PRUDENTIAL GOVERNMENT INCOME FUND INC, 485BPOS, 1996-03-01

PRUDENTIAL GOVERNMENT INCOME FUND INC
485BPOS, 1996-03-01

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 1996

REGISTRATION NOS. 2-82976
811-3712
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

PRE-EFFECTIVE AMENDMENT NO. / /

POST-EFFECTIVE AMENDMENT NO. 21 /X/

AND/OR

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/

AMENDMENT NO. 24 /X/

(Check appropriate box or boxes)

------------------------

PRUDENTIAL GOVERNMENT INCOME FUND, INC.

(Formerly Prudential-Bache Government Plus Fund, Inc. doing business as
Prudential Government Plus Fund)
(Exact name of registrant as specified in charter)

ONE SEAPORT PLAZA,
NEW YORK, NEW YORK 10292
(Address of Principal Executive Offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 214-1250

S. JANE ROSE, ESQ.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
(NAME AND ADDRESS OF AGENT FOR SERVICE OF PROCESS)

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE
DATE OF THE REGISTRATION STATEMENT.

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE
(CHECK APPROPRIATE BOX):

<TABLE>
<C> <S>
/X/ immediately upon filing pursuant to paragraph (b)

/ / on (date) pursuant to paragraph (b)

/ / 60 days after filing pursuant to paragraph (a)(1)

/ / on (date) pursuant to paragraph (a)(1)

/ / 75 days after filing pursuant to paragraph (a)(2)

/ / on (date) pursuant to paragraph (a)(2) of Rule
485.
If appropriate, check the following box:

/ / This post-effective amendment designates a new
effective date for a previously filed
post-effective amendment.
</TABLE>

PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT
HAS PREVIOUSLY REGISTERED AN INDEFINITE NUMBER OF SHARES OF COMMON STOCK, PAR
VALUE $.01 PER SHARE. THE REGISTRANT FILED A NOTICE UNDER SUCH RULE FOR ITS
FISCAL YEAR ENDED FEBRUARY 28, 1995 ON OR ABOUT APRIL 28, 1995.

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<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)

<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- ---------------------------------------------------------------------------- ------------------------------------
<S> <C> <C>
PART A
Item 1. Cover Page....................................................... Cover Page
Item 2. Synopsis......................................................... Fund Expenses; Fund Highlights
Item 3. Condensed Financial Information.................................. Fund Expenses; Financial Highlights
Item 4. General Description of Registrant................................ Cover Page; Fund Highlights; How the
Fund Invests; How the Fund is
Managed; General Information
Item 5. Management of the Fund........................................... Financial Highlights; How the Fund
is Managed; General Information
Item 6. Capital Stock and Other Securities............................... Taxes, Dividends and Distributions;
General Information
Item 7. Purchase of Securities Being Offered............................. Shareholder Guide; How the Fund
Values its Shares
Item 8. Redemption or Repurchase......................................... Shareholder Guide; How the Fund
Values its Shares; General
Information
Item 9. Pending Legal Proceedings........................................ Not Applicable
PART B
Item 10. Cover Page....................................................... Cover Page
Item 11. Table of Contents................................................ Table of Contents
Item 12. General Information and History.................................. General Information
Item 13. Investment Objectives and Policies............................... Investment Objective and Policies;
Investment Restrictions
Item 14. Management of the Fund........................................... Directors and Officers; Manager;
Distributor
Item 15. Control Persons and Principal Holders of Securities.............. Not Applicable
Item 16. Investment Advisory and Other Services........................... Manager; Distributor; Custodian,
Transfer and Dividend Disbursing
Agent and Independent Accountants
Item 17. Brokerage Allocation and Other Practices......................... Portfolio Transactions and Brokerage
Item 18. Capital Stock and Other Securities............................... Not Applicable
Item 19. Purchase, Redemption and Pricing of Securities Being Offered..... Purchase and Redemption of Fund
Shares; Shareholder Investment
Account
Item 20. Tax Status....................................................... Taxes, Dividends and Distributions
Item 21. Underwriters..................................................... Distributor
Item 22. Calculation of Performance Data.................................. Performance Information
Item 23. Financial Statements............................................. Financial Statements
</TABLE>

PART C

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Post-Effective Amendment to
the Registration Statement.
<PAGE>

PRUDENTIAL GOVERNMENT INCOME FUND, INC.

(Class Z Shares)

- ----------------------------------------------------

PROSPECTUS DATED MARCH 1, 1996

- ----------------------------------------------------------------

Prudential Government Income Fund, Inc. (formerly, Prudential-Bache Government
Plus 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.

- --------------------------------------------------------------------------------

Class Z shares are offered exclusively for sale to participants in the PSI
401(k) Plan, an employee benefit plan sponsored by Prudential Securities
Incorporated (the PSI 401(k) Plan or the Plan). 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 May 1, 1995 (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 May 1, 1995, 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.

- --------------------------------------------------------------------------------

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>
- --------------------------------------------------------------------------------

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

ANNUAL FUND OPERATING EXPENSES* CLASS Z SHARES
----------------------
<S> <C>
(as a percentage of average net assets)
Management Fees.......................... .50%
12b-1 Fees............................... None
Other Expenses........................... .30
-----
Total Fund Operating Expenses............ .80%
-----
-----
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- --------- --------- ---------
<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 $26 $44 $99
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 28, 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." "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.
- -------------
* Estimated based on expenses expected to have been incurred if Class Z shares had
been in existence throughout the fiscal year ended February 28, 1995.
</TABLE>

2
<PAGE>

THE FOLLOWING INFORMATION SUPPLEMENTS "HOW THE FUND IS MANAGED--DISTRIBUTOR" IN
THE 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 "TAXES, DIVIDENDS AND
DISTRIBUTIONS--TAXATION OF SHAREHOLDERS" IN THE RETAIL CLASS PROSPECTUS:

As a qualified plan, the PSI 401(k) Plan generally pays no federal income
tax. Individual participants in the Plan should consult Plan documents and their
own tax advisers for information on the tax consequences associated with
participating in the PSI 401(k) Plan.

The per share dividends on Class Z shares will generally be higher than the
per share dividends on Class A, Class B or Class C shares as a result of the
fact that Class Z shares are not subject to any distribution or service fee.

THE FOLLOWING INFORMATION REPLACES THE INFORMATION UNDER "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 offered exclusively for sale to participants
in the PSI 401(k) Plan. Such shares may be purchased or redeemed only by the
Plan on behalf of individual Plan participants at NAV without any sales or
redemption charge. Class Z shares are not subject to any minimum investment
requirements. The Plan purchases and redeems shares to implement the investment
choices of individual Plan participants with respect to their contributions in
the Plan. All purchases through the Plan will be for Class Z shares. Effective
as of March 1, 1996, Class A shares held through the PSI 401(k) Plan on behalf
of participants will be automatically exchanged at relative net asset value for
Class Z shares. Individual Plan participants should contact the Prudential
Securities Benefits Department for information on making or changing of
investment choices. The Prudential Securities Benefits Department is located at
One Seaport Plaza, 33rd Floor, New York, New York 10292 and may be reached by
calling (212) 214-7194.

The average net asset value per share at which shares of the Fund are
purchased or redeemed by the Plan for the accounts of individual Plan
participants might be more or less than the net asset value per share prevailing
at the time that such participants made their investment choices or made their
contributions to the Plan.

THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER GUIDE--HOW TO EXCHANGE YOUR
SHARE" IN THE RETAIL CLASS PROSPECTUS:

Class Z shareholders of the Fund may exchange their Class Z shares for Class
Z shares of certain other Prudential Mutual Funds on the basis of relative net
asset value. You should contact the Prudential Securities Benefits Department
about how to exchange your Class Z shares. See "How to Buy Shares of the Fund"
above. Participants 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.

THE INFORMATION ABOVE ALSO SUPPLEMENTS THE INFORMATION UNDER "FUND
HIGHLIGHTS" IN THE RETAIL CLASS PROSPECTUS AS APPROPRIATE.

3
<PAGE>

PRUDENTIAL GOVERNMENT INCOME FUND, INC.
Supplement dated March 1, 1996 to
Prospectus dated May 1, 1995

THE FOLLOWING INFORMATION SUPPLEMENTS "FINANCIAL HIGHLIGHTS" IN THE PROSPECTUS:

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED)
(CLASS A, CLASS B AND CLASS C SHARES)

The following financial highlights for Class A, Class B and Class C shares are
unaudited. This information should be read in conjunction with the financial
statements and the notes thereto, which appear in the Statement of Additional
Information. The financial highlights contain selected data for a Class A, Class
B and Class C share of common stock, respectively, outstanding, total return,
ratios to average net assets and other supplemental data for the period
indicated. The information has been determined based on data contained in the
financial statements. No Class Z shares were outstanding during the indicated
period.

<TABLE>
<CAPTION>
SIX MONTHS ENDED AUGUST 31, 1995
----------------------------------
CLASS A CLASS B CLASS C
-------- -------- --------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 8.59 $ 8.60 $ 8.60
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................................. 0.30 0.27 0.27
Net realized and unrealized gain (loss) on investments................ 0.39 0.39 0.39
-------- -------- --------
Total from investment operations.................................. 0.69 0.66 0.66
-------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income.................................. (0.30) (0.27) (0.27)
-------- -------- --------
Net asset value, end of period........................................ $ 8.98 $ 8.99 $ 8.99
-------- -------- --------
-------- -------- --------
TOTAL RETURN (b)...................................................... 8.12% 7.75% 7.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)....................................... $915,779 $621,267 $606
Average net assets (000).............................................. $892,079 $671,724 $414
Ratios to average net assets: (a)
Expenses, including distribution fees............................... 0.96% 1.63% 1.56%
Expenses, excluding distribution fees............................... 0.81% 0.81% 0.81%
Net investment income............................................... 6.78% 6.11% 6.16%
Portfolio turnover rate............................................... 70% 70% 70%
<FN>
-------------
(a) Annualized.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
</TABLE>

<PAGE>
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 any distribution and/or service fee), (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 not subject
to any sales or redemption charge and are offered exclusively for sale to the
Trustee of the PSI 401(k) Plan. 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.
Currently, the Fund is offering four classes, designated Class A, Class B, Class
C and Class Z shares.

MF128A-2

2
<PAGE>

PRUDENTIAL GOVERNMENT INCOME FUND, INC.
Supplement dated March 1, 1996 to
Statement of Additional Information dated May 1, 1995

THE FOLLOWING INFORMATION SUPPLEMENTS "DIRECTORS AND OFFICERS" IN THE STATEMENT
OF ADDITIONAL INFORMATION:

As of February 9, 1996, the directors and officers of the Fund, as a group,
owned less than 1% of the outstanding common stock of the Fund.

As of February 9, 1996: Prudential Securities C/F, Donald St. Hilaire IRA DTD
12/19/94, 125 Main Street, Hoosick Falls, New York owned 10,723 Class C shares
(approximately 5.6% of the outstanding Class C shares); Anthony Tarantino &
Frances Tarantino JT TEN, 656 Guy Lombardo Avenue, Freeport, New York owned
14,297 Class C shares (approximately 7.5% of the outstanding Class C shares);
and H-M Co Post 237 American Legion, 2900 Drake Avenue SW, Huntsville, Alabama
owned 12,019 Class C shares (approximately 6.3% of the outstanding Class C
shares).

As of February 9, 1996, Prudential Securities was the record holder for other
beneficial owners of 64,328,897 Class A shares (or 61.4% of the outstanding
Class A shares), 40,272,928 Class B shares (or 56.5% of the outstanding Class B
shares) and 133,928 Class C shares (or 70.5% of the outstanding Class C shares)
of the Fund. In the event of any meetings of shareholders, Prudential Securities
will forward, or cause the forwarding of, proxy materials to the beneficial
owners for which it is the record holder.

THE FOLLOWING INFORMATION SUPPLEMENTS "DISTRIBUTOR" IN THE STATEMENT OF
ADDITIONAL INFORMATION:

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 not subject to any sales or redemption charge and are offered exclusively
for sale to the Trustee of the Prudential Securities 401(k) Plan, a defined
contribution plan sponsored by Prudential Securities (the PSI 401(k) Plan). 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 or redemption charge or to any distribution
and/or service fee), (ii) each class has exclusive voting rights with respect to
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
the Trustee of the PSI 401(k) Plan. See "Distributor" and "Shareholder
Investment Account--Exchange Privilege."
<PAGE>
SPECIMEN PRICE MAKE-UP

Under the current distribution arrangement between the Fund and the
Distributor, Class A shares are sold with a maximum sales charge of 4% and Class
B*, Class C* and Class Z** shares are sold at net asset value. Using the Fund's
net asset value at August 31, 1995, the maximum offering price of the Fund's
shares is as follows:

<TABLE>
<S> <C>
CLASS A
Net asset value and redemption price per Class A share....... $ 8.98
Maximum sales charge (4% of offering price).................. .37
---------
Offering price to public..................................... 9.35
---------
---------
CLASS B
Net asset value, offering price and redemption price per
Class B share*.............................................. $ 8.99
---------
---------
CLASS C
Net asset value, offering price and redemption price per
Class C share*.............................................. $ 8.99
---------
---------
CLASS Z
Net asset value, offering price and redemption price per
Class Z share**............................................. $ 8.98
---------
---------
</TABLE>

- ------------

*Class B and Class C shares are subject to a contingent deferred sales
charge on certain redemptions. See "Shareholder Guide--How to Sell
Your Shares--Contingent Deferred Sales Charges" in the Prospectus.

