Prudential Diversified Funds
                       Supplement dated November 5, 1998
                      to Prospectus dated October 5, 1998

Waiver of Initial Sales Charge--Class A Shares

    The paragraph under "Alternative Purchase Plan--Class A Shares--Reduction
and Waiver of Initial Sales Charges--Benefit Plans" is amended to read in its
entirety as follows:

    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, deferred compensation
and annuity plans under Sections 457 and 403 (b)(7) of the Internal Revenue Code
and non-qualified deferred compensation plans that are sponsored by any employer
that has a tax qualified benefit plan with Prudential (collectively, Benefit
Plans), provided that the Benefit 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
recordkeeping (Direct Account Benefit Plans) and Benefit Plans sponsored by
Prudential, Prudential Securities or its subsidiaries (Prudential Securities 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.

Waiver of Initial Sales Charge--Class C Shares

    The section entitled "Alternative Purchase Plan--Waiver of Initial Sales
Charge--Class C Shares" is amended to read in its entirety as follows:

    Benefit Plans. Class C shares may be purchased at NAV, without payment of an
initial sales charge, by Benefit Plans (as defined above). 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 recordkeeping (Direct Account Benefit Plans) and Benefit
Plans sponsored by Prudential, Prudential Securities or its subsidiaries
(Prudential Securities or Subsidiary Prototype Benefit Plans), Class C shares
may be purchased at NAV by participants who are repaying the loans made from
such plans to the participant.


    Prudential Retirement Plans. The initial sales charge will be waived with
respect to purchases of Class C shares by qualified and non-qualified retirement
and deferred compensation plans participating in the PruArray Plan and other
plans for which Prudential provides administrative or recordkeeping services.

    Investments of Redemption Proceeds from Other Investment Companies.
Investors may purchase Class C shares at NAV, without the initial sales charge,
with the proceeds from the redemption of shares of any unaffiliated registered
investment company which were not held through an account with any Prudential
affiliate. Such purchases must be made within 60 days of the redemption.
Investors eligible for this waiver include: (i) investors purchasing shares
through an account at Prudential Securities Incorporated; (ii) investors
purchasing shares through an ADVANTAGE Account or an Investor Account with Pruco
Securities Corporation; and (iii) investors purchasing shares through other
Dealers. This waiver is not available to investors who purchase shares directly
from the Transfer Agent. You must notify the Transfer Agent directly or through
your Dealer if you are entitled to this waiver and provide the Transfer Agent
with such supporting documents as it may deem appropriate.
Waiver of Class C Contingent Deferred Sales Charges

    The section entitled "How to Sell Your Shares--Waiver of Contingent Deferred
Sales Charges--Class C Shares" is amended to read in its entirety as follows:

    Prudential Retirement Plans. The CDSC will be waived on redemptions from
qualified and non-qualified retirement and deferred compensation plans that
participate in the PruArray Program and other plans for which Prudential
provides administrative or recordkeeping services. The CDSC will also be waived
on redemptions from Benefit Plans sponsored by Prudential and its affiliates to
the extent that the redemption proceeds are invested in The Guaranteed
Investment Account, a group annuity insurance product issued by Prudential, the
Guaranteed Insulated Separate Account, a separate account offered by Prudential,
and units of The Stable Value Fund, an unaffiliated bank collective fund.

    Other Benefit Plans. The CDSC will be waived on redemptions from Benefit
Plans holding shares through a Dealer not affiliated with Prudential and for
whom the Dealer provides administrative or recordkeeping services.

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