.
He also has been a portfolio manager for the Fund since May 2000. He chairs the
Quantitative Management Group's Investment Policy Committee and is responsible
for its model portfolio. Mr. Stumpp developed and oversees the methodology
underlying the group's actively managed equity portfolios. Mr. Stumpp has
managed mutual fund portfolios since 1995 and has managed investment portfolios
for over 11 years. Mr. Stumpp received a B.A. from Boston University and an M.A.
and a Ph.D. from Brown University.
Prudential Investments' Fixed Income Corporate Team, headed by Steven
Kellner, has been primarily responsible for overseeing the day-to-day
management of the fixed-income portion of the Fund since September 1999. The
Team uses a bottom-up approach, which focuses on individual securities, while
staying within the guidelines of the Fixed Income Investment Policy Committee
and the Fund's investment restrictions and policies. In addition, a credit
research team of analysts supports the Team using bottom-up fundamentals, as
well as economic and industry trends. Other sector teams may contribute to
securities selection when appropriate.