**Class Z shares were not offered prior to March 1, 1996.

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 the funds
listed below which participate in the PSI 401(k) Plan. No fee or sales load will
be imposed upon the exchange.

Prudential Allocation Fund
(Balanced Portfolio)
Prudential Equity Income Fund
Prudential Equity Fund, Inc.
Prudential Global Fund, Inc.
Prudential Government Securities Trust
(Money Market Series)
Prudential Growth Opportunity Fund, Inc.
Prudential High Yield Fund, Inc.
Prudential Jennison Fund, Inc. (expected to be available later in 1996)
Prudential MoneyMart Assets, Inc.
Prudential Multi-Sector Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential Utility Fund, Inc.

2
<PAGE>
THE FOLLOWING INFORMATION SUPPLEMENTS "PERFORMANCE INFORMATION" IN THE STATEMENT
OF ADDITIONAL INFORMATION:

AVERAGE ANNUAL TOTAL RETURN. The Fund may from time to time advertise its
average annual total return. Average annual total return is determined
separately for Class A, Class B, Class C and Class Z shares. See "How the Fund
Calculates Performance" in the Prospectus.

The average annual total return for Class A shares for the one year, five year
and since inception (January 22, 1990) periods ended August 31, 1995 was 4.1%,
7.8% and 7.2%, respectively. The average annual total return for the Class B
shares of the Fund for the one, five and ten year periods ended on August 31,
1995 was 1.9%, 7.8% and 7.0%, respectively. The average annual total return for
Class C shares for the one year and since inception (August 1, 1994) periods
ended August 31, 1995 was 5.7% and 6.3%, respectively. During these periods, no
Class Z shares were outstanding.

AGGREGATE TOTAL RETURN. The Fund may also advertise its aggregate total
return. Aggregate total return is determined separately for Class A, Class B,
Class C and Class Z shares. See "How the Fund Calculates Performance" in the
Prospectus.

The aggregate total return for Class A shares for the one year, five year and
since inception (January 22, 1990) periods ended August 31, 1995 was 7.4%, 49.8%
and 51.9%, respectively. The aggregate total return with respect to the Class B
shares of the Fund for the one, five and ten-year periods ended on August 31,
1995 was 6.9%, 46.8%, and 76.7%, respectively. The aggregate total return for
Class C shares for the one year and since inception (August 1, 1994) periods
ended August 31, 1995 was 6.7% and 6.3%, respectively. During these periods, no
Class Z shares were outstanding.

YIELD. The Fund may from time to time advertise its yield as calculated over a
30-day period. Yield is calculated separately for Class A, Class B, Class C and
Class Z shares. The Fund's 30-day yields for the 30-day period ended August 31,
1995 for the Fund's Class A, Class B and Class C shares was 5.8%, 5.4% and 5.5%,
respectively. During this period, no Class Z shares were outstanding.

The following financial statements are unaudited and are based upon the
results of operations for the interim period ended August 31, 1995. Included
therein are all adjustments, if any, which are, in the opinion of management,
necessary to a fair statement of the results for the interim period presented.

3
<PAGE>

Portfolio of Investments as of August 31, 1995 (Unaudited) PRUDENTIAL
GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--97.1%
- ------------------------------------------------------------
U.S. Government Agency Mortgage Pass-Throughs--40.3%
Federal Home Loan Mortgage Corp.,
$44,814 7.50%, 2/01/22 - 4/01/25 $ 44,994,996
79,875 8.00%, 1/01/22 - 9/01/24 81,497,690
7,339 8.50%, 6/01/07 - 4/01/20 7,594,929
3,531 11.50%, 10/01/19 3,891,223
Federal National Mortgage Assoc.,
25,055 6.50%, 10/01/23 - 6/01/24 24,068,386
54,638 7.00%, 2/01/24 - 5/01/24 53,699,062
42,516 7.50%, 4/01/07 - 5/01/10 43,206,652
52,851 8.50%, 6/01/17 - 3/01/25 54,543,141
12,113 9.00%, 4/01/25 12,623,727
Government National Mortgage
Assoc.,
57,826 6.50%, 5/15/23 - 10/15/24 55,422,202
92,712 7.00%, 2/15/09 - 11/15/24 91,118,648
29,170 7.50%, 5/15/02 - 6/15/25 29,348,448
46,309 8.00%, 7/15/16 - 3/15/24 47,771,856
30,377 9.00%, 4/15/01 - 12/15/09 31,829,774
29,309 9.50%, 10/15/09 - 12/15/17 31,362,608
Government National Mortgage
Assoc. II,
6,061 9.50%, 5/20/18 - 8/20/21 6,358,100
---------------
Total U.S. Government Agency
Mortgage Pass-Throughs
(cost $599,256,734) 619,331,442
- ----------------------------------------------------------------
U.S. Government Obligations--38.8%
United States Treasury Bonds,
100,000 8.75%, 8/15/20 123,266,000
40,000 10.75%, 2/15/03 50,543,600
68,000 12.00%, 8/15/13 99,556,080
143,000(b) 12.50%, 8/15/14 218,566,920
28,000(b) 14.00%, 11/15/11 44,467,360
United States Treasury Note,
50,000 7.50%, 2/15/05 54,047,000
United States Treasury Strip,
35,000 Zero Coupon, 5/15/20 6,380,500
---------------
Total U.S. Government Obligations
(cost $576,531,401) 596,827,460
U.S. Government Agency Securities--15.1%
Federal Home Loan Mortgage Corp.,
$34,000 6.71%, 6/11/02 $ 34,015,980
24,810 6.99%, 5/24/02 25,077,454
25,000 8.20%, 1/16/98 25,625,000
Federal National Mortgage Assoc.,
45,000 6.55%, 9/12/05 45,063,450
40,000 6.85%, 5/26/00 40,456,400
3,011 Trust 1991 G-37 Class C, (I/O(a)) 97,858
Israel AID,
37,600 Zero Coupon, 5/15/15 9,298,480
37,600 Zero Coupon, 5/15/16 8,632,960
Resolution Funding Corp.,
50,000 Zero Coupon, 7/15/20 8,713,500
Tennessee Valley Authority,
35,000 6.235%, 7/15/45 34,871,550
---------------
Total U.S. Government Agency
Securities (cost $228,749,924) 231,852,632
- ----------------------------------------------------------------
Asset-Backed Securities--2.6%
John Deere Owner Trust,
40,000 Series 1995-2A, 5.97%, 5/15/02
(cost $39,993,360) 39,987,500
- ----------------------------------------------------------------
Adjustable Rate Mortgage Pass-Throughs--0.3%
Ryland Mortgage Securities
Corporation,
Mortgage Participation Securities,
Series 1993-3, Class A-3,
7.57%, 9/25/24
5,430 (cost $5,538,598) 5,368,923
------------------------------------------------------------
Total long-term investments
(cost $1,450,070,017) 1,493,367,957
---------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

<PAGE>

PRUDENTIAL GOVERNMENT INCOME FUND
Portfolio of Investments as of August 31, 1995 (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ----------------------------------------------------------------
SHORT-TERM INVESTMENTS--2.8%
- ----------------------------------------------------------------
Commercial Paper--2.8%
Associates Corp. of North America,
$9,758 5.86%, 9/01/95 $ 9,758,000
Dai-Ichi Kangyo Bank, Ltd.,
32,480 5.875%, 9/01/95 32,480,000
---------------
Total Commercial Paper
(cost $42,238,000) 42,238,000
------------------------------------------------------------
Total Investments, Before Outstanding Option Written--99.9%
(cost $1,492,308,017; Note 4) 1,535,605,957
Contracts(c)
- ---------
OUTSTANDING PUT OPTION WRITTEN
United States Treasury Note,
expiring October '95 @ $105.23
50 (premium received $234,375) (85,937)
- ----------------------------------------------------------------
Total Investments, Net of Outstanding Option
Written--99.9% 1,535,520,020
Other assets in excess of
liabilities--0.1% 2,132,373
---------------
Net Assets--100% $ 1,537,652,393
---------------
---------------
</TABLE>
- ---------------
AID--Agency for International Development.
I/O--Interest Only.
(a) REMIC--Real Estate Mortgage Investment Conduit.
(b) Principal amount segregated as collateral for options written. Approximate
aggregate value of segregated securities--$263,000,000.
(c) One contract equals $10,000 of par value.
- --------------------------------------------------------------------------------
5 See Notes to Financial Statements.

<PAGE>

Statement of Assets and Liabilities (Unaudited) PRUDENTIAL GOVERNMENT INCOME
FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets August 31, 1995
Investments, at value (cost $1,492,308,017)............................................................... $1,535,605,957
Cash...................................................................................................... 32,984
Receivable for investments sold........................................................................... 45,278,200
Interest receivable....................................................................................... 9,452,907
Receivable for Fund shares sold........................................................................... 561,663
Deferred expenses and other assets........................................................................ 323,026
---------------
Total assets........................................................................................... 1,591,254,737
---------------
Liabilities
Payable for investments purchased......................................................................... 44,921,250
Payable for Fund shares reacquired........................................................................ 3,688,397
Accrued expenses.......................................................................................... 2,650,700
Dividends payable......................................................................................... 1,059,064
Management fee payable.................................................................................... 646,455
Distribution fee payable.................................................................................. 550,541
Outstanding call option written, at value (premiums received $234,375).................................... 85,937
---------------
Total liabilities...................................................................................... 53,602,344
---------------
Net Assets................................................................................................ $1,537,652,393
---------------
---------------
Net assets were comprised of:
Common stock, at par................................................................................... $ 1,711,677
Paid-in capital in excess of par....................................................................... 1,640,503,786
---------------
1,642,215,463
Accumulated net realized losses on investments......................................................... (148,009,448 )
Net unrealized appreciation on investments............................................................. 43,446,378
---------------
Net assets at August 31, 1995............................................................................. $1,537,652,393
---------------
---------------
Class A:
Net asset value and redemption price per share
($915,779,454 / 101,971,531 shares of common stock issued and outstanding).......................... $8.98
Maximum sales charge (4.0% of offering price).......................................................... .37
---------------
Maximum offering price to public....................................................................... $9.35
---------------
---------------
Class B:
Net asset value, offering price and redemption price per share
($621,267,120 / 69,128,757 shares of common stock issued and outstanding)........................... $8.99
---------------
---------------
Class C:
Net asset value, offering price and redemption price per share
($605,819 / 67,409 shares of common stock issued and outstanding)................................... $8.99
---------------
---------------
</TABLE>

- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6

<PAGE>

PRUDENTIAL GOVERNMENT INCOME FUND
Statement of Operations (Unaudited)
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income August 31, 1995
---------------
<S> <C>
Income
Interest................................. $ 60,956,414
Income from securities loaned-net........ 118,813
---------------
61,075,227
---------------
Expenses
Distribution fee--Class A................ 672,715
Distribution fee--Class B................ 2,786,004
Distribution fee--Class C................ 1,562
Management fee........................... 3,931,912
Transfer agent's fees and expenses....... 1,241,000
Custodian's fees and expenses............ 600,000
Franchise taxes.......................... 314,000
Reports to shareholders.................. 127,000
Registration fees........................ 47,000
Audit fee................................ 32,000
Legal fees............................... 29,000
Insurance expense........................ 26,000
Directors' fees.......................... 24,000
Miscellaneous............................ 5,255
---------------
Total expenses........................ 9,837,448
---------------
Net investment income....................... 51,237,779
---------------
Realized and Unrealized
Gain on Investments
Net realized gain:
Investment transactions.................. 25,140,083
Written option transactions.............. 182,032
---------------
25,322,115
---------------
Net change in unrealized appreciation on:
Investments.............................. 44,094,257
Written options.......................... 148,438
---------------
44,242,695
---------------
Net gain on investments..................... 69,564,810
---------------
Net Increase in Net Assets
Resulting from Operations................... $ 120,802,589
---------------
---------------
</TABLE>
PRUDENTIAL GOVERNMENT INCOME FUND
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year Ended
Increase (Decrease) Ended February 28,
in Net Assets August 31, 1995 1995
---------------- --------------
<S> <C> <C>
Operations
Net investment income....... $ 51,237,779 $ 114,223,550
Net realized gain (loss) on
investment
transactions............. 25,322,115 (93,893,429)
Net change in unrealized
appreciation on
investments.............. 44,242,695 (39,470,823)
-------------- --------------
Net increase (decrease) in
net assets resulting from
operations............... 120,802,589 (19,140,702)
-------------- --------------
Dividends to shareholders
from net investment
income
(Note 1)
Class A.................. (30,507,134) (7,117,500)
Class B.................. (20,717,784) (107,101,716)
Class C.................. (12,861) (4,334)
-------------- --------------
(51,237,779) (114,223,550)
-------------- --------------
Fund share transactions (net of
share conversions) (Note 5)
Net proceeds from shares
subscribed............... 37,545,612 79,769,541
Net asset value of shares
issued to shareholders in
reinvestment of dividends
and distributions........ 29,425,496 64,092,911
Cost of shares reacquired... (175,964,452) (687,645,132)
-------------- --------------
Decrease in net assets from
Fund share
transactions............. (108,993,344) (543,782,680)
-------------- --------------
Total decrease................. (39,428,534) (677,146,932)
Net Assets
Beginning of period............ 1,577,080,927 2,254,227,859
-------------- --------------
End of period.................. $1,537,652,393 $1,577,080,927
-------------- --------------
-------------- --------------
</TABLE>

- --------------------------------------------------------------------------------
7 See Notes to Financial Statements.

