Prduential Pacific Growth Fund, Inc.
(Class Z Shares)
- --------------------------------------------------------------------------------
PROSPECTUS DATED JANUARY 2, 1996
(AS SUPPLEMENTED ON SEPTEMBER 12, 1996)
- --------------------------------------------------------------------------------
Prudential Pacific Growth Fund, Inc. (the Fund) is an open-end, diversified
management investment company whose investments objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily in
common stocks, common stock equivalents (such as convertible debt securities and
warrants) and other securities of companies doing business in or domiciled in
the Pacific Basin region. Under normal circumstances, the Fund intends to invest
at least 65% of its total assets in such securities. The Fund may invest in
equity securities of other companies and in non-convertible debt securities. The
Fund also may engage in various derivative transactions, such as those involving
options on stocks, stock indices, foreign currencies and futures contracts on
foreign currencies and groups of currencies and on financial or stock indices so
as to hedge its portfolio and to attempt to enhance return. See "How the Fund
Invests--Investment Objective and Policies." There can be no assurance that the
Fund's investment objective will be achieved. The Fund's address is One Seaport
Plaza, New York, New York l0292, and its telephone number is (800) 225-1852.
The Fund is not intended to constitute a complete investment program. Because of
its objective and policies, including its Pacific Basin orientation, the Fund is
subject to greater investment risks than certain other mutual funds. See "How
the Fund Invests--Risks and Special Considerations of Investing in Foreign
Securities" and "Portfolio Turnover" in the Retail Class Prospectus (defined
below).
- --------------------------------------------------------------------------------
Class Z shares are offered exclusively for sale to a limited group of investors.
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
January 2, 1996, as supplemented, (the Retail Class Prospectus) which is a part
hereof.
- --------------------------------------------------------------------------------
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 January 2, 1996, as supplemented,
which information is incorporated herein by reference (is legally considered a
part of this Prospectus) and is available without charge upon request to the
Fund, at the address or telephone number noted above.
- --------------------------------------------------------------------------------
Investors are advised to read this Prospectus and retain it for future
reference.
- --------------------------------------------------------------------------------
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>
FUND EXPENSES
<TABLE>
<CAPTION>
CLASS Z SHARES
---------------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)................................................................. None
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
</TABLE>
<TABLE>
<CAPTION>
CLASS Z SHARES
--------------
<S> <C>
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of average net assets):
Management Fees.......................................................... .75%
12b-1 Fees............................................................... None
Other Expenses........................................................... .46
-----
Total Fund Operating Expenses............................................ 1.21%
-----
-----
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE 1 3 5 10
- ------- YEAR YEARS YEARS YEARS
---- ----- ----- -----
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...................................................... $ 12 $38 $66 $147
</TABLE>
The above example is based on expenses expected to have been incurred if
Class Z shares had been in existence during the fiscal year ended October
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 Fund
will bear, whether directly or indirectly. For more complete descriptions of
the various costs and expenses, see "How the Fund is Managed" in the Retail
Class Prospectus. "Other Expenses" includes operating expenses of the Fund,
such as directors' and professional fees, registration fees, reports to
shareholders, transfer agency and custodian (domestic and foreign) fees (but
excludes foreign withholding taxes).
------------------
* Estimated based on expenses expected to have been incurred if Class Z
shares had been in existence throughout the fiscal year ended October 31,
1995.
2
<PAGE>
THE FOLLOWING INFORMATION SUPPLEMENTS "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 of the Fund are available for purchase by the following
categories of investors: (i) pension, profit-sharing or other employee benefit
plans qualified under Section 401 of the Internal Revenue Code, deferred
compensation and annuity plans under Sections 457 and 403(b)(7) of the
Internal Revenue Code, and non-qualified plans for which the Fund is an
available option (collectively, Benefit Plans), provided such Benefit Plans
(in combination with other plans sponsored by the same employer or group of
related employers) have at least $50 million in defined contribution assets;
(ii) participants in any fee-based program sponsored by Prudential Securities
Incorporated (Prudential Securities) or its affiliates which includes mutual
funds as investment options and for which the Fund is an available option;
(iii) investors who are, or have executed a letter of intent to become,
Shareholders of any series of The Prudential Institutional Fund (Institutional
Fund) on or before one or more series of Institutional Fund reorganize or who
on that date have investments in certain products for which Institutional Fund
provides exchangeability and (iv) the PSI Cash Balance Pension Plan, an
employee defined plan sponsored by Prudential Securities (PSI Pension Plan).
