THE PRUDENTIAL INSTITUTIONAL FUND
Supplement dated June 13, 1996 to
Prospectus dated February 1, 1996
To better serve its customers, Prudential has formed a business division
called the Money Management Group that consolidates within one unit Prudential's
various money management businesses. Following the formation of the Money
Management Group, management of The Prudential Institutional Fund (the Fund)
recommended, and on May 17, 1996 the Fund's Board of Trustees approved, plans
whereby the seven institutional series of the Fund (the Series) will become part
of the Prudential Mutual Funds (PMF). The PMF Funds are a broad retail and
institutional fund family that provides economies of scale normally associated
with large fund families. The Series included in this Prospectus Supplement are
the Growth Stock Fund, Balanced Fund, International Stock Fund and Stock Index
Fund. The three largest Series will continue with the same investment objectives
and portfolio managers. The smallest Series will be combined with a PMF Fund
having a similar but not identical investment objective.
The Board's actions are contingent upon shareholder approval. Proxy
statements will be sent to shareholders of the relevant Series in or about late
July discussing the consolidation in detail and the reasons why the manager and
the Board believe the consolidation is in the best interests of the shareholders
of the Fund. The information below describes the nature of the consolidation
with respect to each Series of the Fund.
FOR SHAREHOLDERS OF THE GROWTH STOCK FUND, BALANCED FUND AND
INTERNATIONAL STOCK FUND:
The Board of Trustees of the Fund recently approved plans of reorganization
whereby assets of the Series listed below would be exchanged for Class Z shares
(which have no sales or distribution fees) of PMF Funds as follows:
-- Growth Stock Fund assets in exchange for shares of Prudential Jennison
Fund, Inc.
-- Balanced Fund assets in exchange for shares of the Balanced Portfolio of
Prudential Allocation Fund
-- International Stock Fund assets in exchange for shares of the newly
created International Stock Series of Prudential Global Fund, Inc.
Each reorganization is subject to approval by the shareholders of the
relevant Series at a Special Meeting of Shareholders scheduled for September 6,
1996. If the reorganizations are approved by shareholders, each Series' assets
would be combined with the assets of the respective PMF Fund on or about
September 20, 1996. At that time, the shareholders of the Series will receive a
number of full and fractional Class Z shares of the applicable PMF Fund
corresponding to the value of the shareholder's investment in the Series.
FOR SHAREHOLDERS OF THE STOCK INDEX FUND:
To make the Stock Index Fund part of the PMF Funds, the Board of Trustees
of the Fund recently approved a new manager, distributor and transfer agent for
the Trust and new subadvisory agreements between the Fund's manager and
subadviser as detailed below. Specifically, the Board of Trustees approved
agreements necessary to:
-- Engage Prudential Mutual Fund Management, Inc. (PMF) as manager of the
Fund to replace Prudential Institutional Fund Management, Inc. (PIFM).
-- Engage Prudential Securities Incorporated (PSI) to replace Prudential
Retirement Services, Inc. as distributor of the Fund's shares.
-- Engage Prudential Mutual Fund Services, Inc. (PMFS) to replace PMF as
the Fund's transfer agent.
-- Continue to engage The Prudential Investment Corporation (PIC) as
subadviser to the Stock Index Fund.
PMF, PSI, PMFS and PIC each are wholly-owned subsidiaries of The Prudential
Insurance Company of America.
Each of the agreements is subject to approval by the shareholders of the
Series at a Special Meeting of Shareholders scheduled for October 8, 1996.
