<PAGE>
PRUDENTIAL GOVERNMENT INCOME FUND, INC.
(Class Z Shares)
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PROSPECTUS DATED APRIL 30, 1996
(AS SUPPLEMENTED ON SEPTEMBER 12, 1996)
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Prudential Government Income Fund, Inc. (the Fund), is an open-end, diversified,
management investment company, or mutual fund, which has as its investment
objective the seeking of a high current return. The Fund will seek to achieve
this objective primarily by investing in U.S. Government securities, including
U.S. Treasury Bills, Notes, Bonds and other debt securities issued by the U.S.
Treasury, and obligations issued or guaranteed by U.S. Government agencies or
instrumentalities, and by engaging in various derivative transactions such as
the purchase and sale of put and call options. In an effort to hedge against
changes in interest rates and thus preserve its capital, the Fund may also
engage in transactions involving futures contracts on U.S. Government securities
and options on such futures. 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 10292,
and its telephone number is (800) 225-1852.
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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 April
30, 1996, as supplemented, (the Retail Class Prospectus), which is a part
hereof.
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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 April 30, 1996, as supplemented,
which information is incorporated herein by reference (is legally considered to
be a part of this Prospectus) and is available without charge upon request to
the Fund at the address or telephone number noted above.
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INVESTORS ARE ADVISED TO READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE
REFERENCE.
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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>
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FUND EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS Z SHARES
----------------------
<S> <C>
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
<CAPTION>
ANNUAL FUND OPERATING EXPENSES* CLASS Z SHARES
----------------------
(as a percentage of average net assets)
<S> <C>
Management Fees.......................... .50%
12b-1 Fees............................... None
Other Expenses........................... .26
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Total Fund Operating Expenses............ .76
-----
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</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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<S> <C> <C> <C> <C>
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................. $8 $24 $42 $94
The above example is based on expenses expected to have been incurred if
Class Z shares had been in existence throughout the fiscal year ended
February 29, 1996. 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." "Other Expenses" includes operating expenses of the Fund,
such as Directors' and professional fees, registration fees, reports
to shareholders and transfer agency and custodian fees.
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* Estimated based on expenses expected to have been incurred if Class Z shares had
been in existence throughout the fiscal year ended February 29, 1996. Class Z shares
commenced being offered on March 1, 1996.
</TABLE>
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; and (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. 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 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 give
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
of any offer to buy any of the securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such offer in such jurisdiction.
-------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
FUND HIGHLIGHTS................................. 2
Risk Factors and Special Characteristics...... 2
FUND EXPENSES................................... 4
FINANCIAL HIGHLIGHTS............................ 5
HOW THE FUND INVESTS............................ 8
Investment Objective and Policies............. 8
Other Investments and Policies................ 9
Other Investment Information.................. 15
Investment Restrictions....................... 16
HOW THE FUND IS MANAGED......................... 17
Manager....................................... 17
Distributor................................... 18
Fee Waivers and Subsidy....................... 20
Portfolio Transactions........................ 20
Custodian and Transfer and Dividend Disbursing
Agent........................................ 20
HOW THE FUND VALUES ITS SHARES.................. 20
HOW THE FUND CALCULATES PERFORMANCE............. 20
TAXES, DIVIDENDS AND DISTRIBUTIONS.............. 21
GENERAL INFORMATION............................. 23
Description of Common Stock................... 23
Additional Information........................ 23
SHAREHOLDER GUIDE............................... 24
How to Buy Shares of the Fund................. 24
Alternative Purchase Plan..................... 24
How to Sell Your Shares....................... 27
Conversion Feature--Class B Shares............ 30
How to Exchange Your Shares................... 31
Shareholder Services.......................... 32
THE PRUDENTIAL MUTUAL FUND FAMILY............... A-1
</TABLE>
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MF128Z 4440464
CUSIP No.: Class Z: 744339-40-9
PRUDENTIAL
GOVERNMENT
INCOME
FUND, INC.
- --------------------
(CLASS Z SHARES)
PROSPECTUS
April 30, 1996
(as supplemented on September 12, 1996)
PRUDENTIAL MUTUAL FUNDS
BUILDING YOUR FUTURE
ON OUR STRENGTH-SM-
[LOGO]
<PAGE>
PRUDENTIAL GOVERNMENT INCOME FUND, INC.
Supplement dated September 12, 1996 to
Prospectus dated April 30, 1996
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, $.01 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 different sales charges and 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 Board of Directors may
determine.
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 Section 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 share of certain unaffiliated non-money market mutual funds that participate
in the PruArray or SmartPath Program (Participating Funds). "Existing assets"
also include shares of money market funds acquired by exchange form 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.
<PAGE>
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 or 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.
MF109C-1
<PAGE>
PRUDENTIAL GOVERNMENT INCOME FUND, INC.
Supplement dated September 12, 1996 to
Statement of Additional Information dated
April 30, 1996
THE FOLLOWING INFORMATION SUPPLEMENTS "DISTRIBUTOR" IN THE STATEMENT OF
ADDITIONAL INFORMATION:
Prudential Securities Incorporated 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 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 arrangements 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.
MF109C-2
