PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND INC
485B24E, 1995-03-01
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     As filed with the Securities and Exchange Commission on March 1, 1995
                                               Securities Act File No. 33-42093
                                       Investment Company Act File No. 811-5510
    
===============================================================================
                       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. 7                    [x]
                                     and/or
                        REGISTRATION STATEMENT UNDER THE
                         INVESTMENT COMPANY ACT OF 1940
                                Amendment No. 11                           [x]
                        (Check appropriate box or boxes)
    

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

                PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
            (Formerly The Prudential Intermediate Income Fund, Inc.)
               (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):

   
     [x]    immediately upon filing pursuant to paragraph (b)
     [ ]    on (date) pursuant to paragraph (b)
     [ ]    60 days after filing pursuant to paragraph (a)(i)
     [ ]    on (date), pursuant to paragraph (a)(i)
     [ ]    75 days after filing pursuant to paragraph (a)(ii)
     [ ]    on (date) pursuant to paragraph (a)(ii) 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

     Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The Rule 24f-2 Notice for the Registrant's most recent fiscal year
ended December 31, 1994 was filed on February 23, 1995.
    

                        CALCULATION OF REGISTRATION FEE

<TABLE> 
<CAPTION>
===========================================================================================================
                                               Proposed Maximum   Proposed Maximum      Amount of
  Title of Securities          Amount Being     Offering Price        Aggregate        Registration
    Being Registered            Registered         Per Share*      Offering Price**         Fee
- -----------------------------------------------------------------------------------------------------------
<S>                                <C>                <C>            <C>                 <C> 
   
Common Stock, par value 
 $.001 per share ........          13,415,379         $7.68          $289,996.80          $100.00
    
===========================================================================================================

   
<FN>
*    Computed under Rule 457(d) on the basis of the offering price per share on
     the close of business on February 16, 1995.

**   Registrant elects to calculate the maximum aggregate offering price
     pursuant to Rule 24e-2. 13,377,619 shares were redeemed during the fiscal
     year ended December 31, 1994. None of such shares was used for reduction
     pursuant to paragraph (a) of Rule 24e-2 or paragraph (c) of Rule 24f-2
     during the current fiscal year. 13,377,619 shares redeemed during the
     Registrant's previous fiscal year are being used for reduction for this
     amendment.

</FN>
</TABLE>
    
===============================================================================


<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;
                                                                     How the Fund Calculates Performance
Item  4.     General Description of Registrant .................     Cover Page; Fund Highlights;
                                                                     How the Fund Invests; General Information
Item  5.     Management of the Fund ............................     Financial Highlights; How the Fund is Managed
Item  5A.    Management's Discussion of Fund Performance .......     Not Applicable
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;
                                                                     Net Asset Value
Item 20.     Tax Status ........................................     Taxes
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 Intermediate Global
Income Fund, Inc.

   
- -------------------------------------------------------------------------------
Prospectus dated March 2, 1995
- -------------------------------------------------------------------------------

Prudential Intermediate Global Income Fund, Inc. (the Fund) is an open-end
management investment company, or a mutual fund, whose investment objective is
to seek to maximize total return, the components of which are current income and
capital appreciation. The Fund seeks to achieve its objective through investment
in a portfolio consisting primarily of U.S. Government securities and Foreign
Government securities. The Fund may also purchase and sell certain derivatives,
including put and call options on securities and foreign currencies and engage
in transactions involving futures contracts and options on such futures to hedge
its portfolio and to attempt to enhance income. See "How the Fund
Invests--Investment Objective and Policies." The Fund is non-diversified and may
invest more than 5% of its total assets in the securities of one or more
issuers. Investment in a non-diversified portfolio involves greater risk than
investment in a diversified portfolio. In addition, the Fund may invest up to
10% of its total assets in non-investment grade securities, which may entail
additional risks. There can be no assurance that the Fund's investment objective
will be achieved. Investing in Foreign Government securities, options and
futures contracts involves considerations and possible risks which are different
from those ordinarily associated with investing in U.S. Government securities.
See "How the Fund Invests--Investment Objective and Policies."

     The Fund may engage in short-term trading and enter into bank borrowings.
These techniques may be considered speculative and may result in higher risks
and costs to the Fund. See "How the Fund Invests--Investment Objective and
Policies." The Fund's address is One Seaport Plaza, New York, New York 10292,
and its telephone number is (800) 225-1852.

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 March 2, 1995, which information is
incorporated herein by reference (is legally considered 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.
- -------------------------------------------------------------------------------

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
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.




<PAGE>

                                FUND HIGHLIGHTS

     The following summary is intended to highlight certain information
contained in this Prospectus and is qualified in its entirety by the more
detailed information appearing elsewhere herein.

What Is Prudential Intermediate Global Income Fund, Inc.?

     Prudential Intermediate Global Income Fund, Inc. is a mutual fund. A mutual
fund pools the resources of investors by selling its shares to the public and
investing the proceeds of such sale in a portfolio of securities designed to
achieve its investment objective. Technically, the Fund is an open-end,
non-diversified management investment company.

What Is the Fund's Investment Objective?

   
     The Fund's investment objective is to seek to maximize total return, the
components of which are current income and capital appreciation. It seeks to
achieve this objective by investing primarily in a portfolio consisting of U.S.
Government securities and Foreign Government securities. There can be no
assurance that the Fund's objective will be achieved. See "How the Fund
Invests--Investment Objective and Policies" at page 9.

Risk Factors and Special Characteristics

     Investing in securities issued by foreign governments involves
considerations and risks not typically associated with investing in obligations
issued by the U.S. Government and domestic corporations. See "How the Fund
Invests--Risk Factors--Risk Factors on Foreign Investments" at page 13. The Fund
may also engage in various hedging and income enhancement strategies, including
derivatives, which may be considered speculative and may result in higher risks
and costs to the Fund. See "How the Fund Invests--Hedging and Income Enhancement
Strategies--Risks of Hedging and Income Enhancement Strategies" at page 19. In
addition, the Fund may invest up to 10% of its total assets in securities rated
below investment grade, but with a minimum rating of B, as determined by Moody's
Investors Service (Moody's), Standard & Poor's Ratings Group (Standard & Poor's)
or by another nationally recognized statistical ratings organization NRSRO, or
if unrated, deemed to be of equivalent quality by the investment adviser.
Lower-rated securities are subject to a greater risk of loss of principal and
interest. See "How the Fund Invests--Risk Factors--Medium and Lower-Rated
Securities" at page 14. The amount of income available for distribution to
shareholders will be affected by any foreign currency gains or losses generated
by the Fund upon the disposition of debt securities denominated in a foreign
currency and by certain hedging activities of the Fund. Gains and losses on
security and currency transactions cannot be predicted. This fact coupled with
the different accounting and tax treatment of certain currency gains and losses
increases the likelihood of distributions in whole or in part constituting a
return of capital to shareholders. See "Taxes, Dividends and Distributions" at
page 24.

Who Manages the Fund?

     Prudential Mutual Fund Management, Inc. (PMF or the Manager) is the Manager
of the Fund and is compensated for its services at an annual rate of .75 of 1%
of the Fund's average daily net assets. As of January 31, 1995, PMF served as
manager or administrator to 69 investment companies, including 39 mutual funds,
with aggregate assets of approximately $45 billion. The Prudential Investment
Corporation (PIC or the Subadviser) furnishes investment advisory services in
connection with the management of the Fund under a Subadvisory Agreement with
PMF. See "How the Fund is Managed--Manager" at page 20. The management fee is
higher than that paid by most other investment companies.
    
                                       2




<PAGE>


Who Distributes the Fund's Shares?
   
     Prudential Mutual Fund Distributors, Inc. (PMFD) acts as the Distributor of
the Fund's Class A shares and is paid an annual distribution and service fee
which is currently being charged at the rate of .15 of 1% of the average daily
net assets of the Class A shares.

     Prudential Securities Incorporated (Prudential Securities or PSI), a major
securities underwriter and securities and commodities broker, acts as the
Distributor of the Fund's Class B and Class C shares and is paid an annual
distribution and service fee at the rate of .75 of 1% of the average daily net
assets of the Class B shares and an annual distribution and service fee which is
currently being charged at the rate of .75 of 1% of the average daily net assets
of the Class C shares, respectively.

     See "How the Fund is Managed--Distributor" at page 21.
    

What Is the Minimum Investment?

   
     The minimum initial investment for Class A and Class B shares is $1,000 per
class and $5,000 for Class C shares. The minimum subsequent investment is $100
for all classes. There is no minimum investment requirement for certain
retirement and employee savings plans or custodial accounts for the benefit of
minors. For purchases made through the Automatic Savings Accumulation Plan, the
minimum initial and subsequent investment is $50. See "Shareholder Guide--How to
Buy Shares of the Fund" at page 27 and "Shareholder Guide--Shareholder Services"
at page 36.
    

 How Do I Purchase Shares?

   
     You may purchase shares of the Fund through Prudential Securities, Pruco
Securities Corporation (Prusec) or directly from the Fund, through its transfer
agent, Prudential Mutual Fund Services, Inc. (PMFS or the Transfer Agent) at the
net asset value per share (NAV) next determined after receipt of your purchase
order by the Transfer Agent or Prudential Securities plus a sales charge which
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). See "How the Fund Values Its Shares"
at page 23 and "Shareholder Guide--How to Buy Shares of the Fund" at page 27.
    

What Are My Purchase Alternatives?

     The Fund offers three classes of shares:

     o Class A Shares:              Sold with an initial sales charge of up to
                                    3% of the offering price.
   
     o Class B Shares:              Sold without an initial sales charge but 
                                    are subject to a contingent deferred sales 
                                    charge or CDSC (declining from 3% to zero 
                                    of the lower of the amount invested or the 
                                    redemption proceeds) which will be imposed
                                    on certain redemptions made within four
                                    years of purchase. Although Class B shares
                                    are subject to higher ongoing
                                    distribution-related expenses than Class A
                                    shares, Class B shares will automatically
                                    convert to Class A shares (which are
                                    subject to lower ongoing
                                    distribution-related expenses) approximately
                                    five years after purchase.
    
     o Class C Shares:              Sold without an initial sales charge and,
                                    for one year after purchase, are subject to
                                    a 1% CDSC on redemptions. Like Class B
                                    shares, Class C shares are subject to higher
                                    ongoing distribution-related expenses than
                                    Class A shares but do not convert to another
                                    class.

   
     See "Shareholder Guide--Alternative Purchase Plan" at page 28.
    
                                       3




<PAGE>


How Do I Sell My Shares?

   
     You may redeem shares of the Fund at any time at the NAV next determined
after Prudential Securities or the Transfer Agent receives your sell order.
However, the proceeds of redemptions of Class B and Class C shares may be
subject to a CDSC. See "Shareholder Guide--How to Sell Your Shares" at page 31.
    

How Are Dividends and Distributions Paid?

   
     The Fund expects to declare daily and pay monthly dividends of net
investment income and make distributions of any net capital gains at least
annually. Dividends and distributions will be automatically reinvested in
additional shares of the Fund at NAV without a sales charge unless you request
that they be paid to you in cash. The amount of income available for
distribution to shareholders will be affected by any foreign currency gains or
losses generated by the Fund upon the disposition of debt securities denominated
in a foreign currency and by certain hedging activities of the Fund. See "Taxes,
Dividends and Distributions" at page 24.
    
                                       4



<PAGE>


                                 FUND EXPENSES

<TABLE>
<CAPTION>

                                                            Class A Shares         Class B Shares           Class C Shares
                                                            --------------         --------------           --------------
<S>                                                               <C>                   <C>                      <C>  
Shareholder Transaction Expenses+
  Maximum Sales Load Imposed on Purchases
   (as a percentage of offering price) ...................        3.0%                   None                     None
  Maximum Sales Load or Deferred Sales Load
   Imposed on Reinvested Dividends .......................        None                   None                     None
  Deferred Sales Load (as a percentage of original                              3% during the first year,
   purchase price or redemption price, whichever                                decreasing by 1% annually          1% on
   is lower) .............................................        None         to 1% in the third year and      redemptions
                                                                                1% in the fourth year and     made within one
                                                                                   0% in the fifth year*      year of purchase
  Redemption Fees ........................................        None                   None                     None
  Exchange Fees ..........................................        None                   None                     None
Annual Fund Operating Expenses                                Class A Shares        Class B Shares           Class C Shares
  (as a percentage of average net assets)                     --------------        --------------           --------------

   
     Management Fees .....................................        .75%                   .75%                    .75%
     12b-1 Fees+ .........................................        .15%++                 .75%                    .75%++
     Other Expenses ......................................        .56%                   .56%                    .56%
                                                                 ----                   ----                    ---- 
     Total Fund Operating Expenses .......................       1.46%                  2.06%                   2.06%
                                                                 ====                   ====                    ==== 
Example                                                                1 year       3 years       5 years       10 years
- -------                                                                ------       -------       -------       --------
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 A ...................         $44          $75           $107           $199
                                     Class B ...................         $51          $75           $111           $203
                                     Class C** .................         $31          $65           $111           $239
You would pay the following expenses on the same investment,
assuming no redemption:              Class A ...................         $44          $75           $107           $199
                                     Class B ...................         $21          $65           $111           $203
                                     Class C** .................         $21          $65           $111           $239
    
</TABLE>

   
The above example with respect to Class A and Class B shares is based on
restated data for the Fund's fiscal year ended December 31, 1994. The above
example with respect to Class C shares is based on expenses expected to have
been incurred if Class C shares had been in existence during the entire fiscal
year ended December 31, 1994. 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 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 an estimate of
operating expenses of the Fund, such as directors' and professional fees,
registration fees, reports to shareholders and transfer agency and custodian
(domestic and foreign) fees.

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

*    Class B shares will automatically convert to Class A shares approximately
     five years after purchase. See "Shareholder Guide--Conversion Feature--
     Class B Shares."

   
**   Estimated based on expenses expected to have been incurred if Class C
     shares had been in existence during the entire fiscal year ended December
     31, 1994.

+    Pursuant to rules of the National Association of Securities Dealers, Inc.,
     the aggregate initial sales charges, deferred sales charges and asset-based
     sales charges on shares of the Fund may not exceed 6.25% of total gross
     sales, subject to certain exclusions. This 6.25% limitation is imposed on
     each class of the Fund rather than on a per shareholder basis. Therefore,
     long-term shareholders of the Fund may pay more in total sales charges than
     the economic equivalent of 6.25% of such shareholders' investment in such
     shares. See "How the Fund is Managed--Distributor."

++   Although the Class A and Class C Distribution and Service Plans provides
     that the Fund may pay up to an annual rate of .30 of 1% and 1% of average
     daily net assets of the Class A and Class C shares, respectively, the
     Distributor has agreed to limit its distribution fee with respect to Class
     A and Class C shares of the Fund to no more than .15 of 1% and .75 of 1% of
     the average daily net assets of the Class A and Class C shares,
     respectively, for the fiscal year ending December 31, 1995. Total operating
     expenses without such limitation would be 1.61% for Class A shares and
     2.31% for Class C shares. See "How the Fund is Managed--Distributor."
    
                                       5



<PAGE>


                              FINANCIAL HIGHLIGHTS
                                 Class A Shares
       (for a share outstanding throughout each of the indicated periods)


   
     The following financial highlights have been audited by Price Waterhouse
LLP, independent accountants, whose report thereon was unqualified. This
information should be read in conjunction with the financial statements and
notes thereto, which appear in the Statement of Additional Information. The
following financial highlights contain selected data for a Class A share of
common stock outstanding, total return, ratios to average net assets and other
supplemental data for the periods indicated. The information is based on data
contained in the financial statements.
    

<TABLE>
<CAPTION>

                                             Year Ended            Ten Months                                      May 26,
                                            December 31,             Ended        Year Ended February 28,         1988** to  
                                         --------------------     December 31, -----------------------------     February 28,
                                            1994        1993        1992@      1992+      1991+       1990+        1989+
                                            ----        ----        -----      -----      -----       -----        ------
<S>                                      <C>          <C>        <C>         <C>         <C>         <C>         <C>

   
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .   $   8.43     $  7.77    $   8.39    $   8.79    $   8.56    $   8.93    $   9.30
                                         --------     -------    --------    --------    --------    --------    --------
Income from investment operations
Net investment income ................        .50         .59         .61         .71         .74         .73         .59
Net realized and
  unrealized gain (loss)
  on investment and 
  foreign currency
  transactions .......................      (1.09)        .63        (.36)       (.36)        .35        (.10)       (.26)
                                         --------     -------    --------    --------    --------    --------    --------
  Total from investment
   operations ........................       (.59)       1.22         .25         .35        1.09         .63         .33
                                         --------     -------    --------    --------    --------    --------    --------
Less distributions
Dividends from net
  investment income ..................       (.29)       (.48)       (.59)       (.71)       (.74)       (.73)       (.59)
Distributions from 
  capital gains ......................       (.01)       (.08)       (.28)         --          --          --          --
Tax return of 
  capital distributions ..............       (.22)        --           --        (.04)       (.12)       (.27)       (.09)
                                         --------     -------    --------    --------    --------    --------    --------
 Total distributions .................       (.52)       (.56)       (.87)       (.75)       (.86)      (1.00)       (.68)
                                         --------     -------    --------    --------    --------    --------    --------
Capital charge resulting from
  the issuance of Fund shares ........         --          --          --          --          --          --        (.02)
                                         --------     -------    --------    --------    --------    --------    --------
Net asset value, end of period .......   $   7.32    $   8.43    $   7.77    $   8.39    $   8.79    $   8.56    $   8.93
                                         ========    ========    ========    ========    ========    ========    ========
TOTAL RETURN#: .......................      (7.02)%     16.12%       3.09%       4.24%      13.49%       7.20%       3.41%
                                         ========    ========    ========    ========    ========    ========    ========
RATIOS/SUPPLEMENTAL DATA:++
Net assets, end of period (000) ......   $207,153    $320,406    $378,865    $271,714    $449,178    $437,558    $456,224
Average net assets (000) .............   $262,882    $355,018    $331,339    $399,714    $437,752    $455,386    $463,039
Ratios to average net assets:
  Expenses, including
    distribution fees ................       1.46%       1.41%       1.30%*      1.20%       1.04%       1.07%        .97%*
  Expenses, excluding 
    distribution fees ................       1.31%       1.26%       1.15%*      1.15%       1.04%       1.07%        .97%*
  Net investment income ..............       6.04%       7.42%       9.08%*      8.43%       8.61%       8.16%       8.54%*
Portfolio turnover rate ..............        554%        361%        201%        170%        250%        231%        358%
Total debt outstanding 
 at end of period (000) ..............         --          --          --          --    $ 20,240    $ 27,600    $ 34,960
Asset coverage@@ .....................         --          --          --          --    $ 23,193    $ 16,854    $ 14,050
    

- --------------
<FN>

*    Annualized.

**   Commencement of investment operations.

+    During these periods, the Fund operated as a closed-end investment company.
     Effective October 7, 1991, the Fund commenced operations as an open-end
     investment company. Accordingly, historical expenses and ratios of expenses
     to average net assets are not necessarily indicative of future expenses and
     related ratios.

++   Because of the events referred to in + and the timing of such, the ratios
     for the Class A and B shares are not necessarily comparable to each other
     or those of prior periods and are not necessarily indicative of future
     ratios.

@    The Fund changed its fiscal year end to December 31.

@@   Per $1,000 of debt outstanding.

#    Total return does not consider the effect 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.
</FN>
</TABLE>
                                       6



<PAGE>



                              FINANCIAL HIGHLIGHTS
                                 Class B Shares
       (for a share outstanding throughout each of the indicated periods)

   
     The following financial highlights have been audited by Price Waterhouse
LLP, independent accountants, whose report thereon was unqualified. This
information should be read in conjunction with the financial statements and
notes thereto, which appear in the Statement of Additional Information. The
following financial highlights contain selected data for a Class B share of
common stock outstanding, total return, ratios to average net assets and other
supplemental data for each of the periods indicated. The information is based on
data contained in the financial statements.
    

<TABLE>
<CAPTION>

                                                                        Year Ended                  Ten Months         January 15,
                                                                        December 31,                   Ended          1992+ Through
                                                                    -----------------------          December 31,      February 29,
                                                                    1994               1993             1992@             1992
                                                                    ----               ----             ------            -----
<S>                                                               <C>                <C>                <C>               <C>
   
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .....................        $  8.44            $  7.79            $ 8.40            $ 8.43
                                                                  -------            -------            ------            ------
Income from investment operations
Net investment income ....................................            .45                .54               .57               .08
Net realized and unrealized gain (loss)
 on investment and foreign currency
 transactions ............................................          (1.09)               .63              (.35)             (.03)
                                                                  -------            -------            ------            ------
 Total from investment operations ........................           (.64)              1.17               .22               .05
                                                                  -------            -------            ------            ------
Less distributions
Dividends from net investment income .....................           (.26)              (.44)             (.55)             (.08)
Distributions from capital gains .........................           (.01)              (.08)             (.28)              --
Tax return of capital distributions ......................           (.20)               --                --                --
                                                                  -------            -------            ------            ------
 Total distributions .....................................           (.47)              (.52)             (.83)             (.08)
                                                                  -------            -------            ------            ------
Net asset value, end of period ...........................        $  7.33            $  8.44            $ 7.79            $ 8.40
                                                                  =======            =======            ======            ======
TOTAL RETURN#: ...........................................          (7.69)%            15.29%             2.70%             0.58%
                                                                  =======            =======            ======            ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) ..........................        $22,906            $39,440           $33,500            $1,049
Average net assets (000) .................................        $31,835            $36,197           $18,358            $  456
Ratios to average net assets:
 Expenses, including distribution fees ...................           2.07%              2.01%             1.90%*            1.03%*
 Expenses, excluding distribution fees ...................           1.31%              1.26%             1.15%*             .28%*
 Net investment income ...................................           5.44%              6.67%             8.54%*            9.43%*
Portfolio turnover rate ..................................            554%               361%              201%              170%
    

- -------------
   
<FN>
*    Annualized.

+    The Fund commenced a public offering of Class B shares on January 15, 1992.
     Accordingly, historical expenses and ratios to average net assets of Class
     B shares are not necessarily indicative of future expenses and related
     ratios of Class B shares. See "How the Fund is Managed--Distributor."
    
@    The Fund changed its fiscal year end to December 31.

#    Total return does not consider the effect 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.
</FN>
</TABLE>
                                       7




<PAGE>
   
                              FINANCIAL HIGHLIGHTS
                                 Class C Shares
           (for a share outstanding throughout the indicated period)
                 
     The following financial highlights have been audited by Price Waterhouse
LLP, independent accountants, whose report thereon was unqualified. This
information should be read in conjunction with the financial statements and
notes thereto, which appear in the Statement of Additional Information. The
following financial highlights contain selected data for a Class C share of
common stock outstanding, total return, ratios to average net assets and other
supplemental data for the period indicated. The information is based on
data contained in the financial statements.
 
<TABLE>
<CAPTION>
                                                                                                            Class C
                                                                                                         -------------
                                                                                                           August 1,
                                                                                                         1994+ through
                                                                                                          December 31,
                                                                                                              1994
                                                                                                          -------------
<S>                                                                                                          <C>   
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ......................................................................  $  7.69
                                                                                                             -------
Income from investment operations
Net investment income .....................................................................................      .14
Net realized and unrealized gain (loss) on investment and foreign currency transactions ...................     (.32)
                                                                                                             -------
  Total from investment operations ........................................................................     (.18)
                                                                                                             -------
Less distributions
Dividends from net investment income ......................................................................     (.10)
Tax return of capital distributions .......................................................................     (.08)
                                                                                                             -------
  Total distributions .....................................................................................     (.18)
                                                                                                             -------
Net asset value, end of period ............................................................................  $  7.33
                                                                                                             =======
TOTAL RETURN#: ............................................................................................    (2.44)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) ...........................................................................      193**
Average net assets (000) ..................................................................................      197**
Ratios to average net assets: ++
  Expenses, including distribution fees ...................................................................     1.05%*
  Expenses, excluding distribution fees ...................................................................      .30%*
  Net investment income ...................................................................................     3.30%*
Portfolio turnover rate ....................................................................................      554%
<FN>
- ----------------
*    Annualized.

+    Commencement of offering of Class C shares.

#    Total return does not consider the effect 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 return is not annualized.

++   Because of the event referred to in + and the timing of such, the
     ratios for Class C shares are not necessarily comparable to those of Class
     A and Class B shares and are not necessarily indicative of future ratios.

**   Figures are actual and not rounded to the nearest thousand.

</FN>
</TABLE>
    

                                       8
<PAGE>

                              HOW THE FUND INVESTS

INVESTMENT OBJECTIVE AND POLICIES

   
     The Fund's investment objective is to seek to maximize total return, the
components of which are current income and capital appreciation. The Fund will
attempt to achieve its objective by investing primarily in obligations issued or
guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities (U.S. Government securities) and in obligations issued or
guaranteed by certain foreign governments, quasi-governmental entities,
governmental agencies, supranational entities or any of their political
subdivisions or instrumentalities (Foreign Government securities). The Fund will
invest primarily in investment grade securities (i.e., those rated in one of the
four highest rating categories by Moody's, Standard & Poor's or another NRSRO),
or in non-rated securities determined by the Fund's investment adviser to be of
equivalent quality. The Fund may invest up to 10% of its total assets in debt
securities rated below investment grade, with a minimum rating of B, by either
Standard & Poor's or Moody's or by another NRSRO, or, if unrated, deemed to be
of equivalent quality by the investment adviser. See "Medium and Lower-Rated
Securities." Under normal circumstances, the Fund intends to maintain
investments in at least three countries (including the United States). The Fund
will maintain an average maturity of not more than ten years and, in general,
will not invest in securities with remaining maturities greater than ten years.
See "Investment Objective and Policies" in the Statement of Additional
Information. For temporary defensive purposes, the Fund may invest without limit
in high-quality money market instruments, including commercial paper of domestic
and foreign corporations, certificates of deposit, bankers' acceptances and
other obligations of domestic and foreign banks and short-term obligations
issued or guaranteed by the U.S. Government, its instrumentalities or agencies.
See "Other Investments and Investment Techniques." There is no assurance that
the Fund will achieve its investment objective.

     The average maturity of the Fund's portfolio will be actively managed in
light of market conditions and trends. Generally, when the investment adviser
expects interest rates to rise, the average maturity of the Fund's portfolio
will be shortened. Conversely, when the investment adviser expects interest
rates to fall, the average maturity of the Fund's portfolio will be lengthened.
The investment adviser believes that this strategy will enable the Fund to
preserve capital while seeking to provide high current income. Intermediate-term
U.S. and Foreign Government securities generally are more stable and less
susceptible to principal loss than longer-term securities. While
intermediate-term securities in most cases offer lower yields than securities
with longer maturities, the Fund intends to enhance income by writing options on
U.S. and Foreign Government securities. Option writing can result in the loss of
principal under certain market conditions. See "Other Investments and Investment
Techniques--Hedging and Income Enhancement Strategies." The Fund will, to a
limited extent, also be permitted to acquire other debt securities of U.S.
corporate issuers, securities issued in private placements, convertible
securities, preferred stock, collateralized mortgage obligations and warrants
accompanied by debt securities.
    

     The Fund's investment objective is a fundamental policy of the Fund.
Fundamental policies may not be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities as defined in the
Investment Company Act of 1940, as amended (the Investment Company Act). Fund
policies that are not fundamental may be modified by the Board of Directors.

     The Fund is a "non-diversified" investment company and may invest more than
5% of its total assets in the securities of one or more issuers. Investment in a
non-diversified investment company involves greater risk than investment in a
diversified investment company because a loss resulting from the default of a
single issuer may represent a greater portion of the total assets of a
non-diversified portfolio.

                                       9

<PAGE>

     U.S. Government Securities

     U.S. Treasury Securities. The Fund will invest in U.S. Treasury securities,
including Bills, Notes, Bonds and other debt securities issued by the U.S.
Treasury. These instruments are direct obligations of the U.S. Government and,
as such, are backed by the "full faith and credit" of the United States. They
differ primarily in their interest rates, the lengths of their maturities and
the dates of their issuances.

   
     Securities Issued or Guaranteed by U.S. Government Agencies and
Instrumentalities. The Fund will invest in securities issued by agencies of the
U.S. Government or instrumentalities of the U.S. Government. These obligations,
including those which are guaranteed by Federal agencies or instrumentalities,
may or may not be backed by the full faith and credit of the United States.
Obligations of the Government National Mortgage Association (GNMA), the Farmers
Home Administration and the Small Business Administration are backed by the full
faith and credit of the United States. In the case of securities not backed by
the full faith and credit of the United States, the Fund must look principally
to the agency issuing or guaranteeing the obligation for ultimate repayment and
may not be able to assert a claim against the United States if the agency or
instrumentality does not meet its commitments. Securities in which the Fund may
invest which are not backed by the full faith and credit of the United States
include obligations such as those issued by the Federal Home Loan Banks, the
Federal Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage
Association, the Student Loan Marketing Association, Resolution Funding
Corporation and the Tennessee Valley Authority, each of which has the right to
borrow from the U.S. Treasury to meet its obligations, and obligations of the
Farm Credit System, the obligations of which may be satisfied only by the
individual credit of the issuing agency. FHLMC investments may include
collateralized mortgage obligations. See "Other Investments and Investment
Techniques" below.
    

     Obligations issued or guaranteed as to principal and interest by the United
States Government may be acquired by the Fund in the form of custodial receipts
that evidence ownership of future interest payments, principal payments or both
on certain United States Treasury notes or bonds. Such notes and bonds are held
in custody by a bank on behalf of the owners. These custodial receipts are
commonly referred to as Treasury strips.

     Mortgage-Related Securities Issued by U.S. Government Agencies and
Instrumentalities. The Fund may invest in mortgage-backed securities, including
those which represent undivided ownership interests in pools of mortgages. The
U.S. Government or the issuing agency or instrumentality guarantees the payment
of interest on and principal of these securities. However, the guarantees do not
extend to the yield or value of the securities nor do the guarantees extend to
the yield or value of the Fund's shares. These securities are in most cases
"pass-through" instruments, through which the holders receive a share of all
interest and principal payments from the mortgages underlying the securities,
net of certain fees. Because the prepayment characteristics of the underlying
mortgages vary, it is not possible to predict accurately the average life of a
particular issue of pass-through certificates. Mortgage-backed securities are
often subject to more rapid repayment than their stated maturity date would
indicate as a result of the pass-through of prepayments of principal on the
underlying mortgage obligations. During periods of declining interest rates,
prepayment of mortgages underlying mortgage-backed securities can be expected to
accelerate. The Fund's ability to maintain a portfolio of high-yielding
mortgage-backed securities will be adversely affected to the extent that
prepayments of mortgages must be reinvested in securities which have lower
yields than the prepaid mortgages. Moreover, prepayments of mortgages which
underlie securities purchased at a premium could result in capital losses. 

