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Prudential Mutual Funds
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Prudential Diversified Bond Fund, Inc.
SUPPLEMENT DATED FEBRUARY 10, 2000 TO
PROSPECTUS DATED MARCH 2, 1999
At a meeting of the Board of Directors of Prudential Diversified Bond Fund,
Inc. (the Fund), held on February 7, 2000, the Board of Directors approved: (1)
an amendment of the investment objective of the Fund, and (2) amendments to the
Fund's fundamental investment restrictions relating to (a) borrowing
transactions, (b) the making of loans, and (c) investments in securities of
other investment companies. None of these amendments can be implemented without
shareholder approval. A shareholder meeting has been scheduled for April 19,
2000. If the proposed amendments are approved by shareholders at the shareholder
meeting, the Fund's prospectus and statement of additional information will be
revised as appropriate to reflect the amendments.
The current investment objective of the Fund is high current income
consistent with an appropriate balance between risk and reward. The Board of
Directors has approved an amendment to change the Fund's investment objective to
a prudent mix of current income and capital appreciation. As a result of the
change, the Fund will seek total return (which consists of both current income
and capital appreciation), rather than primarily high current income. If the
proposed new investment objective is approved by shareholders, the Fund will
continue to invest in bonds and other fixed-income securities in different
sectors of the fixed-income securities markets, although the Fund's current
yield likely will be lower than it would be under the existing objective, and
the Fund's potential for total return, i.e., yield plus capital appreciation,
could be increased.
If the change in investment objective is approved by shareholders, The
Prudential Investment Corporation, doing business as Prudential Investments (the
Investment Adviser), does not contemplate any immediate material changes in the
Fund's portfolio composition. However, to obtain greater flexibility to take
advantage of total return opportunities, the Investment Adviser has indicated
that a primary difference in how it may manage the Fund in the future, depending
on market conditions and the available price and yield of other types of
securities,
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would be in the percentage of Fund assets permitted to be invested in below
investment-grade securities, also known as high-yield or 'junk' bonds. If the
investment objective is changed, this limit would be increased from 35% of net
assets to 50% of total assets. The Investment Adviser has also indicated that if
the change in investment objective is approved by shareholders, the Fund will
increase its authority to invest in privately issued asset-backed securities
from the current limit, which is 25% of total assets up to 35% of total assets,
to provide the Fund with greater flexibility in pursuing its investment program.
The Investment Adviser has no present intention to increase the Fund's current
holdings of privately issued asset-backed securities. The risks related to
investment in below investment-grade securities and privately issued
asset-backed securities are discussed in the Fund's current prospectus. To the
extent the Fund increases its exposure to these securities, it will be subject
to greater risks.
If the proposal to change the Fund's investment objective is approved by the
Fund's shareholders, the Fund intends to change its name to Prudential Total
Return Bond Fund, Inc.