<PAGE>

Notes to Financial Statements (Unaudited) PRUDENTIAL GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
Prudential Government Income Fund (the ``Fund'') is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. Investment operations commenced on April 22, 1985.
The Fund's investment objective is to seek 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.
- -----------------------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Security Valuation: The Fund values portfolio securities on the basis of current
market quotations provided by dealers or by a pricing service approved by the
Board of Directors, which uses information such as quotations from dealers,
market transactions in comparable securities, various relationships between
securities and calculations on yield to maturity in determining values. Options
and financial futures contracts listed on exchanges are valued at their closing
price on the applicable exchange. When market quotations are not readily
available, a security is valued at fair value as determined in good faith by or
under the direction of the Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
In connection with repurchase agreement transactions, the Fund's custodian, or
designated subcustodians as the case may be under triparty repurchase
agreements, takes possession of the underlying collateral securities, the value
of which exceeds the principal amount of the repurchase transaction, including
accrued interest. To the extent that any repurchase transaction exceeds one
business day, the value of the collateral is marked-to-market on a daily basis
to ensure the adequacy of the collateral. If the seller defaults and the value
of the collateral declines or if bankruptcy proceedings are commenced with
respect to the seller of the security, realization of the collateral by the Fund
may be delayed or limited.
Options: The Fund may either purchase or write options in order to hedge against
adverse market movements or fluctuations in value caused by changes in
prevailing interest rates with respect to securities which the Fund currently
owns or intends to purchase. The Fund's principal reason for writing options is
to realize, through receipt of premiums, a greater current return than would be
realized on the underlying security alone. When the Fund purchases an option, it
pays a premium and an amount equal to that premium is recorded as an investment.
When the Fund writes an option, it receives a premium and an amount equal to
that premium is recorded as a liability. The investment or liability is adjusted
daily to reflect the current market value of the option. If an option expires
unexercised, the Fund realizes a gain or loss to the extent of the premium
received or paid. If an option is exercised, the premium received or paid is an
adjustment to the proceeds from the sale or the cost of the purchase in
determining whether the Fund has realized a gain or loss. The difference between
the premium and the amount received or paid on effecting a closing purchase or
sale transaction is also treated as a realized gain or loss. Gain or loss on
purchased options is included in net realized gain (loss) on investment
transactions. Gain or loss on written options is presented separately as net
realized gain (loss) on written option transactions.
The Fund, as a writer of an option, may have no control over whether the
underlying securities may be sold (called) or purchased (put). As a result, the
Fund bears the market risk of an unfavorable change in the price of the security
underlying the written option. The Fund, as purchaser of an option, bears the
risk of the potential inability of the counterparties to meet the terms of their
contracts.
Dollar Rolls: The Fund enters into mortgage dollar rolls in which the Fund sells
mortgage securities for delivery in the current month, realizing a gain or loss
and simultaneously contracts to repurchase somewhat similar (same type, coupon
and maturity) securities on a specified future date. During the roll period, the
Fund forgoes principal and interest paid on the securities. The Fund is
compensated by the interest earned on the cash proceeds of the initial sale and
by the lower repurchase price at the future date. The difference between the
sales proceeds and the lower repurchase price is recorded as interest income.
The Fund maintains a segregated account, the dollar value of which is at least
equal to its obligations, in respect of dollar rolls. There were no dollar rolls
outstanding as of August 31, 1995.
Securities Lending: The Fund may lend its U.S. Government securities to
broker-dealers or government securities dealers. The loans are secured by
collateral at least equal at all times to the market value of the securities
- --------------------------------------------------------------------------------
8

<PAGE>

Notes to Financial Statements (Unaudited) PRUDENTIAL GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
loaned. The Fund may bear the risk of delay in recovery of, or even loss of
rights in, the securities loaned should the borrower of the securities fail
financially. The Fund receives compensation for lending its securities in the
form of fees or it retains a portion of interest on the investment of any cash
received as collateral. The Fund also continues to receive interest on the
securities loaned and any gain or loss in the market price of the securities
loaned that may occur during the term of the loan will be for the account of the
Fund. There were no loans outstanding as of August 31, 1995.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains or losses on sales of securities are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis. Net investment income (other than distribution fees) and
unrealized and realized gains or losses are allocated daily to each class of
shares based upon the relative proportion of net assets of each class at the
beginning of the day.
Dividends and Distributions: The Fund declares daily and pays monthly dividends
from net investment income. The Fund will distribute at least annually any net
capital gains in excess of loss carryforwards. Dividends and distributions are
recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
Federal Income Taxes: It is the Fund's policy to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable net income to its shareholders.
Therefore, no federal income tax provision is required.
- ------------------------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Mutual Fund Management, Inc.
(``PMF''). Pursuant to this agreement, PMF has responsibility for all investment
advisory services and supervises the subadviser's performance of such services.
PMF has entered into a subadvisory agreement with The Prudential Investment
Corporation (``PIC''); PIC furnishes investment advisory services in connection
with the management of the Fund. PMF pays for the cost of the subadviser's
services, the compensation of officers of the Fund, occupancy and certain
clerical and bookkeeping costs of the Fund. The Fund bears all other costs and
expenses.
The management fee paid PMF is computed daily and payable monthly, at an annual
rate of .50 of 1% of the Fund's average daily net assets up to $3 billion and
.35 of 1% of the average daily net assets of the Fund in excess of $3 billion.
The Fund has distribution agreements with Prudential Mutual Fund Distributors,
Inc. (``PMFD''), who acts as the distributor of the Class A shares of the Fund
and Prudential Securities Incorporated (``PSI''), who acts as distributor of the
Class B and Class C shares of the Fund (collectively the ``Distributors''). The
Fund compensates the Distributors for distributing and servicing the Fund's
Class A, Class B and Class C shares, pursuant to plans of distribution (the
``Class A, B and C Plans'') regardless of expenses actually incurred by them.
The distribution fees are accrued daily and payable monthly.
Pursuant to the Class A Plan, the Fund compensates PMFD for its expenses with
respect to Class A shares, at an annual rate of up to .30 of 1% of the average
daily net assets of the Class A shares. Such expenses under the Class A Plan
were .15 of 1% of the average daily net assets of the Class A shares for the
year ended .
Pursuant to the Class B Plan, the Fund compensates PSI for its
distribution-related expenses with respect to Class B shares at an annual rate
of up to 1% of the average daily net assets up to $3 billion, .80 of 1% of the
next $1 billion of such net assets and .50 of 1% over $4 billion of the average
daily net assets of the Class B shares. Such expenses under the Class B Plan
were charged at .825 of 1% of the average daily net assets of Class B shares.
Pursuant to the Class C Plan, the Fund compensates PSI for its
distribution-related expenses with respect to Class C shares at an annual rate
of up to 1% of the average daily net assets of the Class C shares. Such expenses
under Class C Plan were charged at .75 of 1% of average daily net assets.
PMFD has advised the Fund that it has received approximately $76,000 in
front-end sales charges resulting from sales of Class A shares during the period
ended August 31, 1995. From these fees, PMFD paid such sales charges to dealers
which in turn paid commissions to salespersons.
PSI has advised the Fund that for the period ended August 31, 1995 it received
approximately $766,000 in contingent deferred sales charges imposed upon
redemptions by certain Class B and Class C shareholders.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC are indirect,
wholly-owned subsidiaries of The Prudential Insurance Company of America.
- --------------------------------------------------------------------------------
9

<PAGE>

Notes to Financial Statements (Unaudited) PRUDENTIAL GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent. During the period ended August 31,
1995, the Fund incurred fees of approximately $972,000 for the services of PMFS.
As of August 31, 1995, approximately $181,000 of such fees were due to PMFS.
Transfer agent fees and expenses in the Statement of Operations also include
certain out of pocket expenses paid to non-affiliates.
- --------------------------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the period ended August 31, 1995 were $1,063,645,384 and $1,144,015,526,
respectively.
The federal income tax cost basis of the Fund's investments, at August 31, 1995
was the same as for book purposes and, accordingly, net unrealized appreciation
for federal income tax purposes was $43,446,378
(gross unrealized appreciation-$48,838,509; gross unrealized
depreciation-$5,392,131).
The Fund had a capital loss carryforward as of February 28, 1995 of
approximately $140,517,000 of which $34,965,000 expires in 1998, $41,965,000
expires in 1999 and $63,587,000 expires in 2003. Accordingly, no capital gains
distribution is expected to be paid to shareholders until net gains have been
realized in excess of such amounts.
Transactions in written options during the period ended August 31, 1995 were as
follows:
<TABLE>
<CAPTION>
Number of Premiums
Contracts Received
<S> <C> <C>
--------- ----------
Options written....................... 260 $1,257,811
Options terminated in closing purchase
transactions........................ (150) (840,624)
Options expired....................... (60) (182,812)
--------- ----------
Options outstanding at August 31,
1995................................ 50 $ 234,375
--------- ----------
--------- ----------
</TABLE>

The average balance of dollar rolls outstanding during the period ended August
31, 1995 was approximately $14,801,000.
- ------------------------------------------------------------------------------
Note 5. Capital
The Fund offers Class A, Class B and Class C shares. Class A shares are sold
with a front-end sales charge of up to 4.0%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Class C shares are sold with a contingent
deferred sales charge of 1% during the first year. Class B shares automatically
convert to Class A shares on a quarterly basis approximately seven years after
purchase. A special exchange privilege is also available for shareholders who
qualified to purchase Class A shares at net asset value.
There are 2 billion shares of common stock, $.01 par value per share, divided
into three classes, designated Class A, B and Class C common stock, each of
which consists of 666,666,666.67 authorized shares.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- --------------------------------- ------------ ---------------
<S> <C> <C>
Six months ended August 31, 1995:
Shares sold...................... 1,525,197 $ 13,525,537
Shares issued in reinvestment of
dividends...................... 1,990,560 17,659,959
Shares reacquired................ (10,929,886) (96,570,860)
------------ ---------------
Net decrease in shares
outstanding before
conversion..................... (7,414,129) (65,385,364)
Shares sold upon conversion from
Class B........................ 7,978,834 70,637,633
------------ ---------------
Net increase in shares
outstanding.................... 564,705 $ 5,252,269
------------ ---------------
------------ ---------------
Year ended February 28, 1995:
Shares sold...................... 1,650,843 $ 14,143,438
Shares issued in reinvestment of
dividends...................... 517,170 4,416,369
Shares reacquired................ (3,871,087) (33,161,047)
------------ ---------------
Net decrease in shares
outstanding before
conversion..................... (1,703,074) (14,601,240)
Shares sold upon conversion from
Class B........................ 97,449,952 825,401,064
------------ ---------------
Net increase in shares
outstanding.................... 95,746,878 $ 810,799,824
------------ ---------------
------------ ---------------
<CAPTION>
Class B
- ---------------------------------
<S> <C> <C>
Six months ended August 31, 1995:
Shares sold...................... 2,661,466 $ 23,522,953
Shares issued in reinvestment of
dividends...................... 1,325,342 11,754,680
Shares reacquired................ (8,975,135) (79,273,579)
------------ ---------------
Net decrease in shares
outstanding before
conversion..................... (4,988,327) (43,995,946)
Shares reacquired upon conversion
into Class A................... (7,973,287) (70,637,633)
------------ ---------------
Net decrease in shares
outstanding.................... (12,961,614) $ (114,633,579)
------------ ---------------
------------ ---------------
</TABLE>
- --------------------------------------------------------------------------------
10