     The Fund may also invest in mortgage pass-through securities where all
interest payments go to one class of holders (Interest Only Securities or IOs)
and all principal payments go to a second class of holders (Principal Only
Securities or POs). These securities are commonly referred to as mortgage-backed
securities strips or MBS strips. The yields to maturity on IOs are very
sensitive to the rate of principal payments (including prepayments) on the
related underlying mortgage assets, and a rapid rate of principal payments may
have a material adverse effect on yield to maturity. If the underlying mortgage
assets experience greater than anticipated prepayments of principal, the Fund
may not fully recoup its initial investment in these securities. Conversely, if
the underlying mortgage assets experience less than anticipated prepayments of
principal, the yield on POs could be materially adversely affected. The Fund
will only invest in 

                                       10

<PAGE>

MBS strips rated Aaa by Moody's or AAA by Standard & Poor's. See "Investment
Objective and Policies--U.S. Government Securities--Mortgage-Related Securities
Issued by U.S. Government Instrumentalities" in the Statement of Additional
Information.

     The Fund will invest in both Adjustable Rate Mortgage Securities (ARMs),
which are pass-through mortgage securities collateralized by adjustable rate
mortgages, and Fixed-Rate Mortgage Securities (FRMs), which are collateralized
by fixed-rate mortgages. See "Investment Objective and Policies" in the
Statement of Additional Information.

   
     The values of U.S. Government securities (like those of other fixed-income
securities generally) will change as interest rates fluctuate. Under adverse
market or economic conditions, the secondary market for these securities may not
be as liquid as the market for other mortgage-related securities and it may be
difficult for the investment adviser to sell these securities or the investment
adviser might have to sell these securities at a loss. During periods of falling
U.S. interest rates, the values of U.S. Government securities generally rise
and, conversely, during periods of rising interest rates, the values of such
securities generally decline. The magnitude of these fluctuations will generally
be greater for securities with longer-term maturities.

     Zero Coupon Bonds. The Fund may invest up to 5% of its total assets in zero
coupon securities. Zero coupon bonds are purchased at a discount from the face
amount because the buyer receives only the right to receive a fixed payment on a
certain date in the future and does not receive any periodic interest payments.
The effect of owning instruments which do not make current interest payments is
that a fixed yield is earned not only on the original investment but also, in
effect, on all discount accretion during the life of the obligations. This
implicit investment of earnings at the same rate eliminates the risk of being
unable to reinvest distributions at a rate as high as the implicit yield on the
zero coupon bond, but at the same time eliminates the holder's ability to
reinvest at higher rates in the future. For this reason, zero coupon bonds are
subject to substantially greater price fluctuations during periods of changing
market interest rates than are comparable securities which pay interest
currently, which fluctuation increases the longer the period to maturity.
Although zero coupon securities pay no interest to holders prior to maturity,
interest on these securities is reported as income to the Fund and distributed
to its shareholders. These distributions must be made from the Fund's cash
assets or, if necessary, from the proceeds of sales of portfolio securities. The
Fund will not be able to purchase additional income-producing securities with
cash used to make such distributions and consequently its current income may be
reduced. 

     Foreign Government Securities. "Foreign Government securities" include debt
securities issued or guaranteed, as to payment of principal and interest, by
governments, quasi-governmental entities, governmental agencies, supranational
entities and other governmental entities (collectively, Government Entities).
The Fund may invest in the Foreign Government securities of developed countries
and developing or emerging market countries that the investment adviser believes
to be stable. Foreign Government securities may be denominated in U.S. dollars
or in foreign currencies. The Fund's investments may include Foreign Government
securities of the countries named below, among others: 


Americas       Pacific                               Europe
- --------       -------          ------------------------------------------------
Argentina      Australia        Austria          Ireland          Spain 
Canada         China            Belgium          Israel           Sweden
Chile          Hong Kong        Czech Republic   Italy            Switzerland 
Colombia       Indonesia        Denmark          The Netherlands  United Kingdom
Mexico         Japan            Finland          Norway           Germany
               Malaysia         France           Portugal 
               New Zealand      Greece
               Singapore 
               South Korea 
               Thailand 
    



                                       11

<PAGE>

     A "supranational entity" is an entity constituted by the national
governments of several countries to promote economic development. Examples of
such supranational entities include, among others, the World Bank (International
Bank for Reconstruction and Development), the European Investment Bank and the
Asian Development Bank. Debt securities of "quasi-governmental entities" are
issued by entities owned by a national, state, or equivalent government or are
obligations of a political unit that are not backed by the national government's
"full faith and credit" and general taxing powers. Examples of quasi-government
issuers include, among others, the Province of Ontario and the City of
Stockholm. "Foreign Government securities" shall also include debt securities of
Government Entities denominated in European Currency Units. A European Currency
Unit represents specified amounts of the currencies of certain of the twelve
member states of the European Community. Foreign Government securities shall
also include mortgage-backed securities issued by foreign Government Entities
including quasi-governmental entities and the remaining maturities of such
securities shall be treated by the Fund in the same manner as mortgage-backed
U.S. Government securities.

   
     Returns available from foreign currency denominated debt instruments can be
adversely affected by changes in exchange rates. The Fund's investment adviser
believes that the use of foreign currency hedging techniques, including
"cross-currency hedges" may assist, under certain conditions, in helping to
protect against declines in the U.S. dollar value of income available for
distribution to shareholders and declines in the net asset value of the Fund's
shares resulting from adverse changes in currency exchange rates. For example,
the return available from securities denominated in a particular foreign
currency would diminish in the event the value of the U.S. dollar increased
against such currency. Such a decline could be partially or completely offset by
an increase in value of a cross-currency hedge involving a forward exchange
contract to sell a different foreign currency, where such contract is available
on terms more advantageous to the Fund than a contract to sell the currency in
which the position being hedged is denominated. Cross-currency hedges can,
therefore, under certain conditions, provide protection of net asset value in
the event of a general rise in the U.S. dollar against foreign currencies.
However, there can be no assurance that the Fund will be able to engage in
cross-currency hedging or that foreign exchange rate relationships will be
sufficiently predictable to enable the investment adviser to employ
cross-currency hedging techniques successfully. A cross-currency hedge cannot
protect against exchange rate risks perfectly, and if the investment adviser is
incorrect in its judgment of future exchange rate relationships, the Fund could
be in a less advantageous position than if such a hedge had not been
established.
    
     The Fund may invest without limitation in commercial paper and other
instruments which are indexed to certain specific foreign currency exchange
rates. The terms of such instruments provide that its principal amount is
adjusted upwards or downwards (but not below zero) at maturity to reflect
changes in the exchange rate between two currencies while the obligation is
outstanding. The Fund will purchase such instruments with the currency in which
it is denominated and, at maturity, will receive interest and principal payments
thereon in that currency, but the amount of principal payable by the issuer at
maturity will change in proportion to the change (if any) in the exchange rate
between the two specified currencies between the date the instrument is issued
and the date the instrument matures. The Fund will establish a segregated
account with respect to its investments in this type of instrument and maintain
in such account cash or liquid high quality debt securities having a value at
least equal to the aggregate principal amount of outstanding instruments of this
type. While such instruments entail the risk of loss of principal, the potential
for realizing gains as a result of changes in foreign currency exchange rates
enables the Fund to hedge (or cross-hedge) against a decline in the U.S. dollar
value of investments denominated in foreign currencies while providing an
attractive money market rate of return.

     The Fund will not normally invest in securities denominated in a particular
foreign currency if, immediately thereafter, securities denominated in such
currency would exceed 30% of the total assets of the Fund unless, in the
judgment of the investment adviser, the particular currency appears likely to
appreciate significantly relative to the U.S. dollar. However, the Fund may
invest up to 50% of its total assets in securities denominated in Canadian,
Japanese, British or German currencies. The Fund will not invest more than 25%
of its total assets in securities issued or guaranteed by foreign Government
Entities associated with any single foreign country, which shall be deemed to be
"industries." The foreign 

                                       12

<PAGE>

Government Entities of national and local governments will be considered
separate industries. See "Investment Restrictions" in the Statement of
Additional Information.

   
    

RISK FACTORS

     Risk Factors on Foreign Investments

     Investing in securities issued by foreign governments involves
considerations and possible risks not typically associated with investing in
obligations issued by the U.S. Government and domestic corporations. The values
of foreign investments are affected by changes in currency rates or exchange
control regulations, application of foreign tax laws, including withholding
taxes, changes in governmental administration or economic or monetary policy (in
this country or abroad) or changed circumstances in dealings between nations.
Costs are incurred in connection with conversions between various currencies. In
addition, foreign brokerage commissions are generally higher than in the United
States, and foreign securities markets may be less liquid, more volatile and
less subject to governmental supervision than in the United States. Investments
in foreign countries could be affected by other factors not present in the
United States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations and could be subject to extended settlement periods.

    
     The Fund will invest in Foreign Government securities denominated in
foreign currencies. A change in the value of any such currency against the U.S.
dollar will result in a corresponding change in the U.S. dollar value of the
Fund's assets denominated in that currency. These changes will also affect the
Fund's yield, income and distributions to shareholders. In addition, although
the Fund will receive income in such currencies, the Fund will be required to
compute and distribute its income in U.S. dollars. Therefore, if the exchange
rate for any such currency decreases after the Fund's income has been accrued
and translated into U.S. dollars, the Fund could be required to liquidate
portfolio securities to make such distributions. Similarly, if an exchange rate
for any such currency decreases between the time the Fund incurs expenses in
U.S. dollars and the time such expenses are paid, the amount of such currency
required to be converted into U.S. dollars in order to pay such expenses in U.S.
dollars will be greater than the equivalent amount of such currency at the time
such expenses were incurred. Under the Internal Revenue Code of 1986, as amended
(the Internal Revenue Code), changes in an exchange rate which occur between the
time the Fund accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivables or pays such liabilities will result in foreign
exchange gains or losses that increase or decrease distributable net investment
income. Similarly, dispositions of certain debt securities (by sale, at maturity
or otherwise) at a U.S. dollar amount that is higher or lower than the Fund's
original U.S. dollar cost may result in foreign exchange gains or losses, which
will increase or decrease distributable net investment income. The Fund will
invest only in foreign currency denominated Foreign Government securities that
are freely convertible into U.S. dollars without legal restriction at the time
of investment. Gains and losses on security and currency transactions cannot be
predicted. This fact coupled with the different accounting and tax treatment of
certain currency gains and losses increases the likelihood of distributions in
whole or in part constituting a return of capital to shareholders.

     The Fund's interest income from Foreign Government securities issued in
local markets may, in some cases, be subject to applicable withholding taxes
imposed by governments in such markets. The Fund may sell a foreign security it
owns prior to maturity in order to avoid foreign withholding taxes on dividend
and interest income and buy back the same security for a future settlement date.
See "How the Fund Invests--Other Investments and Investment Techniques--
When-Issued and Delayed Delivery Securities." Interest on Foreign Government
securities is not generally subject to foreign withholding taxes. See "Taxes,
Dividends and Distributions" in the Statement of Additional Information.

     Shareholders should be aware that investing in the fixed-income markets of
emerging market countries involves exposure to economies that are generally less
diverse and mature, and to political systems which can be expected to have less
stability than those of developed countries. Historical experience indicates
that the markets of developing 
    



                                       13

<PAGE>

countries have been more volatile than the markets of developed countries. The
risks associated with investments in foreign securities, described above, may be
greater with respect to investments in developing countries.

     Medium and Lower-Rated Securities

   
     The Fund may invest in medium grade securities (i.e., rated Baa by Moody's
or BBB by Standard & Poor's) and up to 10% of its total assets in lower-rated
securities (i.e., rated lower than Baa by Moody's or lower than BBB by Standard
& Poor's). However, the Fund will not purchase a security rated lower than B by
Moody's or Standard & Poor's. Securities rated Baa by Moody's or BBB by Standard
& Poor's, although considered investment grade, possess speculative
characteristics, and changes in economic or other conditions are more likely to
impair the ability of issuers of these securities to make interest and principal
payments than is the case with respect to issuers of higher-grade bonds.
    

     Generally, lower-rated securities and unrated securities of comparable
quality, sometimes referred to as junk bonds (i.e., securities rated lower than
Baa by Moody's or BBB or Standard & Poor's), offer a higher current yield than
is offered by higher-rated securities, but also (i) will likely have some
quality and protective characteristics that, in the judgment of the rating
organizations, are outweighed by large uncertainties or major risk exposures to
adverse conditions and (ii) are predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation. The market values of certain of these securities also
tend to be more sensitive to individual issuer developments and changes in
economic conditions than higher-quality bonds. In addition, medium and
lower-rated securities and comparable unrated securities generally present a
higher degree of credit risk. The risk of loss due to default by these issuers
is significantly greater because medium and lower-rated securities and unrated
securities of comparable quality generally are unsecured and frequently are
subordinated to the prior payment of senior indebtedness. The investment
adviser, under the supervision of the Manager and the Directors, in evaluating
the creditworthiness of an issuer whether rated or unrated, takes various
factors into consideration, which may include, as applicable, the issuer's
financial resources, its sensitivity to economic conditions and trends and
regulatory matters.

     In addition, the market value of securities in lower-rated categories is
more volatile than that of higher-quality securities, and the markets in which
medium and lower-rated or unrated securities are traded are more limited than
those in which higher-rated securities are traded. The existence of limited
markets may make it more difficult for the Fund to obtain accurate market
quotations for purposes of valuing its portfolio and calculating its net asset
value. Moreover, the lack of a liquid trading market may restrict the
availability of securities for the Fund to purchase and may also have the effect
of limiting the ability of the Fund to sell securities at their fair value
either to meet redemption requests or to respond to changes in the economy or
the financial markets.

     Lower-rated debt obligations also present risks based on payment
expectations. If an issuer calls the obligation for redemption, the Fund may
have to replace the security with a lower-yielding security, resulting in a
decreased return for investors. Also, as the principal value of bonds moves
inversely with movements in interest rates, in the event of rising interest
rates the value of the securities held by the Fund may decline proportionately
more than a portfolio consisting of higher-rated securities. If the Fund
experiences unexpected net redemptions, it may be forced to sell its
higher-rated bonds, resulting in a decline in the overall credit quality of the
securities held by the Fund and increasing the exposure of the Fund to the risks
of lower-rated securities. Investments in zero coupon bonds may be more
speculative and subject to greater fluctuations in value due to changes in
interest rates than bonds that pay interest currently.

     Subsequent to its purchase by a Fund, an issue of securities may cease to
be rated or its rating may be reduced below the minimum required for purchase by
the Fund. Neither event will require sale of these securities by the Fund, but
the investment adviser will consider this event in its determination of whether
the Fund should continue to hold the securities.

OTHER INVESTMENTS AND INVESTMENT TECHNIQUES

     In addition to U.S. Government securities and Foreign Government
securities, the Fund is permitted to make the investments described below. Under
normal circumstances, these investments will represent no more than 35% of the
total assets of the Fund.

                                       14

<PAGE>


   
     The Fund is permitted to invest (i) up to 20% of its total assets in any
combination of debt securities of U.S. corporate issuers that are rated Baa or
better by Moody's or BBB or better by Standard & Poor's, (ii) up to 10% of its
total assets in convertible securities and (iii) up to 10% of its total assets
in common shares and warrants to purchase common shares when such shares or
warrants are accompanied by debt securities. See "Medium and Lower-Rated
Securities." Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well. Debt rated
BBB is regarded as having an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to
weakened capacity to pay interest and repay principal for debt in this category
than for debt in higher rated categories. If the quality of securities held by
the Fund changes so that the securities would no longer qualify for investment
by the Fund, the Fund will seek to dispose of the securities as soon as is
reasonably practicable in light of the circumstances and consistent with the
interests of the Fund.
    

     The Fund may invest in obligations of foreign banks and foreign branches of
U.S. banks only if after giving effect to such investment all such investments
would constitute less than 20% of the Fund's total assets (determined at the
time of investment). This limitation shall not be construed to apply to any
forward commitments or options on foreign currencies purchased by the Fund from
any such banks for hedging purposes as described above under "Hedging and Income
Enhancement Strategies." These investments may be subject to certain risks,
including future political and economic developments, the possible imposition of
withholding taxes on interest income, the seizure or nationalization of foreign
deposits and foreign exchange controls or other restrictions. In addition, there
may be less publicly available information about a foreign bank or foreign
branch of a U.S. bank than about a domestic bank and such entities may not be
subject to the same accounting, auditing and financial recordkeeping standards
and requirements as domestic banks.

     The Fund may also purchase collateralized mortgage obligations (CMOs) if,
after giving effect to such investment, all such investments would constitute
less than 10% of the Fund's total assets (determined at the time of investment).
CMOs are debt obligations collateralized by mortgage loans or mortgage
pass-through securities. Typically, CMOs are collateralized by GNMA, FNMA or
FHLMC Certificates, but also may be collateralized by whole loans or private
mortgage pass-through securities (such collateral collectively hereinafter
referred to as Mortgage Assets). Multi-class pass-through securities are equity
interests in a trust composed of Mortgage Assets. Payments of principal of and
interest on the Mortgage Assets, and any reinvestment income thereon, provide
the funds to pay debt service on the CMOs or make scheduled distributions on the
multi-class pass-through securities. CMOs may be issued by agencies or
instrumentalities of the U.S. Government, or by private originators of, or
investors in, mortgage loans, including depository institutions, mortgage banks,
investment banks and special-purpose subsidiaries of the foregoing. The issuer
of a series of CMOs may elect to be treated as a Real Estate Mortgage Investment
Conduit (REMIC). All future references to CMOs shall also be deemed to include
REMICs.

     In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMOs, often referred to as a "tranche," is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal prepayments on the Mortgage Assets may cause the CMOs to be
retired substantially earlier than their stated maturities or final distribution
dates. Interest is paid or accrues on all classes of the CMOs on a monthly,
quarterly or semi-annual basis. The principal of and interest on the Mortgage
Assets may be allocated among the several classes of a CMO series in a number of
different ways. Generally, the purpose of the allocation of the cash flow of a
CMO to the various classes is to obtain a more predictable cash flow to the
individual tranches than exists with the underlying collateral of the CMO. As a
general rule, the more predictable the cash flow is on a CMO tranche, the lower
the anticipated yield will be on that tranche at the time of issuance relative
to prevailing market yields on mortgage-backed securities. CMOs and REMICs
issued by an agency or instrumentality of the U.S. Government are considered
U.S. Government securities for purposes of this Prospectus.


                                       15
<PAGE>

     Securities Lending

     The Fund may lend its portfolio securities to brokers or dealers, banks or
other recognized institutional borrowers of securities, provided that the
borrower at all times maintains cash or equivalent collateral or secures an
irrevocable letter of credit in favor of the Fund in an amount equal to at least
100% of the market value of the securities loaned. During the time portfolio
securities are on loan, the borrower will pay the Fund an amount equivalent to
any dividend or interest paid on such securities and the Fund may invest the
cash collateral and earn additional income, or it may receive an agreed-upon
amount of interest income from the borrower. As is the case with any extension
of credit, portfolio securities loans involve certain risks in the event a
borrower should fail financially, including delays or inability to recover the
loaned securities or possible foreclosure against the collateral. As a matter of
fundamental policy, the Fund cannot lend more than 30% of the value of its total
assets.

     When-Issued and Delayed Delivery Securities

     The Fund may purchase or sell securities on a when-issued or delayed
delivery basis. When-issued or delayed delivery transactions arise when
securities are purchased or sold by the Fund with payment and delivery taking
place as much as a month or more in the future in order to secure what is
considered to be an advantageous price and yield to the Fund at the time of
entering into the transaction. When the Fund engages in when-issued or delayed
delivery transactions, it relies on the seller to consummate the sale. The
seller's failure to do so may result in the Fund's losing the opportunity to
obtain an advantageous price and yield. The Fund's Custodian will maintain, in a
segregated account of the Fund, cash, U.S. Government securities or other liquid
high-grade debt obligations having a value equal to or greater than the Fund's
purchase commitments; the Custodian will likewise segregate securities sold on a
delayed delivery basis. The securities so purchased are subject to market
fluctuation and no interest accrues to the purchaser during the period between
purchase and settlement. At the time of delivery of the securities the value may
be more or less than the purchase price and an increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued or
delayed delivery basis may increase the volatility of the Fund's net asset
value.

     Repurchase Agreements

     The Fund may enter into repurchase agreements whereby the seller of a
security agrees to repurchase that security from the Fund at a mutually
agreed-upon time and price. The repurchase date is usually within a day or two
of the original purchase, although it may extend over a number of months. The
resale price is in excess of the purchase price, reflecting an agreed-upon rate
of return effective for the period of time the Fund's money is invested in the
security. The Fund's repurchase agreements will at all times be fully
collateralized in an amount at least equal to the purchase price including
accrued interest earned on the underlying securities. The instruments held as
collateral are valued daily, and as the value of instruments declines, the Fund
will require additional collateral. If the seller defaults and the value of the
collateral securing the repurchase agreement declines, the Fund may incur a
loss. The Fund participates in a joint repurchase account with other investment
companies managed by Prudential Mutual Fund Management, Inc. pursuant to an
order of the Securities and Exchange Commission (SEC).

     Borrowing

     The Fund may borrow money up to 20% of the value of its total assets
(computed at the time the loan is made) from banks for temporary, extraordinary
or emergency purposes or for the clearance of transactions. During periods when
the Fund has borrowed for temporary, extraordinary or emergency purposes or for
the clearance of transactions, the Fund may pursue its investment objective by
purchasing additional securities which can result in increased volatility of the
Fund's net asset value. The Fund will not borrow to take advantage of investment
opportunities. See "Additional Investment Policies--Borrowing" in the Statement
of Additional Information. The Fund may pledge up to 20% of its total assets to
secure these borrowings.

                                       16

<PAGE>

  Illiquid Securities

   
     The Fund may not invest more than 15% of its net assets in illiquid
securities, including repurchase agreements which have a maturity of longer than
seven days, securities with legal or contractual restrictions on resale and
securities that are not readily marketable. Restricted securities eligible for
resale pursuant to Rule 144A under the Securities Act of 1933, as amended (the
Securities Act), and privately placed commercial paper that have a readily
available market are not considered illiquid for purposes of this limitation.
The investment adviser will monitor the liquidity of such restricted securities
under the supervision of the Board of Directors. Repurchase agreements subject
to demand are deemed to have a maturity equal to the applicable notice period.
    

     The staff of the SEC has taken the position that purchased OTC options and
the assets used as "cover" for written OTC options are illiquid securities
unless the Fund and the counterparty have provided for the Fund, at the Fund's
election, to unwind the over-the-counter option. The exercise of such an option
ordinarily would involve the payment by the Fund of an amount designed to
reflect the counterparty's economic loss from an early termination, but does
allow the Fund to treat the assets used as "cover" as "liquid."

HEDGING AND INCOME ENHANCEMENT STRATEGIES

   
     The Fund may engage in various portfolio strategies, including derivatives,
to reduce certain risks of its investments and to attempt to enhance income, but
not for speculation. These strategies currently include the use of options,
forward currency exchange contracts and futures contracts and options thereon.
The Fund's ability to use these strategies may be limited by market conditions,
regulatory limits and tax considerations and there can be no assurance that any
of these strategies will succeed. See "Investment Objective and
Policies--Additional Investment Policies" in the Statement of Additional
Information. New financial products and risk management techniques continue to
be developed and the Fund may use these new investments and techniques to the
extent consistent with its investment objective and policies.
    

  Options Transactions

     The Fund may purchase and write (i.e., sell) put and call options on
securities and currencies that are traded on national securities exchanges or in
the over-the-counter market to enhance income or to hedge its portfolio
investments. These options will be on debt securities, financial indices (e.g.,
S&P 500), U.S. Government securities (listed on an exchange and
over-the-counter, i.e., purchased or sold through U.S. Government securities
dealers), Foreign Government securities and foreign currencies. The Fund may
write covered put and call options to generate additional income through the
receipt of premiums, purchase put options in an effort to protect the value of a
security that it owns against a decline in market value and purchase call
options in an effort to protect against an increase in price of securities (or
currencies) it intends to purchase. The Fund may also purchase put and call
options to offset previously written put and call options of the same type. See
"Additional Investment Policies--Options on Securities" in the Statement of
Additional Information.

     A call option gives the purchaser, in exchange for a premium paid, the
right for a specified period of time to purchase the securities or currency
subject to the option at a specified price (the exercise price or strike price).
The writer of a call option, in return for the premium, has the obligation, upon
exercise of the option, to deliver, depending upon the terms of the option
contract, the underlying securities or a specified amount of cash to the
purchaser upon receipt of the exercise price. When the Portfolio writes a call
option, it gives up the potential for gain on the underlying securities or
currency in excess of the exercise price of the option during the period that
the option is open.

     A put option gives the purchaser, in return for a premium, the right, for a
specified period of time, to sell the securities or currency subject to the
option to the writer of the put at the specified exercise price. The writer of
the put option, in return for the premium, has the obligation, upon exercise of
the option, to acquire the securities or currency underlying the option at the
exercise price. The Fund might, therefore, be obligated to purchase the
underlying securities or currency for more than their current market price.

                                       17

<PAGE>

   
     The Fund will write only "covered" options. An option is covered if, so
long as the Fund is obligated under the option, it owns an offsetting position
in the underlying security or currency or maintains cash, U.S. Government
securities or other liquid high-grade debt obligations with a value sufficient
at all times to cover its obligations. See "Investment Objective and
Policies--Additional Investment Policies--Options on Securities--Additional
Risks of Options, Futures Contracts, Options on Futures Contracts and Forward
Contracts" in the Statement of Additional Information.
    

     There is no limitation on the amount of covered call options the Fund may
write. The Fund may only write covered put options to the extent that cover for
such options does not exceed 25% of its net assets. The Fund will not purchase
an option if, as a result of such purchase, more than 20% of its total assets
would be invested in premiums for options and options on futures.

  Forward Currency Exchange Contracts

     The Fund may enter into forward foreign currency exchange contracts to
protect the value of its portfolio against future changes in the level of
currency exchange rates. The Fund may enter into such contracts on a spot, i.e.,
cash, basis at the rate then prevailing in the currency exchange market or on a
forward basis, by entering into a forward contract to purchase or sell currency.
A forward contract on foreign currency is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days agreed
upon by the parties from the date of the contract at a price set on the date of
the contract.

     The Fund's dealings in forward contracts will be limited to hedging
involving either specific transactions or portfolio positions. Transaction
hedging is the purchase or sale of a forward contract with respect to specific
receivables or payables of the Fund generally arising in connection with the
purchase or sale of its portfolio securities and accruals of interest or
dividends receivable and Fund expenses. Position hedging is the sale of a
foreign currency with respect to portfolio security positions denominated or
quoted in or convertible into that currency or in a different currency (cross
hedge). Although there are no limits on the number of forward contracts which
the Fund may enter into, the Fund may not position hedge with respect to a
particular currency for an amount greater than the aggregate market value
(determined at the time of making any sale of forward currency) of the
securities held in its portfolio denominated or quoted in, or currently
convertible into, such currency. If the Fund enters into a position hedging
transaction, the Fund's custodian or subcustodian will place cash or U.S.
Government securities or other high-grade debt obligations in a segregated
account of the Fund in an amount equal to the value of the Fund's total assets
committed to the consummation of the given forward contract. If the value of the
securities placed in the segregated account declines, additional cash or
securities will be placed in the account so that the value of the account will,
at all times, equal the amount of the Fund's commitment with respect to the
forward contract. See "Investment Objective and Policies--Additional Investment
Policies--Forward Currency Exchange Contracts" in the Statement of Additional
Information.

  Futures Contracts and Options Thereon

     The Fund may purchase and sell financial futures contracts and options
thereon which are traded on a commodities exchange or board of trade for certain
hedging, return enhancement and risk management purposes in accordance with
regulations of the Commodity Futures Trading Commission. These futures contracts
and related options will be on debt securities, financial indices, U.S.
Government securities, Foreign Government securities and foreign currencies. A
financial futures contract is an agreement to purchase or sell an agreed amount
of securities or currencies at a set price for delivery in the future.

     The Fund may not purchase or sell futures contracts and related options for
return enhancement or risk management purposes, if immediately thereafter the
sum of the amount of initial margin deposits on the Fund's existing futures and
options on futures and premiums paid for such related options would exceed 5% of
the market value of the Fund's total assets. The Fund may purchase and sell
futures contracts and related options without limitation, for bona fide hedging
purposes. The value of all futures contracts sold will not exceed the total
market value of the Fund's investments.


                                       18

<PAGE>

     The Fund's successful use of futures contracts and related options depends
upon the investment adviser's ability to predict the direction of the market and
is subject to various additional risks. The correlation between movements in the
price of a futures contract and the price of the securities being hedged is
imperfect and there is a risk that the value of the securities being hedged may
increase or decrease at a greater rate than a specified futures contract,
resulting in losses to the Fund. Certain futures exchanges or boards of trade
have established daily limits on the amount that the price of a futures contract
or related options may vary, either up or down, from the previous day's
settlement price. These daily limits may restrict the Fund's ability to purchase
or sell certain futures contracts or related options on any particular day.

     The Fund's ability to enter into futures contracts and options thereon is
limited by the requirements of the Internal Revenue Code for qualification as a
regulated investment company. See "Investment Objective and Policies--Additional
Investment Policies--Futures Contracts--Options on Futures Contracts" and
"Taxes, Dividends and Distributions" in the Statement of Additional Information.

   
  Risks of Hedging and Income Enhancement Strategies
    

     Participation in the options or futures markets and in currency exchange
transactions involves investment risks and transaction costs to which the Fund
would not be subject absent the use of these strategies. If the investment
adviser's prediction of movements in the direction of the securities, foreign
currency and interest rate markets are inaccurate, the adverse consequences to
the Fund may leave the Fund in a worse position than if such strategies were not
used. Risks inherent in the use of options, foreign currency and futures
contracts and options on futures contracts and foreign currencies include (1)
dependence on the investment adviser's ability to predict correctly movements in
the direction of interest rates, securities prices and currency markets; (2)
imperfect correlation between the price of options and futures contracts and
options thereon and movements in the prices of the securities or currencies
being hedged; (3) the fact that skills needed to use these strategies are
different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
(5) the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences; and (6) the possible inability of the Fund to purchase
or sell a security at a time that otherwise would be favorable for it to do so,
or the possible need for the Fund to sell a security at a disadvantageous time,
due to the need for the Fund to maintain "cover" or to segregate securities in
connection with hedging techniques. See "Taxes, Dividends and Distributions" in
the Statement of Additional Information.