After a Benefit Plan qualifies to purchase Class Z shares, all subsequent
purchases will be for Class Z shares.
In connection with the sale of Class Z shares, the Manager, the Distributor
or one of their affiliates may pay dealers, financial advisers and other
persons which distribute shares a finders' fee based on a percentage of the
net asset value of shares sold by such persons.
THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER GUIDE--HOW TO EXCHANGE
YOUR SHARES" IN THE RETAIL CLASS PROSPECTUS:
Class Z shareholders of the Fund may exchange their Class Z shares for Class
Z shares of other Prudential Mutual Funds (except that the PSI Pension Plan
may only exchange its Class Z shares for Class Z shares of those Prudential
Mutual Funds which permit investment by the PSI Pension Plan) on the basis of
relative net asset value. Shareholders who qualify to purchase Class Z shares
(other than participants in any fee-based program) will have their Class B and
Class C shares which are not subject to contingent deferred sales charges and
their Class A shares exchanged for Class Z shares on a quarterly basis.
Participants in any fee-based program for which the Fund is an available
option will have their Class A shares, if any, exchanged for Class Z shares
when they elect to have those assets become a part of the fee-based program.
Upon leaving the program (whether voluntarily or not), such Class Z shares
(and, to the extent provided for in the program, Class Z shares acquired
through participation in the program) will be exchanged for Class A shares at
net asset value. Similarly, participants in PSI's 401(k) Plan, an employee
benefit plan sponsored by Prudential Securities (the PSI 401(k) Plan), for
which the Fund's Class Z shares are an available option and 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. See "Shareholder Guide--How to Exchange Your Shares--Special
Exchange Privilege."
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 Fund's Class Z shares under a Distribution
Agreement with the Fund, none of which are 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 because 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:
The Fund has obtained opinions of counsel to the effect that neither (i) the
conversion of Class B shares into Class A shares nor (ii) the exchange of any
class of the Fund's shares for any other class of its shares constitutes a
taxable event for federal income tax purposes. However, such opinions are not
binding on the Internal Revenue Service.
THE INFORMATION ABOVE ALSO SUPPLEMENTS THE INFORMATION UNDER "FUND
HIGHLIGHTS" IN THE RETAIL CLASS PROSPECTUS AS APPROPRIATE.
3
<PAGE>
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER
PERSON HAS BEEN AUTHORIZED TO GIVEV ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS,
OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER
CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE FUND OR THE DISTRIBUTOR. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER BY THE FUND OR
BY THE DISTRIBUTOR TO SELL, OR A SOLICITATION Prudential
OF ANY OFFER TO BUY ANY OF THE SECURITIES Pacific
OFFERED HEREBY IN ANY JURISDICTION TO ANY Growth
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH Fund, Inc.
OFFER IN SUCH JURISDICTION.