<PAGE>

Notes to Financial Statements (Unaudited) PRUDENTIAL GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Shares Amount
- --------------------------------- ------------ ---------------
Year ended February 28, 1995:
<S> <C> <C>
Shares sold...................... 7,582,662 $ 65,420,737
Shares issued in reinvestment of
dividends...................... 5,979,498 59,672,362
Shares reacquired................ (75,332,177) (654,474,203)
------------ ---------------
Net decrease in shares
outstanding before
conversion..................... (61,770,017) (529,381,104)
Shares reacquired upon conversion
into Class A................... (97,449,952) (825,401,064)
------------ ---------------
Net decrease in shares
outstanding.................... (159,219,969) $(1,354,782,168)
------------ ---------------
------------ ---------------
<CAPTION>
Class C
- ------------------
<S> <C> <C>
Six months ended August 31, 1995:
Shares sold...................... 55,688 $ 497,122
Shares issued in reinvestment of
dividends...................... 1,217 10,857
Shares reacquired................ (13,217) (120,013)
------------ ---------------
Net increase in shares
outstanding.................... 43,688 $ 387,966
------------ ---------------
------------ ---------------
August 1, 1994* through
February 28, 1995:
Shares sold...................... 24,418 $ 205,366
Shares issued in reinvestment of
dividends...................... 498 4,180
Shares reacquired................ (1,195) (9,882)
------------ ---------------
Net increase in shares
outstanding.................... 23,721 $ 199,664
------------ ---------------
------------ ---------------
</TABLE>

- ---------------
* Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
11

<PAGE>

Financial Highlights (Unaudited) PRUDENTIAL GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------
Six Months
Ended Years Ended February 28/29,
August 31, --------------------------------------------------------
1995 1995 1994 1993 1992 1991
---------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....... $ 8.59 $ 9.13 $ 9.40 $ 9.17 $ 9.02 $ 9.00
---------- -------- ------- ------- ------- -------
Income from investment operations
Net investment income...................... 0.30 0.59 0.61 0.66 0.68 0.69
Net realized and unrealized gain (loss) on
investment transactions................. 0.39 (0.54) (0.25) 0.35 0.37 0.26
---------- -------- ------- ------- ------- -------
Total from investment operations........ 0.69 0.05 0.36 1.01 1.05 0.95
---------- -------- ------- ------- ------- -------
Less distributions
Dividends from net investment income....... (0.30) (0.59) (0.61) (0.66) (0.68) (0.69)
Distributions in excess of accumulated
gains................................... -- -- (0.02) -- -- --
Distributions from paid-in capital in
excess of par........................... -- -- -- (0.12) (0.22) (0.24)
---------- -------- ------- ------- ------- -------
Total distributions..................... (0.30) (0.59) (0.63) (0.78) (0.90) (0.93)
---------- -------- ------- ------- ------- -------
Net asset value, end of period............. $ 8.98 $ 8.59 $ 9.13 $ 9.40 $ 9.17 $ 9.02
---------- -------- ------- ------- ------- -------
---------- -------- ------- ------- ------- -------
TOTAL RETURN(c):........................... 8.12% .83% 3.90% 11.55% 12.18% 11.21%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............ $915,779 $871,145 $51,673 $61,297 $33,181 $28,971
Average net assets (000)................... $892,079 $ 95,560 $55,921 $46,812 $29,534 $23,428
Ratios to average net assets:
Expenses, including distribution fees... 0.96%(b) 0.98% 0.84% 0.84% 0.86% 0.85%
Expenses, excluding distribution fees... 0.81%(b) 0.83% 0.69% 0.69% 0.71% 0.70%
Net investment income................... 6.78%(b) 7.45% 6.48% 7.17% 7.51% 7.76%
Portfolio turnover rate.................... 70% 206% 80% 36% 187% 213%
</TABLE>

<TABLE>
<C> <S>
- ---------------
(a) Commencement of offering of Class C shares.
(b) Annualized.
(c) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of shares on the
first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions.
Total returns for periods of less than a full year are not annualized.
</TABLE>

- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12

<PAGE>

Financial Highlights (Unaudited) PRUDENTIAL GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------------------------------------
Six Months
Ended Years Ended February 28/29,
August 31, ----------------------------------------------------------------------
1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....... $ 8.60 $ 9.13 $ 9.40 $ 9.17 $ 9.02 $ 9.00
---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations
Net investment income...................... 0.27 0.53 0.53 0.58 0.60 0.62
Net realized and unrealized gain (loss) on
investment transactions................. 0.39 (0.53) (0.25) 0.35 0.37 0.26
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations........ 0.66 -- 0.28 0.93 0.97 0.88
---------- ---------- ---------- ---------- ---------- ----------
Less distributions
Dividends from net investment income....... (0.27) (0.53) (0.53) (0.58) (0.60) (0.62)
Distributions in excess of accumulated
gains................................... -- -- (0.02) -- -- --
Distributions from paid-in capital in
excess of par........................... -- -- -- (0.12) (0.22) (0.24)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions..................... (0.27) (0.53) (0.55) (0.70) (0.82) (0.86)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period............. $ 8.99 $ 8.60 $ 9.13 $ 9.40 $ 9.17 $ 9.02
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN(c):........................... 7.75% .24% 3.03% 10.61% 11.27% 10.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............ $621,267 $ 705,732 $2,202,555 $2,680,259 $2,724,428 $3,127,587
Average net assets (000)................... $671,724 $1,735,413 $2,487,990 $2,670,924 $2,903,704 $3,432,948
Ratios to average net assets:
Expenses, including distribution fees... 1.63%(b) 1.66% 1.68% 1.69% 1.71% 1.67%
Expenses, excluding distribution fees... 0.81%(b) 0.80% 0.69% 0.69% 0.71% 0.70%
Net investment income................... 6.11%(b) 6.17% 5.64% 6.32% 6.66% 6.94%
Portfolio turnover rate.................... 70% 206% 80% 36% 187% 213%
<CAPTION>
Class C
---------------------------
<S> <C> <C>
August 1,
Six Months 1994(a)
Ended Through
August 31, February 28,
1995 1995
---------- ------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....... $ 8.60 $ 8.69
---------- -----
Income from investment operations
Net investment income...................... 0.27 0.31
Net realized and unrealized gain (loss) on
investment transactions................. 0.39 (0.09)
---------- -----

Total from investment operations........ 0.66 0.22
---------- -----
Less distributions
Dividends from net investment income....... (0.27) (0.31)
Distributions in excess of accumulated
gains................................... -- --
Distributions from paid-in capital in
excess of par........................... -- --
---------- -----
Total distributions..................... (0.27) (0.31)
---------- -----
Net asset value, end of period............. $ 8.99 $ 8.60
---------- -----
---------- -----
TOTAL RETURN(c):........................... 7.80% 2.75%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............ $ 606 $ 204
Average net assets (000)................... $ 414 $ 111
Ratios to average net assets:
Expenses, including distribution fees... 1.56%(b) 1.63%(b)
Expenses, excluding distribution fees... 0.81%(b) 0.88%(b)
Net investment income................... 6.16%(b) 6.69%(b)
Portfolio turnover rate.................... 70% 206%
</TABLE>

The Prospectus and Statement of Additional Information dated May 1, 1995, as
supplemented, are incorporated herein by reference in their entirety from
Post-Effective Amendment No. 19 to Registrant's Registration Statement (File No.
2-82976) filed via EDGAR on November 3, 1995.

<PAGE>
PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) FINANCIAL STATEMENTS:

(1) Financial statements included in the Prospectus constituting Part A of
this Registration Statement:

Financial Highlights for each of the years since inception in the
period ended February 28, 1995 (audited) and the six months ended August
31, 1995 (unaudited).

(2) Financial statements included in the Statement of Additional
Information constituting Part B of this Registration Statement:

Portfolio of Investments at February 28, 1995 (audited) and August
31, 1995 (unaudited).

Statement of Assets and Liabilities at February 28, 1995 (audited)
and August 31, 1995 (unaudited).

Statement of Operations for the year ended February 28, 1995
(audited) and the six months ended August 31, 1995 (unaudited).

Statement of Changes in Net Assets for the year ended February 28,
1995 (audited) and the six months ended August 31, 1995 (unaudited).

Notes to Financial Statements.

Financial Highlights with respect to the five-year period ended
February 28, 1995 (audited) and the six months ended August 31, 1995
(unaudited).

Independent Auditors' Report.

(b) EXHIBITS:

C-1
<PAGE>
<TABLE>
<S> <C>
(b) Subadvisory Agreement between Prudential Mutual Fund Management,
Inc. and The Prudential Investment Corporation, incorporated by
reference to Exhibit No. 5(b) to Post-Effective Amendment No. 6 to
Registration Statement on Form N-1A (File No. 2-82976).

6. (a) Distribution Agreement with respect to Class A shares between
Registrant and Prudential Mutual Fund Distributors, Inc.,
incorporated by reference to Exhibit 6(a) to Post-Effective Amendment
No. 18 to the Registration Statement on Form N-1A (File No. 2-82976)
filed via EDGAR.

(b) Distribution Agreement with respect to Class B shares between
Registrant and Prudential Securities Incorporated, incorporated by
reference to Exhibit 6(b) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.

(c) Distribution Agreement with respect to Class C shares between
Registrant and Prudential Securities Incorporated, incorporated by
reference to Exhibit 6(c) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.

(d) Dealer Agreement between Prudential-Bache Securities Inc. and
dealer or dealers to be determined, incorporated by reference to
Exhibit No. 6(b) to Post-Effective Amendment No. 2 to Registration
Statement on Form N-1A (File No. 2-82976).

(e) Form of Distribution Agreement for Class Z shares incorporated by
reference to Exhibit 6(e) to Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A (File No. 2-82976 filed via
EDGAR.

7. Not Applicable.

8. (a) Revised Custodian Agreement between the Registrant and State
Street Bank and Trust Company, incorporated by reference to Exhibit
No. 8(d) to Post-Effective Amendment No. 11 to Registration Statement
on Form N-1A (File No. 2-82976).

(b) Special Custody Agreement among the Registrant, State Street Bank
and Trust Company, and Goldman, Sachs & Co., incorporated by
reference to Exhibit No. 8(b) to Post-Effective Amendment No. 2 to
Registration Statement on Form N-1A (File No. 2-82976).

(c) Customer Agreement between the Registrant and Goldman, Sachs &
Co., incorporated by reference to Exhibit No. 8(c) to Post-Effective
Amendment No. 2 to the Registration Statement on Form N-1A (File No.
2-82976).

(d) Form of Amendment to Revised Custodian Agreement incorporated by
reference to Exhibit 8(d) to Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.

9. Transfer Agency Agreement between the Registrant and Prudential
Mutual Fund Services, Inc., incorporated by reference to Exhibit No.
9 to Post-Effective Amendment No. 6 to Registration Statement on Form
N-1A (File No. 2-82976).

10. (a) Opinion and Consent incorporated by reference to Exhibit 10 to
Post-Effective Amendment No. 2 to Registration Statement on Form N-1A
(File No. 2-82976).

(b) Opinion and Consent of Counsel, incorporated by reference to
Exhibit 10(b) to Post-Effective Amendment No. 18 to the Registration
Statement on Form N-1A (File No. 2-82976) filed via EDGAR.

11. Consent of Independent Accountants.*

12. Not Applicable.

13. Purchase Agreement, incorporated by reference to Exhibit No. 13 to
Post-Effective Amendment No. 2 to Registration Statement on Form N-1A
(File No. 2-82976).

14. Not Applicable.

15. (a) Distribution and Service Plan for Class A shares, incorporated by
reference to Exhibit 15(a) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.
</TABLE>

C-2
<PAGE>

<TABLE>
<S> <C>
(b) Distribution and Service Plan for Class B shares, incorporated by
reference to Exhibit 15(b) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.

(c) Distribution and Service Plan for Class C shares, incorporated by
reference to Exhibit 15(c) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.

16. (a) Schedule of computation of performance (Class A), incorporated by
reference to Exhibit 16(a) of Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A (File No. 2-82976).

(b) Schedule of computation of performance (Class B), incorporated by
reference to Exhibit 16(a) of Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A (File No. 2-82976).

(c) Schedule of computation of performance (Class C), incorporated by
reference to Exhibit 16(c) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.

17. (a) Financial Data Schedule for Class A shares, filed as Exhibit
17(a) to Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A (File No. 2-82976) filed via EDGAR.

(b) Financial Data Schedule for Class B shares, filed as Exhibit
17(b) to Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A (File No. 2-82976) filed via EDGAR.

(c) Financial Data Schedule for Class C shares, filed as Exhibit
17(c) to Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A (File No. 2-82976) filed via EDGAR.