  Short Sales Against-the-Box

     The Fund may make short sales against-the-box for the purpose of deferring
realization of gain or loss for federal income tax purposes. A short sale
"against-the-box" is a short sale in which the Fund owns an equal amount of the
securities sold short or owns securities convertible into or exchangeable,
without payment of any further consideration, for securities of the same issue
as, and equal in amount to, the securities sold short. 

PORTFOLIO TURNOVER AND BROKERAGE

   
     The Fund has no fixed policy with respect to portfolio turnover; however it
is anticipated that the Fund's annual portfolio turnover rate will not exceed
300%. The portfolio turnover rate is calculated by dividing the lesser of sales
or purchases of portfolio securities by the average monthly value of the Fund's
investment securities, excluding securities having a maturity at the date of
purchase of one year or less. While the Fund will pay commissions in connection
with its options and futures transactions, most of the securities purchased by
the Fund are generally traded on a "net" basis with dealers acting as principal
for their own accounts without a stated commission. Nevertheless, high portfolio
turnover (over 100%) may involve correspondingly greater brokerage commissions
and other transaction costs which will be borne directly by the Fund. See
"Portfolio Transactions and Brokerage" in the Statement of Additional
Information.
    

                                       19

<PAGE>

INVESTMENT RESTRICTIONS

     The Fund is subject to certain investment restrictions which, like its
investment objective, constitute fundamental policies. Fundamental policies
cannot be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities, as defined in the Investment Company Act.
See "Investment Restrictions" in the Statement of Additional Information.

                            HOW THE FUND IS MANAGED

     The Fund has a Board of Directors which, in addition to overseeing the
actions of the Fund's Manager, Subadviser and Distributor, as set forth below,
decide upon matters of general policy. The Fund's Manager conducts and
supervises the daily business operations of the Fund. The Fund's Subadviser
furnishes daily investment advisory services.

   
     For the fiscal year ended December 31, 1994, the Fund's total expenses as a
percentage of average net assets for the Fund's Class A, Class B and Class C
shares were 1.46%, 2.07% and 1.05%, respectively. See "Financial Highlights."

MANAGER

     Prudential Mutual Fund Management, Inc. (PMF or the Manager), One Seaport
Plaza, New York, New York 10292, is the Manager of the Fund and is compensated
for its services at an annual rate of .75 of 1% of the Fund's average daily net
assets. It was incorporated in May 1987 under the laws of the State of Delaware.
For the fiscal year ended December 31, 1994, the Fund paid management fees to
PMF of .75% of the Fund's average net assets. This management fee is higher than
such fees charged by most investment companies. See "Manager" in the Statement
of Additional Information.

     As of January 31, 1995, PMF served as the manager of 39 open-end investment
companies, constituting all of the Prudential Mutual Funds, and as manager or
administrator to 30 closed-end investment companies. These companies have
aggregate assets of approximately $45 billion.
    

     Under the Management Agreement with the Fund, PMF manages the investment
operations of the Fund and also administers the Fund's corporate affairs. See
"Manager" in the Statement of Additional Information.

     Under a Subadvisory Agreement between PMF and The Prudential Investment
Corporation (PIC or the Subadviser), a wholly-owned subsidiary of Prudential,
PIC furnishes investment advisory services in connection with the management of
the Fund and is reimbursed by PMF for its reasonable costs and expenses incurred
in providing such services. PMF continues to have responsibility for all
investment advisory services pursuant to the Management Agreement and supervises
PIC's performance of such services.

   
     The portfolio is managed by Global Advisors, a unit of The Prudential
Investment Corporation (PIC). Andrew Barnett, a senior portfolio manager, has
responsibility for the day-to-day management of the portfolio. Mr. Barnett
performs these duties with the assistance of a mutual fund investment team. Mr.
Barnett is a Vice President of PIC. He has managed the portfolio since January
1991. Mr. Barnett has been employed by PIC since 1987 and also serves as the
portfolio manager of The Global Government Plus Fund, Inc. and for other
institutional clients.
    

     PMF and PIC are wholly-owned subsidiaries of The Prudential Insurance
Company of America (Prudential), a major diversified insurance and financial
services company.

                                       20

<PAGE>

DISTRIBUTOR

     Prudential Mutual Fund Distributors, Inc. (PMFD), One Seaport Plaza, New
York, New York 10292, is a corporation organized under the laws of the State of
Delaware and serves as the distributor of the Class A shares of the Fund. It is
a wholly-owned subsidiary of PMF.

     Prudential Securities Incorporated (Prudential Securities or PSI), One
Seaport Plaza, New York, New York 10292, is a corporation organized under the
laws of the State of Delaware and serves as the distributor of the Class B and
Class C shares of the Fund. It is an indirect, wholly-owned subsidiary of
Prudential.

     Under separate Distribution and Service Plans (the Class A Plan, the Class
B Plan and the Class C Plan, collectively, the Plans) adopted by the Fund under
Rule 12b-1 under the Investment Company Act and separate distribution agreements
(the Distribution Agreements), PMFD and Prudential Securities (collectively, the
Distributor) incur the expenses of distributing the Fund's Class A, Class B and
Class C shares. These expenses include commissions and account servicing fees
paid to, or on account of, financial advisers of Prudential Securities and
representatives of Pruco Securities Corporation (Prusec), an affiliated
broker-dealer, commissions and account servicing fees paid to, or on account of,
other broker-dealers or financial institutions (other than national banks) which
have entered into agreements with the Distributor, advertising expenses, the
cost of printing and mailing prospectuses to potential investors and indirect
and overhead costs of Prudential Securities and Prusec associated with the sale
of Fund shares, including lease, utility, communications and sales promotion
expenses. The State of Texas requires that shares of the Fund may be sold in
that state only by dealers or other financial institutions which are registered
there as broker-dealers.

     Under the Plans, the Fund is obligated to pay distribution and/or service
fees to the Distributor as compensation for its distribution and service
activities, not as reimbursement for specific expenses incurred. If the
Distributor's expenses exceed its distribution and service fees, the Fund will
not be obligated to pay any additional expenses. If the Distributor's expenses
are less than such distribution and service fees, it will retain its full fees
and realize a profit.

   
     Under the Class A Plan, the Fund may pay PMFD for its distribution-related
activities with respect to Class A shares at an annual rate of up to .30 of 1%
of the average daily net asset value of the Class A shares. The Class A Plan
provides that (i) up to .25 of 1% of the average daily net assets of the Class A
shares may be used to pay for personal service and/or the maintenance of
shareholder accounts (service fee) and (ii) total distribution fees (including
the service fee of up to .25 of 1%) may not exceed .30 of 1% of the average
daily net assets of the Class A shares. PMFD has agreed to limit its
distribution related fees payable under the Class A Plan to .15 of 1% of the
average daily net assets of the Class A shares for the fiscal year ending
December 31, 1995.

     For the fiscal year ended December 31, 1994, PMFD received payments of
$394,323 under the Class A Plan. This amount was primarily expended for payment
of account servicing fees to financial advisers and other persons who sell Class
A shares. For the fiscal year ended December 31, 1994, PMFD also received
approximately $32,800 in initial sales charges from the Class A shareholders of
the Fund.
    

     Under the Class B and Class C Plans, the Fund may pay Prudential Securities
for its distribution-related activities with respect to Class B and Class C
shares at an annual rate of up to .75 of 1% and up to 1% of the average daily
net assets of the Class B and Class C shares, respectively. The Class B Plan
provides for the payment to Prudential Securities of (i) an asset-based sales
charge of up to .75 of 1% of the average daily net assets of the Class B shares,
and (ii) a service fee of up to .25 of 1% of the average daily net assets of the
Class B shares; provided that the total distribution-related fee does not exceed
.75 of 1%. The Class C Plan provides for the payment to Prudential Securities of
(i) an asset-based sales charge of up to .75 of 1% of the average daily net
assets of the Class C shares, and (ii) a service fee of up to .25 of 1% of the
average daily net assets of the Class C shares. The service fee is used to pay
for personal service and/or the maintenance of shareholder accounts. Prudential
Securities has agreed to limit its distribution-re-

                                       21

<PAGE>
   
lated fees payable under the Class C Plan to .75 of 1% of the average daily net
assets of the Class C shares for the fiscal year ending December 31, 1995.
Prudential Securities also receives contingent deferred sales charges from
certain redeeming shareholders. See "Shareholder Guide--How to Sell Your
Shares--Contingent Deferred Sales Charges."

     For the fiscal year ended December 31, 1994, Prudential Securities incurred
distribution expenses of approximately $173,200 under the Class B Plan and
received $238,759 from the Fund under the Class B Plan, representing .75 of 1%
of the average daily net assets attributable to Class B shares. In addition,
Prudential Securities received approximately $133,200 in contingent deferred
sales charges from redemptions of Class B shares during this period.
 
     For the fiscal year ended December 31, 1994, the Fund paid distribution
expenses of .15%, .75% and .75% of the average daily net assets of the Class A,
Class B and Class C shares, respectively. The Fund records all payments made
under the Plans as expenses in the calculation of net investment income. Prior
to August 1, 1994, the Class A and Class B Plans operated as "reimbursement
type" plans and, in the case of Class B, provided for the reimbursement of
distribution expenses incurred in current and prior years. See "Distributor" in
the Statement of Additional Information.
    

     Distribution expenses attributable to the sale of shares of the Fund will
be allocated to each class based upon the ratio of sales of each class to the
sales of all shares of the Fund other than expenses allocable to a particular
class. The distribution fee and initial sales charge of one class will not be
used to subsidize the sale of another class.

     Each Plan provides that it shall continue in effect from year to year
provided that a majority of the Board of Directors of the Fund, including a
majority of the Directors who are not "interested persons" of the Fund (as
defined in the Investment Company Act) and who have no direct or indirect
financial interest in the operation of the Plan or any agreement related to the
Plan (the Rule 12b-1 Directors), vote annually to continue the Plan. Each Plan
may be terminated at any time by vote of a majority of the Rule 12b-1 Directors
or of a majority of the outstanding shares of the applicable class of the Fund.
The Fund will not be obligated to pay expenses incurred under any plan if it is
terminated or not continued.

   
     In addition to distribution and service fees paid by the Fund under the
Class A, Class B and Class C Plans, the Manager (or one of its affiliates) may
make payments out of its own resources to dealers and other persons which
distribute shares of the Fund. Such payments may be calculated by reference to
the net asset value of shares sold by such persons or otherwise.

     The Distributor is subject to the rules of the National Association of
Securities Dealers, Inc. (the NASD) governing maximum sales charges. See
"Distributor" in the Statement of Additional Information.

     On October 21, 1993, PSI entered into an omnibus settlement with the SEC,
state securities regulators (with the exception of the Texas Securities
Commissioner who joined the settlement on January 18, 1994) and the NASD to
resolve allegations that from 1980 through 1990 PSI sold certain limited
partnership interests in violation of securities laws to persons for whom such
securities were not suitable and misrepresented the safety, potential returns
and liquidity of these investments. Without admitting or denying the allegations
asserted against it, PSI consented to the entry of an SEC Administrative Order
which stated that PSI's conduct violated the federal securities laws, directed
PSI to cease and desist from violating the federal securities laws, pay civil
penalties, and adopt certain remedial measures to address the violations.

     Pursuant to the terms of the SEC settlement, PSI agreed to the imposition
of a $10,000,000 civil penalty, established a settlement fund in the amount of
$330,000,000 and procedures to resolve legitimate claims for compensatory
damages by purchasers of the partnership interests. PSI has agreed to provide
additional funds, if necessary, for the purpose of the settlement fund. PSI's
settlement with the state securities regulators included an agreement to pay a
penalty of $500,000 per jurisdiction. PSI consented to a censure and to the
payment of a $5,000,000 fine in settling the NASD action.
    

                                       22

<PAGE>
   
     In October 1994, a criminal complaint was filed with the United States
Magistrate for the Southern District of New York alleging that PSI committed
fraud in connection with the sale of certain limited partnership interests in
violation of federal securities laws. An agreement was simultaneously filed to
defer prosecution of these charges for a period of three years from the signing
of the agreement, provided that PSI complies with the terms of the agreement.
If, upon completion of the three year period, PSI has complied with the terms of
the agreement, no prosecution will be instituted by the United States for the
offenses charged in the complaint. If on the other hand, during the course of
the three year period, PSI violates the terms of the agreement, the U.S.
Attorney can then elect to pursue these charges. Under the terms of the
agreement, PSI agreed, among other things, to pay an additional $330,000,000
into the fund established by the SEC to pay restitution to investors who
purchased certain PSI limited partnership interests.

     For more detailed information concerning the foregoing matters, see
"Distributor" in the Statement of Additional Information, a copy of which may be
obtained at no cost by calling 1-800-225-1852.

     The Fund is not affected by PSI's financial condition and is an entirely
separate legal entity from PSI, which has no beneficial ownership therein and
the Fund's assets which are held by State Street Bank and Trust Company, an
independent custodian, are separate and distinct from PSI.
    

PORTFOLIO TRANSACTIONS

     Prudential Securities may act as a broker and/or futures commission
merchant for the Fund provided that the commissions, fees or other remuneration
it receives are fair and reasonable. See "Portfolio Transactions and Brokerage"
in the Statement of Additional Information.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

     State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for the Fund's portfolio securities and
cash and, in that capacity, maintains certain financial and accounting books and
records pursuant to an agreement with the Fund. Its mailing address is P.O. Box
1713, Boston, Massachusetts 02105.

     Prudential Mutual Fund Services, Inc., (PMFS) Raritan Plaza One, Edison,
New Jersey 08837, serves as Transfer Agent and Dividend Disbursing Agent and in
those capacities maintains certain books and records for the Fund. PMFS is a
wholly-owned subsidiary of PMF. Its mailing address is P.O. Box 15005, New
Brunswick, New Jersey 08906-5005.

                         HOW THE FUND VALUES ITS SHARES

     The Fund's net asset value per share or NAV is determined by subtracting
its liabilities from the value of its assets and dividing the remainder by the
number of outstanding shares. NAV is calculated separately for each class. The
Board of Directors has fixed the specific time of day for the computation of the
Fund's NAV to be as of 4:15 P.M., New York time.

     Portfolio securities are valued based on market quotations or, if not
readily available, at fair value as determined in good faith under procedures
established by the Fund's Board of Directors. See "Net Asset Value" in the
Statement of Additional Information.


                                       23

<PAGE>

     The Fund will compute its NAV once daily on days that the New York Stock
Exchange is open for trading except on days on which no orders to purchase, sell
or redeem shares have been received by the Fund or days on which changes in the
value of the Fund's portfolio securities do not materially affect the NAV. The
New York Stock Exchange is closed on the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

     Although the legal rights of each class of shares are substantially
identical, the different expenses borne by each class will result in different
NAVs and dividends. As long as the Fund declares dividends daily, the net asset
value of Class A, Class B and Class C shares will generally be the same. It is
expected, however, that the dividends will differ by approximately the amount of
the distribution-related expense accrual differential among the classes.

                      HOW THE FUND CALCULATES PERFORMANCE

     From time to time the Fund may advertise its "yield" and "total return"
(including "average annual" total return and "aggregate" total return) in
advertisements or sales literature. Yield and total return are calculated
separately for Class A, Class B and Class C shares. These figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" refers to the income generated by an investment in the Fund over a
one-month or 30-day period. This income is then "annualized" that is, the amount
of income generated by the investment during that 30-day period is assumed to be
generated each 30-day period for twelve periods and is shown as a percentage of
the investment. The income earned on the investment is also assumed to be
reinvested at the end of the sixth 30-day period. The "total return" shows how
much an investment in the Fund would have increased (decreased) over a specified
period of time (i.e., one, five or ten years or since inception of the Fund)
assuming that all distributions and dividends by the Fund were reinvested on the
reinvestment dates during the period and less all recurring fees. The
"aggregate" total return reflects actual performance over a stated period of
time. "Average annual" total return is a hypothetical rate of return that, if
achieved annually, would have produced the same aggregate total return if
performance had been constant over the entire period. "Average annual" total
return smooths out variations in performance and takes into account any
applicable initial or contingent deferred sales charges. Neither "average
annual" total return nor "aggregate" total return takes into account any federal
or state income taxes which may be payable upon redemption. The Fund also may
include comparative performance information in advertising or marketing the
Fund's shares. Such performance information may include data from Lipper
Analytical Services, Inc., Morningstar Publications, Inc., other industry
publications, business periodicals and market indices. See "Performance
Information" in the Statement of Additional Information. The Fund will include
performance data for each class of shares of the Fund in any advertisement or
information including performance data for the Fund. Further performance
information is contained in the Fund's annual and semi-annual reports to
shareholders, which may be obtained without charge. See "Shareholder
Guide--Shareholder Services--Reports to Shareholders."

                       TAXES, DIVIDENDS AND DISTRIBUTIONS

  Taxation of the Fund

     The Fund has elected to qualify and intends to remain qualified as a
regulated investment company under the Internal Revenue Code. Accordingly, the
Fund will not be subject to federal income taxes on its net investment income
and capital gains, if any, that it distributes to its shareholders.

                                       24

<PAGE>

     Gains or losses on disposition of debt securities denominated in a foreign
currency attributable to fluctuations in the value of foreign currency between
the date of acquisition of the security and the date of disposition also are
treated as ordinary gain or loss. These gains or losses increase or decrease the
amount of the Fund's investment company taxable income available to be
distributed to shareholders as ordinary income, rather than increasing or
decreasing the amount of the Fund's net capital gain. If currency losses exceed
other investment company taxable income during a taxable year, distributions
made by the Fund during the year would be a return of capital to you, reducing
your basis in your Fund shares.

     The Fund may incur foreign income taxes in connection with some of its
foreign investments. Certain of these taxes may be credited to shareholders. The
Fund may be permitted to "pass through" to shareholders the right to take
credits against federal income taxes or deductions in respect of foreign taxes
paid by the Fund. See "Taxes, Dividends and Distributions" in the Statement of
Additional Information.

     In addition, under the Internal Revenue Code, special rules apply to the
treatment of certain options and futures contracts (Section 1256 contracts). At
the end of each year, such investments held by the Fund will be required to be
"marked to market" for federal income tax purposes; that is, treated as having
been sold at market value. Sixty percent of any gain or loss recognized on these
"deemed sales" and on actual dispositions may be treated as long-term capital
gain or loss, and the remainder will be treated as short-term capital gain or
loss. See "Taxes, Dividends and Distributions" in the Statement of Additional
Information.

   
     Taxation of Shareholders. Any dividends out of net taxable investment
income, together with distributions of short-term gains (i.e., the excess of net
short-term capital gains over net long-term capital losses) distributed to
shareholders, will be taxable as ordinary income to the shareholder whether or
not reinvested. Certain gains or losses from fluctuations in exchange rates
(Section 988 gains or losses) will affect the amount of ordinary income the Fund
will be able to pay as dividends. See "Taxes, Dividends and Distributions" in
the Statement of Additional Information. Any net capital gains (i.e., the excess
of net long-term capital gains over net short-term capital losses) distributed
to shareholders will be taxable as long-term capital gains to the shareholders,
whether or not reinvested and regardless of the length of time a shareholder has
owned his or her shares.

     The Fund has obtained opinions of counsel to the effect that neither (i)
the conversion of Class B shares into Class A shares nor (ii) the exchange of
Class B or Class C shares for Class A shares constitutes a taxable event for
federal income tax purposes. However, such opinions are not binding on the
Internal Revenue Service.
    

     Withholding Taxes. Under U.S. Treasury Regulations, the Fund is required to
withhold and remit to the U.S. Treasury 31% of taxable dividends, capital gain
income and redemption proceeds on the accounts of those shareholders who fail to
furnish their tax identification numbers on IRS Form W-9 (or IRS Form W-8 in the
case of certain foreign shareholders) with the required certifications regarding
the shareholder's status under the federal income tax law. However, dividends of
net investment income and short-term capital gains to a foreign shareholder will
generally be subject to U.S. withholding tax at the rate of 30% (or lower treaty
rate).

  Dividends and Distributions

     The Fund expects to declare daily and pay monthly dividends of net
investment income and make distributions at least annually of any net capital
and currency gains. The per share dividends on Class B and Class C shares will
be lower than the per share dividends on Class A shares as a result of the
higher distribution fee applicable with respect to Class B and Class C shares.
Distributions of capital gains will be in the same amount for each class of
shares. See "How the Fund Values Its Shares."

     Dividends and distributions will be paid in additional Fund shares, based
on the NAV of each class on the payment date and record date, or such other date
as the Board of Directors may determine, unless the shareholder 


                                       25

<PAGE>
elects in writing not less than five business days prior to the payment date to
receive such dividends and distributions in cash. Such election should be
submitted to Prudential Mutual Fund Services, Inc., Attention: Account
Maintenance, P.O. Box 15015, New Brunswick, New Jersey 08906-5015. The Fund will
notify each shareholder after the close of the Fund's taxable year of both the
dollar amount and the taxable status of that year's dividends and distributions
on a per share basis. If you hold shares through Prudential Securities, you
should contact your financial adviser to elect to receive dividends and
distributions in cash. To the extent that, in a given year, distributions to
shareholders exceed recognized net investment income and recognized short-term
and long-term capital gains for the year, shareholders will receive a return of
capital in respect of such year and, in an annual statement, will be notified of
the amount of any return of capital for such year.

   
     As of December 31, 1994, the Fund had a capital loss carryforward for
federal income tax purposes of approximately $87,650,400.
    

     When the Fund goes "ex-dividend," its NAV is reduced by the amount of the
dividend or distribution. If you buy shares just prior to the ex-dividend date
(which generally occurs four business days prior to the record date) for a
capital gain distribution, the price you pay will include the distribution. Such
distributions, although in effect a return of invested principal, are subject to
federal income taxes. Accordingly, prior to purchasing shares of the Fund, an
investor should carefully consider the impact of capital gains distributions
which are expected to be or have been announced.

     Shareholders are advised to consult their own tax advisers regarding
specific questions as to federal, state or local taxes. See "Taxes, Dividends
and Distributions" in the Statement of Additional Information.

                              GENERAL INFORMATION

DESCRIPTION OF COMMON STOCK

   
     The Fund was incorporated in Maryland on March 15, 1988 under the name "The
Prudential Intermediate Income Fund, Inc." as a closed-end, non-diversified
management investment company. The Fund operated as a closed-end fund prior to
October 7, 1991. On August 8, 1991, shareholders approved open-ending the Fund
and changing the Fund's name to "Prudential Intermediate Global Income Fund,
Inc." and, since October 7, 1991, the Fund has operated as an open-end fund. The
Fund is authorized to issue 2 billion shares of common stock, $.001 par value
per share, divided into three classes, designated Class A, Class B and Class C
common stock. Each of the Class A common stock and Class B common stock consists
of 666,666,666 authorized shares and the Class C common stock consists of
666,666,668 authorized shares. Each class of common stock represents an interest
in the same assets of the Fund and is identical in all respects except that (i)
each class bears different distribution expenses, (ii) each class has exclusive
voting rights with respect to its distribution and service plan (except that the
Fund has agreed with the SEC in connection with the offering of a conversion
feature on Class B shares to submit any amendment of the Class A Plan to both
Class A and Class B shareholders), (iii) each class has a different exchange
privilege and (iv) only Class B shares have a conversion feature. See "How the
Fund is Managed--Distributor." The Fund has received an order from the SEC
permitting the issuance and sale of multiple classes of common stock. Currently,
the Fund is offering three classes designated as Class A, Class B and Class C
shares. In accordance with the Fund's Articles of Incorporation, the Board of
Directors may authorize the creation of additional series of common stock and
classes within such series, with such preferences, privileges, limitations and
voting and dividend rights as the Board of Directors may determine.
    

     The Board of Directors may increase or decrease the number of authorized
shares without the approval of shareholders. Shares of the Fund, when issued,
are fully paid, nonassessable, fully transferable and redeemable at the

                                       26

<PAGE>
option of the holder. Shares are also redeemable at the option of the Fund
under certain circumstances as described under "Shareholder Guide--How to Sell
Your Shares." Each share of each class of common stock is equal as to earnings,
assets and voting privileges, except as noted above, and each class bears the
expenses related to the distribution of its shares. Except for the conversion
feature applicable to the Class B shares, there are no conversion, preemptive or
other subscription rights. In the event of liquidation, each share of the Fund
is entitled to its portion of all of the Fund's assets after all debt and
expenses of the Fund have been paid. 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. The Fund's shares do not have cumulative voting rights for the
election of Directors.

     The Fund does not intend to hold annual meetings of shareholders unless
otherwise required by law. The Fund will not be required to hold meetings of
shareholders unless for example the election of Directors is required to be
acted on by shareholders under the Investment Company Act. Shareholders have
certain rights, including the right to call a meeting upon a vote of 10% of the
Fund's outstanding shares for the purpose of voting on the removal of one or
more Directors of the Fund or to transact any other business.

ADDITIONAL INFORMATION

     This Prospectus, including the Statement of Additional Information which
has been incorporated by reference herein, does not contain all the information
set forth in the Registration Statement filed by the Fund with the SEC under the
Securities Act of 1933. Copies of the Registration Statement may be obtained at
a reasonable charge from the SEC or may be examined, without charge, at the
office of the SEC in Washington, D.C.

                               SHAREHOLDER GUIDE

HOW TO BUY SHARES OF THE FUND

   
     You may purchase shares of the Fund through Prudential Securities, Prusec
or directly from the Fund, through its Transfer Agent, Prudential Mutual Fund
Services, Inc. (PMFS or the Transfer Agent), Attention: Investment Services,
P.O. Box 15020, New Brunswick, New Jersey 08906-5020. In addition, Class A
shares may be purchased through a dealer which has entered into a selected
dealer agreement with the Fund's Distributor. The minimum initial investment for
Class A and Class B shares is $1,000 per class and $5,000 for Class C shares.
The minimum subsequent investment is $100 for all classes. All minimum
investment requirements are waived for certain retirement and employee savings
plans or custodial accounts for the benefit of minors. For purchases made
through the Automatic Savings Accumulation Plan, the minimum initial and
subsequent investment is $50. The minimum initial investment requirement is
waived for purchases of Class A shares effected through an exchange of Class B
shares of The BlackRock Government Income Trust. See "Shareholder Services"
below.
    

     The purchase price is the NAV next determined following receipt of an order
by the Transfer Agent or Prudential Securities plus a sales charge which, at
your option, 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). See "Alternative
Purchase Plan" and "How the Fund Values its Shares."

     Application forms can be obtained from PMFS, Prudential Securities, Prusec
or a selected dealer (Class A only). If a stock certificate is desired, it must
be requested in writing for each transaction. Certificates are issued only for
full shares. Shareholders who hold their shares through Prudential Securities
will not receive share certificates.

                                       27

<PAGE>

   
     The Fund reserves the right to reject any purchase order (including an
exchange into the Fund) or to suspend or modify the continuous offering of its
shares. See "How to Sell Your Shares."
    

     Your dealer is responsible for forwarding payment promptly to the Fund. The
Distributor reserves the right to cancel any purchase order for which payment
has not been received by the fifth business day following the investment.

     Transactions in Fund shares may be subject to postage and handling charges
imposed by your dealer.

     Purchase by Wire. For an initial purchase of shares of the Fund by wire,
you must first telephone PMFS at (800) 225-1852 (toll-free) to receive an
account number. The following information will be requested: your name, address,
tax identification number, dividend distribution election, amount being wired
and wiring bank. Instructions should then be given by you to your bank to
transfer funds by wire to State Street Bank and Trust Company, Boston,
Massachusetts, Custody and Shareholder Services Division, Attention: Prudential
Intermediate Global Income Fund, Inc., specifying on the wire the account number
assigned by PMFS and your name and identifying the sales charge alternative
(Class A, Class B or Class C shares).

     If you arrange for receipt by State Street Bank and Trust Company of
Federal Funds prior to 4:15 P.M., New York time, on a business day, you may
purchase shares of the Fund as of that day.

     In making a subsequent purchase order by wire, you should wire State Street
Bank and Trust Company directly and should be sure that the wire specifies
Prudential Intermediate Global Income Fund, Inc., Class A, Class B or Class C
shares and your name and individual account number. It is not necessary to call
PMFS to make subsequent purchase orders utilizing Federal Funds. The minimum
amount which may be invested by wire is $1,000.

ALTERNATIVE PURCHASE PLAN

     The Fund offers three classes of shares (Class A, Class B and Class C
shares) which allows you to choose the most beneficial sales charge structure
for your individual circumstances given the amount of the purchase, the length
of time you expect to hold the shares and other relevant circumstances
(Alternative Purchase Plan).

<TABLE>
<CAPTION>
                                                       Annual 12b-1 Fees
                                                    (as a % of average daily
                    Sales Charge                          net assets)                     Other Information
                    ------------                    ------------------------              -----------------

<S>                                                  <C>                        <C>       
Class A    Maximum initial sales charge of 3%        .30 of 1% (currently       Initial sales charge waived or reduced
           of the public offering price              being charged at a rate    for certain purchases
                                                     of .15 of 1%)

Class B    Maximum contingent deferred sales         .75%                       Shares convert to Class A shares
           charge or CDSC of 3% of the lesser                                   approximately five years after
           of the amount invested or the                                        purchase
           redemption proceeds; declines to
           zero after four years

Class C    Maximum CDSC of 1% of the lesser          1% (currently being        Shares do not convert to another class
           of the amount invested or the             charged at a rate of
           redemption  proceeds on                   .75 of 1%)
           redemptions made within one
           year of purchase
</TABLE>

     The three classes of shares represent an interest in the same portfolio of
investments of the Fund and have the same rights, except that (i) each class
bears the separate expenses of its Rule 12b-1 distribution and service plan,
(ii) each 

                                       28

<PAGE>

class has exclusive voting rights with respect to its plan (except as noted
under the heading "General Information--Description of Common Stock"), and (iii)
only Class B shares have a conversion feature. The three classes also have
separate exchange privileges. See "How to Exchange Your Shares" below. The
income attributable to each class and the dividends payable on the shares of
each class will be reduced by the amount of the distribution fee of each class.
Class B and Class C shares bear the expenses of a higher distribution fee which
will generally cause them to have higher expense ratios and to pay lower
dividends than the Class A shares.