(Class Z Shares)
- ----------------------------------------
TABLE OF CONTENTS
PAGE
----
FUND HIGHLIGHTS...................... 2
FUND EXPENSES........................ 4
FINANCIAL HIGHLIGHTS................. 5
HOW THE FUND INVESTS................. 7
Investment Objective and Policies... 7
Risks and Special Considerations of
Investing in Foreign Securities... 8
Hedging and Return Enhancement
Strategies......................... 9
Other Investments and Policies...... 12
Investment Restrictions............. 14
HOW THE FUND IS MANAGED.............. 14
Manager............................. 14
Distributor......................... 15
Fee Waivers and Subsidy............. 17
Portfolio Transactions.............. 17
Custodian and Transfer and Dividend
Disbursing Agent..................... 17
HOW THE FUND VALUES ITS SHARES....... 17
HOW THE FUND CALCULATES
PERFORMANCE.......................... 18
TAXES, DIVIDENDS AND DISTRIBUTIONS... 18 PROSPECTUS
GENERAL INFORMATION.................. 20 JANUARY 2, 1996
Description of Common Stock......... 20 (AS SUPPLEMENTED ON)
Additional Information.............. 20 SEPTEMBER 12, 1996)
SHAREHOLDER GUIDE.................... 21
How to Buy Shares of the Fund....... 21
Alternative Purchase Plan........... 22
How to Sell Your Shares............. 24
Conversion Feature--Class B
Shares............................ 28
How to Exchange Your Shares......... 29
Shareholder Services................ 30
THE PRUDENTIAL MUTUAL FUND FAMILY.... A-1
- ----------------------------------------
CUSIP NO.: CLASS Z: 743941-40-3
PRUDENTIAL MUTUAL FUNDS
BUILDING YOUR FUTURE [LOGO]
ON OUR STRENGTHSM
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
SUPPLEMENT DATED SEPTEMBER 12, 1996 TO
PROSPECTUS DATED JANUARY 2, 1996
THE FOLLOWING INFORMATION SUPPLEMENTS "HOW THE FUND INVESTS" IN THE PROSPECTUS:
INVESTMENT OBJECTIVE AND POLICIES
Under normal conditions, the Fund may also invest up to 35% of its total
assets in debt obligations, including obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities or by foreign governments or
supranational organizations, obligations issued by banks and corporations and
other debt obligations. These obligations may be denominated in U.S. dollars or
in foreign currencies. The issuers of such securities may or may not be
domiciled in the Pacific Basin region. Supranational organizations include
entities such as the World Bank, which was chartered to finance development
projects in developing member countries, and the Asian Development Bank, which
is an international development bank established to lend funds, promote
investment and provide technical assistance to member nations in the Asian and
Pacific regions.
The Fund will purchase "investment grade" debt obligations. Investment grade
debt obligations are bonds and other obligations rated within the four highest
quality grades as determined by Moody's Investors Service (Moody's) (currently
Aaa, Aa, A and Baa for bonds, MIG 1, MIG 2, MIG 3 and MIG 4 for notes and P-1
for commercial paper) or Standard & Poor's Ratings Group (S&P) (currently AAA,
AA, A and BBB for bonds, SP-1 and SP-2 for notes and A-1 for commercial paper),
or by another nationally recognized statistical rating organization (NRSRO) or,
if unrated securities of equivalent quality. The Fund is permitted to invest up
to 25% of its net assets in lower quality foreign convertible debt securities
(i.e., high yield or high risk securities, commonly referred to as "junk" bonds)
provided that such securities have minimum rating of at least B as determined by
one NRSRO or, if unrated, are deemed by the investment adviser to be of
comparable quality. Securities rated Baa by Moody's or BBB by S&P, although
considered to be investment grade, are subject to changes in economic conditions
or other circumstances which are more likely to lead to a weakened capacity to
make interest and principal payments than is the case with higher grade bonds.
Lower rated securities are subject to a greater risk of loss of principal and
interest.
CONVERTIBLE SECURITIES
A convertible security is a bond or preferred stock which may be converted at
a stated price within a specified period of time into a certain quantity of the
common stock of the same or a different issuer. Convertible securities are
senior to common stocks in a corporation's capital structure, but are usually
subordinated to similar nonconvertible securities. While providing a fixed
income stream (generally higher in yield than the income derivable from a common
stock but lower than that afforded by a similar nonconvertible security), a
convertible security also affords an investor the opportunity, through its
conversion feature, to participate in the capital appreciation dependent upon a
market price advance in the convertible security's underlying common stock. The
Fund may invest up to 25% of its net assets in foreign convertible securities as
described above. See "Risk Factors Relating to Investing in Foreign Debt
Securities Rate Below Investment Grade" below.