18. Rule 18f-3 Plan.*
</TABLE>

- ------------------------
*Filed herewith.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

As of February 9, 1996 there were 39,917, 24,176, 78 and 0 record holders of
Class A, Class B, Class C and Class Z shares of common stock, respectively, $.01
par value per share, of the Registrant.

ITEM 27. INDEMNIFICATION.

As permitted by Section 17(h) and (i) of the Investment Company Act of 1940
(the 1940 Act) and pursuant to Article VI of the Fund's By-Laws (Exhibit 2 to
the Registration Statement), officers, directors, employees and agents of the
Registrant will not be liable to the Registrant, any stockholder, officer,
director, employee, agent or other person for any action or failure to act,
except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified against
liabilities in connection with the Registrant, subject to the same exceptions.
Section 2-418 of Maryland General Corporation Law permits indemnification of
directors who acted in good faith and reasonably believed that the conduct was
in the best interests of the Registrant. As permitted by Section 17(i) of the
1940 Act, pursuant to Section 10 of each Distribution Agreement (Exhibit 6 to
the Registration Statement), each Distributor of the Registrant may be
indemnified against liabilities which it may incur, except liabilities arising
from bad faith, gross negligence, willful misfeasance or reckless disregard of
duties.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (Securities Act) may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1940 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such director,
officer or controlling person in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1940 Act and will be governed by the final adjudication of such
issue.

C-3
<PAGE>
The Registrant has purchased an insurance policy insuring its officers and
directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers and directors under certain circumstances.

Section 9 of the Management Agreement (Exhibit 5(a) to the Registration
Statement) and Section 4 of the Subadvisory Agreement (Exhibit 5(b) to the
Registration Statement) limit the liability of Prudential Mutual Fund
Management, Inc. (PMF) and The Prudential Investment Corporation (PIC),
respectively, to liabilities arising from willful misfeasance, bad faith or
gross negligence in the performance of their respective duties or from reckless
disregard by them of their respective obligations and duties under the
agreements.

The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws and each Distribution Agreement in a manner consistent
with Release No. 11330 of the Securities and Exchange Commission under the 1940
Act so long as the interpretation of Section 17(h) and 17(i) of such Act remain
in effect and are consistently applied.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

(a) Prudential Mutual Fund Management, Inc.

See "How the Fund is Managed-Manager" in the Prospectus constituting Part A
of this Registration Statement and "Manager" in the Statement of Additional
Information constituting Part B of this Registration Statement.

The business and other connections of the officers of PMF are listed in
Schedules A and D of Form ADV of PMF as currently on file with the Securities
and Exchange Commission, the text of which is hereby incorporated by reference
(File No. 801-31104, filed on March 30, 1995).

The business and other connections of PMF's directors and principal
executive officers are set forth below. Except as otherwise indicated, the
address of each person is One Seaport Plaza, New York, NY 10292.

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATIONS
- ------------------------- -------------------- -------------------------------------------------------------
<S> <C> <C>
Brendan D. Boyle Executive Vice Executive Vice President Director of Marketing and Director,
President, Director PMF; Senior Vice President, Prudential Securities
of Marketing and Incorporated (Prudential Securities); Chairman and Director
Director of Prudential Mutual Fund Distributors, Inc. (PMFD)
Stephen P. Fisher Senior Vice Senior Vice President, PMF; Senior Vice President, Prudential
President Securities; Vice President, PMFD
Frank W. Giordano Executive Vice Executive Vice President, General Counsel, Secretary and
President, General Director, PMF and PMFD; Senior Vice President, Prudential
Counsel, Secretary Securities; Director, Prudential Mutual Fund Services, Inc.
and Director (PMFS)
Robert F. Gunia Executive Vice Executive Vice President, Chief Financial and Administrative
President, Chief Officer, Treasurer and Director, PMF; Senior Vice
Financial and President, Prudential Securities; Executive Vice President,
Administrative Treasurer, Comptroller and Director; PMFD, Director PMFS
Officer, Treasurer
and Director
Theresa A. Hamacher Director Director, PMF; Vice President, The Prudential Insurance
Prudential Plaza Company of America (Prudential); Vice President, The
Newark, NJ 07102 Prudential Investment Corporation (PIC)
Timothy J. O'Brien Director President, Chief Executive Officer, Chief Operating Officer,
Raritan Plaza One and Director, PMFD; Chief Executive Officer and Director,
Edison, NJ 08837 PMFS; Director, PMF
</TABLE>

C-4
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATIONS
- ------------------------- -------------------- -------------------------------------------------------------
<S> <C> <C>
Richard A. Redeker President, Chief President, Chief Executive Officer and Director, PMF;
Executive Officer Executive Vice President, Director and Member of the
and Director Operating Committee, Prudential Securities; Director,
Prudential Securities Group, Inc. (PSG); Executive Vice
President, PIC; Director, PMFD; Director, PMFS
S. Jane Rose Senior Vice Senior Vice President, Senior Counsel and Assistant
President, Senior Secretary, PMF; Senior Vice President and Senior Counsel,
Counsel and Prudential Securities
Assistant Secretary
</TABLE>

(b) The Prudential Investment Corporation (PIC)

See "How the Fund is Managed--Manager" in the Prospectus constituting Part A
of this Registration Statement and "Manager" in the Statement of Additional
Information constituting Part B of this Registration Statement.

The business and other connections of PIC's directors and executive officers
are as set forth below. Except as otherwise indicated, the address of each
person is Prudential Plaza, Newark, NJ 07101.

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIC PRINCIPAL OCCUPATIONS
- ------------------------- -------------------- -------------------------------------------------------------
<S> <C> <C>
William M. Bethke Senior Vice Senior Vice President, Prudential; Senior Vice President, PIC
Two Gateway Center President
Newark, NJ 07102

Barry M. Gillman Director Director, PIC

Theresa A. Hamacher Vice President Director, PMF; Vice President, Prudential; Vice President,
The Prudential Investment Corporation (PIC)

Harry E. Knapp, Jr. President, Chairman President, Chairman of the Board, Director and Chief
of the Board, Executive Officer, PIC; Vice President, Prudential
Director and Chief
Executive Officer

Richard A. Redeker Executive Vice President, Chief Executive Officer and Director, PMF;
One Seaport Plaza President Executive Vice President, Director and Member of the
New York, NY 10292 Operating Committee, Prudential Securities; Director, PSG;
Executive Vice President, PIC; Director, PMFD; Director,
PMFS

John L. Reeve Senior Vice Managing Director, Prudential Asset Management Group; Senior
President Vice President, PIC

Eric A. Simonson Vice President and Vice President and Director, PIC; Executive Vice President,
Director Prudential

Claude J. Zinngrabe, Jr. Executive Vice Executive Vice President, PIC; Vice President, Prudential
President
</TABLE>

ITEM 29. PRINCIPAL UNDERWRITERS.

(a) Prudential Securities

Prudential Securities is distributor for Command Government Fund,
Command Money Fund, Command Tax-Free Fund, Prudential Government Securities
Trust (Intermediate Term Series, Money Market Series and U.S. Treasury Money
Market Series), Prudential MoneyMart Assets, Inc., Prudential Institutional
Liquidity Portfolio, Inc., Prudential Special Money Market Fund, Inc.,
Prudential Tax-Free Money Fund, Inc. Prudential Jennison Fund, Inc., The Target
Portfolio Trust Prudential Allocation Fund, Prudential California Municipal
Fund, Prudential Diversified Bond Fund, Inc., Prudential Equity Fund, Inc.,
Prudential Equity Income Fund, Prudential Europe Growth Fund, Inc., Prudential
Global Fund, Inc., Prudential Global Genesis Fund, Inc., Prudential

C-5
<PAGE>

Global Limited Maturity Fund, Inc., Prudential Global Natural Resources Fund,
Inc., Prudential Government Income Fund, Inc., Prudential Growth Opportunity
Fund, Inc., Prudential High Yield Fund, Prudential Intermediate Global Income
Fund, Inc., Prudential Mortgage Income Fund, Inc., Prudential Multi-Sector Fund,
Inc., Prudential Municipal Bond Fund, Prudential Municipal Series Fund,
Prudential National Municipals Fund, Inc., Prudential Pacific Growth Fund, Inc.,
Prudential Structured Maturity Fund, Inc., Prudential Utility Fund, Inc., The
Global Government Plus Fund, Inc., The Global Total Return Fund, Inc., Global
Utility Fund, Inc., Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth
Equity Fund) and The BlackRock Government Income Trust. Prudential Securities is
also a depositor for the following unit investment trust:

Corporate Investment Trust Fund

Prudential Equity Trust Shares

National Equity Trust

Prudential Unit Trusts

Government Securities Equity Trust

National Municipal Trust

(b) Information concerning the directors and officers of Prudential
Securities Incorporated is set forth below.

<TABLE>
<CAPTION>
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME(1) UNDERWRITER REGISTRANT
- ------------------------------------ ----------------------------------------------------------- --------------
<S> <C> <C>
Robert C. Golden ................... Executive Vice President and Director None
One New York Plaza
New York, N.Y. 10292
Alan D. Hogan....................... Executive Vice President, Chief Administrative Officer and None
Director
George A. Murray.................... Executive Vice President and Director None
Leland B. Paton .................... Executive Vice President and Director None
One New York Plaza
New York, N.Y. 10292
Martin Pfinsgraff................... Executive Vice President, Chief Financial Officer and None
Director
Vincent T. Pica, II ................ Executive Vice President and Director None
One New York Plaza
New York, N.Y. 10292
Richard A. Redeker.................. Executive Vice President and Director Director and
President
Hardwick Simmons.................... Chief Executive Officer, President and Director None
Lee B. Spencer, Jr.................. General Counsel, Executive Vice President, Secretary and None
Director
<FN>
- ------------------------
(1) The address of each person named is One Seaport Plaza, New York, NY 10292
unless otherwise indicated.
</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.

All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the Rules thereunder are maintained at the offices of
State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, the Registrant, One Seaport Plaza, New York, New York, and
Prudential Mutual Fund Services, Inc., Raritan Plaza One, Edison, New Jersey.
Documents required by Rules 31a-1(b)(5), (6), (7), (9), (10) and (11) and
31a-1(f) will be kept at 2 Gateway Center, documents required by Rules
31a-1(b)(4) and (11) and 31a-1(d) at One Seaport Plaza and the remaining
accounts, books and other documents required by such other pertinent provisions
of Section 31(a) and the Rules promulgated thereunder will be kept by State
Street Bank and Trust Company and Prudential Mutual Fund Services, Inc.

C-6
<PAGE>
ITEM 31. MANAGEMENT SERVICES.

Other than as set forth under the captions "How the Fund is Managed-Manager"
and "Management of the Fund-Distributor" in the Prospectus and the captions
"Manager" and "Distributor" in the Statement of Additional Information,
constituting Parts A and B, respectively, of this Registration Statement,
Registrant is not a party to any management-related service contract.

ITEM 32. UNDERTAKINGS.

Registrant makes the following undertaking:

(a) To furnish each person to whom a prospectus is delivered with a copy of
the Fund's latest annual report upon request and without charge.

C-7
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
and State of New York, on the 29th day of February, 1996.

PRUDENTIAL GOVERNMENT INCOME FUND, INC.

/s/ Richard A. Redeker
-------------------------------------------------
(RICHARD A. REDEKER, PRESIDENT)

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------ ------------------------------------------------

<S> <C> <C>
/s/ Edward D. Beach Director February 29, 1996
- ------------------------------------
EDWARD D. BEACH

/s/ Delayne D. Gold Director February 29, 1996
- ------------------------------------
DELAYNE D. GOLD

/s/ Harry A. Jacobs, Jr. Director February 29, 1996
- ------------------------------------
HARRY A. JACOBS, JR.

/s/ Thomas T. Mooney Director February 29, 1996
- ------------------------------------
THOMAS T. MOONEY

/s/ Thomas H. O'Brien Director February 29, 1996
- ------------------------------------
THOMAS H. O'BRIEN

/s/ Thomas A. Owens, Jr. Director February 29, 1996
- ------------------------------------
THOMAS A. OWENS, JR.