     Financial advisers and other sales agents who sell shares of the Fund will
receive different compensation for selling Class A, Class B and Class C shares
and will generally receive more compensation initially for selling Class A and
Class B shares than for selling Class C shares.

     In selecting a purchase alternative, you should consider, among other
things, (1) the length of time you expect to hold your investment, (2) the
amount of any applicable sales charge (whether imposed at the time of purchase
or redemption) and distribution-related fees, as noted above, (3) whether you
qualify for any reduction or waiver of any applicable sales charge, (4) the
various exchange privileges among the different classes of shares (see "How to
Exchange Your Shares" below) and (5) the fact that Class B shares automatically
convert to Class A shares approximately seven years after purchase (see
"Conversion Feature--Class B shares" below).

     The following is provided to assist you in determining which method of
purchase best suits your individual circumstances and is based on current fees
and expenses being charged to the Fund:

     If you intend to hold your investment in the Fund for less than 5 years and
do not qualify for a reduced sales charge on Class A shares, since Class A
shares are subject to a maximum initial sales charge of 3% and Class B shares
are subject to a CDSC of 3% which declines to zero over a 4 year period, you
should consider purchasing Class C shares over either Class A or Class B shares.

     If you intend to hold your investment for 5 years or more and do not
qualify for a reduced sales charge on Class A shares, since Class B shares
convert to Class A shares approximately 5 years after purchase and because all
of your money would be invested initially in the case of Class B shares, you
should consider purchasing Class B shares over either Class A or Class C shares.

     If you qualify for a reduced sales charge on Class A shares, it may be more
advantageous for you to purchase Class A shares over either Class B or Class C
shares regardless of how long you intend to hold your investment. However,
unlike Class B and Class C shares, you would not have all of your money invested
initially because the sales charge on Class A shares is deducted at the time of
purchase.

     If you do not qualify for a reduced sales charge on Class A shares and you
purchase Class C shares, you would have to hold your investment for more than 5
years for the higher cumulative annual distribution-related fee on those shares
to exceed the initial sales charge plus cumulative annual distribution-related
fees on Class A shares. This does not take into account the time value of money,
which further reduces the impact of the higher Class C distribution-related fee
on the investment, fluctuations in net asset value, the effect of the return on
the investment over the period of time or redemptions during which the CDSC is
applicable.


                                       29

<PAGE>


   
     All purchases of $1 million or more, either as part of a single investment
or under Rights of Accumulation or Letters of Intent, must be for Class A
shares. See "Reduction and Waiver of Initial Sales Charges" below.
    

  Class A Shares

     The offering price is the NAV per share next determined following receipt
of an order by the Transfer Agent or Prudential Securities plus a sales charge
(expressed as a percentage of the offering price and of the amount invested) as
shown in the following table:

   
<TABLE>
<CAPTION>

                                                      Sales Charge as     Sales Charge as        Dealer Concession as
                                                      Percentage of        Percentage of            Percentage of
Amount of Purchase                                    Offering Price       Amount Invested          Offering Price
- ------------------                                    ---------------     ----------------       ---------------------

<S>                                                       <C>                   <C>                     <C>
Less than $100,000                                        3.0%                  3.09%                   2.75%
$100,000 but less than $499,000                           2.5                   2.56                    2.25
$500,000 but less than $999,000                           2.0                   2.04                    1.75
$1,000,000 and above                                      None                  None                    None

</TABLE>
    

     Selling dealers may be deemed to be underwriters, as that term is defined
under the Federal securities laws.

   
     Reduction and Waiver of Initial Sales Charges. Reduced sales charges are
available through Rights of Accumulation and Letters of Intent. Shares of the
Fund and shares of other Prudential Mutual Funds (excluding money market funds
other than those acquired pursuant to the exchange privilege) may be aggregated
to determine the applicable reduction. See "Purchase and Redemption of Fund
Shares--Reduction and Waiver of Initial Sales Charge--Class A Shares" in the
Statement of Additional Information.

     Benefit Plans. Class A shares may be purchased at NAV, without payment of
an initial sales charge, by pension, profit-sharing or other employee benefit
plans qualified under Section 401 of the Internal Revenue Code and deferred
compensation and annuity plans under Sections 457 and 403(b)(7) of the Internal
Revenue Code (Benefit Plans), provided that the plan has existing assets of at
least $1 million invested in shares of Prudential Mutual Funds (excluding money
market funds other than those acquired pursuant to the exchange privilege) or
1,000 eligible employees or participants. In the case of Benefit Plans whose
accounts are held directly with the Transfer Agent or Prudential Securities and
for which the Transfer Agent or Prudential Securities does individual account
record keeping (Direct Account Benefit Plans) and Benefit Plans sponsored by PSI
or its subsidiaries (PSI or Subsidiary Prototype Benefit Plans), Class A shares
may be purchased at NAV by participants who are repaying loans made from such
plans to the participant. After a Benefit Plan qualifies to purchase Class A
shares at NAV, all subsequent purchases will be made at NAV.

     Other. In addition, Class A shares may be purchased at NAV, through
Prudential Securities or the Transfer Agent, by the following persons: (a)
Directors and officers of the Fund and other Prudential Mutual Funds,
(b)employees of Prudential Securities and PMF and their subsidiaries and members
of the families of such persons who maintain an "employee related" account at
Prudential Securities or the Transfer Agent, (c) employees and special agents of
Prudential and its subsidiaries and all persons who have retired directly from
active service with Prudential or one of its subsidiaries, (d) registered
representatives and employees of dealers who have entered into a selected dealer
agreement with Prudential Securities provided that purchases at NAV are
permitted by such person's employer and (e) investors who have a business
relationship with a financial adviser who joined Prudential Securities from
another investment firm, provided that (i) the purchase is made within 90 days
of the commencement of the financial adviser's employment at Prudential
Securities, (ii) the purchase is made with proceeds of a redemption of shares of
any open-end, non-money market fund sponsored by the financial adviser's
previous employer (other than a fund which imposes a distribution or service fee
of .25 of 1% or less) and (iii) the financial adviser served as the client's
broker on the previous purchases.
    

                                       30

<PAGE>

     You must notify the Transfer Agent either directly or through Prudential
Securities or Prusec that you are entitled to the reduction or waiver of the
sales charge. The reduction or waiver will be granted subject to confirmation of
your entitlement. No initial sales charges are imposed upon Class A shares
acquired upon the reinvestment of dividends and distributions. See "Purchase and
Redemption of Fund Shares--Reduction and Waiver of Initial Sales Charges--Class
A Shares" in the Statement of Additional Information.

  Class B and Class C Shares

     The offering price of Class B and Class C shares for investors choosing one
of the deferred sales alternatives is the NAV next determined following receipt
of an order by the Transfer Agent or Prudential Securities. Although there is no
sales charge imposed at the time of purchase, redemptions of Class B and Class C
shares may be subject to a CDSC. See "How to Sell Your Shares--Contingent
Deferred Sales Charges." 

HOW TO SELL YOUR SHARES

     You can redeem your shares at any time for cash at the NAV next determined
after the redemption request is received in proper form by the Transfer Agent or
Prudential Securities. See "How the Fund Values Its Shares." In certain cases,
however, redemption proceeds will be reduced by the amount of any applicable
contingent deferred sales charge, as described below. See "Contingent Deferred
Sales Charges" below.

     If you hold shares of the Fund through Prudential Securities, you must
redeem your shares by contacting your Prudential Securities financial adviser.
If you hold shares in non-certificate form, a written request for redemption
signed by you exactly as the account is registered is required. If you hold
certificates, the certificates, signed in the name(s) shown on the face of the
certificates, must be received by the Transfer Agent in order for the redemption
request to be processed. If redemption is requested by a corporation,
partnership, trust or fiduciary, written evidence of authority acceptable to the
Transfer Agent must be submitted before such request will be accepted. All
correspondence and documents concerning redemptions should be sent to the Fund
in care of its Transfer Agent, Prudential Mutual Fund Services, Inc., Attention:
Redemption Services, P.O. Box 15010, New Brunswick, New Jersey 08906-5010.

     If the proceeds of the redemption (a) exceed $50,000, (b) are to be paid to
a person other than the record owner, (c) are to be sent to an address other
than the address on the Transfer Agent's records, or (d) are to be paid to a
corporation, partnership, trust or fiduciary, the signature(s) on the redemption
request and on the certificates, if any, or stock power must be guaranteed by an
"eligible guarantor institution." An "eligible guarantor institution" includes
any bank, broker, dealer or credit union. The Transfer Agent reserves this right
to request additional information from, and make reasonable inquiries of, any
eligible guarantor institution. For clients of Prusec, a signature guarantee may
be obtained from the agency or office manager of most Prudential Insurance and
Financial Services or Prudential Preferred Financial Services Offices.

   
     Payment for shares presented for redemption will be made by check within
seven days after receipt by the Transfer Agent of the certificate and/or written
request, except as indicated below. If you hold shares through Prudential
Securities, payment for shares presented for redemption will be credited to your
Prudential Securities account, unless you indicate otherwise. Such payment may
be postponed or the right of redemption suspended at times (a) when the New York
Stock Exchange is closed for other than customary weekends and holidays, (b)
when trading on such Exchange is restricted, (c) when an emergency exists as a
result of which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (d) during any other period when the SEC, by
order, so permits; provided that applicable rules and regulations of the SEC
shall govern as to whether the conditions prescribed in (b), (c) or (d) exist.
    


                                       31

<PAGE>

     Payment for redemption of recently purchased shares will be delayed until
the Fund or its Transfer Agent has been advised that the purchase check has been
honored, up to 10 calendar days from the time of receipt of the purchase check
by the Transfer Agent. Such delay may be avoided by purchasing shares by wire or
by certified or official bank checks.

     Redemption In Kind. If the Board of Directors determines that it would be
detrimental to the best interests of the remaining shareholders of the Fund to
make payment wholly or partly in cash, the Fund may pay the redemption price in
whole or in part by a distribution in kind of securities from the investment
portfolio of the Fund, in lieu of cash, in conformity with applicable rules of
the SEC. Securities will be readily marketable (i.e., U.S. Government securities
or securities listed on a national exchange) and will be valued in the same
manner as in a regular redemption. See "How the Fund Values its Shares." If your
shares are redeemed in kind, you would incur transaction costs in converting the
assets into cash. The Fund, however, has elected to be governed by Rule 18f-1
under the Investment Company Act, under which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net asset value
of the Fund during any 90-day period for any one shareholder.

     Involuntary Redemption. In order to reduce expenses of the Fund, the Board
of Directors may redeem all of the shares of any shareholder, other than a
shareholder which is an IRA or other tax-deferred retirement plan, whose account
has a net asset value of less than $500 due to a redemption. The Fund will give
such shareholders 60 days' prior written notice in which to purchase sufficient
additional shares to avoid such redemption. No contingent deferred sales charge
will be imposed on any involuntary redemption.

   
     90-day Repurchase Privilege. If you redeem your shares and have not
previously exercised the repurchase privilege, you may reinvest any portion or
all of the proceeds of such redemption in shares of the Fund at the NAV next
determined after the order is received, which must be within 90 days after the
date of the redemption. No sales charge will apply to such repurchases. You will
receive pro rata credit for any CDSC paid in connection with the redemption of
Class B or Class C shares. You must notify the Fund's Transfer Agent, either
directly or through Prudential Securities or Prusec, at the time the repurchase
privilege is exercised that you are entitled to credit for the CDSC previously
paid. Exercise of the repurchase privilege will generally not affect federal tax
treatment of any gain realized upon redemption. If the redemption resulted in a
loss, some or all of the loss, depending on the amount reinvested, will
generally not be allowed for federal income tax purposes.
    

Contingent Deferred Sales Charges

   
     Redemptions of Class B shares will be subject to a contingent deferred
sales charge or CDSC declining from 3% to zero over a four-year period. Class C
shares redeemed within one year of purchase will be subject to a 1% CDSC. The
CDSC will be deducted from the redemption proceeds and reduce the amount paid to
you. The CDSC will be imposed on any redemption by you which reduces the current
value of your shares to an amount which is lower than the amount of all payments
by you for shares during the preceding four years, in the case of Class B
shares, and one year, in the case of Class C shares. A CDSC will be applied on
the lesser of the original purchase price or the current value of the shares
being redeemed. Increases in the value of your shares or shares acquired through
reinvestment of dividends or distributions are not subject to a CDSC. The amount
of any CDSC will be paid to and retained by the Distributor. See "How the Fund
is Managed--Distributor" and "Waiver of the Contingent Deferred Sales
Charges--Class B Shares" below.
    

     The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of shares until the time of redemption
of such shares. Solely for purposes of determining the number of years from the
time of any payment for the purchase of shares, all payments during a month will
be aggregated and deemed to have been made on the last day of the month. The
CDSC will be calculated from the first day of the month after the initial


                                       32
<PAGE>

purchase, excluding the time shares were held in a money market fund. See "How
to Exchange Your Shares." The following table sets forth the rates of the CDSC
applicable to redemptions of Class B shares:

                                              Contingent Deferred Sales Charge
Year Since Purchase                          as a Percentage of Dollars Invested
   Payment Made                                     or Redemption Proceeds
- ------------------                                --------------------------
      First                                                     3.0%
      Second                                                    2.0%
      Third                                                     1.0%
      Fourth                                                    1.0%
      Fifth                                                     None

     In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares acquired pursuant to the reinvestment of dividends and distributions;
then of amounts representing the increase in net asset value above the total
amount of payments for the purchase of Fund shares made during the preceding
four years; then of amounts representing the cost of shares held beyond the
applicable CDSC period; and finally, of amounts representing the cost of shares
held for the longest period of time within the applicable CDSC period.

     For example, assume you purchased 100 Class B shares at $10 per share for a
cost of $1,000. Subsequently, you acquired 5 additional Class B shares through
dividend reinvestment. During the second year after the purchase you decided to
redeem $500 of your investment. Assuming at the time of the redemption the net
asset value had appreciated to $12 per share, the value of your Class B shares
would be $1,260 (105 shares at $12 per share). The CDSC would not be applied to
the value of the reinvested dividend shares and the amount which represents
appreciation ($260). Therefore, $240 of the $500 redemption proceeds ($500 minus
$260) would be charged at a rate of 2% (the applicable rate in the second year
after purchase) for a total CDSC of $4.80.

     For federal income tax purposes, the amount of the CDSC will reduce the
gain or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.

     Waiver of the Contingent Deferred Sales Charges--Class B Shares. The CDSC
will be waived in the case of a redemption following the death or disability of
a shareholder or, in the case of a trust account, following the death or
disability of the grantor. The waiver is available for total or partial
redemptions of shares owned by a person, either individually or in joint tenancy
(with rights of survivorship), or a trust, at the time of death or initial
determination of disability, provided that the shares were purchased prior to
death or disability. 

   
     The CDSC will also be waived in the case of a total or partial redemption
in connection with certain distributions made without penalty under the Internal
Revenue Code from a tax-deferred retirement plan, an IRA or Section 403(b)
custodial account. These distributions include: (i)in the case of a tax-deferred
retirement plan, a lump-sum or other distribution after retirement; (ii)in the
case of an IRA or Section 403(b) custodial account, a lump-sum or other
distribution after attaining age 59 1/2; and (iii)a tax-free return of an
excess contribution or plan distributions following the death or disability of
the shareholder, provided that the shares were purchased prior to death or
disability. The waiver does not apply in the case of a tax-free rollover or
transfer of assets, other than one following a separation from service (i.e.,
following voluntary or involuntary termination of employment or following
retirement). Under no circumstances will the CDSC be waived on redemptions
resulting from the termination of a tax-deferred retirement plan, unless such
redemptions otherwise qualify for a waiver as described above. In the case of
Direct Account and PSI or Subsidiary Prototype Benefit Plans, the CDSC will be
waived on redemptions which represent borrowings from such plans. Shares
purchased with amounts used to repay a loan from such plans on which a CDSC was
not previously deducted will thereafter be subject to a CDSC without regard to
the time such amounts were previously invested. In the case of a 
    


                                       33

<PAGE>

401(k) plan, the CDSC will also be waived upon the redemption of shares
purchased with amounts used to repay loans made from the account to the
participant and from which a CDSC was previously deducted.

     In addition, the CDSC will be waived on redemptions of shares held by
Directors of the Fund.

   
     You must notify the Fund's Transfer Agent either directly or through
Prudential Securities or Prusec, at the time of redemption, that you are
entitled to waiver of the CDSC and provide the Transfer Agent with such
supporting documentation as it may deem appropriate. The waiver will be granted
subject to confirmation of your entitlement. See "Purchase and Redemption of
Fund Shares--Waiver of the Contingent Deferred Sales Charge--Class B Shares" in
the Statement of Additional Information.

     A quantity discount may apply to redemptions of Class B shares purchased
prior to August 1, 1994. See "Purchase and Redemption of Fund Shares--Quantity
Discount--Class B Shares Purchased Prior to August 1, 1994" in the Statement of
Additional Information.
    

CONVERSION FEATURE--CLASS B SHARES 

   
     Class B shares will automatically convert to Class A shares on a quarterly
basis approximately five years after purchase. It is currently anticipated that
conversions will occur during the months of February, May, August and November.
Conversions will be effected at relative net asset value without the imposition
of any additional sales charge. The first conversion of Class B shares occurred
in February 1995, when the conversion feature was first implemented.
    


     Since the Fund tracks amounts paid rather than the number of shares bought
on each purchase of Class B shares, the number of Class B shares eligible to
convert to Class A shares (excluding shares acquired through the automatic
reinvestment of dividends and other distributions) (the Eligible Shares) will be
determined on each conversion date in accordance with the following formula: (i)
the ratio of (a) the amounts paid for Class B shares purchased at least five
years prior to the conversion date to (b) the total amount paid for all Class B
shares purchased and then held in your account (ii) multiplied by the total
number of Class B shares then in your account. Each time any Eligible Shares in
your account convert to Class A shares, all shares or amounts representing Class
B shares then in your account that were acquired through the automatic
reinvestment of dividends and other distributions will convert to Class A
shares.

     For purposes of determining the number of Eligible Shares, if the Class B
shares in your account on any conversion date are the result of multiple
purchases at different net asset values per share, the number of Eligible Shares
calculated as described above will generally be either more or less than the
number of shares actually purchased approximately five years before such
conversion date. For example, if 100 shares were initially purchased at $10 per
share (for a total of $1,000) and a second purchase of 100 shares was
subsequently made at $11 per share (for a total of $1,100), 95.24 shares would
convert approximately five years from the initial purchase (i.e., $1,000 divided
by $2,100 (47.62%) multiplied by 200 shares equals 95.24 shares). The Manager
reserves the right to modify the formula for determining the number of Eligible
Shares in the future as it deems appropriate on notice to shareholders.

     Since annual distribution-related fees are lower for Class A shares than
Class B shares, the per share net asset value of the Class A shares may be
higher than that of the Class B shares at the time of conversion. Thus, although
the aggregate dollar value will be same, you may receive fewer Class A shares
than Class B shares converted. See "How the Fund Values its Shares."

   
     For purposes of calculating the applicable holding period for conversions,
all payments for Class B shares during a month will be deemed to have been made
on the last day of the month, or for Class B shares acquired through exchange,
or a series of exchanges, on the last day of the month in which the original
payment for purchases of such Class B shares was made. For Class B shares
previously exchanged for shares of a money market fund, the time period during
which such shares were held in the money market fund will be excluded. For
example, Class B shares held in a money market fund for one year will not
convert to Class A shares until approximately six years from purchase. For
purposes of measuring the time period during which shares are held in a money
market fund, exchanges will be deemed to have been 
    

                                       34

<PAGE>

   
made on the last day of the month. Class B shares acquired through exchange will
convert to Class A shares after expiration of the conversion period applicable
to the original purchase of such shares.
    

     The conversion feature may be subject to the continuing availability of
opinions of counsel or rulings of the Internal Revenue Service (i) that the
dividends and other distributions paid on Class A, Class B, and Class C shares
will not constitute "preferential dividends" under the Internal Revenue Code and
(ii) that the conversion of shares does not constitute a taxable event. The
conversion of Class B shares into Class A shares may be suspended if such
opinions or rulings are no longer available. If conversions are suspended, Class
B shares of the Fund will continue to be subject, possibly indefinitely, to
their higher annual distribution and service fee.

HOW TO EXCHANGE YOUR SHARES

   
     As a shareholder of the Fund you have an exchange privilege with certain
other Prudential Mutual Funds, including one or more specified money market
funds, subject to the minimum investment requirements of such funds. Class A,
Class B and Class C shares may be exchanged for Class A, Class B and Class C
shares, respectively, of another fund on the basis of the relative NAV. No sales
charge will be imposed at the time of the exchange. Any applicable CDSC payable
upon the redemption of shares exchanged will be that imposed by the Fund in
which shares were initially purchased and will be calculated from the first day
of the month after the initial purchase, excluding the time shares were held in
a money market fund. Class B and Class C shares may not be exchanged into money
market funds other than Prudential Special Money Market Fund. For purposes of
calculating the holding period applicable to the Class B conversion feature, the
time period during which Class B shares were held in a money market fund will be
excluded. See "Conversion Feature--Class B Shares" above. An exchange will be
treated as a redemption and purchase for tax purposes. See "Shareholder
Investment Account--Exchange Privilege" in the Statement of Additional
Information.
    

     In order to exchange shares by telephone, you must authorize the telephone
exchange privilege on your initial application form or by written notice to the
Transfer Agent and hold shares in non-certificate form. Thereafter, you may call
the Fund at (800) 225-1852 to execute a telephone exchange of shares, on
weekdays, except holidays, between the hours of 8:00 a.m. and 6:00 p.m., New
York time. For your protection and to prevent fraudulent exchanges, your
telephone call will be recorded and you will be asked to provide your personal
identification number. A written confirmation of the exchange transaction will
be sent to you. Neither the Fund nor its agents will be liable for any loss,
liability or cost which results from acting upon instructions reasonably
believed to be genuine under the foregoing procedures. All exchanges will be
made on the basis of the relative NAV of the two funds next determined after the
request is received in good order. The exchange privilege is available only in
states where the exchange may legally be made.
                
     If you hold shares through Prudential Securities, you must exchange your
shares by contacting your Prudential Securities financial adviser.

     If you hold certificates, the certificates, signed in the name(s) shown on
the face of the certificates, must be returned in order for the shares to be
exchanged. See "How to Sell Your Shares" above.

     You may also exchange shares by mail by writing to Prudential Mutual Fund
Services, Inc., Attention: Exchange Processing, P.O. Box 15010, New Brunswick,
New Jersey 08906-5010.

     In periods of severe market or economic conditions the telephone exchange
of shares may be difficult to implement and you should make exchanges by mail by
writing to Prudential Mutual Fund Services, Inc., at the address noted above.

    
     Special Exchange Privilege. A special exchange privilege is available for
shareholders who qualify to purchase Class A shares at NAV. See "Alternative
Purchase Plan--Class A Shares--Reduction and Waiver of Initial Sales Charges"
above. Under this exchange privilege, amounts representing any Class B and Class
C shares (which are not subject to a CDSC) held in such a shareholder's account
will be automatically exchanged for Class A shares on a
    

                                       35


<PAGE>

   
quarterly basis, unless the shareholder elects otherwise. [It is currently
anticipated that this exchange will occur quarterly in February, May, August and
November.] Eligibility for this exchange privilege will be calculated on the
business day prior to the date of the exchange. Amounts representing Class B or
Class C shares which are not subject to a CDSC include the following: (1)
amounts representing Class B or Class C shares acquired pursuant to the
automatic reinvestment of dividends and distributions, (2) amounts representing
the increase in the net asset value above the total amount of payments for the
purchase of Class B or Class C shares and (3) amounts representing Class B or
Class C shares held beyond the applicable CDSC period. Class B and Class C
shareholders must notify the Transfer Agent either directly or through
Prudential Securities or Prusec that they are eligible for this special exchange
privilege.
    

     The exchange privilege may be modified or terminated at any time on 60
days' notice to shareholders.

SHAREHOLDER SERVICES

     In addition to the exchange privilege, as a shareholder in the Fund, you
can take advantage of the following additional services and privileges.

     o Automatic Reinvestment of Dividends and/or Distributions Without a Sales
Charge. For your convenience, all dividends and distributions are automatically
reinvested in full and fractional shares of the Fund at NAV without a sales
charge. You may direct the Transfer Agent in writing not less than 5 full
business days prior to the record date to have subsequent dividends and/or
distributions sent in cash rather than reinvested. If you hold shares through
Prudential Securities you should contact your financial adviser.

     o Automatic Savings Accumulation Plan (ASAP). Under ASAP you may make
regular purchases of the Fund's shares in amounts as little as $50 via an
automatic debit to a bank account or Prudential Securities account (including a
Command Account). For additional information about this service, you may contact
your Prudential Securities financial adviser, Prusec representative or the
Transfer Agent directly.

     o Tax-Deferred Retirement Plans. Various tax-deferred retirement plans,
including a 401(k) plan, self-directed individual retirement accounts and
"tax-sheltered accounts" under Section 403(b)(7) of the Internal Revenue Code
are available through the Distributor. These plans are for use by both
self-employed individuals and corporate employers. These plans permit either
self-direction of accounts by participants, or a pooled account arrangement.
Information regarding the establishment of these plans, the administration,
custodial fees and other details is available from Prudential Securities or the
Transfer Agent. If you are considering adopting such a plan, you should consult
with your own legal or tax adviser with respect to the establishment and
maintenance of such a plan.

     o Systematic Withdrawal Plan. A systematic withdrawal plan is available to
shareholders which provides for monthly or quarterly checks. Withdrawals of
Class B and Class C shares may be subject to a CDSC. See "How to Sell Your
Shares--Contingent Deferred Sales Charges."

     o Reports to Shareholders. The Fund will send to you annual and semi-annual
reports. The financial statements appearing in annual reports are audited by
independent accountants. In order to reduce duplicate mailing and printing
expenses, the Fund will provide one annual and semi-annual shareholder report
and annual prospectus per household. You may request additional copies of such
reports by calling (800) 225-1852 or by writing to the Fund at One Seaport
Plaza, New York, New York 10292. In addition, monthly unaudited financial data
are available upon request from the Fund.

     o Shareholder Inquiries. Inquiries should be addressed to the Fund at One
Seaport Plaza, New York, New York 10292, or by telephone, at (800) 225-1852
(toll-free) or, from outside the U.S.A., at (908) 417-7555 (collect).

     For additional information regarding the services and privileges described
above, see "Shareholder Investment Account" in the Statement of Additional
Information.

                                       36

<PAGE>

                                   APPENDIX A

                        DESCRIPTION OF SECURITY RATINGS

Moody's Investors Service

     Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

     Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than Aaa bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

     A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

     Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

     Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

     B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

     Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

     Ca: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

     C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Commercial Paper

     Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months.

     P-1: The designation "Prime-1" or "P-1" indicates the highest quality
repayment capacity of the rated issue.

     P-2: The designation "Prime-2" or "P-2" indicates a strong capacity for
repayment.


                                      A-1

<PAGE>

Standard & Poor's Ratings Group

     AAA: Debt rated AAA has the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

     AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.

     A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

     BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories.

     BB, B, CCC, CC: Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions.

Commercial Paper

     Standard & Poor's commercial paper ratings are current assessments of the
likelihood of timely payment of debt having an original maturity of no more than
270 days.

     A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is very strong.

     A-2: Capacity for timely payment on issues with the designation A-2 is
strong. However, the relative degree of safety is not as overwhelming as for
issues designated A-1.


                                      A-2

<PAGE>

                       THE PRUDENTIAL MUTUAL FUND FAMILY

     Prudential Mutual Fund Management offers a broad range of mutual funds
designed to meet your individual needs. We welcome you to review the investment
options available through our family of funds. For more information on the
Prudential Mutual Funds, including charges and expenses, contact your Prudential
Securities financial adviser or Prusec representative or telephone the Fund at
(800) 225-1852 for a free prospectus. Read the prospectus carefully before you
invest or send money.

   
                Taxable Bond Funds
Prudential Adjustable Rate Securities Fund, Inc.
Prudential Diversified Bond Fund, Inc.
Prudential GNMA Fund, Inc.
Prudential Government Securities Trust
  Intermediate Term Series
Prudential Government Income Fund, Inc.
Prudential High Yield Fund, Inc.
Prudential Structured Maturity Fund, Inc.
  Income Portfolio
Prudential U.S. Government Fund
The BlackRock Government Income Trust

              Tax-Exempt Bond Funds
Prudential California Municipal Fund
  California Series
  California Income Series
Prudential Municipal Bond Fund
  High Yield Series
  Insured Series
  Modified Term Series
Prudential Municipal Series Fund 
  Arizona Series 
  Florida Series 
  Georgia Series
  Hawaii Income Series 
  Maryland Series 
  Massachusetts Series 
  Michigan Series
  Minnesota Series 
  New Jersey Series 
  New York Series 
  North Carolina Series 
  Ohio Series 
  Pennsylvania Series
Prudential National Municipals Fund, Inc.

                   Global Funds
Prudential Europe Growth Fund, Inc.
Prudential Global Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Global Natural Resources Fund, Inc.
Prudential Intermediate Global Income Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential Short-Term Global Income Fund, Inc.
  Global Assets Portfolio
  Short-Term Global Income Portfolio
Global Utility Fund, Inc.

                   Equity Funds
Prudential Allocation Fund
  Conservatively Managed Portfolio
  Strategy Portfolio
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
Prudential Growth Opportunity Fund, Inc.
Prudential IncomeVertibler(R) Fund, Inc.
Prudential Multi-Sector Fund, Inc.
Prudential Strategist Fund, Inc.
Prudential Utility Fund
Nicholas-Applegate Fund, Inc.
  Nicholas-Applegate Growth Equity Fund
    

                Money Market Funds
o Taxable Money Market Funds
Prudential Government Securities Trust
  Money Market Series
  U.S. Treasury Money Market Series
Prudential Special Money Market Fund
  Money Market Series
Prudential MoneyMart Assets
o Tax-Free Money Market Funds
Prudential Tax-Free Money Fund
Prudential California Municipal Fund
  California Money Market Series
Prudential Municipal Series Fund
  Connecticut Money Market Series
  Massachusetts Money Market Series
  New Jersey Money Market Series
  New York Money Market Series
o Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
o Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
  Institutional Money Market Series


                                      B-1

<PAGE>

No dealer, sales representative or any other person has been authorized to give
any information or to make any representations, other than those contained in
this Prospectus, in connection with the offer contained herein, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Fund or the Distributor. This Prospectus does not
constitute an offer by the Fund or by the Distributor to sell or a solicitation
of any offer to buy any of the securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such offer in such jurisdiction.
   