In general the market value of a convertible security is at least the higher
of its "investment value" (i.e., its value as a fixed-income security) or its
"conversion value" (i.e., its value upon conversion into its underlying common
stock). As a fixed-income security, a convertible security tends to increase in
market value when interest rates decline and tends to decrease in value when
interest rates rise. However, the price of a convertible security is also
influenced by the market value of the security's underlying stock. The price of
a convertible security tends to increase as the market value of the underlying
stock rises, whereas it tends to decrease as the market value of the underlying
stock declines. While no securities investment is without some risk, investments
in convertible securities generally entail less risk than investments in the
common stock of the same issuer.
MF157C-4
<PAGE>
ILLIQUID SECURITIES
The Fund may hold up to 10% of its net assets in illiquid securities including
repurchase agreements which have a maturity of longer than seven days, in
securities with legal or contractual restrictions on resale (restricted
securities) and securities that are not readily marketable in securities markets
either within or outside of the United States.
RISK FACTORS RELATING TO INVESTING IN FOREIGN DEBT SECURITIES RATED BELOW
INVESTMENT GRADE
Fixed-income securities are subject to the risk of an issuer's inability to
meet principal and interest payments on the obligations (credit risk) and may
also be subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer and general
market liquidity (market risk). Lower rated or unrated (i.e., high yield or high
risk) securities, commonly referred to as "junk" bonds, are more likely to react
to developments affecting market and credit risk than are more highly rated
securities, which react primarily to movements in the general level of interest
rates. The investment adviser considers both credit risk and market risk in
making investment decisions for the Fund. Investors should carefully consider
the relative risks of investing in high yield securities and understand that
such securities are not generally meant for short-term trading.
Under adverse economic conditions, there is a risk that highly leveraged
issuers may be unable to service their debt obligations or to repay their
obligations upon maturity. In addition, the secondary market for high yield
securities, which is concentrated in relatively few market makers, may not be as
liquid as the secondary market for more highly rated securities. Under adverse
market or economic conditions, the secondary market for high yield securities
could contract further, independent of any specific adverse changes in the
condition of a particular issuer. As a result, the investment adviser would find
it more difficult to sell these securities or may be able to sell the securities
only at prices lower than if such securities were widely traded. Prices realized
upon the sale of such lower rated or unrated securities, under these
circumstances, may be less than the prices used in calculating the Fund's net
asset value.
Lower rated or unrated debt obligations also present risks based on payment
expectations. If an issuer calls the obligation for redemption, the Fund may
have to replace the security with a lower yielding security, resulting in a
decreased return for investors. If the Fund experiences unexpected net
redemptions, it may be forced to sell its higher rated securities, resulting in
a decline in the overall credit quality of the debt portion of the Fund's
portfolio and increasing the exposure of the Fund to the risks of high yield
securities.
THE FOLLOWING INFORMATION SUPPLEMENTS "GENERAL INFORMATION--DESCRIPTION OF
COMMON STOCK" IN THE PROSPECTUS:
The Fund is authorized to offer 2 billion shares of common stock, $.001 par
value per share, divided into four classes of shares, designated Class A, Class
B, Class C and Class Z shares, each consisting of 500 million authorized shares.
Each class represents an interest in the same assets of the Fund and is
identical in all respects except that (i) each class is subject to different
sales charges and distribution and/or service fees (except for Class Z shares
which are not subject to any sales charge or 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 a
limited group of investors. For more information about Class Z shares, contact
your Prudential Securities financial adviser or Prusec representative or
telephone the Fund at (800) 225-1852. Participants in programs sponsored by
Prudential Retirement Services should contact their client representative for
more information about Class Z Shares. 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 Articles of
Incorporation, the Board of Directors may authorize the creation of additional
series and classes within such series, with such preferences, privileges,
limitations and voting and dividend rights as the Directors may determine.