/s/ Richard A. Redeker President and Director February 29, 1996
- ------------------------------------
RICHARD A. REDEKER

/s/ Stanley E. Shirk Director February 29, 1996
- ------------------------------------
STANLEY E. SHIRK

/s/ Eugene S. Stark Treasurer and Principal February 29, 1996
- ------------------------------------ Financial and Accounting
EUGENE S. STARK Officer
</TABLE>

<PAGE>
EXHIBIT INDEX

<TABLE>
<S> <C>
1. (a) Articles of Incorporation of Registrant, incorporated by
reference to Exhibit No. 1(a) to Registration Statement on Form N-1
(File No. 2-82976).
(b) Articles of Amendment filed January 3, 1985 with the State
Department of Assessments and Taxation of Maryland, incorporated by
reference to Exhibit No. 1(b) to Post-Effective Amendment No. 2 to
Registration Statement on Form N-1A (File No. 2-82976).
(c) Amendment to Articles of Incorporation of Registrant filed March
7, 1986 with the State Department of Assessments and Taxation of
Maryland, incorporated by reference to Exhibit No. 1(c) to
Post-Effective Amendment No. 4 to Registration Statement on Form N-1A
(File No. 2-82976).
(d) Amendments to Articles of Incorporation of the Registrant filed
on January 17, 1990, incorporated by reference to Exhibit 1(d) to
Post-Effective Amendment No. 10 to Registration Statement on Form
N-1A (File No. 2-82976).
(e) Amended Articles of Incorporation, incorporated by reference to
Exhibit 1(e) to Post-Effective Amendment No. 18 to the Registration
Statement on Form N-1A (File No. 2-82976) filed via EDGAR.
(f) Form of Restated Articles of Incorporation.*
2. Amended and Restated By-laws of the Registrant, incorporated by
reference to Exhibit 2 to Post-Effective Amendment No. 15 to
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.
3. Not applicable.
4. Instruments defining rights of holders of securities being offered,
incorporated by reference to Exhibit 4 to Post-Effective Amendment
No. 15 to Registration Statement on Form N-1A (File No. 2-82976)
filed via EDGAR.
5. (a) Management Agreement between the Registrant and Prudential Mutual
Fund Management, Inc, incorporated by reference to Exhibit No. 5(b)
to Post-Effective Amendment No. 6 to Registration Statement on Form
N-1A (File No. 2-82976).
(b) Subadvisory Agreement between Prudential Mutual Fund Management,
Inc. and The Prudential Investment Corporation, incorporated by
reference to Exhibit No. 5(b) to Post-Effective Amendment No. 6 to
Registration Statement on Form N-1A (File No. 2-82976).
6. (a) Distribution Agreement with respect to Class A shares between
Registrant and Prudential Mutual Fund Distributors, Inc.,
incorporated by reference to Exhibit 6(a) to Post-Effective Amendment
No. 18 to the Registration Statement on Form N-1A (File No. 2-82976)
filed via EDGAR.
(b) Distribution Agreement with respect to Class B shares between
Registrant and Prudential Securities Incorporated, incorporated by
reference to Exhibit 6(b) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.
(c) Distribution Agreement with respect to Class C shares between
Registrant and Prudential Securities Incorporated, incorporated by
reference to Exhibit 6(c) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.
(d) Dealer Agreement between Prudential-Bache Securities Inc. and
dealer or dealers to be determined, incorporated by reference to
Exhibit No. 6(b) to Post-Effective Amendment No. 2 to Registration
Statement on Form N-1A (File No. 2-82976).
(e) Form of Distribution Agreement for Class Z shares incorporated by
reference to Exhibit 6(e) to Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.
7. Not Applicable.
8. (a) Revised Custodian Agreement between the Registrant and State
Street Bank and Trust Company, incorporated by reference to Exhibit
No. 8(d) to Post-Effective Amendment No. 11 to Registration Statement
on Form N-1A (File No. 2-82976).
(b) Special Custody Agreement among the Registrant, State Street Bank
and Trust Company, and Goldman, Sachs & Co., incorporated by
reference to Exhibit No. 8(b) to Post-Effective Amendment No. 2 to
Registration Statement on Form N-1A (File No. 2-82976).
(c) Customer Agreement between the Registrant and Goldman, Sachs &
Co., incorporated by reference to Exhibit No. 8(c) to Post-Effective
Amendment No. 2 to the Registration Statement on Form N-1A (File No.
2-82976).
</TABLE>

<PAGE>

<TABLE>
<S> <C>
(d) Form of Amendment to Custodian Contract incorporated by reference
to Exhibit 8(d) to Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.
9. Transfer Agency Agreement between the Registrant and Prudential
Mutual Fund Services, Inc., incorporated by reference to Exhibit No.
9 to Post-Effective Amendment No. 6 to Registration Statement on Form
N-1A (File No. 2-82976).
10. (a) Opinion and Consent incorporated by reference to Exhibit 10 to
Post-Effective Amendment No. 2 to Registration Statement on Form N-1A
(File No. 2-82976).
(b) Opinion and Consent of Counsel, incorporated by reference to
Exhibit 10(b) to Post-Effective Amendment No. 18 to the Registration
Statement on Form N-1A (File No. 2-82976) filed via EDGAR.
11. Consent of Independent Accountants.*
12. Not Applicable.
13. Purchase Agreement, incorporated by reference to Exhibit No. 13 to
Post-Effective Amendment No. 2 to Registration Statement on Form N-1A
(File No. 2-82976).
14. Not Applicable.
15. (a) Distribution and Service Plan for Class A shares, incorporated by
reference to Exhibit 15(a) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.
(b) Distribution and Service Plan for Class B shares, incorporated by
reference to Exhibit 15(b) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.
(c) Distribution and Service Plan for Class C shares, incorporated by
reference to Exhibit 15(c) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.
16. (a) Schedule of computation of performance (Class A), incorporated by
reference to Exhibit 16(a) of Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A (File No. 2-82976).
(b) Schedule of computation of performance (Class B), incorporated by
reference to Exhibit 16(a) of Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A (File No. 2-82976).
(c) Schedule of computation of performance (Class C), incorporated by
reference to Exhibit 16(c) to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A (File No. 2-82976) filed via
EDGAR.
17. (a) Financial Data Schedule for Class A shares, filed as Exhibit
17(a) to Post-Effective Amendment No. 19 to the Registration
Statement on Form N-1A (File No. 2-82976) filed via EDGAR.
(b) Financial Data Schedule for Class B shares, filed as Exhibit
17(b) to Post-Effective Amendment No. 19 to the Registration
Statement on Form N-1A (File No. 2-82976) filed via EDGAR.
(c) Financial Data Schedule for Class C shares, filed as Exhibit
17(c) to Post-Effective Amendment No. 19 to the Registration
Statement on Form N-1A (File No. 2-82976) filed via EDGAR.
18. Rule 18f-3 Plan.*
</TABLE>

- ------------------------
*Filed herewith.

<PAGE>

PRUDENTIAL GOVERNMENT INCOME FUND, INC.

ARTICLES OF RESTATEMENT

Prudential Government Income Fund, Inc., a Maryland corporation, having
its principal office in the city of Baltimore, (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:

FIRST: The Corporation desires to restate its charter as currently in
effect, such restatement to be effective on ________, 1996, and is restated as
follows:

ARTICLE I.

The name of the corporation (hereinafter called the "Corporation") is
Prudential Government Income Fund, Inc.

ARTICLE II.

PURPOSES

The purpose for which the Corporation is formed is to act as an open-end
investment company of the management type registered as such with the
Securities and Exchange Commission pursuant to the Investment Company Act of
1940 and to exercise and generally to enjoy all of the powers, rights and
privileges granted to, or conferred upon, corporations by the General Laws of
the State of Maryland now or hereafter in force.

ARTICLE III.

ADDRESS IN MARYLAND

The post office address of the place at which the principal office of
the Corporation in the State of Maryland is located is c/o The Corporation
Trust Incorporated, 32 South Street, Baltimore, Maryland 21202.

<PAGE>

The name of the Corporation's resident agent is The Corporation Trust
Incorporated, and its post office address is 32 South Street, Baltimore,
Maryland 21202. Said resident agent is a corporation of the State of
Maryland.

ARTICLE IV.

COMMON STOCK

Section 1. The total number of shares of capital stock which the
Corporation shall have authority to issue is 2,000,000,000 shares of common
stock of the par value of $.01 per share, having an aggregate par value of
$20,000,000, divided into four classes, consisting of 500,000,000 shares of
Class A Common Stock, 500,000,000 shares of Class B Common Stock, 500,000,000
shares of Class C Common Stock and 500,000,000 shares of Class Z Common Stock.

(a) Each share of Class A, Class B, Class C and Class Z Common Stock
of the Corporation shall represent the same interest in the Corporation and
have identical voting, dividend, liquidation and other rights except that
(i) Expenses related to the distribution of each class of shares shall be
borne solely by such class; (ii) The bearing of such expenses solely by
shares of each class shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value, dividends,
distribution and liquidation rights of the shares of such class; (iii) The
Class A Common Stock shall be subject to a front-end sales load and a Rule
12b-1 distribution fee as determined by the

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<PAGE>

Board of Directors from time to time; (iv) The Class B Common Stock
shall be subject to a contingent deferred sales charge and a Rule 12b-1
distribution fee as determined by the Board of Directors from time to
time; (v) The Class C Common Stock shall be subject to a contingent
deferred sales charge and a Rule 12b-1 distribution fee as determined
by the Board of Directors from time to time and (vi) The Class Z Common
Stock shall not be subject to a front-end sales load, a contingent
deferred sales charge nor a 12b-1 distribution fee. All shares of each
particular class shall represent an equal proportionate interest in
that class, and each share of any particular class shall be equal to
each other share of that class.

(b) Each share of the Class B Common Stock of the Corporation shall be
converted automatically, and without any action or choice on the part of
the holder thereof, into shares (including fractions thereof) of the Class
A Common Stock of the Corporation (computed in the manner hereinafter
described), at the applicable net asset value per share of each Class, at
the time of the calculation of the net asset value of such Class B Common
Stock at such times, which may vary between shares originally issued for
cash and shares purchased through the automatic reinvestment of dividends
and distributions with respect to Class B Common Stock (each "Conversion
Date"), determined by the Board of Directors in accordance with applicable
laws, rules, regulations, and

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<PAGE>

interpretations of the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc. and pursuant to such procedures
as may be established from time to time by the Board of Directors and
disclosed in the Corporation's then current prospectus for such Class A
and Class B Common Stock.

(c) The number of shares of the Class A Common Stock of the
Corporation into which a share of the Class B Common Stock is converted
pursuant to Paragraph (1)(b) hereof shall equal the number (including for
this purpose fractions of a share) obtained by dividing the net asset value
per share of the Class B Common Stock for purposes of sales and redemptions
thereof at the time of the calculation of the net asset value on the
Conversion Date by the net asset value per share of the Class A Common
Stock for purposes of sales and redemptions thereof at the time of the
calculation of the net asset value on the Conversion Date.

(d) On the Conversion Date, the shares of the Class B Common Stock of
the Corporation converted into shares of the Class A Common Stock will
cease to accrue dividends and will no longer be outstanding and the rights
of the holders thereof will cease (except the right to receive declared but
unpaid dividends to the Conversion Date).

(e) The Board of Directors shall have full power and authority to
adopt such other terms and conditions concerning the conversion of shares
of Class B Common Stock to shares of

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<PAGE>

the Class A Common Stock as they deem appropriate; provided such terms
and conditions are not inconsistent with the terms contained in this
Section 1 and subject to any restrictions or requirements under the
Investment Company Act of 1940 and the rules, regulations and
interpretations thereof promulgated or issued by the Securities and
Exchange Commission, any conditions or limitations contained in an
order issued by the Securities and Exchange Commission applicable to
the Corporation, or any restrictions or requirements under the Internal
Revenue Code of 1986, as amended, and the rules, regulations and
interpretations promulgated or issued thereunder.

Section 2. The Board of Directors may, in its discretion, classify and
reclassify any unissued shares of the capital stock of the Corporation into
one or more additional or other classes or series by setting or changing in
any one or more respects the designations, conversion or other rights,
restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption of such shares and pursuant to such classification
or reclassification to increase or decrease the number of authorized shares
of any existing class or series. If designated by the Board of Directors,
particular classes or series of capital stock may relate to separate
portfolios of investments.

Section 3. Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, the holders of each class and

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<PAGE>

series of capital stock of the Corporation shall be entitled to dividends and
distributions in such amounts and at such times as may be determined by the
Board of Directors, and the dividends and distributions paid with respect to
the various classes or series of capital stock may vary among such classes or
series. Expenses related to the distribution of, and other identified
expenses that should properly be allocated to, the shares of a particular
class or series of capital stock may be charged to and borne solely by such
class or series and the bearing of expenses solely by a class or series may
be appropriately reflected (in a manner determined by the Board of Directors)
and cause differences in the net asset value attributable to, and the
dividend, redemption and liquidation rights of, the shares of each such class
or series of capital stock.

Section 4. Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or
series of capital stock, on each matter submitted to a vote of stockholders,
each holder of a share of capital stock of the Corporation shall be entitled
to one vote for each share standing in such holder's name on the books of the
Corporation, irrespective of the class or series thereof, and all shares of
all classes and series shall vote together as a single class; provided,
however, that (a) as to any matter with respect to which a separate vote of
any class or series is required by the Investment Company Act of 1940, as
amended, and in effect from time to time, or any rules, regulations or orders
issued thereunder, or

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<PAGE>

by the Maryland General Corporation Law, such requirement as to a separate
vote by that class or series shall apply in lieu of a general vote of all
classes and series as described above; (b) in the event that the separate
vote requirements referred to in (a) above apply with respect to one or more
classes or series, then subject to paragraph (c) below, the shares of all
other classes and series not entitled to a separate vote shall vote together
as a single class; and (c) as to any matter which in the judgment of the
Board of Directors (which shall be conclusive) does not affect the interest
of a particular class or series, such class or series shall not be entitled
to any vote and only the holders of shares of the one or more affected
classes and series shall be entitled to vote.