- --------------------------------------------------------------------------------
                               TABLE OF CONTENTS
                                                                            Page
                                                                            ----
FUND HIGHLIGHTS ...........................................................    2
  Risk Factors and Special Characteristics ................................    2
FUND EXPENSES .............................................................    5
FINANCIAL HIGHLIGHTS ......................................................    6
HOW THE FUND INVESTS ......................................................    8
  Investment Objective and Policies .......................................    8
  Risk Factors ............................................................   12
  Other Investments and Investment Techniques .............................   13
  Hedging and Income Enhancement Strategies ...............................   16
  Portfolio Turnover and Brokerage ........................................   18
  Investment Restrictions .................................................   19
HOW THE FUND IS MANAGED ...................................................   19
  Manager .................................................................   19
  Distributor .............................................................   20
  Portfolio Transactions ..................................................   21
  Custodian and Transfer and
    Dividend Disbursing Agent .............................................   21
HOW THE FUND VALUES ITS SHARES ............................................   22
HOW THE FUND CALCULATES PERFORMANCE .......................................   22
TAXES, DIVIDENDS AND DISTRIBUTIONS ........................................   23
GENERAL INFORMATION .......................................................   24
  Description of Common Stock .............................................   24
  Additional Information ..................................................   25
SHAREHOLDER GUIDE .........................................................   25
  How to Buy Shares of the Fund ...........................................   25
  Alternative Purchase Plan ...............................................   26
  How to Sell Your Shares .................................................   29
  Conversion Feature-Class B Shares .......................................   32
  How to Exchange Your Shares .............................................   33
  Shareholder Services ....................................................   34
DESCRIPTION OF SECURITY RATINGS ...........................................  A-1
THE PRUDENTIAL MUTUAL FUND FAMILY .........................................  B-1
- --------------------------------------------------------------------------------
MF 155A                                                                  4445810

            CUSIP Nos.: Class A: 74435G-20-3
                        Class B: 74435G-30-2
                        Class C: 74435G-40-1
    


                              Prudential
                             Intermediate
                            Global Income
                              Fund, Inc.




             Prudential Mutual Funds
               BUILDING YOUR FUTURE
                ON OUR STRENGTH(SM)

                        P
                        R
                        O
                        S
                        P
                        E
                        C
                        T
                        U
                        S

   
                       March 2, 1995
    


<PAGE>

                PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.

   
                      Statement of Additional Information
                              dated March 2, 1995

     Prudential Intermediate Global Income Fund, Inc. (the Fund) is an open-end,
non-diversified management investment company, or a mutual fund, whose
investment objective is to seek to maximize total return, the components of
which are current income and capital appreciation. The Fund will seek to achieve
this objective through investment in a portfolio consisting primarily of U.S.
Government securities and Foreign Government securities. The Fund may also
purchase and sell certain derivatives, including put and call options on U.S.
Government securities and Foreign Government securities and engage in
transactions involving futures contracts and options on such futures with
respect to U.S. Government securities and Foreign Government securities. There
can be no assurance that the Fund's investment objective will be achieved.
Investing in Foreign Government securities, options and futures contracts
involves considerations and possible risks which are different from those
ordinarily associated with investing in U.S. Government securities.
    

     The Fund's investment objective and policies are described in the Fund's
Prospectus. This statement contains additional information about those policies.
The Fund is also subject to certain investment restrictions. See "Investment
Restrictions" below.

     The Fund's address is One Seaport Plaza, New York, New York 10292, and its
telephone number is (800) 225-1852.
 
   
     This Statement of Additional Information is not a prospectus and should
only be read in conjunction with the Fund's Prospectus, dated March 2, 1995, a
copy of which may be obtained from the Fund at the address noted above.

                               TABLE OF CONTENTS
                                                                 Cross-reference
                                                                    to page in  
                                                         Page       Prospectus  
                                                         ----    ---------------
General Information .................................     B-2          26       
Investment Objective and Policies ...................     B-2           9       
Additional Investment Policies ......................     B-4          14       
Investment Restrictions .............................     B-14         20       
Directors and Officers ..............................     B-16         20       
Manager .............................................     B-18         20       
Distributor .........................................     B-19         21       
Portfolio Transactions and Brokerage ................     B-21         23       
Purchase and Redemption of Fund Shares ..............     B-23         27       
Shareholder Investment Account ......................     B-26         36       
Net Asset Value .....................................     B-29         23       
Performance Information .............................     B-30         24       
Taxes, Dividends and Distributions ..................     B-31         24      
Organization and Capitalization .....................     B-33         --      
Custodian, Transfer and Dividend Disbursing 
  Agent and Independent Accountants .................     B-33         23      
Financial Statements ................................     B-34         --      
Report of Independent Accountants ...................     B-45         --      
Description of Securities Ratings ...................     A-1          --      
- --------------------------------------------------------------------------------
MF 155 B
    

<PAGE>

                              GENERAL INFORMATION

     The Fund was incorporated in Maryland on March 15, 1988 under the name "The
Prudential Intermediate Income Fund, Inc." as a closed-end, non-diversified
management investment company. The Fund operated as a closed-end fund prior to
October 7, 1991. On August 8, 1991, shareholders approved open-ending the Fund
and changing the Fund's name to "Prudential Intermediate Global Income Fund,
Inc." and since October 7, 1991, the Fund has operated as an open-end fund.

                       INVESTMENT OBJECTIVE AND POLICIES

     The Fund's investment objective is to seek to maximize total return, the
components of which are current income and capital appreciation. The Fund will
seek to achieve this objective through investment in a portfolio consisting
primarily of U.S. Government securities and Foreign Government securities. The
Fund may also purchase and sell put and call options on U.S. Government
securities and Foreign Government securities and engage in transactions
involving futures contracts and options on such futures with respect to U.S.
Government securities and Foreign Government securities. There can be no
assurance that the Fund's investment objective will be achieved. See "How the
Fund Invests--Investment Objective and Policies" in the Prospectus.

U.S. Government Securities

     Mortgage-Related Securities Issued by U.S. Government Instrumentalities.
Mortgages backing the securities purchased by the Fund include conventional
thirty year fixed rate mortgages, graduated payment mortgages, fifteen year
mortgages and adjustable rate mortgages. All of these mortgages can be used to
create pass-through securities. A pass-through security is formed when mortgages
are pooled together and undivided interests in the pool or pools are sold. The
cash flow from the mortgages is passed through to the holders of the securities
in the form of periodic payments of interest, principal and prepayments (net of
a service fee). Prepayments occur when the holder of an individual mortgage
prepays the remaining principal before the mortgage's scheduled maturity date.
As a result of the pass-through of prepayments of principal on the underlying
securities, mortgage-backed securities are often subject to more rapid
prepayment of principal than their stated maturity would indicate. The remaining
expected average life of a pool of mortgage loans underlying a mortgage-backed
security is a prediction of when the mortgage loans will be repaid and is based
upon a variety of factors, such as the demographic and geographic
characteristics of the borrowers and the mortgaged properties, the length of
time that each of the mortgage loans has been outstanding, the interest rates
payable on the mortgage loans and the current interest rate environment.

     During periods of declining interest rates, prepayments of mortgages
underlying mortgage-backed securities can be expected to accelerate. When
mortgage obligations are prepaid, the Fund reinvests the prepaid amounts in
securities, the yields of which reflect interest rates prevailing at that time.
Therefore, the Fund's ability to maintain a portfolio of high-yielding
mortgage-backed securities will be adversely affected to the extent that
prepayments of mortgages must be reinvested in securities which have lower
yields than the prepaid mortgages. Moreover, prepayments of mortgages which
underlie securities purchased at a premium generally will result in capital
losses.

     GNMA Certificates. Certificates of the Government National Mortgage
Association (GNMA Certificates) are mortgage-backed securities, which evidence
an undivided interest in a pool or pools of mortgages. GNMA Certificates that
the Fund purchases are the "modified pass-through" type, which entitle the
holder to receive timely payment of all interest and principal payments due on
the mortgage pool, net of fees paid to the "issuer" and GNMA, regardless of
whether or not the mortgagor actually makes the payment.

     GNMA Guarantee. The National Housing Act authorizes GNMA to guarantee the
timely payment of principal and interest on securities backed by a pool of
mortgages insured by the Federal Housing Administration (FHA) or the Farmers'
Home Administration (FMHA), or guaranteed by the Veterans Administration (VA).
The GNMA guarantee is backed by the full faith and credit of the United States.
The GNMA is also empowered to borrow without limitation from the U.S. Treasury
if necessary to make any payments required under its guarantee.

     Life of GNMA Certificates. The average life of a GNMA Certificate is likely
to be substantially shorter than the original maturity of the mortgages
underlying the securities. Prepayments of principal by mortgagors and mortgage
foreclosures will usually result in the return of the greater part of principal
investment long before the maturity of the mortgages in the pool. Foreclosures
impose no risk to principal investment because of the GNMA guarantee, except to
the extent that the Fund has purchased the certificates above par in the
secondary market.

     FHLMC Securities. The Federal Home Loan Mortgage Corporation (FHLMC) was
created in 1970 through enactment of Title III of the Emergency Home Finance Act
of 1970. Its purpose is to promote development of a nationwide secondary market
in conventional residential mortgages.

     The FHLMC presently issues two types of mortgage pass-through securities,
mortgage participation certificates (PCs) and guaranteed mortgage certificates
(GMCs). The Fund does not intend to invest in GMCs. PCs resemble GNMA
Certificates in that 

                                      B-2

<PAGE>

each PC represents a pro rata share of all interest and principal payments made
and owed on the underlying pool. The FHLMC guarantees timely monthly payment of
interest on PCs and the stated principal amount.

     GMCs also represent a pro rata interest in a pool of mortgages. However,
these instruments pay interest semi-annually and return principal once a year in
guaranteed minimum payments. The expected average life of these securities is
approximately ten years.

     FNMA Securities. The Federal National Mortgage Association (FNMA) was
established in 1938 to create a secondary market in mortgages insured by the
FHA.

     FNMA issues guaranteed mortgage pass-through certificates (FNMA
Certificates). FNMA Certificates resemble GNMA Certificates in that each FNMA
Certificate represents a pro rata share of all interest and principal payments
made and owed on the underlying pool. FNMA guarantees timely payment of interest
and principal on FNMA Certificates.

     Adjustable Rate Mortgage Securities. Generally, Adjustable Rate Mortgage
securities (ARMs) have a specified maturity date and amortize principal over
their life. In periods of declining interest rates, there is a reasonable
likelihood that ARMs will experience increased rates of prepayment of principal.
However, the major difference between ARMs and Fixed Rate Mortgage Securities
(FRMs) is that the interest rate and the rate of amortization of principal of
ARMs can and do change in accordance with movements in a particular,
pre-specified, published interest rate index. The amount of interest on an ARM
is calculated by adding a specified amount, the "margin," to the index, subject
to limitations on the maximum and minimum interest that is charged during the
life of the mortgage or to maximum and minimum changes to that interest rate
during a given period. Because the interest rate on ARMs generally moves in the
same direction as market interest rates, the market value of ARMs tends to be
more stable than that of long-term fixed-rate securities.

     Fixed-Rate Mortgage Securities. The Fund anticipates investing in
high-coupon fixed-rate mortgage securities. Such securities are collateralized
by fixed-rate mortgages and tend to have high prepayment rates when the level of
prevailing interest rates declines significantly below the interest rates on the
mortgages. Thus, under those circumstances, the securities are generally less
sensitive to interest rate movements than lower coupon FRMs.

     Characteristics of Mortgage-Backed Securities. The interest rates paid on
the ARMs in which the Fund invests generally are readjusted at intervals of one
year or less to an increment over some predetermined interest rate index. There
are two main categories of indices: those based on U.S. Treasury securities and
those derived from a calculated measure such as a cost of funds index or a
moving average of mortgage rates. Commonly utilized indices include the one-year
and five-year constant maturity Treasury Note rates, the three-month Treasury
Bill rate, the 180-day Treasury Bill rate, rates on longer-term Treasury
securities, the 11th District Federal Home Loan Bank Cost of Funds, the National
Median Cost of Funds, the one-month or three-month London Interbank Offered Rate
(LIBOR), the prime rate of a specific bank, or commercial paper rates. Some
indices, such as the one-year constant maturity Treasury Note rate, closely
mirror changes in market interest rate levels. Others, such as the 11th District
Home Loan Bank Cost of Funds index (often related to ARMs issued by FNMA), tend
to lag changes in market rate levels and tend to be somewhat less volatile.

     The underlying mortgages which collateralize the ARMs, collateralized
mortgage obligations and Real Estate Mortgage Investment Conduits in which the
Fund invests will frequently have caps and floors which limit the maximum amount
by which the loan rate to the residential borrower may change up or down (1) per
reset or adjustment interval and (2) over the life of the loan. Some residential
mortgage loans restrict periodic adjustments by limiting changes in the
borrower's monthly principal and interest payments rather than limiting interest
rate changes. These payment caps may result in negative amortization.

     The market value of mortgage securities, like other U.S. Government
securities, will generally vary inversely with changes in market interest rates,
declining when interest rates rise and rising when interest rates decline.
However, mortgage securities, while having comparable risk of decline during
periods of rising rates, usually have less potential for capital appreciation
than other investments of comparable maturities due to the likelihood of
increased prepayments of mortgages as interest rates decline. In addition, to
the extent such mortgage securities are purchased at a premium, mortgage
foreclosures and unscheduled principal prepayments generally will result in some
loss of the holders' principal to the extent of the premium paid. On the other
hand, if such mortgage securities are purchased at a discount, an unscheduled
prepayment of principal will increase current and total returns and will
accelerate the recognition of income which when distributed to shareholders will
be taxable as ordinary income. 

Foreign Securities

     Foreign securities in which the Fund will invest will generally be
denominated in foreign currencies, will be traded on foreign markets, including
foreign stock exchanges, and will be affected by changes in currency exchange
rates and in exchange control regulations. A change in the value of a foreign
currency against the U.S. dollar will result in a corresponding change in the
U.S. 


                                      B-3

<PAGE>

dollar value of the Fund's assets denominated in that currency. These changes
will affect the Fund's income and distributions to shareholders. In addition,
although the Fund will receive income in such currencies, the Fund will be
required to compute and distribute its income in U.S. dollars. Therefore, if the
value of the U.S. dollar strengthens against a foreign currency after the Fund's
income has been accrued and translated into U.S. dollars, the Fund would
experience a foreign currency loss. Similarly, if the U.S. dollar value weakens
against a foreign currency between the time the Fund incurs expenses and the
time such expenses are paid, the amount of such currency required to be
converted into U.S. dollars in order to pay such expenses in U.S. dollars will
be greater than the equivalent amount of such currency at the time such expenses
were incurred. Under the Internal Revenue Code of 1986, as amended (the Internal
Revenue Code), changes in an exchange rate which occur between the time the Fund
accrues interest or other receivables or accrues expenses or other liabilities
denominated in a foreign currency and the time the Fund actually collects such
receivables or pays such liabilities will result in foreign currency gains or
losses that increase or decrease an investment company's taxable income.
Similarly, dispositions of certain debt securities (by sale, at maturity or
otherwise) at a U.S. dollar value that is higher or lower than the Fund's
original U.S. dollar cost may result in foreign exchange gains or losses which
will increase or decrease investment company taxable income. The exchange rates
between the U.S. dollar and other currencies can be volatile and are determined
by such factors as supply and demand in the currency exchange markets,
international balances of payments, government intervention, speculation and
other economic and political conditions.

     Foreign securities include securities of any foreign country the investment
adviser considers appropriate for investment by the Fund. Foreign securities may
also include securities of foreign issuers that are traded in U.S. dollars in
the United States although the underlying security is usually denominated in a
foreign currency. These securities include but are not limited to securities
traded in the form of American Depositary Receipts.

     The costs attributable to foreign investing are higher than the costs of
domestic investing. For example, the cost of maintaining custody of foreign
securities generally exceeds custodian costs for domestic securities, and
transaction and settlement costs of foreign investing are frequently higher than
those attributable to domestic investing. Foreign investment income may be
subject to foreign withholding or other government taxes that could reduce the
return to the Fund on those securities. Tax treaties between the United States
and certain foreign countries may, however, reduce or eliminate the amount of
foreign tax to which the Fund would be subject.

     In the event of a default of foreign debt obligations, it may be difficult
for the Fund to obtain or enforce a judgment against the issuer of the
securities.

                         ADDITIONAL INVESTMENT POLICIES

     In seeking to protect against the effect of changes in interest rates or
currency exchange rates that are adverse to the present or prospective position
of the Fund and to enhance returns, the Fund may employ certain hedging, yield
enhancement and risk management techniques including the purchase and sale of
options, futures and options on futures on debt securities, financial indices,
U.S. and foreign government debt securities and foreign currencies and forward
contracts on foreign currencies. The Fund's ability to engage in these practices
may be limited by tax considerations and certain other legal considerations. See
"Taxes, Dividends and Distributions."

Options On Securities

     The Fund may purchase put and call options and write covered put and call
options on debt securities, aggregates of debt securities or indices of prices
thereof, other financial indices and U.S. and foreign government debt
securities. These may include options traded on U.S. or foreign exchanges and
options traded on U.S. or foreign over-the-counter markets (OTC Options).

     When the Fund writes an option, it receives a premium which it retains
whether or not the option is exercised. The Fund's principal objective in
writing options is to realize, through the receipt of premiums, a greater return
than would be realized on the underlying securities alone.

     The purchaser of a call option has the right, for a specified period of
time, to purchase the securities subject to the option at a specified price (the
exercise price). By writing a call option, the Fund becomes obligated during the
term of the option, upon exercise of the option, to sell, depending upon the
terms of the option contract, the underlying securities or a specified amount of
cash to the purchaser against receipt of the exercise price.

     Conversely, the purchaser of a put option has the right, for a specified
period of time, to sell the securities subject to the option to the writer of
the put at a specified exercise price. By writing a put option, the Fund becomes
obligated during the term of the option to purchase the securities underlying
the option at the exercise price, upon exercise of the option.

     The Fund may write only "covered" options. This means that so long as the
Fund is obligated as the writer of a call option, it will own the underlying
securities subject to the option or an option to purchase the same underlying
securities, having an 

                                      B-4

<PAGE>

exercise price equal to or less than the exercise price of the "covered" option,
or will establish and maintain with its Custodian for the term of the option a
segregated account consisting of cash, U.S. Government securities or other
liquid high-grade debt obligations having a value at least equal to the
fluctuating market value of the optioned securities. A put option written by the
Fund will be considered "covered" if, so long as the Fund is obligated as the
writer of the option, it owns an option to sell the underlying securities
subject to the option having an exercise price equal to or greater than the
exercise price of the "covered" option, or it deposits and maintains with its
Custodian in a segregated account cash, U.S. Government securities or other
liquid high-grade debt obligations having a value equal to or greater than the
exercise price of the option.

     The Fund may also buy and write straddles (i.e., a combination of a call
and a put written on the same security at the same strike price where the same
segregated collateral is considered "cover" for both the put and the call). In
such cases, the Fund will also deposit in a segregated account with its
Custodian cash, U.S. Government securities or other liquid high-grade debt
obligations equivalent to the amount, if any, by which the put is
"in-the-money," i.e., the amount by which the exercise price of the put exceeds
the current market value of the underlying security. It is contemplated that the
Fund's use of straddles will be limited to 5% of the Fund's net assets (meaning
that the securities used for cover or segregated as described above will not
exceed 5% of the Fund's net assets at the time the straddle is written).

     The Fund may write both American style options and European style options.
An American style option is an option which may be exercised by the holder at
any time prior to its expiration. A European style option may only be exercised
as of the expiration of the option. The writer of an American style option has
no control over when the underlying securities must be sold, in the case of a
call option, or purchased, in the case of a put option, since such options may
be exercised by the holder at any time prior to the expiration of the option.
Whether or not an option expires unexercised, the writer retains the amount of
the premium. This amount may be offset or exceeded, in the case of a covered
call option, by a decline and, in the case of a covered put option, by an
increase in the market value of the underlying security during the option
period. If a call option is exercised, the writer must fulfill the obligation to
sell the underlying security at the exercise price, which will usually be lower
than the then market value of the underlying security. If a put option is
exercised, the writer must fulfill the obligation to purchase the underlying
security at the exercise price, which will usually exceed the then market value
of the underlying security.

     Prior to being notified of exercise of the option, the writer of an
exchange-traded option that wishes to terminate its obligation may effect a
"closing purchase transaction" by buying an option of the same series as the
option previously written. (Options of the same series are options with respect
to the same underlying security, having the same expiration date and the same
strike price.) The effect of the purchase is that the writer's position will be
cancelled by the exchange's affiliated clearing organization. However, the
writer of an option may not effect a closing purchase transaction after being
notified of the exercise of the option. Likewise, the holder of an option may
liquidate a position by effecting a "closing sale transaction" by selling an
option of the same series as the option previously purchased. There is no
guarantee that either a closing purchase or a closing sale transaction can be
effected.

     An exchange-traded option position may be closed out only where there
exists a secondary market for an option of the same series. If a secondary
market does not exist, the Fund might not be able to effect a closing sale
transaction in a particular option it has purchased with the result that the
Fund would have to exercise the option in order to realize any profit. If the
Fund is unable to effect a closing purchase transaction in an option the Fund
has written, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise or it
otherwise covers its position. Reasons for the absence of a liquid secondary
market include the following: (i) there may be insufficient trading interest in
certain options; (ii) restrictions may be imposed by a securities exchange
(Exchange) on opening transactions or closing transactions or both; (iii)
trading halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities; (iv) unusual
or unforeseen circumstances may interrupt normal operations on an Exchange; (v)
the facilities of an Exchange or clearing organization may not at all times be
adequate to handle current trading volume; or (vi) one or more Exchanges could,
for economic or other reasons, decide or be compelled at some future date to
discontinue the trading of options (or a particular class or series of options),
in which event the secondary market on that Exchange (or in that class or series
of options) would cease to exist, although outstanding options would continue to
be exercisable in accordance with their terms.

     Exchange-traded options in the U.S. are issued by a clearing organization
affiliated with the Exchange on which the option is listed which, in effect,
gives its guarantee to every exchange-traded option transaction. In contrast,
OTC Options are contracts between the Fund and its contra-party with no clearing
organization guarantee. Thus, when the Fund purchases an OTC Option, it relies
on the dealer from which it has purchased the OTC Option to make or take
delivery of the securities underlying the option. Failure by the dealer to do so
would result in the loss of the premium paid by the Fund as well as the loss of
the expected benefit of the transaction. The Board of Directors will evaluate
the creditworthiness of any dealer from which the Fund proposes to purchase OTC
Options.

     Exchange-traded options generally have a continuous liquid market while OTC
Options may not. Consequently, the Fund will generally be able to realize the
value of an OTC Option it has purchased only by exercising it or reselling it to
the dealer who issued


                                      B-5

<PAGE>

it. Similarly, when the Fund writes an OTC Option, it generally will be
able to close out the OTC Option prior to its expiration only by entering into a
closing purchase transaction with the dealer which originally purchased the OTC
Option. While the Fund will enter into OTC Options only with dealers which agree
to, and which are expected to be capable of, entering into closing transactions
with the Fund, there can be no assurance that the Fund will be able to liquidate
an OTC Option at a favorable price at any time prior to expiration. Until the
Fund is able to effect a closing purchase transaction in a covered OTC call
option the Fund has written, it will not be able to liquidate securities used as
cover until the option expires or is exercised or different cover is
substituted. In the event of insolvency of the contra-party, the Fund may be
unable to liquidate an OTC Option. With respect to options written by the Fund,
the inability to enter into a closing purchase transaction could result in
material losses to the Fund.

     The Fund may write options in connection with buy-and-write transactions;
that is, the Fund may purchase a security and concurrently write a call option
against that security. The exercise price of the call the Fund determines to
write will depend upon the expected price movement of the underlying security.
The exercise price of a call option may be below (in-the-money), equal to
(at-the-money) or above (out-of-the-money) the current value of the underlying
security at the time the option is written. Buy-and-write transactions using
in-the-money call options may be used when it is expected that the price of the
underlying security will remain flat or decline moderately during the option
period. Buy-and-write transactions using at-the-money call options may be used
when it is expected that the price of the underlying security will remain fixed
or advance moderately during the option period. A buy-and-write transaction
using out-of-the-money call options may be used when it is expected that the
premium received from writing the call option plus the appreciation in the
market price of the underlying security up to the exercise price will be greater
than the appreciation in the price of the underlying security alone. If the call
option is exercised in such a transaction, the Fund's maximum gain will be the
premium received by it for writing the option, adjusted upwards or downwards by
the difference between the Fund's purchase price of the security and the
exercise price of the option. If the option is not exercised and the price of
the underlying security declines, the amount of such decline will be offset in
part, or entirely, by the premium received.

     The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close out the position or
take delivery of the underlying security at the exercise price.

     The Fund may purchase call options on debt securities it intends to acquire
in order to hedge against an anticipated market appreciation in the price of the
underlying securities at limited risk and with a limited cash outlay. If the
market price does rise as anticipated, the Fund will benefit from that rise but
only to the extent that the rise exceeds the premiums paid. If the anticipated
rise does not occur or if it does not exceed the premium, the Fund will bear the
expense of the option premiums and transaction costs without gaining an
offsetting benefit.

     The Fund may purchase put options on debt securities to hedge against a
decline in the value of its portfolio. If the market price of the Fund's
portfolio should increase, however, the profit which the Fund might otherwise
have realized will be reduced by the amount of the premium paid for the put
option and by transaction costs. The Fund may purchase call options on debt
securities to hedge against an anticipated rise in the price it will have to pay
for debt securities it intends to buy in the future. If the market price of the
debt securities should fall instead of rise, however, the benefit the Fund
obtains from purchasing the securities at a lower price will be reduced by the
amount of the premium paid for the call options and by transaction costs.

     The Fund may purchase put options if the Fund believes that a defensive
posture is warranted for all or a portion of its portfolio. Protection is
provided during the life of the put because the put gives the Fund the right to
sell the underlying security at the put exercise price, regardless of a decline
in the underlying security's market price below the exercise price. This right
limits the Fund's losses from the security's possible decline in value below the
strike price of the option to the premium paid for the put option and related
transaction costs.
 
     The Fund may wish to protect certain portfolio securities against a decline
in market value through purchase of put options on other carefully selected
securities, which the investment adviser believes may move in the same direction
as those portfolio securities. If the investment adviser's judgment is correct,
changes in the value of the put options should generally offset changes in the
value of the portfolio securities being hedged. If the investment adviser's
judgment is not correct, the value of the securities underlying the put option
may decrease less than the value of the Fund's portfolio securities and
therefore the put option may not provide complete protection against a decline
in the value of the Fund's portfolio securities below the level sought to be
protected by the put option.

     The Fund may similarly wish to hedge against appreciation in the value of
debt securities that it intends to acquire at through purchase of call options
on other carefully selected debt securities, which the investment adviser
believes may move in the same direction as those portfolio securities. In such
circumstances the Fund will be subject to risks analogous to those summarized
above in the event that the correlation between the value of a call option so
purchased and the value of the securities intended to be

                                      B-6
<PAGE>

acquired by the Fund is not as close as anticipated and the value of the
securities underlying the call option increases less than the value of the
securities to be acquired by the Fund. 

Special Considerations Applicable to Options

     On Treasury Bonds and Notes. Because trading interest in Treasury Bonds and
Notes tends to center on the most recently auctioned issues, the Exchanges will
not indefinitely continue to introduce new series of options with expirations to
replace expiring options on particular issues. Instead, the expirations
introduced at the commencement of options trading on a particular issue will be
allowed to run their course, with the possible addition of a limited number of
new expirations as the original ones expire. Options trading on each series of
Bonds or Notes will thus be phased out as new options are listed on the more
recent issues, and a full range of expiration dates will not ordinarily be
available for every series on which options are traded.

     On Treasury Bills. Because the deliverable Treasury Bill changes from week
to week, writers of Treasury Bill call options cannot provide in advance for
their potential exercise settlement obligations by acquiring and holding the
underlying security. However, if the Fund holds a long position in Treasury
Bills with a principal amount corresponding to the option contract size, the
Fund may be hedged from a risk standpoint. In addition, the Fund will maintain
in a segregated account with its Custodian Treasury Bills maturing no later than
those which would be deliverable in the event of an assignment of an exercise
notice to ensure that it can meet its open option obligations.

   
     On GNMA Certificates. The Fund may purchase and write options on GNMA
Certificates in the over-the-counter market and, to the extent available, on any
Exchange.
    

     Since the remaining principal balance of GNMA Certificates declines each
month as a result of mortgage payments, the Fund, as a writer of a covered GNMA
call option holding GNMA Certificates as "cover" to satisfy its delivery
obligation in the event of assignment of an exercise notice, may find that its
GNMA Certificates no longer have sufficient remaining principal balance for this
purpose. Should this occur, the Fund will enter into a closing purchase
transaction or will purchase additional GNMA Certificates from the same pool (if
obtainable) or replacement GNMA Certificates in the cash market in order to
remain covered or substitute cover.

     A GNMA Certificate held by the Fund to cover a call option the Fund has
written in any but the nearest expiration month may cease to represent cover for
the option in the event of a decline in the GNMA coupon rate at which new pools
are originated under the FHA/VA loan ceiling in effect at any given time. Should
this occur, the Fund will no longer be covered, and the Fund will either enter
into a closing purchase transaction or replace the Certificate with a
Certificate which represents cover. When the Fund closes its option position or
replaces the Certificate, it may realize an unanticipated loss and incur
transaction costs.

Futures Contracts

     The Fund will enter into futures contracts only for certain bona fide
hedging, yield enhancement and risk management purposes. The Fund may enter into
futures contracts for the purchase or sale of debt securities, aggregates of
debt securities or indices of prices thereof, other financial indices, U.S.
Government securities, corporate debt securities and certain foreign government
debt securities (collectively, interest rate futures contracts). It may also
enter into futures contracts for the purchase or sale of foreign currencies or
composite foreign currencies (such as the European Currency Unit) in which
securities held or to be acquired by the Fund are denominated, or the value of
which have a high degree of positive correlation to the value of such currencies
as to constitute an appropriate vehicle for hedging. The Fund may enter into
such futures contracts both on U.S. and foreign exchanges.