<PAGE>
THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER GUIDE--HOW TO BUY SHARES OF
THE FUND" IN THE PROSPECTUS:
REDUCTION AND WAIVER OF INITIAL SALES CHARGES. Reduced sales charges are
available through Rights of Accumulation and Letters of Intent. Shares of the
Fund and shares of other Prudential Mutual Funds (excluding money market funds
other than those acquired pursuant to the exchange privilege) may be aggregated
to determine the applicable reduction. See "Purchase and Redemption of Fund
Shares--Reduction and Waiver of Initial Sales Charges--Class A Shares" in the
Statement of Additional Information.
BENEFIT PLANS. Class A shares may be purchased at NAV, without payment of an
initial sales charge, by pension, profit sharing or other employee benefit plans
qualified under Section 401 of the Internal Revenue Code and deferred
compensation and annuity plans under Sections 457 and 403(b)(7) of the Internal
Revenue Code (Benefit Plans), provided that the plan has existing assets of at
least $1 million invested in shares of Prudential Mutual Funds (excluding money
market funds other than those acquired pursuant to the exchange privilege) or
250 eligible employees or participants. In the case of Benefit Plans whose
accounts are held directly with the Transfer Agent or Prudential Securities and
for which the Transfer Agent or Prudential Securities does individual account
record keeping (Direct Account Benefit Plans) and Benefit Plans sponsored by PSI
or its subsidiaries (PSI or Subsidiary Prototype Benefit Plans), Class A shares
may be purchased at NAV by participants who are repaying loans made from such
plans to the participant.
PRUARRAY AND SMARTPATH PLANS. Class A shares may be purchased at NAV by
certain savings, retirement and deferred compensation plans, qualified or
non-qualified under the Internal Revenue Code, including pension,
profit-sharing, stock-bonus or other employee benefit plans under Section 401 of
the Internal Revenue Code and deferred compensation and annuity plans under
Sections 457 and 403(b)(7) of the Code that participate in Prudential's PruArray
or SmartPath Programs (benefit plan record keeping services) (hereafter referred
to as a PruArray or SmartPath Plan); provided that the plan has at least $1
million in existing assets or 250 eligible employees or participants. The term
"existing assets" for this purpose includes stock issued by a PruArray or
SmartPath Plan sponsor and shares of non-money market Prudential Mutual Funds
and shares of certain unaffiliated non-money market mutual funds that
participate in the PruArray or SmarthPath Program (Participating Funds).
"Existing assets" also include shares of money market funds acquired by exchange
from a Participating Fund.
SPECIAL RULES APPLICABLE TO RETIREMENT PLANS. After a Benefit Plan or
PruArray or SmartPath Plan qualifies to purchase Class A shares at NAV, all
subsequent purchases will be made at NAV.
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 purchases.
You must notify the Fund's 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>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
SUPPLEMENT DATED SEPTEMBER 12, 1996 TO
STATEMENT OF ADDITIONAL INFORMATION DATED
JANUARY 2, 1996
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 Fund's Class Z shares under a Distribution
Agreement with the Fund, none of which are 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 Fund
are offered to a limited group of investors at net asset value without any sales
charges. See "Shareholder Guide--How to Buy Shares of the Fund" in the
Prospectus.
Each class represents an interest in the same assets of the Fund and is
identical in all respects except that (i) each class is subject to different
sales charges and distribution and/or service expenses (except for Class Z
shares which are not subject to any sales charge or distribution and/or service
fee), 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 a
limited group of investors. See "Distributor" and "Shareholder Investment
Account--Exchange Privilege."
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 other
Prudential Mutual Funds (except that the PSI Pension Plan may only exchange its
Class Z shares for Class Z shares of those Prudential Mutual Funds which permit
investment by the PSI Pension Plan).
MF157C-5