Section 5. Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or
series of capital stock, in the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, holders of
shares of capital stock of the Corporation shall be entitled, after payment
or provision for payment of the debts and other liabilities of the
Corporation (as such liabilities may affect one or more of the classes of
shares of capital stock of the Corporation), to share ratably in the
remaining net assets of the Corporation; provided, however, that in the event
the capital stock of the Corporation shall be classified or reclassified into
series, holders of any shares of capital stock within such series shall be
entitled to share ratably out of assets

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<PAGE>

belonging to such series pursuant to the provisions of Section 7(c) of this
Article IV.

Section 6. Each share of any class of the capital stock of the
Corporation, and in the event the capital stock of the Corporation shall be
classified or reclassified into series, each share of any class of Capital
Stock of the Corporation within such series shall be subject to the following
provisions:

(a) The net asset value of each outstanding share of capital
stock of the Corporation (or of a class or series, in the event the
capital stock of the Corporation shall be so classified or
reclassified), subject to subsection (b) of this Section 6, shall be
the quotient obtained by dividing the value of the net assets of the
Corporation (or the net assets of the Corporation attributable or
belonging to that class or series as designated by the Board of
Directors pursuant to Articles Supplementary) by the total number of
outstanding shares of capital stock of the Corporation (or of such
class or series, in the event the capital stock of the Corporation
shall be classified or reclassified into series). Subject to
subsection (b) of this Section 6, the value of the net assets of the
Corporation (or of such class or series, in the event the capital
stock of the Corporation shall be classified or reclassified into
series) shall be determined pursuant to the procedures or methods
(which procedures or methods, in the event the capital stock of

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<PAGE>

the Corporation shall be classified or reclassified into series, differ
from class to class or from series to series) prescribed or approved
by the Board of Directors in its discretion, and shall be determined
at the time or times (which time or times may, in the event the
capital stock of the Corporation shall be classified into classes or
series, differ from series to series) prescribed or approved by the
Board of Directors in its discretion. In addition, subject to
subsection (b) of this Section 6, the Board of Directors, in its
discretion, may suspend the daily determination of net asset value of
any share of any series or class of capital stock of the Corporation.

(b) The net asset value of each share of the capital stock of
the Corporation or any class or series thereof shall be determined in
accordance with any applicable provision of the Investment Company Act
of 1940, as amended (the "Investment Company Act"), any applicable
rule, regulation or order of the Securities and Exchange Commission
thereunder, and any applicable rule or regulation made or adopted by
any securities association registered under the Securities Exchange
Act of 1934.

(c) All shares now or hereafter authorized shall be subject to
redemption and redeemable at the option of the stockholder pursuant to
the applicable provisions of the

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<PAGE>

Investment Company Act and laws of the State of Maryland,
including any applicable rules and regulations thereunder.
Each holder of a share of any class or series, upon request to
the Corporation (if such holder's shares are certificated, such
request being accompanied by surrender of the appropriate stock
certificate or certificates in proper form for transfer), shall be
entitled to require the Corporation to redeem all or any part of such
shares outstanding in the name of such holder on the books of the
Corporation (or as represented by share certificates surrendered to
the Corporation by such redeeming holder) at a redemption price per
share determined in accordance with subsection (a) of this Section 6.

(d) Notwithstanding subsection (c) of this Section 6, the Board
of Directors of the Corporation may suspend the right of the holders
of shares of any or all classes or series of capital stock to require
the Corporation to redeem such shares or may suspend any purchase of
such shares:

(i) for any period (A) during which the New York Stock
Exchange is closed, other than customary weekend and holiday
closings, or (B) during which trading on the New York Stock
Exchange is restricted;

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<PAGE>

(ii) for any period during which an emergency, as
defined by the rules of the Securities and Exchange
Commission or any successor thereto, exists as a result of
which (A) disposal by the Corporation of securities owned by
it and belonging to the affected series of capital stock (or
the Corporation, if the shares of capital stock of the
Corporation have not been classified or reclassified into
series) is not reasonably practicable, or (B) it is not
reasonably practicable for the Corporation fairly to
determine the value of the net assets of the affected series
of capital stock; or

(iii) for such other periods as the Securities and
Exchange Commission or any successor thereto may by order
permit for the protection of the holders of shares of
capital stock of the Corporation.

(e) All shares of the capital stock of the Corporation now or
hereafter authorized shall be subject to redemption and redeemable at
the option of the Corporation. The Board of Directors may by
resolution from time to time authorize the Corporation to require the
redemption of all or any part of the outstanding shares of any class
or series upon the sending of written

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<PAGE>

notice thereof to each holder whose shares are to be redeemed
and upon such terms and conditions as the Board of Directors,
in its discretion, shall deem advisable, out of funds legally
available therefor, at the net asset value per share of that
class or series determined in accordance with subsections (a)
and (b) of this Section 6 and take all other steps deemed
necessary or advisable in connection therewith.

(f) The Board of Directors may by resolution from time to time
authorize the purchase by the Corporation, either directly or through
an agent, of shares of any class or series of the capital stock of the
Corporation upon such terms and conditions and for such consideration
as the Board of Directors, in its discretion, shall deem advisable out
of funds legally available therefor at prices per share not in excess
of the net asset value per share of that class or series determined in
accordance with subsections (a) and (b) of this Section 6 and to take
all other steps deemed necessary or advisable in connection therewith.

(g) Except as otherwise permitted by the Investment Company Act
of 1940, payment of the redemption price of shares of any class or
series of the capital stock of the Corporation surrendered to the
Corporation for redemption pursuant to the provisions of subsection
(c) of this Section 6 or for purchase by the Corporation pursuant to

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<PAGE>

the provisions of subsection (e) or (f) of this Section 6 shall be
made by the Corporation within seven days after surrender of such
shares to the Corporation for such purpose. Any such payment may be
made in whole or in part in portfolio securities or in cash, as the
Board of Directors, in its discretion, shall deem advisable, and no
stockholder shall have the right, other than as determined by the
Board of Directors, to have his or her shares redeemed in portfolio
securities.

(h) In the absence of any specification as to the purposes for
which shares are redeemed or repurchased by the Corporation, all
shares so redeemed or repurchased shall be deemed to be acquired for
retirement in the sense contemplated by the laws of the State of
Maryland. Shares of any class or series retired by repurchase or
redemption shall thereafter have the status of authorized but unissued
shares of such class or series.

Section 7. In the event the Board of Directors shall authorize the
classification or reclassification of shares into classes or series, the Board
of Directors may (but shall not be obligated to) provide that each class or
series shall have the following powers, preferences and voting or other special
rights, and the qualifications, restrictions and limitations thereof shall be as
follows:

(a) All consideration received by the Corporation for the issue
or sale of shares of capital stock of each

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<PAGE>

series, together with all income, earnings, profits,
and proceeds received thereon, including any proceeds
derived from the sale, exchange or liquidation thereof, and any
funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to
the series with respect to which such assets, payments or funds were
received by the Corporation for all purposes, subject only to the
rights of creditors, and shall be so handled upon the books of account
of the Corporation. Such assets, payments and funds, including any
proceeds derived from the sale, exchange or liquidation thereof, and
any assets derived from any reinvestment of such proceeds in whatever
form the same may be, are herein referred to as "assets belonging to"
such series.

(b) The Board of Directors may from time to time declare and pay
dividends or distributions, in additional shares of capital stock of
such series or in cash, on any or all series of capital stock, the
amount of such dividends and the means of payment being wholly in the
discretion of the Board of Directors.

(i) Dividends or distributions on shares of any series
shall be paid only out of earned surplus or other lawfully
available assets belonging to such series.

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<PAGE>

(ii) Inasmuch as one goal of the Corporation is to
qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended, or any successor
or comparable statute thereto, and Regulations promulgated
thereunder, and inasmuch as the computation of net income
and gains for federal income tax purposes may vary from the
computation thereof on the books of the Corporation, the
Board of Directors shall have the power, in its discretion,
to distribute in any fiscal year as dividends, including
dividends designated in whole or in part as capital gains
distributions, amounts sufficient, in the opinion of the
Board of Directors, to enable the Corporation to qualify as
a regulated investment company and to avoid liability for
the Corporation for federal income tax in respect of that
year. In furtherance, and not in limitation of the
foregoing, in the event that a series has a net capital loss
for a fiscal year, and to the extent that the net capital
loss offsets net capital gains from such series, the amount
to be deemed available for distribution to that series with
the net capital gain may be reduced by the amount offset.

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<PAGE>

(c) In the event of the liquidation or dissolution of the
Corporation, holders of shares of capital stock of each series shall
be entitled to receive, as a series, out of the assets of the
Corporation available for distribution to such holders, but other than
general assets not belonging to any particular series, the assets
belonging to such series; and the assets so distributable to the
holders of shares of capital stock of any series shall be distributed,
subject to the provisions of subsection (d) of this Section 7, among
such stockholders in proportion to the number of shares of such series
held by them and recorded on the books of the Corporation. In the
event that there are any general assets not belonging to any
particular series and available for distribution, such distribution
shall be made to the holders of all series in proportion to the net
asset value of the respective series determined in accordance with the
charter of the Corporation.

(d) The assets belonging to any series shall be charged with the
liabilities in respect to such series, and shall also be charged with its
share of the general liabilities of the Corporation, in proportion to the
asset value of the respective series determined in accordance with the
Charter of the Corporation. The determination of the Board of Directors
shall be conclusive as to the amount of liabilities, including accrued
expenses and reserves, as to the allocation of the

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<PAGE>

same as to a given series, and as to whether the same or general assets
of the Corporation are allocable to one or more classes.

Section 8. Any fractional shares shall carry proportionately all the
rights of a whole share, excepting any right to receive a certificate
evidencing such fractional share, but including, without limitation, the
right to vote and the right to receive dividends.

Section 9. No holder of shares of Common Stock of the Corporation
shall, as such holder, have any pre-emptive right to purchase or subscribe
for any shares of the Common Stock of the Corporation of any class or series
which it may issue or sell (whether out of the number of shares authorized by
the Articles of Incorporation, or out of any shares of the Common Stock of
the Corporation acquired by it after the issue thereof, or otherwise).

Section 10. All persons who shall acquire any shares of capital stock
of the Corporation shall acquire the same subject to the provisions of the
charter and By-Laws of the Corporation. All shares of Common Stock of the
Corporation issued on or before the date of the filing of the amendment filed
January 17, 1990 to the Articles of Incorporation shall without further act
of the Board of Directors or the holders of such shares be deemed to be
shares of Class B Common Stock.

Section 11. Notwithstanding any provision of law requiring action to be
taken or authorized by the affirmative vote of the holders of a designated
proportion greater than a majority of the

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<PAGE>

shares of common stock, such action shall be valid and effective if taken or
authorized by the affirmative vote of the holders of a majority of the total
number of Shares of common stock outstanding and entitled to vote thereupon
pursuant to the provisions of these Articles of Incorporation.

ARTICLE V.

DIRECTORS

The By-Laws of the Corporation may fix the number of directors at a number
other than four and may authorize the Board of Directors, by the vote of a
majority of the entire Board of Directors, to increase or decrease the number of
directors within a limit specified in the By-Laws, provided that in no case
shall the number of directors be less than three, and to fill the vacancies
created by any such increase in the number of directors. Unless otherwise
provided by the By-Laws of the Corporation, the directors of the Corporation
need not be stockholders.

The By-Laws of the Corporation may divide the Directors of the Corporation
into classes and prescribe the tenure of office of the several classes; but no
class shall be elected for a period shorter than that from the time of the
election of such class until the next annual meeting and thereafter for a period
shorter than the interval between annual meetings or for a longer period than
five years, and the term of office of at least one class shall expire each year.

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<PAGE>

ARTICLE VI.

LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS

A director or officer of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director or officer, except to the extent such exemption from
liability or limitation thereof is not permitted by law (including the
Investment Company Act of 1940) as currently in effect or as the same may
hereafter be amended.

No amendment modification or repeal of this Article VI shall adversely
affect any right or protection of a director or officer that exists at the time
of such amendment, modification or repeal.

ARTICLE VII.

MISCELLANEOUS

The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Corporation, and for creating,
defining, limiting and regulating the powers of the Corporation, the directors
and the stockholders.