     A "sale" of a futures contract (or a "short" futures position) means the
assumption of a contractual obligation to deliver the securities or currency
underlying the contract at a specified price at a specified future time. A
"purchase" of a futures contract (or a "long" futures position) means the
assumption of a contractual obligation to acquire the securities or currency
underlying the contract at a specified price at a specified future time. Certain
futures contracts are settled on a net cash payment basis rather than by the
sale and delivery of the securities or currency underlying the futures contract.
U.S. futures contracts have been designed by exchanges that have been designated
as "contract markets" by the Commodity Futures Trading Commission (the CFTC), an
agency of the U.S. Government, and must be executed through a futures commission
merchant (i.e., a brokerage firm) which is a member of the relevant contract
market. Futures contracts trade on these contract markets and the exchange's
affiliated clearing organization guarantees performance of the contracts as
between the clearing members of the exchange.

     At the time a futures contract is purchased or sold, the Fund must allocate
cash or securities as a deposit payment (initial margin). It is expected that
the initial margin on U.S. exchanges will vary from one-half of 1% to 4% of the
face value of the contract. Under certain circumstances, however, such as during
periods of high volatility, the Fund may be required by an exchange to increase
the level of its initial margin payment. Thereafter, the futures contract is
valued daily and the payment in cash of "variation margin" may be required, a
process known as "mark-to-the-market." Each day the Fund is required to provide
or is entitled to receive variation margin in an amount equal to any change in
the value of the contract since the preceding day.

                                      B-7


<PAGE>

     Although futures contracts by their terms may call for the actual delivery
or acquisition of underlying assets, in most cases the contractual obligation is
extinguished by offset before the expiration of the contract. The offsetting of
a contractual obligation is accomplished by buying (to offset an earlier sale)
or selling (to offset an earlier purchase) an identical futures contract calling
for delivery in the same month. Such a transaction cancels the obligation to
make or take delivery of the underlying commodity. When the Fund purchases or
sells futures contracts, the Fund will incur brokerage fees and related
transaction costs.

     The ordinary spreads between values in the cash and futures markets, due to
differences in the character of those markets, are subject to distortions. In
addition, futures contracts entail risks. First, all participants in the futures
market are subject to initial and variation margin requirements. Rather than
meeting additional variation margin requirements, investors may close futures
contracts through offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the liquidity of the
futures market depends on participants entering into offsetting transactions
rather than making or taking delivery. To the extent participants decide to make
or take delivery, liquidity in the futures market could be reduced, thus
producing price distortions. Third, from the point of view of speculators, the
margin deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Increased participation by speculators in
the futures market may cause temporary price distortions. Due to the possibility
of distortion, a correct forecast of general interest rate trends by the
investment adviser may still not result in a successful transaction.

     If the Fund seeks to hedge against a decline in the value of its portfolio
securities and sells futures contracts on other securities which historically
have had a high degree of positive correlation to the value of the portfolio
securities, the value of its portfolio securities might decline more rapidly
than the value of a poorly correlated futures contract rises. In that case, the
hedge will be less effective than if the correlation had been greater. In a
similar but more extreme situation, the value of the futures position might in
fact decline while the value of the portfolio securities holds steady or rises.
This would result in a loss that would not have occurred but for the attempt to
hedge.

Options on Futures Contracts

     The Fund will also enter into options on futures contracts for certain bona
fide hedging, yield enhancement and risk management purposes. The Fund may
purchase put and call options and write (i.e., sell) "covered" put and call
options on futures contracts that are traded on U.S. and foreign exchanges. An
option on a futures contract gives the purchaser the right, in return for the
premium paid, to assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the option exercise period. The writer of the
option is required upon exercise to assume a short futures position (if the
option is a call) or a long futures position (if the option is a put). Upon
exercise of the option, the assumption of offsetting futures positions by the
writer and holder of the option will be accompanied by delivery of the
accumulated cash balance in the writer's futures margin account which represents
the amount by which the market price of the futures contract at exercise,
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option on the futures contract.

     The Fund may only write (i.e., sell) covered put and call options on
futures contracts. The Fund will be considered "covered" with respect to a call
option it writes on a futures contract if the Fund owns the securities or
currency which is deliverable under the futures contract or an option to
purchase that futures contract having a strike price equal to or less than the
strike price of the "covered" option and having an expiration date not earlier
than the expiration date of the "covered" option, or if it segregates and
maintains with its Custodian for the term of the option cash, U.S. Government
securities or other liquid high-grade debt obligations equal to the fluctuating
value of the optioned futures. The Fund will be considered "covered" with
respect to a put option it writes on a futures contract if it owns an option to
sell that futures contract having a strike price equal to or greater than the
strike price of the "covered" option and having an expiration date not earlier
than the expiration date of the "covered" option, or if it segregates and
maintains with its Custodian for the term of the option cash, U.S. Government
securities or other liquid high-grade debt obligations at all times equal in
value to the exercise price of the put (less any initial margin deposited by the
Fund with its Custodian with respect to such put option). There is no limitation
on the amount of the Fund's assets which can be placed in the segregated
account.

     Writing a put option on a futures contract serves as a partial hedge
against an increase in the value of debt securities the Fund intends to acquire.
If the futures price at expiration of the option is above the exercise price,
the Fund will retain the full amount of the option premium which provides a
partial hedge against any increase that may have occurred in the price of the
debt securities the Fund intends to acquire. If the market price of the
underlying futures contract is below the exercise price when the option is
exercised, the Fund will incur a loss, which may be wholly or partially offset
by the decrease in the value of the securities the Fund intends to acquire.

     Writing a call option on a futures contract serves as a partial hedge
against a decrease in the value of the Fund's portfolio securities. If the
market price of the underlying futures contract at expiration of a written call
option is below the exercise price, the Fund will retain the full amount of the
option premium, thereby partially hedging against any decline that may have
occurred in the 


                                      B-8

<PAGE>

Fund's holdings of debt securities. If the futures price when the option is
exercised is above the exercise price, however, the Fund will incur a loss,
which may be wholly or partially offset by the increase in the value of the
securities in the Fund's portfolio which were being hedged.

     The Fund will purchase put options on futures contracts to hedge its
portfolio against the risk of a decline in the value of the debt securities it
owns as a result of rising interest rates or fluctuating currency exchange
rates. The Fund will also purchase call options on futures contracts as a hedge
against an increase in the value of securities the Fund intends to acquire as a
result of declining interest rates or fluctuating currency exchange rates.

     If the investment adviser wishes to shorten the effective average maturity
of the Fund, the Fund may sell a futures contract or a call option thereon, or
purchase a put option on that futures contract. If the investment adviser wishes
to lengthen the effective average maturity of the Fund, the Fund may buy a
futures contract or a call option thereon or sell a put option.

Interest Rate Futures Contracts and Options Thereon

     The Fund will purchase or sell interest rate futures contracts to take
advantage of or to protect the Fund against fluctuations in interest rates
affecting the value of debt securities which the Fund holds or intends to
acquire. For example, if interest rates are expected to increase, the Fund might
sell futures contracts on debt securities, the values of which historically have
a high degree of positive correlation to the values of the Fund's portfolio
securities. Such a sale would have an effect similar to selling an equivalent
value of the Fund's portfolio securities. If interest rates increase, the value
of the Fund's portfolio securities will decline, but the value of the futures
contracts to the Fund will increase at approximately an equivalent rate thereby
keeping the net asset value of the Fund from declining as much as it otherwise
would have. The Fund could accomplish similar results by selling debt securities
with longer maturities and investing in debt securities with shorter maturities
when interest rates are expected to increase. However, since the futures market
may be more liquid than the cash market, the use of futures contracts as a risk
management technique allows the Fund to maintain a defensive position without
having to sell its portfolio securities.

     Similarly, the Fund may purchase interest rate futures contracts when it is
expected that interest rates may decline. The purchase of futures contracts for
this purpose constitutes a hedge against increases in the price of debt
securities (caused by declining interest rates) which the Fund intends to
acquire. Since fluctuations in the value of appropriately selected futures
contracts should approximate that of the debt securities that will be purchased,
the Fund can take advantage of the anticipated rise in the cost of the debt
securities without actually buying them. Subsequently, the Fund can make the
intended purchase of the debt securities in the cash market and currently
liquidate its futures position. To the extent the Fund enters into futures
contracts for this purpose, it will maintain a segregated asset account with the
Fund's Custodian sufficient to cover the Fund's obligations with respect to such
futures contracts, which will consist of cash, U.S. Government securities or
other liquid high-grade debt obligations from its portfolio in an amount equal
to the difference between the fluctuating market value of such futures contracts
and the aggregate value of the initial margin deposited by the Fund with its
Custodian with respect to such futures contracts.

     The purchase of a call option on a futures contract is similar in some
respects to the purchase of a call option on an individual security. Depending
on the pricing of the option compared to either the price of the futures
contract upon which it is based or the price of the underlying debt securities,
it may or may not be less risky than ownership of the futures contract or
underlying debt securities. As with the purchase of futures contracts, when the
Fund is not fully invested it may purchase a call option on a futures contract
to hedge against a market advance due to declining interest rates.

     The purchase of a put option on a futures contract is similar to the
purchase of protective put options on portfolio securities. The Fund will
purchase a put option on a futures contract to hedge the Fund's portfolio
against the risk of rising interest rates and consequent reduction in the value
of portfolio securities.

     The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the securities which are deliverable upon
exercise of the futures contract. If the futures price at expiration of the
option is below the exercise price, the Fund will retain the full amount of the
option premium which provides a partial hedge against any decline that may have
occurred in the Fund's portfolio holdings. The writing of a put option on a
futures contract constitutes a partial hedge against increasing prices of the
securities which are deliverable upon exercise of the futures contract. If the
futures price at expiration of the option is higher than the exercise price, the
Fund will retain the full amount of the option premium which provides a partial
hedge against any increase in the price of debt securities which the Fund
intends to purchase. If a put or call option the Fund has written is exercised,
the Fund will incur a loss which will be reduced by the amount of the premium it
received. Depending on the degree of correlation between changes in the value of
its portfolio securities and changes in the value of its futures positions, the
Fund's losses from options on futures it has written may to some extent be
reduced or increased by changes in the value of its portfolio securities.


                                      B-9

<PAGE>

Currency Futures and Options Thereon

     Generally, foreign currency futures contracts and options thereon are
similar to the interest rate futures contracts and options thereon discussed
previously. By entering into currency futures and options thereon on U.S. and
foreign exchanges, the Fund will seek to establish the rate at which it will be
entitled to exchange U.S. dollars for another currency at a future time. By
selling currency futures, the Fund will seek to establish the number of dollars
it will receive at delivery for a certain amount of a foreign currency. In this
way, whenever the Fund anticipates a decline in the value of a foreign currency
against the U.S. dollar, the Fund can attempt to "lock in" the U.S. dollar value
of some or all of the securities held in its portfolio that are denominated in
that currency. By purchasing currency futures, the Fund can establish the number
of dollars it will be required to pay for a specified amount of a foreign
currency in a future month. Thus if the Fund intends to buy securities in the
future and expects the U.S. dollar to decline against the relevant foreign
currency during the period before the purchase is effected, the Fund can attempt
to "lock in" the price in U.S. dollars of the securities it intends to acquire.

     The purchase of options on currency futures will allow the Fund, for the
price of the premium and related transaction costs it must pay for the option,
to decide whether or not to buy (in the case of a call option) or to sell (in
the case of a put option) a futures contract at a specified price at any time
during the period before the option expires. If the investment adviser, in
purchasing an option, has been correct in its judgment concerning the direction
in which the price of a foreign currency would move as against the U.S. dollar,
the Fund may exercise the option and thereby take a futures position to hedge
against the risk it had correctly anticipated or close out the option position
at a gain that will offset, to some extent, currency exchange losses otherwise
suffered by the Fund. If exchange rates move in a way the Fund did not
anticipate, however, the Fund will have incurred the expense of the option
without obtaining the expected benefit; any such movement in exchange rates may
also thereby reduce rather than enhance the Fund's profits on its underlying
securities transactions.

Options on Currencies

     Instead of purchasing or selling futures or forward currency exchange
contracts, the Fund may attempt to accomplish similar objectives by purchasing
put or call options on currencies or by writing put options or covered call
options on currencies either on exchanges or in over-the-counter markets. A put
option gives the Fund the right to sell a currency at the exercise price until
the option expires. A call option gives the Fund the right to purchase a
currency at the exercise price until the option expires. Both options serve to
insure against adverse currency price movements in the underlying portfolio
assets designated in a given currency. The Fund's use of options on currencies
will be subject to the same limitations as its use of options or securities,
described above. Currency options may be subject to position limits which may
limit the ability of the Fund to fully hedge its positions by purchasing the
options.

     As in the case of interest rate futures contracts and options thereon, the
Fund may hedge against the risk of a decrease or increase in the U.S. dollar
value of a foreign currency denominated debt security which the Fund owns or
intends to acquire by purchasing or selling options contracts, futures contracts
or options thereon with respect to a foreign currency other than the foreign
currency in which such debt security is denominated, where the values of such
different currencies (vis-a-vis the U.S. dollar) historically have a high degree
of positive correlation.

Forward Currency Exchange Contracts

     The Fund may engage in currency transactions otherwise than on futures
exchanges to protect against future changes in the level of future currency
exchange rates. The Fund will conduct such currency exchange transactions either
on a spot, i.e., cash, basis at the rate then prevailing in the currency
exchange market or on a forward basis, by entering into forward contracts to
purchase or sell currency. A forward contract on foreign currency involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days agreed upon by the parties from the date of the
contract, at a price set on the date of the contract. The risk of shifting of a
forward currency contract will be substantially the same as a futures contract
having similar terms. The Fund's dealing in forward currency exchange will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is the purchase or sale of forward currency with
respect to specific receivables or payables of the Fund generally arising in
connection with the purchase or sale of its portfolio securities and accruals of
interest receivable and Fund expenses. Position hedging is the forward sale of
currency with respect to portfolio security positions denominated or quoted in
or convertible into that currency or in a different currency.


                                      B-10

<PAGE>

     The Fund may not position hedge with respect to a particular currency for
an amount greater than the aggregate market value (determined at the time of
making any sale of forward currency) of the securities held in its portfolio
denominated or quoted in, or currently convertible into, such currency. If the
Fund enters into a position-hedging transaction, the Fund's Custodian or
subcustodian will place cash or U.S. Government securities or other high-grade
debt obligations in a segregated account of the Fund in an amount equal to the
value of the Fund's total assets committed to the consummation of the given
forward contract. If the value of the securities placed in the segregated
account declines, additional cash or securities will be placed in the account so
that the value of the account will, at all times, equal the amount of the Fund's
commitment with respect to the forward contract.

     At or before the maturity of a forward sale contract, the Fund may either
sell a portfolio security and make delivery of the currency, or retain the
security and offset its contractual obligations to deliver the currency by
purchasing a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency which it is obligated to deliver.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund, at the time of execution of the offsetting transaction,
will incur a gain or a loss to the extent that movement has occurred in forward
contract prices. Should forward prices decline during the period between the
Fund's entering into a forward contract for the sale of a currency and the date
it enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
purchase is less than the price of the currency it has agreed to sell. Should
forward prices increase, the Fund will suffer a loss to the extent the price of
the currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. Closing out forward purchase contracts involves similar
offsetting transactions.

     The cost to the Fund of engaging in currency transactions varies with
factors such as the currency involved, the length of the contract period and the
market conditions then prevailing. Because forward transactions in currency
exchange are usually conducted on a principal basis, no fees or commissions are
involved. The use of foreign currency contracts does not eliminate fluctuations
in the underlying prices of the securities, but it does establish a rate of
exchange that can be achieved in the future. In addition, although forward
currency contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result if the
value of the currency increases.

     If a decline in any currency is generally anticipated by the investment
adviser, the Fund may not be able to contract to sell the currency at a price
above the level to which the currency is anticipated to decline.

Additional Risks of Options, Futures Contracts, 
Options on Futures Contracts and Forward Contracts

     Options, futures contracts, and options thereon and forward contracts on
securities and currencies may be traded on foreign exchanges. Such transactions
may not be regulated as effectively as similar transactions in the U.S., may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of governmental actions affecting trading in, or the prices of, foreign
securities. The value of such positions also could be adversely affected by (i)
other complex foreign political, legal and economic factors, (ii) lesser
availability than in the U.S. of data on which to make trading decisions, (iii)
delays in the Fund's ability to act upon economic events occurring in the
foreign markets during non-business hours in the U.S., (iv) the imposition of
different exercise and settlement terms and procedures and margin requirements
than in the U.S. and (v) lesser trading volume.

     Exchanges on which options, futures and options on futures are traded may
impose limits on the positions that the Fund may take in certain circumstances.

Special Risk Considerations Relating to Futures and Options Thereon

     The Fund's ability to establish and close out positions in futures
contracts and options on futures contracts will be subject to the development
and maintenance of liquid markets. Although the Fund generally will purchase or
sell only those futures contracts and options thereon for which there appears to
be a liquid market, there is no assurance that a liquid market on an exchange
will exist for any particular futures contract or option thereon at any
particular time. In the event no liquid market exists for a particular futures
contract or option thereon in which the Fund maintains a position, it will not
be possible to effect a closing transaction in that contract or to do so at a
satisfactory price and the Fund would have to either make or take delivery under
the futures contract or, in the case of a written option, wait to sell the
underlying securities until the option expires or is exercised or, in the case
of a purchased option, exercise the option. In the case of a futures contract or
an option on a futures contract which the Fund has written and which the Fund is
unable to close, the Fund would be required to maintain margin deposits on the
futures contract or option and to make variation margin payments until the
contract is closed.

     Successful use of futures contracts and options thereon and forward
contracts by the Fund is subject to the ability of the investment adviser to
predict correctly movements in the direction of interest and foreign currency
rates. If the investment adviser's expectations are not met, the Fund would be
in a worse position than if a hedging strategy had not been pursued. For
example, if the Fund has hedged against the possibility of an increase in
interest rates which would adversely affect the price of securities in its
portfolio and the price of such securities increases instead, the Fund will lose
part or all of the benefit of the increased value of its securities because it
will have offsetting losses in its futures positions. In addition, in such
situations, if the


                                      B-11

<PAGE>

Fund has insufficient cash to meet daily variation margin requirements, it may
have to sell securities to meet the requirements. These sales may, but will not
necessarily, be at increased prices which reflect the rising market. The Fund
may have to sell securities at a time when it is disadvantageous to do so.

Limitations on the Purchase and Sale of Futures Contracts and Options on Futures
Contracts

     The Fund will engage in transactions in futures contracts and options
thereon only for bona fide hedging, yield enhancement and risk management
purposes, in each case in accordance with the rules and regulations of the CFTC,
and not for speculation.

     In accordance with CFTC regulations, the Fund may not purchase or sell
futures contracts or options thereon for yield enhancement or risk management
purposes if immediately thereafter the sum of the amounts of initial margin
deposits on the Fund's existing futures and premiums paid for options on futures
would exceed 5% of the liquidation value of the Fund's total assets after taking
into account unrealized profits and unrealized losses on any such contracts;
provided, however, that in the case of an option that is in-the-money at the
time of the purchase, the in-the-money amount may be excluded in calculating the
5% limitation. The above restriction does not apply to the purchase and sale of
futures contracts and options thereon for bona fide hedging purposes. In
instances involving the purchase of futures contracts or call options thereon or
the writing of put options thereon by the Fund, an amount of liquid assets equal
to the market value of the futures contracts and options thereon (less any
related margin deposits), will be deposited in a segregated account with the
Fund's Custodian to cover the position, or alternative cover will be employed,
thereby insuring that the use of such instruments is unleveraged.

     The Fund's purchase and sale of futures contracts and purchase and writing
of options on futures contracts will be for the purpose of protecting its
portfolio against anticipated future changes in interest rates or foreign
currency exchange which might otherwise either adversely affect the value of the
Fund's portfolio securities or adversely affect the prices of securities that
the Fund intends to purchase at a later date, to change the effective duration
of the Fund's portfolio and to enhance the Fund's return. As an alternative to
bona fide hedging as defined by the CFTC, the Fund may comply with a different
standard established by CFTC rules with respect to futures contracts and options
thereon purchased by the Fund incidental to the Fund's activities in the
securities markets, under which the value of the assets underlying such
positions will not exceed the sum of (i) cash set aside in an identifiable
manner or short-term U.S. Government or other U.S. dollar denominated high-grade
short-term debt securities segregated for this purpose, (ii) cash proceeds on
existing investments due within thirty days and (iii) accrued profits on the
particular futures contract or option thereon.

     In addition, CFTC regulations may impose limitations on the Fund's ability
to engage in certain yield enhancement and risk management strategies. There are
no limitations on the Fund's use of futures contracts and options on futures
contracts beyond the restrictions set forth above.

     Although the Fund intends to purchase or sell futures and options on
futures only on exchanges where there appears to be an active market, there is
no guarantee that an active market will exist for any particular contract or at
any particular time. If there is not a liquid market at a particular time, it
may not be possible to close a futures position at such time, and, in the event
of adverse price movements, the Fund would continue to be required to make daily
cash payments of variation margin. However, when futures positions are used to
hedge portfolio securities, such securities will not be sold until the futures
positions can be liquidated. In such circumstances, an increase in the price of
securities, if any, may partially or completely offset losses on the futures
contracts.

Illiquid Securities

   
     The Fund may not invest more than 15% of its net assets in repurchase
agreements which have a maturity of longer than seven days or in other illiquid
securities, including securities that are illiquid by virtue of the absence of a
readily available market (either within or outside of the United States) or
legal or contractual restrictions on resale. Historically, illiquid securities
have included securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act of 1933, as
amended (Securities Act), securities which are otherwise not readily marketable
and repurchase agreements having a maturity of longer than seven days.
Securities which have not been registered under the Securities Act are referred
to as private placements or restricted securities and are purchased directly
from the issuer or in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted or other illiquid securities because of
the potential for delays on resale and uncertainty in valuation. Limitations on
resale may have an adverse effect on the marketability of portfolio securities
and a mutual fund might be unable to dispose of restricted or other illiquid
securities promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions within seven days. A mutual fund might also
have to register such restricted securities in order to dispose of them
resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.

     In recent years, however, a large institutional market has developed for
certain securities that are not registered under the Securities Act including
repurchase agreements, commercial paper, foreign securities, municipal
securities, convertible
    


                                      B-12

<PAGE>

   
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments. 

     Rule 144A under the Securities Act allows for a broader institutional
trading market for securities otherwise subject to restriction on resale to the
general public. Rule 144A establishes a "safe harbor" from the registration
requirements of the Securities Act for resales of certain securities to
qualified institutional buyers. The investment adviser anticipates that the
market for certain restricted securities such as institutional commercial paper
and foreign securities will expand further as a result of this regulation and
the development of automated systems for the trading, clearance and settlement
of unregistered securities of domestic and foreign issuers, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc.

     Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act and commercial paper for which there is a readily available
market will not be deemed to be illiquid. The investment adviser will monitor
the liquidity of such restricted securities subject to the supervision of the
Board of Directors. In reaching liquidity decisions, the investment adviser will
consider, inter alia, the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers wishing to purchase or sell
the security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security; and (4) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfer). In addition, in order for commercial paper that is issued in
reliance on Section 4(2) of the Securities Act to be considered liquid, (i) it
must be rated in one of the two highest rating categories by at least two
nationally recognized statistical rating organizations (NRSRO), or if only one
NRSRO rates the securities, by that NRSRO, or, if unrated, be of comparable
quality in the view of the investment adviser; and (ii) it must not be "traded
flat" (i.e., without accrued interest) or in default as to principal or
interest. Repurchase agreements subject to demand are deemed to have a maturity
equal to the notice period.
    

Repurchase Agreements

     The Fund may enter into repurchase agreements, wherein the seller agrees to
repurchase a security from the Fund at a mutually agreed-upon time and price.
The period of maturity is usually quite short, possibly overnight or a few days,
although it may extend over a number of months. The resale price is in excess of
the purchase price, reflecting an agreed-upon rate of return effective for the
period of time the Fund's money is invested in the security. The Fund's
repurchase agreements will at all times be fully collateralized in an amount at
least equal to the purchase price including accrued interest earned on the
underlying securities. The instruments held as collateral are valued daily, and
as the value of instruments declines, the Fund will require additional
collateral. If the seller defaults and the value of the collateral securing the
repurchase agreement declines, the Fund may incur a loss.

     The Fund participates in a joint repurchase account with other investment
companies managed by Prudential Mutual Fund Management, Inc. (PMF) pursuant to
an order of the Securities and Exchange Commission. On a daily basis, any
uninvested cash balances of the Fund may be aggregated with such of other
investment companies and invested in one or more repurchase agreements. Each
fund participates in the income earned or accrued in the joint account based on
the percentage of its investment.

Borrowing

     When the Fund borrows money for temporary, extraordinary or emergency
purposes or for the clearance of transactions, it will borrow no more than 20%
of its net assets and, in any event, the value of its total assets (i.e.,
including borrowings) less its liabilities (excluding borrowings) must at all
times be maintained at not less than 300% of all outstanding borrowings. If, for
any reason, including adverse market conditions, the Fund should fail to meet
this test, it will be required to reduce its borrowings within three days (not
including Sundays and holidays) to the extent necessary to meet the test. This
requirement may make it necessary for the Fund to sell a portion of its
portfolio securities at a time when it is disadvantageous to do so.

   
Reverse Repurchase Agreements and Dollar Rolls

     The Fund may enter into reverse repurchase agreements and dollar rolls. The
proceeds from such transactions will be used for the clearance of transactions
or to take advantage of investment opportunities.

     Reverse repurchase agreements involve sales by the Fund of securities
concurrently with an agreement by the Fund to repurchase the same assets at a
later date at a fixed price. During the reverse repurchase agreement period, the
Fund continues to receive principal and interest payments on these securities.

     Dollar rolls involve sales by the Fund of securities for delivery in the
current month and a simultaneous contract to repurchase substantially similar
(same type and coupon) securities on a specified future date from the same
party. During the roll



                                      B-13

<PAGE>

period, the Fund forgoes principal and interest paid on the securities. The Fund
is compensated by the difference between the current sales price and the forward
price for the future purchase (often referred to as the "drop") as well as by
the interest earned on the cash proceeds of the initial sale. A "covered roll"
is a specific type of dollar roll for which there is an offsetting cash position
or a cash equivalent security position which matures on or before the forward
settlement date of the dollar roll transaction.

     The Fund will establish a segregated account with its custodian in which it
will maintain cash, U.S. Government securities or other liquid high-grade debt
obligations equal in value to its obligations in respect of reverse repurchase
agreements and dollar rolls. Reverse repurchase agreements and dollar rolls
involve the risk that the market value of the securities retained by the Fund
may decline below the price of the securities the Fund has sold but is obligated
to repurchase under the agreement. In the event the buyer of securities under a
reverse repurchase agreement or dollar roll files for bankruptcy or becomes
insolvent, the Fund's use of the proceeds of the agreement may be restricted
pending a determination by the other party, or its trustee or receiver, whether
to enforce the Fund's obligation to repurchase the securities.

     Reverse repurchase agreements and dollar rolls, including covered dollar
rolls, are speculative techniques involving leverage and are considered
borrowings by the Fund for purposes of the percentage limitations applicable to
borrowings. See "Borrowings" above. The Fund does not presently intend to enter
into reverse repurchase agreements or dollar rolls.

Interest Rate Swap Transactions

     The Fund may enter into interest rate swaps. Interest rate swaps involve
the exchange by the Fund with another party of their respective commitments to
pay or receive interest, for example, an exchange of floating rate payments for
fixed-rate payments. The Fund expects to enter into these transactions primarily
to preserve a return or spread on a particular investment or portion of its
portfolio or to protect against any increase in the price of securities the Fund
anticipates purchasing at a later date. The Fund intends to use these
transactions as a hedge and not as a speculative investment. The risk of loss
with respect to interest rate swaps is limited to the net amount of interest
payments that the Fund is contractually obligated to make and will not exceed 5%
of the Fund's net assets. The use of interest rate swaps may involve investment
techniques and risks different from those associated with ordinary portfolio
transactions. If the investment adviser is incorrect in its forecast of market
values, interest rates and other applicable factors, the investment performance
of the Fund would diminish compared to what it would have been if this
investment technique was never used. The Fund does not presently intend to enter
into interest rate swap transactions.
    

Portfolio Turnover

   
     The Fund has no fixed policy with respect to portfolio turnover; however,
as a result of the Fund's investment policies, its annual portfolio turnover
rate may exceed 100% although the rate is not expected to exceed 300%. The
portfolio turnover rate is calculated by dividing the lesser of sales or
purchases of portfolio securities by the average monthly value of the Fund's
portfolio securities, excluding securities having a maturity at the date of
purchase of one year or less. High portfolio turnover may involve
correspondingly greater brokerage commissions and other transaction costs which
will be borne directly by the Fund. The Fund's portfolio turnover rate was 554%
and 361% for the fiscal years ended December 31, 1994 and 1993, respectively.
The Fund's portfolio turnover rate for the fiscal year ended December 31, 1994
was high as a result of the Subadviser's attempt to minimize the impact of
rising yields in the global bond markets on principal.

                            INVESTMENT RESTRICTIONS

     The following restrictions are fundamental policies. Fundamental policies
are those which cannot be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities. A "majority of the Fund's
outstanding voting securities," when used in this Statement of Additional
Information, means the lesser of (i) 67% of the voting shares represented at a
meeting at which more than 50% of the outstanding voting shares are present in
person or represented by proxy or (ii) more than 50% of the outstanding voting
shares.
    

     The Fund may not:

     1. Invest 25% or more of its total assets in any one industry. For this
purpose "industry" does not include the U.S. Government and agencies and
instrumentalities of the U.S. Government.

     2. Invest more than 5% of its total assets in securities of companies
having a record, together with predecessors, of less than three years of
continuous operation. This restriction shall not apply to obligations of the
U.S. Government and obligations issued by agencies of the U.S. Government or
instrumentalities established or sponsored by the U.S. Government. 

     3. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of transactions and except that the Fund may make
deposits on margin in connection with futures contracts and options.

     4. Purchase securities of other investment companies, except in accordance
with applicable limits under the Investment Company Act.


                                      B-14
<PAGE>

     5. Make short sales of securities or maintain a short position, with the
exception of "short sales against the box," provided that not more than 10% of
the Fund's net assets (taken at market value) is held as collateral for such
sales at any one time.