Section 1. The Board of Directors shall have the management and control of
the property, business and affairs of the Corporation and is hereby vested with
all the powers possessed by the Corporation itself so far as is not inconsistent
with law or these Articles of Incorporation. In furtherance and without
limitation of the foregoing provisions, it is expressly declared that, subject
to these Articles of Incorporation, the Board of Directors shall have power:

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<PAGE>

(a) To make, alter, amend or repeal from time to time the By-
Laws of the Corporation except as such power may otherwise be limited
in the By-Laws.

(b) To issue shares of any class or series of the capital stock
of the Corporation.

(c) To authorize the purchase of shares of any class or series
in the open market or otherwise, at prices not in excess of their net
asset value for shares of that class, series or class within such
series determined in accordance with subsections (a) and (b) of
Section 6 of Article IV hereof, provided that the Corporation has
assets legally available for such purpose, and to pay for such shares
in cash, securities or other assets then held or owned by the
Corporation.

(d) To declare and pay dividends and distributions from funds
legally available therefor on shares of such class or series, in such
amounts, if any, and in such manner (including declaration by means of
a formula or other similar method of determination whether or not the
amount of the dividend or distribution so declared can be calculated
at the time of such declaration) and to the holders of record as of
such date, as the Board of Directors may determine.

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<PAGE>

(e) To take any and all action necessary or appropriate to
maintain a constant net asset value per share for shares of any class,
series or class within such series.

Section 2. Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally accepted
accounting principles applied by or pursuant to the direction of the Board of
Directors or as otherwise required or permitted by the Securities and
Exchange Commission, shall be final and conclusive, and shall be binding upon
the Corporation and all holders of shares, past, present and future, of each
class or series, and shares are issued and sold on the condition and
undertaking, evidenced by acceptance of certificates for such shares by, or
confirmation of such shares being held for the account of, any stockholder,
that any and all such determinations shall be binding as aforesaid.

Nothing in this Section 2 shall be construed to protect any director or
officer of the Corporation against liability to the Corporation or its
stockholders to which such director or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.

Section 3. The directors of the Corporation may receive compensation
for their services, subject, however, to such limitations with respect
thereto as may be determined from time to time by the holders of shares of
capital stock of the Corporation.

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<PAGE>

Section 4. Except as required by law, the holders of shares of capital
stock of the Corporation shall have only such right to inspect the records,
documents, accounts and books of the Corporation as may be granted by the
Board of Directors of the Corporation.

Section 5. Any vote of the holders of shares of capital stock of the
Corporation authorizing liquidation of the Corporation or proceedings for its
dissolution may authorize the Board of Directors to determine, as provided
herein, or if provision is not made herein, in accordance with generally
accepted accounting principles, which assets are the assets belonging to the
Corporation or any series thereof available for distribution to the holders
of the Corporation or any series thereof (pursuant to the provisions of
Section 7 of Article IV hereof) and may divide, or authorize the Board of
Directors to divide, such assets among the stockholders of the shares of
capital stock of the Corporation or any series thereof in such manner as to
ensure that each such holder receives an amount from the proceeds of such
liquidation or dissolution that such holder is entitled to, as determined
pursuant to the provisions of Sections 3 and 7 of Article IV hereof.

ARTICLE VIII

DEFINITIONS

Section 1. As used in these Articles of Incorporation and in the
By-Laws of the Corporation, the following terms shall have the meanings
indicated:

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"Gross Assets" shall mean the total value of the assets of the
Corporation determined as provided in Section 3 below.

"Person" shall mean a natural person, corporation, joint stock
company, firm association, partnership, trust, syndicate, combination,
organization, government or agency or subdivision thereof.

"Securities" shall mean any stock, shares, bonds, debentures,
notes, mortgages or other obligations, and any certificates, receipts,
warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other
rights or interests therein, or in any property or assets created or
issued by any Person.

Section 2. Net asset value shall be determined by dividing:

(a) The total value of the assets of the Corporation determined
as provided in Section 3 below less, to the extent determined by or
pursuant to the direction of the Board of Directors in accordance with
generally accepted accounting principles, all debts, obligations and
liabilities of the Corporation (which debts, obligations and
liabilities shall include, without limitation of the generality of the
foregoing, any and all debts, obligations, liabilities or claims, of
any and every kind and nature, fixed, accrued or unmatured, including
the estimated accrued expense of investment

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<PAGE>

advisory and administrative services, and any reserves or charges for any
or all of the foregoing, whether for taxes, expenses, contingencies, or
otherwise, and the price of common stock redeemed but not paid for)
but excluding the Corporation's liability upon its shares and its
surplus, by

(b) The total number of shares of the Corporation outstanding
(shares sold by the Corporation whether or not paid for being treated
as outstanding and shares purchased or redeemed by the Corporation
whether or not paid for and treasury shares being treated as not
outstanding).

Section 3. In determining for the purposes of these Articles of
Incorporation the total value of the assets of the Corporation at any time,
securities shall be taken at their market value or, in the absence of readily
available market quotations, at fair value, both as determined pursuant to
methods approved by the Board of Directors and all other assets at fair value
determined in such manner as may be approved from time to time by or pursuant
to the direction of the Board of Directors.

Section 4. Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally accepted
accounting principles or with any order, rule, regulation or release of the
Securities and Exchange Commission by or pursuant to the direction of the
Board of Directors, shall be final and

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<PAGE>

conclusive, and shall be binding upon the Corporation and all holders of its
shares, past, present and future, and shares of the Corporation are issued
and sold on the condition and undertaking, evidenced by acceptance of
certificates for such shares by, or confirmation of such shares being held
for the account of any stockholder, that any and all such determinations
shall be binding as aforesaid.

Nothing in this Section 4 shall be construed to protect any director or
officer of the Corporation against any liability to the Corporation or its
stockholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.

ARTICLE IX.

AMENDMENTS

From time to time any of these provisions of these Articles of
Incorporation may be amended, altered or repealed (including any amendment
that changes the terms of any of the outstanding stock by classification,
reclassification or otherwise), and other provisions that may, under the
statutes of the State of Maryland at the time in force, be lawfully contained
in articles of incorporation may be added or inserted, upon the vote of the
holders of a majority of the shares of common stock of the Corporation at the
time outstanding and entitled to vote, and all rights at any time conferred
upon the stockholders of the

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<PAGE>

Corporation by these Articles of Incorporation are subject to the provisions
of this Article IX."

SECOND: The provisions set forth in these Articles of Restatement are
all provisions of the Charter as currently in effect.

THIRD: The restatement of the Charter has been approved by a majority
of the entire Board of Directors.

FOURTH: The Charter is not amended by these Articles of Restatement.

FIFTH: The Corporation's principal office in the state of Maryland is
c/o CT Corporation, 32 South Street, Baltimore, Maryland 21202.

SIXTH: The name and address of the Corporation's resident agent is CT
Corporation, 32 South Street, Baltimore, Maryland 21202.

SEVENTH: The Corporation currently has eight directors. The names of the
directors currently in office are as follows:

Edward D. Beach
Delayne D. Gold
Harry A. Jacobs, Jr.
Thomas T. Mooney
Thomas H. O'Brien
Thomas A. Owens, Jr.
Richard A. Redeker
Stanley E. Shirk

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<PAGE>

IN WITNESS WHEREOF, PRUDENTIAL GOVERNMENT INCOME FUND, INC., has caused
these presents to be signed in its name and on its behalf by its President
and attested by its Assistant Secretary on __________________, 1996.

PRUDENTIAL GOVERNMENT INCOME FUND, INC.

By
------------------------------------
Richard A. Redeker
President

Attest:
------------------------------
Ellyn C. Acker
Assistant Secretary

THE UNDERSIGNED, President of Prudential Government Income Fund, Inc.,
who executed on behalf of the Corporation the foregoing Articles of
Restatement of which this certificate is made a part, hereby acknowledges in
the name and on behalf of said Corporation the foregoing Articles of
Restatement to be the corporate act of said Corporation and hereby certifies
that to the best of his knowledge, information and belief the matters and
facts set forth therein with respect to the authorization and approval
thereof are true in all material respects under the penalties of perjury.

------------------------------------
Richard A. Redeker
President

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<PAGE>
EXHIBIT 11

CONSENT OF INDEPENDENT AUDITORS

We consent to the use in Post-Effective Amendment No. 21 to Registration
Statement No. 2-82976 of Prudential Government Income Fund, Inc. of our report
dated April 13, 1995, appearing in the Statement of Additional Information,
which is incorporated by reference in such Registration Statement, and to the
references to us under the headings "Financial Highlights" in the Prospectus,
which is incorporated by reference in such Registration Statement, and
"Custodian, Transfer and Dividend Disbursing Agent and Independent Accountants"
in the Statement of Additional Information.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
New York, New York
February 28, 1996

<PAGE>

PRUDENTIAL GOVERNMENT INCOME FUND, INC.
(the Fund)

PLAN PURSUANT TO RULE 18F-3

The Fund hereby adopts this plan pursuant to Rule 18f-3 under the
Investment Company Act of 1940 (the 1940 Act), setting forth the separate
arrangement and expense allocation of each class of shares. Any material
amendment to this plan is subject to prior approval of the Board of Directors,
including a majority of the independent Directors.

CLASS CHARACTERISTICS

CLASS A SHARES: Class A shares are subject to a high initial sales charge
and a distribution and/or service fee pursuant to Rule 12b-1
under the 1940 Act (Rule 12b-1 fee) not to exceed .30 of 1%
per annum of the average daily net assets of the class. The
initial sales charge is waived or reduced for certain
eligible investors.

CLASS B SHARES: Class B shares are not subject to an initial sales charge
but are subject to a high contingent deferred sales charge
(declining by 1% each year) which will be imposed on certain
redemptions and a Rule 12b-1 fee of not to exceed 1% per
annum of the average daily net assets of the class. The
contingent deferred sales charge is waived for certain
eligible investors. Class B shares automatically convert to
Class A shares approximately seven years after purchase.

CLASS C SHARES: Class C shares are not subject to an initial sales charge
but are subject to a low contingent deferred sales charge
(declining by 1% each year) which will be imposed on certain
redemptions and a Rule 12b-1 fee not to exceed 1% per annum
of the average daily net assets of the class.

CLASS Z SHARES: Class Z shares are not subject to either an initial or
contingent deferred sales charge nor are they subject to any
Rule 12b-1 fee.

INCOME AND EXPENSE ALLOCATIONS

Income and expenses not allocated to a particular class, will be allocated
to each class on the basis of relative net assets (settled shares).
"Relative net assets (settled shares)" are net assets valued in accordance
with generally accepted accounting principles but excluding the value of
subscriptions receivable in relation to the net assets of the Fund. Any

<PAGE>

realized and unrealized capital gains and losses will be allocated to each
class on the basis of the net asset value of that class in relation to the
net asset value of the Fund.

DIVIDENDS AND DISTRIBUTIONS

Dividends and other distributions paid by the Fund to each class of shares,
to the extent paid, will be paid on the same day and at the same time, and
will be determined in the same manner and will be in the same amount,
except that the amount of the dividends and other distributions declared
and paid by a particular class may be different from that paid by another
class because of Rule 12b-1 fees and other expenses borne exclusively by
that class.

EXCHANGE PRIVILEGE

Each class of shares is generally exchangeable for the same class of shares
(or the class of shares with similar characteristics), if any, of the other
Prudential Mutual Funds (subject to certain minimum investment
requirements) at relative net asset value without the imposition of any
sales charge.

Class B and Class C shares (which are not subject to a contingent deferred
sales charge) of shareholders who qualify to purchase Class A shares at net
asset value will be automatically exchanged for Class A shares on a
quarterly basis, unless the shareholder elects otherwise.

CONVERSION FEATURES

Class B shares will automatically convert to Class A shares on a quarterly
basis approximately seven years after purchase. Conversions will be
effected at relative net asset value without the imposition of any
additional sales charge.

GENERAL

A. Each class of shares shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its arrangement and shall
have separate voting rights on any matter submitted to shareholders in
which the interests of one class differ from the interests of any other
class.

B. On an ongoing basis, the Directors, pursuant to their fiduciary
responsibilities under the 1940 Act and otherwise, will monitor the Fund
for the existence of any material conflicts among the interests of its
several classes. The Directors, including a majority of the independent
Directors,

<PAGE>

shall take such action as is reasonably necessary to eliminate any such
conflicts that may develop. Prudential Mutual Fund Management, Inc., the
Fund's Manager, will be responsible for reporting any potential or existing
conflicts to the Directors.

C. For purposes of expressing an opinion on the financial statements of the
Fund, the methodology and procedures for calculating the net asset value
and dividends/distributions of the Fund's several classes and the proper
allocation of income and expenses among such classes will be examined
annually by the Fund's independent auditors who, in performing such
examination, shall consider the factors set forth in the relevant auditing
standards adopted, from time to time, by the American Institute of
Certified Public Accountants.

Dated: August 21, 1995