     6. Issue senior securities, borrow money or pledge its assets, except that
the Fund may borrow up to 20% of the value of its total assets (calculated when
the loan is made) for temporary or extraordinary or emergency purposes or for
the clearance of transactions. The Fund may pledge up to 20% of the value of its
total assets to secure such borrowings. For purposes of this restriction, the
purchase or sale of securities on a when-issued or delayed delivery basis,
collateral arrangements with respect to interest rate swaps, reverse repurchase
agreements or dollar roll transactions, options, futures contracts and options
on futures contracts and collateral arrangements with respect to initial and
variation margins are not deemed to be a pledge of assets or the issuance of a
senior security; and neither such arrangements, the purchase or sale of interest
rate futures contracts or other financial futures contracts or the purchase or
sale of related options nor obligations of the Fund to the Directors pursuant to
deferred compensation arrangements are deemed to be the issuance of a senior
security.

     7. Buy or sell commodities, commodity contracts, real estate or interests
in real estate (including mineral leases or rights), except that the Fund may
purchase and sell futures contracts, options on futures contracts and securities
secured by real estate or interests therein or issued by companies that invest
therein. Transactions in foreign currencies and forward contracts and options in
foreign currencies are not considered by the Fund to be transactions in
commodities or commodity contracts. 

     8. Make loans (except that purchases of debt securities in accordance with
the Fund's investment objective and policies and loans of portfolio securities
and repurchase agreements are not considered by the Fund to be "loans"). 

     9. Make investments for the purpose of exercising control or management
over the issuers of any security. 

     10. Act as an underwriter (except to the extent the Fund may be deemed to
be an underwriter in connection with the sale of securities in the Fund's
investment portfolio).

     In order to comply with certain state "blue sky" restrictions, the Fund
will not as a matter of operating policy:

          1. Invest in oil, gas and mineral leases.

          2. Invest in securities of any issuer if, to the knowledge of the
     Fund, any officer or director of the Fund or the Fund's Manager or
     Subadviser owns more than 1/2 of 1% of the outstanding securities of such
     issuer, and such officers and directors who own more than 1/2 of 1% own in
     the aggregate more than 5% of the outstanding securities of such issuer.

          3. Purchase warrants if as a result the Fund would then have more than
     5% of its assets (determined at the time of investment) invested in
     warrants. Warrants will be valued at the lower of cost or market and
     investment in warrants which are not listed on the New York Stock Exchange
     or American Stock Exchange or a major foreign exchange will be limited to
     2% of the Fund's net assets (determined at the time of investment). For
     purposes of this limitation, warrants acquired in units or attached to
     securities are deemed to be without value.

          4. Purchase any security if as a result the Fund would hold more than
     10% of any class of securities of any issuer (taking all common stock
     issues of an issuer as a single class, all preferred stock issues as a
     single class and all debt issues as a single class) or more than 10% of the
     outstanding voting securities of any issuer. 

          5. Invest more than 50% of its total assets in the securities of any
     one issuer. This limitation will not apply to securities which are direct
     obligations of the U.S. Government, its agencies or instrumentalities or to
     obligations of the government of Canada.

          6. Invest in securities of other registered investment companies,
     except by purchases in the open market involving only customary brokerage
     commissions and as a result of which not more than 5% of its total assets
     (taken at current value) would be invested in such securities, or except as
     part of a merger, consolidation or other acquisition.

          7. Invest more than 10% of its assets in securities which the Fund
     would be restricted from selling to the public without registration under
     the Securities Act, but excluding restricted securities eligible for resale
     pursuant to Rule 144A under the Securities Act that are determined to be
     liquid by the Board of Directors, securities of unseasoned issuers
     including their predecessors, which have been in operation for less than
     three years.

          8. Purchase or sell real property (including limited partnership
     interests), excluding readily available interests in real estate investment
     trusts or readily marketable securities of companies which invest in real
     estate.

     Whenever any fundamental investment policy or investment restriction states
a maximum percentage of the Fund's assets, it is intended that if the percentage
limitation is met at the time the investment is made, a later change in
percentage resulting from changing total or net asset values will not be
considered a violation of such policy. However, in the event that the Fund's
asset coverage for borrowings falls below 300%, the Fund will take prompt action
to reduce its borrowings, as required by applicable law.


                                      B-15

<PAGE>
<TABLE>
<CAPTION>

                             DIRECTORS AND OFFICERS
   
                                                    Principal Occupations and                                  Position
Name, Address and Age                                   Other Affiliations                                     with Fund
- ---------------------                               -------------------------                                  ---------

<S>                                <C>                                                                         <C>    
*Lawrence C. McQuade (67)          Vice Chairman of PMF (since 1988), Managing Director Investment             President and
 One Seaport Plaza                   Banking, of Prudential Securities  (1988-1991); Director, Czech and       Director
 New York, NY                        Slovak American Enterprise Fund (since October 1994), Quixote
                                     Corporation (since February 1992) and BUNZL, PLC (since June
                                     1991); formerly Director of Crazy Eddie Inc. (1987-1990) and 
                                     Director of Kaiser Tech Ltd., and Kaiser Aluminum and Chemical 
                                     Corp. (March 1987-November 1988); formerly Executive Vice 
                                     President and Director of W.R. Grace and Company until 1988; 
                                     President and Director of The High Yield Income Fund, Inc., The 
                                     Global Government Plus Fund, Inc. and The Global Total Return 
                                     Fund, Inc.                       

Thomas A. Owens, Jr. (71)          Consultant; Director of EMCORE Corp. (manufacturer of electronic            Director
c/o Prudential Mutual Fund           materials).
    Management, Inc.
    One Seaport Plaza
    New York, NY                                                                                    

*Richard A. Redeker (50)           President, Chief Executive Officer and Director (since October 1993),
 One Seaport Plaza                   PMF; Executive Vice President, Director and Member of the
 New York, NY                        Operating Committee (since October 1993), Prudential Securities;
                                     Director (since October 1993) of Prudential Securities Group, Inc. 
                                     (PSG); Executive Vice President, The Prudential Investment 
                                     Corporation (PIC) (since July 1994); Director (since January 1994) 
                                     of Prudential Mutual Fund Distributors, Inc. (PMFD) and Prudential
                                     Mutual Fund Services, Inc. (PMFS); formerly Senior Executive Vice 
                                     President and Director of Kemper Financial Services, Inc. 
                                     (September 1978-September 1993); Director of The Global Yield 
                                     Fund, Inc., The Global Government Plus Fund, Inc., The Global Total 
                                     Return Fund, Inc. and The High Yield Income Fund, Inc.

Gerald A. Stahl (54)               President, Rochester Lumber Company                                        Director
c/o Prudential Mutual Fund
    Management, Inc.
    One Seaport Plaza
    New York, NY                     

Stephen Stoneburn (50)             Senior Vice President and Managing Director, Cowles Business Media         Director
c/o Prudential Mutual Fund           (since January 1993); Senior Vice President (January 1991-1992)
    Management, Inc.                 and Publishing Vice President (May 1989-December 1990) of Gralla
    One Seaport Plaza                Publications a division of United Newspapers, U.K.; formerly Senior
    New York, NY                     Vice President of Fairchild Publications, Inc.  

Robert H. Wellington (72)          Retired (since January 1994); formerly Chairman and Chief Executive        Director
c/o Prudential Mutual Fund           Officer, AMSTED Industries, Incorporated (diversified manufacturer
    Management, Inc.                 of railroad, construction and industrial products).
    One Seaport Plaza
    New York, NY                

Robert F. Gunia (48)               Chief Administrative Officer (since July 1990), Director (since January    Vice President 
One Seaport Plaza                    1989) and Executive Vice President, Treasurer and Chief Financial
New York, NY                         Officer of PMF; Senior Vice President (since March 1987) of
                                     Prudential Securities; Executive Vice President, Treasurer,
                                     Comptroller and Director (since March 1991) of PMFD; Director 
                                     (since June 1987) of PMFS; Vice President and Director of The Asia 
                                     Pacific Fund, Inc. (since May 1989). 
     
<FN>
- ----------------  
*   "Interested" Director, as defined in the Investment Company Act, by reason 
    of his affiliation with Prudential Securities or PMF.
</FN>
</TABLE>

                                      B-16


<PAGE>
<TABLE>
<CAPTION>

                             DIRECTORS AND OFFICERS
   
                                                    Principal Occupations and                                  Position
Name, Address and Age                                   Other Affiliations                                     with Fund
- ---------------------                               -------------------------                                  ---------

<S>                                <C>                                                                         <C>    
Grace Torres (35)                  First Vice President (since March 1994) Prudential Mutual Fund              Treasurer and
One Seaport Plaza                    Management, Inc. First Vice President of Prudential Securities (since     Chief Accounting
New York, NY                          March 1994); prior thereto, Vice President of Bankers Trust              Officer
                                      Corporation.
 
S. Jane Rose (48)                  Senior Vice President (since January 1991) and Senior Counsel and           Secretary
One Seaport Plaza                    First Vice President (June 1987-December 1990) of PMF; Senior
New York, NY                         Vice President and Senior Counsel of Prudential Securities (since
                                     July 1992) formerly Vice President and Associate General Counsel of 
                                     Prudential Securities.
     
Deborah A. Docs (37)               Vice President and Associate General Counsel (since January 1993) of        Assistant
One Seaport Plaza                    PMF; Vice President and Associate General Counsel (since January          Secretary
New York, NY                         1993), of Prudential Securities; previously Associate Vice President
                                     (January 1990-December 1992) Assistant General Counsel 
                                     (November 1991-December 1992) and Assistant Vice President 
                                     (January 1989-December 1989) of PMF.
    
</TABLE>

     Directors and officers of the Fund are also trustees, directors and
officers of some or all of the other investment companies distributed by
Prudential Securities or Prudential Mutual Fund Distributors, Inc. (PMFD).

     The officers conduct and supervise the daily business operations of the
Fund, while the Directors, in addition to their functions set forth under
"Manager" and "Distributor," review such actions and decide on general policy.
   
     The Fund pays each of its Directors who is not an affiliated person of the
investment adviser annual compensation of $7,500 in addition to certain
out-of-pocket expenses. Directors received $4,691 in out-of-pocket expenses for
the fiscal year ended December 31, 1994. Directors may receive their Directors'
fees pursuant to a deferred fee agreement with the Fund. Under the terms of the
agreement, the Fund accrues daily the amount of such Directors' fees which
accrue interest at a rate equivalent to the prevailing rate applicable to 90-day
U.S. Treasury bills at the beginning of each calendar quarter or, pursuant to an
SEC exemptive order, at the daily rate of return of the Fund. Payment of the
interest so accrued is also deferred and accruals become payable at the option
of the Director. The Fund's obligation to make payments of deferred Board of
Directors' fees, together with interest thereon, is a general obligation of the
Fund.


     The following table sets forth the aggregate compensation paid by the Fund
to the Directors who are not affiliated with the Manager for the fiscal year
ended December 31, 1994 and the aggregate compensation paid to such Directors
for service on the Fund's board and that of all other funds managed by
Prudential Mutual Fund Management, Inc. (Fund Complex) for the calendar year
ended December 31, 1994.

<TABLE>
<CAPTION>
                                                                                                                          Total
                                                                                     Pension or                       Compensation
                                                                                     Retirement       Estimated        From Fund
                                                                      Aggregate   Benefits Accrued      Annual          And Fund
                                                                    Compensation  As Part of Fund    Benefits Upon    Complex Paid
    Name and Position                                                 From Fund      Expenses         Retirement      to Directors
    -----------------                                                 ---------     ----------       ------------     -------------
<S>                                                                     <C>            <C>               <C>           <C>   
Thomas A. Owens, Jr., Director ...................................      $7,500         None              N/A           $100,500(12)*
Gerald A. Stahl, Director ........................................      $7,500         None              N/A           $ 15,000(2)*
Stephen Stoneburn, Director ......................................      $7,500         None              N/A           $ 48,000(7)*
Robert H. Wellington, Director ...................................      $7,500         None              N/A           $ 27,000(3)*
<FN>
- ------------------------ 
*   Indicates number of funds in Fund Complex to which aggregate compensation
    relates.
</FN>
</TABLE>

     As of January 27, 1995, the Directors and officers of the Fund as a group
owned less than 1% of the outstanding common stock of the Fund. 

     As of January 27, 1995, Prudential Securities was record holder of
15,546,422 Class A shares (or 56% of the outstanding Class A shares), 2,276,447
Class B shares (or 75% of the outstanding Class B shares) and 0 Class C shares
(or 0% 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.
    

                                      B-17

<PAGE>

                                    MANAGER

   
     The manager of the Fund is Prudential Mutual Fund Management, Inc. (PMF or
the Manager), One Seaport Plaza, New York, New York 10292. PMF serves as manager
to all of the other investment companies that, together with the Fund, comprise
the "Prudential Mutual Funds." See "How the Fund is Managed" in the Prospectus.
As of January 31, 1995, PMF managed and/or administered open-end and closed-end
management investment companies with assets of approximately $45 billion and
according to the Investment Company Institute as of April 30, 1994, the
Prudential Mutual Funds were the 12th largest family of mutual funds in the
United States.
    

     Pursuant to the Management Agreement with the Fund (the Management
Agreement), PMF, subject to the supervision of the Fund's Board of Directors and
in conformity with the stated policies of the Fund, manages both the investment
operations of the Fund and the composition of the Fund's portfolio, including
the purchase, retention, disposition and loan of securities. In connection
therewith, PMF is obligated to keep certain books and records of the Fund. PMF
also administers the Fund's corporate affairs and, in connection therewith,
furnishes the Fund with office facilities, together with those ordinary clerical
and bookkeeping services which are not being furnished by State Street Bank and
Trust Company, the Fund's custodian, and Prudential Mutual Fund Services, Inc.
(PMFS or the Transfer Agent), the Fund's transfer and dividend disbursing agent.
The management services of PMF for the Fund are not exclusive under the terms of
the Management Agreement and PMF is free to, and does, render management
services to others.

   
     For its services, PMF receives, pursuant to the Management Agreement, a fee
at an annual rate of .75 of 1% of the Fund's average daily net assets. The fee
is computed daily and payable monthly. The Management Agreement also provides
that, in the event the expenses of the Fund (including the fees of PMF, but
excluding interest, taxes, brokerage commissions, distribution fees and
litigation and indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of the Fund's business) for any fiscal year
exceed the lowest applicable annual expense limitation established and enforced
pursuant to the statutes or regulations of any jurisdiction in which the Fund's
shares are qualified for offer and sale, the compensation due to PMF will be
reduced by the amount of such excess. Reductions in excess of the total
compensation payable to PMF will be paid by PMF to the Fund. No such reductions
were required during the fiscal year ended December 31, 1994. Currently, the
Fund believes that the most restrictive expense limitation of state securities
commissions is 2 1/2% of the Fund's average daily net assets up to $30 million,
2% of the next $70 million of such assets and 1 1/2% of such assets in excess of
$100 million.
    

     In connection with its management of the business affairs of the Fund, PMF
bears the following expenses:

     (a) the salaries and expenses of all of its and the Fund's personnel except
the fees and expenses of members of the Board of Directors who are not
affiliated persons of PMF or the Fund's investment adviser;

     (b) all expenses incurred by PMF or by the Fund in connection with managing
the ordinary course of the Fund's business, other than those assumed by the Fund
as described below; and

     (c) the costs and expenses payable to The Prudential Investment Corporation
(PIC) pursuant to the subadvisory agreement between PMF and PIC (the Subadvisory
Agreement).

   
     Under the terms of the Management Agreement, the Fund is responsible for
the payment of the following expenses: (a) the fees payable to the Manager, (b)
the fees and expenses of Directors who are not affiliated persons of the Manager
or the Fund's investment adviser, (c) the fees and certain expenses of the
Custodian and Transfer Agent, including the cost of providing records to the
Manager in connection with its obligation of maintaining required records of the
Fund and of pricing the Fund's shares, (d) the charges and expenses of legal
counsel and independent accountants for the Fund, (e) brokerage commissions and
any issue or transfer taxes chargeable to the Fund in connection with its
securities transactions, (f) all taxes and corporate fees payable by the Fund to
governmental agencies, (g) the fees of any trade associations of which the Fund
may be a member, (h) the cost of stock certificates representing shares of the
Fund, (i) the cost of fidelity and liability insurance, (j) certain organization
expenses of the Fund and the fees and expenses involved in registering and
maintaining registration of the Fund and of its shares with the Securities and
Exchange Commission, registering the Fund and qualifying its shares under state
securities laws, including the preparation and printing of the Fund's
registration statements and prospectuses for such purposes, (k) allocable
communications expenses with respect to investor services and all expenses of
shareholders' and Board of Directors' meetings and of preparing, printing and
mailing reports, proxy statements and prospectuses to shareholders in the amount
necessary for distribution to the shareholders, (l) litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Fund's business and (m) distribution fees.
    


                                      B-18

<PAGE>

   
     The Management Agreement provides that PMF will not be liable for any error
of judgment or for any loss suffered by the Fund in connection with the matters
to which the Management Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard of duty. The
Management Agreement provides that it will terminate automatically if assigned,
and that it may be terminated without penalty by either party upon not more than
60 days' nor less than 30 days' written notice. The Management Agreement will
continue in effect for a period of more than two years from the date of
execution only so long as such continuance is specifically approved at least
annually in conformity with the Investment Company Act. The Management Agreement
was last approved by the Board of Directors of the Fund, including a majority of
the Directors who are not parties to the contract or interested persons of any
such party as defined in the Investment Company Act, on May 11, 1994 and by
shareholders of the Fund on February 25, 1988.

     PMF earned management fees of $2,210,372 for the fiscal year ended December
31, 1994, $2,934,112 for the fiscal year ended December 31, 1993, $2,203,927,
for the fiscal period ended December 31, 1992 and $2,997,852 for the year ended
February 29, 1992.
    


     PMF has entered into the Subadvisory Agreement with PIC (the Subadviser), a
wholly-owned subsidiary of The Prudential Insurance Company of America
(Prudential). The Subadvisory Agreement provides that PIC will furnish
investment advisory services in connection with the management of the Fund. In
connection therewith, PIC is obligated to keep certain books and records of the
Fund; PMF continues to have responsibility for all investment advisory services
pursuant to the Management Agreement and supervises PIC's performance of such
services. PIC is reimbursed by PMF for the reasonable costs and expenses
incurred by PIC in furnishing services to PMF.


   
     The Subadvisory Agreement was last approved by the Board of Directors,
including a majority of the Board of Directors who are not parties to the
contract or interested persons of any such party as defined in the Investment
Company Act, on May 11, 1994 and was approved by shareholders of the Fund on May
12, 1988.
    

     The Subadvisory Agreement provides that it will terminate in the event of
its assignment (as defined in the Investment Company Act) or upon the
termination of the Management Agreement. The Subadvisory Agreement may be
terminated by the Fund, PMF or PIC upon not more than 60 days' nor less than 3O
days' written notice. The Subadvisory Agreement provides that it will continue
in effect for a period of more than two years from its execution only so long as
such continuance is specifically approved at least annually in accordance with
the requirements of the Investment Company Act.

   
     The Manager and the Subadviser are subsidiaries of The Prudential Insurance
Company of America (Prudential) which, as of December 31, 1993 is one of the
largest financial institutions in the world and the largest insurance company in
North America. Prudential has been engaged in the insurance business since 1875.
In July 1994, Institutional Investor ranked Prudential the second largest
institutional money manager of the 300 largest money management organizations in
the United States as of December 31, 1993.
    

                                  DISTRIBUTOR

     Prudential Mutual Fund Distributors, Inc. (PMFD), One Seaport Plaza, New
York, New York 10292, acts as the distributor of the Class A shares of the Fund.
Prudential Securities, One Seaport Plaza, New York, New York 10292 acts as the
distributor of the Class B and Class C shares of the Fund.

     Pursuant to separate Distribution and Service Plans (the Class A Plan, the
Class B Plan and the Class C Plan, collectively the Plans) adopted by the Fund
under Rule 12b-1 under the Investment Company Act and separate distribution
agreements (the Distribution Agreements), PMFD and Prudential Securities
(collectively, the Distributor) incur the expenses of distributing the Fund's
Class A, Class B and Class C shares, respectively. See "How the Fund is
Managed--Distributor" in the Prospectus.

     Prior to October 7, 1991, the Fund operated as a closed-end fund and
offered only one class of shares (the then existing Class A shares). On April
18, 1991, the Board of Directors, including a majority of the Directors who are
not interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Class A or Class B Plan or in any agreement
related to either Plan (the Rule 12b-1 Directors), at a meeting called for the
purpose of voting on the Class A Plan, adopted a plan of distribution for the
Class A shares of the Fund. The Class A Plan was approved by shareholders of the
Fund on August 8, 1991. On April 18, 1991, the Rule 12b-1 Directors, at a
meeting called for the purpose of voting on the Class B Plan, adopted a plan of
distribution for the Class B shares of the Fund. The Class B Plan was approved
by Class B shareholders on December 3, 1992.

   
     On May 12, 1993, the Directors, including a majority of the Rule 12b-1
Directors, at a meeting called for the purpose of voting on each Plan, approved
the continuance of the Plans and Distribution Agreements and approved
modifications of the Fund's Class A and Class B Plans and Distribution
Agreements to conform them with recent amendments to the National Association of
    


                                      B-19

<PAGE>

   
Securities Dealers, Inc. (NASD) maximum sales charge rule described below. As so
modified, the Class A Plan provides that (i) up to .25 of 1% of the average
daily net assets of the Class A shares may be used to pay for personal service
and/or the maintenance of shareholder accounts (service fee) and (ii) total
distribution fees (including the service fee of .25 of 1%) may not exceed .30 of
1%. As so modified, the Class B Plan provides that (i) up to .25 of 1% of the
average daily net assets of the Class B shares may be paid as a service fee and
(ii) up to .75 of 1% (including the service fee) may be used as reimbursement
for distribution-related expenses with respect to the Class B shares
(asset-based sales charge). On May 12, 1993, the Board of Directors, including a
majority of the Rule 12b-1 Directors, at a meeting called for the purpose of
voting on each Plan, adopted a plan of distribution for the Class C shares of
the Fund and approved further amendments to the plans of distribution for the
Fund's Class A and Class B shares changing them from reimbursement type plans to
compensation type plans. The Plans were last approved by the Board of Directors,
including a majority of the Rule 12b-1 Directors, on May 11, 1994. The Class A
Plan, as amended, was approved by Class A and Class B shareholders, and the
Class B Plan, as amended, was approved by Class B shareholders, on July 19,
1994. The Class C Plan was approved by the sole shareholder of Class C shares on
August 1, 1994.

     Class A Plan. For the fiscal year ended December 31, 1994, PMFD received
payment of $394,323 under the Class A Plan. This amount was primarily expended
for payment of account servicing fees to financial advisers and other persons
who sell Class A shares.

     In addition, for the fiscal year ended December 31, 1994, PMFD received
approximately $32,800 in initial sales charges.

     Class B Plan. For the fiscal year ended December 31, 1994, the Distributor
received $238,759 from the Fund under the Class B Plan. It is estimated that the
Distributor spent approximately $173,200 on behalf of the Fund during such year.
It is estimated that of the latter amount approximately 19.1% ($33,000) was
spent on printing and mailing of prospectuses to other than current
shareholders; 3.1% ($5,300) was spent on interest and/or carrying costs; 8.5%
($14,800) on compensation to Pruco Securities Corporation, an affiliated
broker-dealer (Prusec), for commissions to its representatives and other
expenses, including an allocation on account of overhead and other branch office
distribution-related expenses, incurred by it for its distribution of Fund
shares; and 69.3% ($120,100) on the aggregate of (i) payments of commissions to
financial advisers 40.9% ($70,900) and (ii) an allocation of overhead and other
branch office distribution related expenses 28.4% ($49,200). The term "overhead
and other branch office distribution-related expenses" represents (a) the
expenses of operating the Distributor's branch offices in connection with the
sale of Fund shares, including lease costs, the salaries and employee benefits
of operations and sales support personnel, utility costs, communications costs
and the costs of stationery and supplies, (b) the costs of client sales
seminars, (c) expenses of mutual fund sales coordinators to promote the sale of
Fund shares and (d) other incidental expenses relating to branch promotion of
Fund sales.

     Prudential Securities also receives the proceeds of contingent deferred
sales charges paid by holders of Class B shares upon certain redemptions of
Class B shares. See "Shareholder Guide--How to Sell Your Shares--Contingent
Deferred Sales Charges" in the Prospectus. For the fiscal year ended December
31, 1994, Prudential Securities received $133,200 in contingent deferred sales
charges.

     Class C Plan. Prudential Securities receives the proceeds of contingent
deferred sales charges paid by investors upon certain redemptions of Class C
shares. See "Shareholder Guide--How to Sell Your Shares--Contingent Deferred
Sales Charges" in the Prospectus. For the period August 1, 1994 (inception of
Class C shares) through December 31, 1994, Prudential Securities received no
contingent deferred sales charges attributable to Class C shares.
    

     The Class A, Class B and Class C Plans continue in effect from year to
year, provided that each such continuance is approved at least annually by a
vote of the Board of Directors, including a majority vote of the Rule 12b-1
Directors, cast in person at a meeting called for the purpose of voting on such
continuance. The Class A and Class B Plans may be terminated at any time,
without penalty, by the vote of a majority of the Rule 12b-1 Directors or by the
vote of the holders of a majority of the outstanding shares of the Fund on not
more than 30 days' written notice to any other party to the Plans. The Plans may
not be amended to increase materially the amounts to be spent for the services
described therein without approval by the shareholders of the applicable class
(by both Class A and Class B shareholders, voting separately, in the case of
material amendments to the Class A Plan), and all material amendments are
required to be approved by the Board of Directors in the manner described above.
Each Plan will automatically terminate in the event of its assignment. The Fund
will not be contractually obligated to pay expenses incurred under any Plan if
they are terminated or not continued.

     Pursuant to each Plan, the Board of Directors will review at least
quarterly a written report of the distribution expenses incurred on behalf of
each class of shares of the Fund by the Distributor. The report will include an
itemization of the distribution expenses and the purposes of such expenditures.
In addition, as long as the Plans remain in effect, the selection and nomination
of Rule 12b-1 Directors shall be committed to the Rule 12b-1 Directors.

                                      B-20

<PAGE>

   
     Pursuant to each Distribution Agreement, the Fund has agreed to indemnify
PMFD and Prudential Securities to the extent permitted by applicable law against
certain liabilities under the Securities Act of 1933. Each Distribution
Agreement was last approved by the Board of Directors, including a majority of
the Rule 12b-1 Directors, on May 11, 1994.
    

     NASD Maximum Sales Charge Rule. Pursuant to rules of the NASD, the
Distributor is required to limit aggregate initial sales charges, deferred sales
charges and asset-based sales charges to 6.25% of total gross sales of each
class of shares. Interest charges on unreimbursed distribution expenses equal to
the prime rate plus one percent per annum may be added to the 6.25% limitation.
Sales from the reinvestment of dividends and distributions are not included in
the calculation of the 6.25% limitation. The annual asset-based sales charge on
shares of the Fund may not exceed .75 of 1% per class. The 6.25% limitation
applies to each class of the Fund rather than on a per shareholder basis. If
aggregate sales charges were to exceed 6.25% of total gross sales of any class,
all sales charges on shares of that class would be suspended.

   
     On October 21, 1993, PSI entered into an omnibus settlement with the SEC,
state securities regulators in 51 jurisdictions and the NASD to resolve
allegations that PSI sold interests in more than 700 limited partnerships (and a
limited number of other types of securities) from January 1, 1980 through
December 31, 1990, in violation of securities laws to persons for whom such
securities were not suitable in light of the individuals' financial condition or
investment objectives. It was also alleged that the safety, potential returns
and liquidity of the investments had been misrepresented. The limited
partnerships principally involved real estate, oil and gas producing properties
and aircraft leasing ventures. The SEC Order (i) included findings that PSI's
conduct violated the federal securities laws and that an order issued by the SEC
in 1986 requiring PSI to adopt, implement and maintain certain supervisory
procedures had not been complied with; (ii) directed PSI to cease and desist
from violating the federal securities laws and imposed a $10 million civil
penalty; and (iii) required PSI to adopt certain remedial measures including the
establishment of a Compliance Committee of its Board of Directors. Pursuant to
the terms of the SEC settlement, PSI established a settlement fund in the amount
of $330,000,000 and procedures, overseen by a court approved Claims
Administrator, to resolve legitimate claims for compensatory damages by
purchasers of the partnership interests. PSI has agreed to provide additional
funds, if necessary, for that purpose. PSI's settlement with the state
securities regulators included an agreement to pay a penalty of $500,000 per
jurisdiction. PSI consented to a censure and to the payment of a $5,000,000 fine
in settling the NASD action. In setting the above referenced matters, PSI
neither admitted nor denied the allegations asserted against it.

     On January 18, 1994, PSI agreed to the entry of a Final Consent Order and a
Parallel Consent Order by the Texas Securities Commissioner. The firm also
entered into a related agreement with the Texas Securities Commissioner. The
allegations were that the firm had engaged in improper sales practices and other
improper conduct resulting in pecuniary losses and other harm to investors
residing in Texas with respect to purchases and sales of limited partnership
interests during the period of January 1, 1980 through December 31, 1990.
Without admitting or denying the allegations, PSI consented to a reprimand,
agreed to cease and desist from future violations, and to provide voluntary
donations to the State of Texas in the aggregate amount of $1,500,000. The firm
agreed to suspend the creation of new customer accounts, the general
solicitation of new accounts, and the offer for sale of securities in or from
PSI's North Dallas office to new customers during a period of twenty consecutive
business days, and agreed that its other Texas offices would be subject to the
same restrictions for a period of five consecutive business days. PSI also
agreed to institute training programs for its securities salesmen in Texas.

     On October 27, 1994, Prudential Securities Group, Inc. and PSI entered into
agreements with the United States Attorney deferring prosecution (provided PSI
complies with the terms of the agreement for three years) for any alleged
criminal activity related to the sale of certain limited partnership programs
from 1983 to 1990. In connection with these agreements, PSI agreed to add the
sum of $330,000,000 to the Fund established by the SEC and executed a
stipulation providing for a reversion of such funds to the United States Postal
Inspection Service. PSI further agreed to obtain a mutually acceptable outside
director to sit on the Board of Directors of PSG and the Compliance Committee of
PSI. The new director will also serve as an independent "ombudsman" whom PSI
employees can call anonymously with complaints about ethics and compliance.
Prudential Securities shall report any allegations or instances of criminal
conduct and material improprieties to the new director. The new director will
submit compliance reports which shall identify all such allegations or instances
of criminal conduct and material improprieties every three months for a
three-year period.
    

                      PORTFOLIO TRANSACTIONS AND BROKERAGE

     The Manager is responsible for decisions to buy and sell securities,
futures contracts and options on such securities and futures for the Fund, the
selection of brokers, dealers and futures commission merchants to effect the
transactions and the negotiation of brokerage commissions, if any. (For purposes
of this section, the term "Manager" includes the Subadviser.) On a national
securities exchange, broker-dealers may receive negotiated brokerage commissions
on Fund portfolio transactions, including options, futures, and options on
futures transactions and the purchase and sale of underlying securities upon the

                                      B-21
<PAGE>

exercise of options. On a foreign securities exchange, commissions may be fixed.
Orders may be directed to any broker or futures commission merchant including,
to the extent and in the manner permitted by applicable law, Prudential
Securities and its affiliates.

     In the over-the-counter market, securities are generally traded on a "net"
basis with dealers acting as principal for their own accounts without a stated
commission, although the price of the security usually includes a profit to the
dealer. In underwritten offerings, securities are purchased at a fixed price
which includes an amount of compensation to the underwriter, generally referred
to as the underwriter's concession or discount. On occasion, certain money
market instruments and agency securities may be purchased directly from the
issuer, in which case no commissions or discounts are paid. The Fund will not
deal with Prudential Securities in any transaction in which Prudential
Securities acts as principal. Thus, it will not deal in over-the-counter market
with Prudential Securities acting as market maker, and it will not execute a
negotiated trade with Prudential Securities if execution involves Prudential
Securities' acting as principal with respect to any part of the Fund's order.

     In placing orders for portfolio securities of the Fund, the Manager is
required to give primary consideration to obtaining the most favorable price and
efficient execution. This means that the Manager will seek to execute each
transaction at a price and commission, if any, which provide the most favorable
total cost or proceeds reasonably attainable in the circumstances. While the
Manager generally seeks reasonably competitive spreads or commissions, the Fund
will not necessarily be paying the lowest spread or commission available. Within
the framework of this policy, the Manager will consider the research and
investment services provided by brokers, dealers or futures commission merchants
who effect or are parties to portfolio transactions of the Fund, the Manager or
the Manager's other clients. Such research and investment services are those
which brokerage houses customarily provide to institutional investors and
include statistical and economic data and research reports on particular
companies and industries. Such services are used by the Manager in connection
with all of its investment activities, and some of such services obtained in
connection with the execution of transactions for the Fund may be used in
managing other investment accounts. Conversely, brokers, dealers or futures
commission merchants furnishing such services may be selected for the execution
of transactions of such other accounts, whose aggregate assets are far larger
than the Fund, and the services furnished by such brokers, dealers or futures
commission merchants may be used by the Manager in providing investment
management for the Fund. Commission rates are established pursuant to
negotiations with the broker, dealer or futures commission merchant based on the
quality and quantity of execution services provided by the broker, dealer or
futures commission merchant in the light of generally prevailing rates. The
Manager's policy is to pay higher commissions to brokers and futures commission
merchants, other than Prudential Securities, for particular transactions than
might be charged if a different broker had been selected, on occasions when, in
the Manager's opinion, this policy furthers the objective of obtaining best
price and execution. In addition, the Manager is authorized to pay higher
commissions on brokerage transactions for the Fund to brokers and futures
commission merchants other than Prudential Securities in order to secure
research and investment services described above, subject to review by the
Fund's Board of Directors from time to time as to the extent and continuation of
this practice. The allocation of orders among brokers and futures commission
merchants and the commission rates paid are reviewed periodically by the Fund's
Board of Directors. Portfolio securities may not be purchased from any
underwriting or selling syndicate of which Prudential Securities (or any
affiliate), during the existence of the syndicate, is a principal underwriter
(as defined in the Investment Company Act), except in accordance with rules of
the Securities and Exchange Commission. This limitation, in the opinion of the
Fund, will not significantly affect the Fund's ability to pursue its present
investment objective. However, in the future, in other circumstances, the Fund
may be at a disadvantage because of this limitation in comparison to other funds
with similar objectives but not subject to such limitations.

     Subject to the above considerations, Prudential Securities (or any
affiliate) may act as a broker or futures commission merchant for the Fund. In
order for Prudential Securities (or any affiliate) to effect any portfolio
transactions for the Fund, the commissions, fees or other remuneration received
by Prudential Securities (or any affiliate) must be reasonable and fair compared
to the commissions, fees or other remuneration paid to other such brokers or
futures commission merchants in connection with comparable transactions
involving similar securities or futures contracts being purchased or sold on an
exchange or board of trade during a comparable period of time. This standard
would allow Prudential Securities (or any affiliate) to receive no more than the
remuneration which would be expected to be received by an unaffiliated broker or
futures commission merchant in a commensurate arm's-length transaction.
Furthermore, the Board of Directors of the Fund, including a majority of the
non-interested Directors, have adopted procedures which are reasonably designed
to provide that any commissions, fees or other remuneration paid to Prudential
Securities (or any affiliate) are consistent with the foregoing standard. In
accordance with Section 11(a) of the Securities Exchange Act of 1934, Prudential
Securities may not retain compensation for effecting transactions on a national
securities exchange for the Fund unless the Fund has expressly authorized the
retention of such compensation. Prudential Securities must furnish to the Fund
at least annually a statement setting forth the total amount of all compensation
retained by Prudential Securities for transactions effected by the Fund during
the applicable period. Brokerage

                                      B-22

<PAGE>

transactions with Prudential Securities (or any affiliate) are also subject
to such fiduciary standards as may be imposed upon Prudential Securities (or
such affiliates) by applicable law.

   
     The Fund paid no brokerage commissions to Prudential Securities for the
fiscal year ended December 31, 1994, December 31, 1993, the fiscal period ended
December 31, 1992 and the year ended February 29, 1992.
    

                     PURCHASE AND REDEMPTION OF FUND SHARES

     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). See "Shareholder
Guide--How to Buy Shares of the Fund" in the Prospectus.

     Each class of shares represents an interest in the same portfolio of
investments of the Fund and has the same rights, except that (i) each class
bears the separate expenses of its Rule 12b-1 distribution and service plan,
(ii) each class has exclusive voting rights with respect to its plan (except
that the Fund has agreed with the Securities and Exchange Commission in
connection with the offering of a conversion feature on Class B shares to submit
any amendment of the Class A distribution and service plan to both Class A and
Class B shareholders) and (iii) only Class B shares have a conversion feature.
See "Distributor." Each class also has separate exchange privileges. See
"Shareholder Investment Account--Exchange Privilege."

Specimen Price Make-up

   
     Under the current distribution arrangements between the Fund and the
Distributor, Class A shares of the Fund are sold at a maximum sales charge of
3.0% and Class B* and Class C* shares are sold at net asset value. Using the
Fund's net asset value at December 31, 1994, the maximum offering price of the
Fund's shares is as follows:

 Class A
 Net asset value and redemption price per Class A share .................. $7.32
                                                                           -----
 Maximum sales charge (3.0% of offering price) ...........................   .23
                                                                           -----
 Offering price to public ................................................ $7.55
                                                                           =====
 
 Class B
 Net asset value, offering price and redemption price per Class B share*.. $7.33
                                                                           =====

 Class C
 Net asset value, offering price and redemption price per Class C share*.. $7.33
                                                                           =====

 ---------
 *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.

Reduction and Waiver of Initial Sales Charges--Class A Shares

     Combined Purchase and Cumulative Purchase Privilege. If an investor or
eligible group of related investors purchases Class A shares of the Fund
concurrently with Class A shares of other Prudential Mutual Funds, the purchases
may be combined to take advantage of the reduced sales charges applicable to
larger purchases. See the table of breakpoints under "Shareholder
Guide--Alternative Purchase Plan in the Prospectus.
    

     An eligible group of related Fund investors includes any combination of the
following:

     (a) an individual;

     (b) the individual's spouse, their children and their parents;

     (c) the individual's and spouse's Individual Retirement Account (IRA);

                                      B-23

<PAGE>

     (d) any company controlled by the individual (a person, entity or group
         that holds 25% or more of the outstanding voting securities of a
         company will be deemed to control the company, and a partnership will
         be deemed to be controlled by each of its general partners);

     (e) a trust created by the individual, the beneficiaries of which are the
         individual, his or her spouse, parents or children;

     (f) a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act account
         created by the individual or the individual's spouse; and

     (g) one or more employee benefit plans of a company controlled by an
         individual.

     In addition, an eligible group of related Fund investors may include a
employer (or group of related employers) and one or more qualified retirement
plans of such employer or employers (an employer controlling, controlled by or
under common control with another employer is deemed related to that employer).

     The Distributor must be notified at the time of purchase that the investor
is entitled to a reduced sales charge. The reduced sales charges will be granted
subject to confirmation of the investor's holdings. The Combined Purchase and
Cumulative Purchase Privilege does not apply to individual participants in any
retirement or group plans.

     Rights of Accumulation. Reduced sales charges are also available through
Rights of Accumulation, under which an investor or an eligible group of related
investors, as described above under "Combined Purchase and Cumulative Purchase
Privilege," may aggregate the value of their existing holdings of shares of the
Fund and shares of other Prudential Mutual Funds (excluding money market funds
other than those acquired pursuant to the exchange privilege) to determine the
reduced sales charge. However, the value of shares held directly with the
Transfer Agent and through Prudential Securities will not be aggregated to
determine the reduced sales charge. All shares must be held either directly with
the Transfer Agent or through Prudential Securities. The value of existing
holdings for purposes of determining the reduced sales charge is calculated
using the maximum offering price (net asset value plus maximum sales charge) as
of the previous business day. See "Net Asset Value" in the Prospectus. The
Distributor must be notified at the time of purchase that the investor is
entitled to a reduced sales charge. The reduced sales charges will be granted
subject to confirmation of the investor's holdings. Rights of accumulation are
not available to individual participants in any retirement or group plans.

   
     Letter of Intent. Reduced sales charges are available to investors (or an
eligible group of related investors), including retirement and group plans, who
enter into a written Letter of Intent providing for the purchase, within a
thirteen-month period, of shares of the Fund and shares of other Prudential
Mutual Funds. All shares of the Fund and shares of other Prudential Mutual Funds
(excluding money market funds other than those acquired pursuant to the exchange
privilege) which were previously purchased and are still owned are also included
in determining the applicable reduction. However, the value of shares held
directly with the Transfer Agent and through Prudential Securities will not be
aggregated to determine the reduced sales charge. All shares must be held either
directly with the Transfer Agent or through Prudential Securities. The
Distributor must be notified at the time of purchase that the investor is
entitled to a reduced sales charge. The reduced sales charge will be granted
subject to confirmation of the investor's holdings. Letters of Intent are not
available to individual participants in any retirement or group plans.

     A Letter of Intent permits a purchaser to establish a total investment goal
to be achieved by any number of investments over a thirteen-month period. Each
investment made during the period will receive the reduced sales charge
applicable to the amount represented by the goal, as if it were a single
investment. Escrowed Class A shares totaling 5% of the dollar amount of the
Letter of Intent will be held by the Transfer Agent in the name of the
purchaser, except in the case of retirement and group plans where the employer
or plan sponsor will be responsible for paying any applicable sales charge. The
effective date of a Letter of Intent may be back-dated up to 90 days, in order
that any investments made during this 90-day period, valued at the purchaser's
cost, can be applied to the fulfillment of the Letter of Intent goal, except in
the case of retirement and group plans..

     The Letter of Intent does not obligate the investor to purchase, nor the
Fund to sell, the indicated amount. In the event the Letter of Intent goal is
not achieved within the thirteen-month period, the purchaser (or the employer or
plan sponsor in the case of any retirement or group plan) is required to pay the
difference between the sales charge otherwise applicable to the purchases made
during this period and sales charges actually paid. Such payment may be made
directly to the Distributor or, if not paid, the Distributor will liquidate
sufficient escrowed shares to obtain such difference. If the goal is exceeded in
an amount which qualifies for a lower sales charge, a price adjustment is made
by refunding to the purchaser the amount of excess sales charge, if any, paid
during the thirteen-month period. Investors electing to purchase Class A shares
of the Fund pursuant to a Letter of Intent should carefully read such Letter of
Intent.


                                      B-24

<PAGE>

Waiver of the Contingent Deferred Sales Charge--Class B Shares.

     The contingent deferred sales charge is waived under circumtances described
in the Prospectus. See "Shareholder Guide--How to Sell Your Shares--Waiver of
Contingent Deferred Sales Charges--Class B Shares" in the Prospectus. In
connection with these waivers, the Transfer Agent will require you to submit the
supporting documentation set forth below.

Category of Waiver                 Required Documentation
Death                              A copy of the shareholder's death certificate
                                   or, in the case of a trust, a copy of the
                                   grantor's death certificate, plus a copy of
                                   the trust agreement identifying the grantor.

Disability--An individual will     A copy of the Social Security Administration
be considered disabled if he       award letter or a letter from a physician on
or she is unable to engage in      the physician's letterhead stating that the
any substantial gainful            shareholder (or, in the case of a trust, the
activity by reason of any          grantor) is permanently disabled. The letter
medically determinable physical    must also indicate the date of disability.
or mental impairment which can
be expected to result in death
or to be of long-continued and
indefinite duration.

Distribution from an IRA or        A copy of the distribution form from the
403(b) Custodial Account           custodial firm indicating (i) the date 
                                   of birth of the shareholder and (ii) that the
                                   shareholder is over age 59 1/2 and is taking
                                   a normal distribution--signed by the
                                   shareholder.

Distribution from Retirement       A letter signed by the plan administrator/
Plan                               trustee indicating the reason for the
                                   distribution.

Excess Contributions               A letter from the shareholder (for an IRA) or
                                   the plan administrator/trustee on company
                                   letterhead indicating the amount of the
                                   excess and whether or not taxes have been
                                   paid.

     The Transfer Agent reserves the right to request such additional documents
as it may deem appropriate.

Quantity Discount--Class B Shares Purchased Prior to August 1, 1994.

     The CDSC is reduced on redemptions of Class B shares of the Fund purchased
prior to August 1, 1994 if immediately after a purchase of such shares, the
aggregate cost of all Class B shares of the Fund owned by you in a single
account exceeded $500,000. For example, if you purchased $100,000 of Class B
shares of the Fund and the following year purchase an additional $450,000 of
Class B shares with the result that the aggregate cost of your Class B shares of
the Fund following the second purchase was $550,000, the quantity discount would
be available for the second purchase of $450,000 but not for the first purchase
of $100,000. The quantity discount will be imposed at the following rates
depending on whether the aggregate value exceeded $500,000 or $1 million:
    

                                       Contingent Deferred Sales Charge
                                      as a Percentage of Dollars Invested
                                            or Redemption Proceeds
       Year Since Purchase         -----------------------------------------
          Payment Made             $500,001 to $1 million    Over $1 million
       -------------------         ----------------------    ---------------
     First ..........................       3.0%                   2.0%
     Second .........................       2.0%                   1.0%
     Third ..........................       1.0%                     0%
     Fourth and thereafter ..........         0%                     0%

     You must notify the Fund's Transfer Agent either directly or through
Prudential Securities or Prusec, at the time of redemption, that you are
entitled to the reduced CDSC. The reduced CDSC will be granted subject to
confirmation of your holdings.


                                      B-25

<PAGE>

                         SHAREHOLDER INVESTMENT ACCOUNT

     Upon the initial purchase of Fund shares, a Shareholder Investment Account
is established for each investor under which the shares are held for the
investor by the Transfer Agent. If a stock certificate is desired, it must be
requested in writing for each transaction. Certificates are issued only for full
shares and may be redeposited in the Account at any time. There is no charge to
the investor for issuance of a certificate. The Fund makes available to the
shareholders the following privileges and plans.

Automatic Reinvestment of Dividends and/or Distributions.

     For the convenience of investors, all dividends and distributions are
automatically reinvested in full and fractional shares of the Fund at net asset
value on the record date. An investor may direct the Transfer Agent in writing
not less than five (5) full business days prior to the record date to have
subsequent dividends and/or distributions sent in cash rather than reinvested.
In the case of recently purchased shares for which registration instructions
have not been received on the record date, cash payment will be made directly to
the dealer. Any shareholder who receives a cash payment representing a dividend
or distribution may reinvest such distribution at net asset value by returning
the check or the proceeds to the Transfer Agent within 30 days after the payment
date. Such investment will be made at the net asset value per share next
determined after receipt of the check or proceeds by the Transfer Agent. Such
shareholder will receive credit for any contingent deferred sales charge paid in
connection with the amount of proceeds being reinvested.

Exchange Privilege.

     The Fund makes available to its shareholders the privilege of exchanging
their shares of the Fund for shares of certain other Prudential Mutual Funds,
including one or more specified money market funds, subject in each case to the
minimum investment requirements of such funds. Shares of such other Prudential
Mutual Funds may also be exchanged for shares of the Fund. All exchanges are
made on the basis of relative net asset value next determined after receipt of
an order in proper form. An exchange will be treated as a redemption and
purchase for tax purposes. Shares may be exchanged for shares of another fund
only if shares of such fund may legally be sold under applicable state laws. For
retirement and group plans having a limited menu of Prudential Mutual Funds, the
Exchange Privilege is available for those funds eligible for investment in the
particular program.

     It is contemplated that the exchange privilege may be applicable to new
mutual funds whose shares may be distributed by the Distributor.

     Class A.  Shareholders of the Fund will be able to exchange their Class A
shares for Class A shares of certain other Prudential Mutual Funds, shares of
Prudential Government Securities Trust (Intermediate Term Series) and shares of
the money market funds specified below. No fee or sales load will be imposed
upon the exchange. Shareholders of money market funds who acquired such shares
upon exchange of Class A shares may use the Exchange Privilege only to acquire
Class A shares, of the Prudential Mutual Funds participating in the Class A
Exchange Privilege.

     The following money market funds participate in the Class A Exchange
Privilege:

          Prudential California Municipal Fund
            (California Money Market Series)

          Prudential Government Securities Trust
            (Money Market Series)
            (U.S. Treasury Money Market Series)

          Prudential Municipal Series Fund
            (Connecticut Money Market Series)
            (Massachusetts Money Market Series)
            (New Jersey Money Market Series)
            (New York Money Market Series)

          Prudential MoneyMart Assets

          Prudential Tax-Free Money Fund

     Class B and Class C. Shareholders of the Fund may exchange their Class B
and Class C shares for Class B and Class C shares, respectively, of certain
other Prudential Mutual Funds and shares of Prudential Special Money Market
Fund, Inc., a money market fund. No CDSC may be payable upon such exchange, but
a CDSC may be payable upon the redemption of Class B and Class C shares acquired
as a result of the exchange. The applicable sales charge will be that imposed by
the Fund in which shares

                                      B-26

<PAGE>

were initially purchased and the purchase date will be deemed to be the
first day of the month after of the initial purchase, rather than the date of
the exchange.

     Class B and Class C shares of the Fund may also be exchanged for shares of
an eligible money market fund without imposition of any CDSC at the time of
exchange. Upon subsequent redemption from such money market fund or after
re-exchange into the Fund, such shares will be subject to the CDSC calculated by
excluding the time such shares were held in the money market fund. In order to
minimize the period of time in which shares are subject to a CDSC, shares
exchanged out of the money market fund will be exchanged on the basis of their
remaining holding periods, with the longest remaining holding periods being
transferred first. In measuring the time period shares are held in a money
market fund and "tolled" for purposes of calculating the CDSC holding period,
exchanges are deemed to have been made on the last day of the month. Thus, if
shares are exchanged into the Fund from a money market fund during the month
(and are held in the Fund at the end of the month), the entire month will be
included in the CDSC holding period. Conversely, if shares are exchanged into a
money market fund prior to the last day of the month (and are held in the money
market fund on the last day of the month), the entire month will be excluded
from the CDSC holding period. For purposes of calculating the five year holding
period applicable to the Class B conversion feature, the time period during
which Class B shares were held in a money market fund will be excluded.

     At any time after acquiring shares of other funds participating in the
Class B or Class C exchange privilege, a shareholder may again exchange those
shares (and any reinvested dividends and distributions) for Class B or Class C
shares of the Fund, respectively without subjecting such shares to any CDSC.
Shares of any fund participating in the Class B or Class C exchange privilege
that were acquired through reinvestment of dividends or distributions may be
exchanged for Class B or Class C shares, respectively of other funds without
being subject to any CDSC.

     Additional details about the exchange privilege and prospectuses for each
of the Prudential Mutual Funds are available from the Fund's Transfer Agent,
Prudential Securities or Prusec. The exchange privilege may be modified,
terminated or suspended on sixty days' notice, and any fund, including the Fund,
or the Distributor, has the right to reject any exchange application relating to
such fund's shares.

Dollar Cost Averaging

     Dollar cost averaging is a method of accumulating shares by investing a
fixed amount of dollars in shares at set intervals. An investor buys more shares
when the price is low and fewer shares when the price is high. The average cost
per share is lower that it would be if a constant number of shares were bought
at set intervals.

     Dollar cost averaging may be used, for example, to plan for retirement, to
save for a major expenditure, such as the purchase of a home, or to finance a
college education. The cost of a year's education at a four-year college today
averages around $14,000 at a private college and around $4,800 at a public
university. Assuming these costs increase at a rate of 7% a year, as has been
projected, for the freshman class of 2007, the cost of four years at a private
college could reach $163,000 and over $97,000 at a public university.(1)

     The following chart shows how much you would need in monthly investments to
achieve specified lump sums to finance your investment goals.(2)

Period of
Monthly investments:           $100,000     $150,000      $200,000     $250,000
- --------------------           --------     --------      --------     --------
25 Years ...............        $  110       $  165        $  220       $  275
20 Years ...............           176          264           352          440
15 Years ...............           296          444           592          740
10 Years ...............           555          833         1,110        1,388
 5 Years ...............         1,371        2,057         2,742        3,428
See "Automatic Savings Accumulation Plan."

- ----------
     (1) Source information concerning the costs of education at public
universities is available from The College Board Annual Survey of Colleges,
1992. Information about the costs of private colleges is from the Digest of
Education Statistics, 1992; The National Center for Educational Statistics; and
the U.S. Department of Education. Average costs for private institutions include
tuition, fees, room and board.

     (2) The chart assumes an effective rate of return of 8% (assuming monthly
compounding). This example is for illustrative purposes only and is not intended
to reflect the performance of an investment in shares of the Fund. The
investment return and principal value of an investment will fluctuate so that an
investor's shares when redeemed may be worth more or less than their original
cost.

                                      B-27

<PAGE>

Automatic Savings Accumulation Plan (ASAP)

     Under ASAP, an investor may arrange to have a fixed amount automatically
invested in shares of the Fund monthly by authorizing his or her bank account or
Prudential Securities account (including a Command Account) to be debited to
invest specified dollar amounts in shares of the Fund. The investor's bank must
be a member of the Automatic Clearing House System. Share certificates are not
issued to ASAP participants.

     Further information about this program and an application form can be
obtained from the Transfer Agent, Prudential Securities or Prusec.

Systematic Withdrawal Plan

     A systematic withdrawal plan is available to shareholders through
Prudential Securities or the Transfer Agent. Such withdrawal plan provides for
monthly or quarterly checks in any amount, except as provided below, up to the
value of the shares in the shareholder's account. Withdrawals of Class B or
Class C shares may be subject to a CDSC. See "Shareholder Guide--How to Sell
Your Shares--Contingent Deferred Sales Charges" in the Prospectus.

     In the case of shares held through the Transfer Agent (i) a $10,000 minimum
account value applies, (ii) withdrawals may not be for less than $100 and (iii)
the shareholder must elect to have all dividends and/or distributions
automatically reinvested in additional full and fractional shares at net asset
value on shares held under this plan. See "Shareholder Investment
Account--Automatic Reinvestment of Dividends and/or Distributions."

     Prudential Securities and the Transfer Agent act as agents for the
shareholder in redeeming sufficient full and fractional shares to provide the
amount of the periodic withdrawal payment. The systematic withdrawal plan may be
terminated at any time, and the Distributor reserves the right to initiate a fee
of up to $5 per withdrawal, upon 30 days' written notice to the shareholder.

     Withdrawal payments should not be considered as dividends, yield or income.
If periodic withdrawals continuously exceed reinvested dividends and
distributions, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted.

     Furthermore, each withdrawal constitutes a redemption of shares, and any
gain or loss realized must be recognized for federal income tax purposes. In
addition, withdrawals made concurrently with purchases of additional shares are
inadvisable because of the applicable sales charges to (i) the purchase of Class
A shares and (ii) the withdrawal of Class B and Class C shares. Each shareholder
should consult his or her own tax adviser with regard to the tax consequences of
the plan, particularly used in connection with a retirement plan.

Tax-Deferred Retirement Plans.

     Various qualified retirement plans, including a 401(k) plan, self-directed
individual retirement accounts and "tax-deferred accounts" under Section
403(b)(7) of the Internal Revenue Code are available through the Distributor.
These plans are for use by both self-employed individuals and corporate
employers. These plans permit either self-direction of accounts by participants,
or a pooled account arrangement. Information regarding the establishment of
these plans, the administration, custodial fees and other details are available
from Prudential Securities or the Transfer Agent.

     Investors who are considering the adoption of such a plan should consult
with their own legal counsel or tax adviser with respect to the establishment
and maintenance of any such plan.

                                      B-28

<PAGE>

Tax-Deferred Retirement Accounts.

     Individual Retirement Accounts. An individual retirement account (IRA)
permits the deferral of federal income tax on income earned in the account until
the earnings are withdrawn. The following chart represents a comparison of the
earnings in a personal savings account with those in an IRA, assuming a $2,000
annual contribution, and 8% rate of return and a 39.6% federal income tax
bracket and shows how much more retirement income can accumulate within an IRA
as opposed to a taxable individual savings account.

                           Tax-Deferred Compounding(1)

Contributions                                Personal
Made Over:                                    Savings               IRA
- -------------                                --------             --------
10 years .............................       $ 26,165             $ 31,291
15 years .............................         44,675               58,649
20 years .............................         68,109               98,846
25 years .............................         97,780              157,909
30 years .............................        135,346              244,692

- ------------
     (1) The chart is for illustrative purposes only and does not represent the
performance of the Fund or any specific investment. It shows taxable versus
tax-deferred compounding for the periods and on the terms indicated. Earnings in
the IRA account will be subject to tax when withdrawn from the account.

                                NET ASSET VALUE
   
     The net asset value per share is the net worth of the Fund (assets,
including securities at value, minus liabilities) divided by the number of
shares outstanding. Net asset value is calculated separately for each class. The
Fund computes its net asset value at 4:15 P.M., New York time, on each day the
New York Stock Exchange is open for trading except days on which no orders to
purchase, sell or redeem Fund shares have been received or on days on which
changes in the value of the Fund's portfolio investments do not affect net asset
value. In the event the New York Stock Exchange closes early on any business
day, the net asset value of the Fund's shares shall be determined at a time
between such closing and 4:15 P.M., New York time. The New York Stock Exchange
is closed on the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
    

     Under the Investment Company Act, the Board of Directors is responsible for
determining in good faith the fair value of securities of the Fund. In
accordance with procedures adopted by the Board of Directors, the value of the
Fund's portfolio will be determined as follows:

   
     Government securities for which quotations are available will be based on
the prices provided by independent pricing services. Pricing services consider
such factors as security prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving at securities
valuations. Other portfolio securities that are actively traded in the over-the-
counter market, including listed securities for which the primary market is
believed to be over-the-counter, will be valued at the average of the quoted bid
and asked prices provided by an independent pricing service or by principal
market makers. Any security for which the primary market is on an exchange is
valued at the last sale price on such exchange on the day of valuation or, if
there was no sale on such day, the last bid price quoted on such day. Quotations
of foreign securities in a foreign currency will be converted to U.S. dollar
equivalents at the spot currency value. Forward currency exchange contracts will
be valued at the current cost of covering or offsetting the contract. Options
will be valued at their last sale price as of the close of options trading on
the applicable exchanges. If there is no sale on the applicable options exchange
on a given day, options will be valued at the average of the quoted bid and
asked prices as of the close of the applicable exchange. The Fund may engage
pricing services to obtain such prices. Over-the-counter options will be valued
at the average of the bid and asked prices provided by principal market makers.
Options will be valued at market value or fair value if no market exists.
Futures contracts are marked to market daily, and options thereon are valued at
their last sale price, as of the close of the applicable commodities exchanges.
Short-term instruments which mature in 60 days or less are valued at amortized
cost, if their original maturity was 60 days or less, or by amortizing their
value on the 61st day prior to maturity, unless the Fund's Manager determines
that such valuation does not represent fair value. Repurchase agreements will be
valued at cost plus accrued interest. Securities or other assets for which
reliable market quotations are not readily available are valued by the Manager
in good faith at fair market value in accordance with procedures adopted by the
Board of Directors on the basis of the following factors: cost of the security,
transactions in comparable securities, relationships among various securities
and such other factors as may be determined by the Manager to materially affect
the value of the security.
    

                                      B-29
<PAGE>


                            PERFORMANCE 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 and Class C shares. See "How the Fund Calculates
Performance" in the Prospectus.

     Average annual total return is computed according to the following formula:

                                       n
                                 P(1+T) = ERV

       Where: P   = a hypothetical initial payment of $1,000.
              T   = average annual total return.
              n   = number of years.
              ERV = ending redeemable value at the end of the one, five or ten
                    year periods (or fractional portion thereof) of a
                    hypothetical $1,000 investment made at the beginning of
                    the one, five or ten year periods.

     Average annual total return takes into account any applicable initial or
contingent deferred sales charge but does not take into account any federal or
state income taxes that may be payable upon redemption.

   
     The average annual total return for Class A shares for the one, five and
five and seven twelfths year periods ended December 31, 1994 was -9.81%, 4.40%
and 5.39%, respectively. The average annual total return for Class B shares for
the one year and one year and eleven and one-half month periods ended December
31, 1994 was -10.69% and 2.93%, respectively. The average annual total return
for Class C shares for the since inception period ended December 31, 1994 was
- -3.44%.
    

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

     Aggregate total return represents the cumulative change in the value of an
investment in the Fund and is computed according to the following formula:

                                     ERV-P
                                     --- -
                                       P

     Where:   P = a hypothetical initial payment of $1,000.
            ERV = ending redeemable value of a hypothetical $1,000 payment made
                  at the beginning of the one, five or ten year periods (or
                  fractional portion thereof) at the end of the one, five or ten
                  year periods.

     Aggregate total return does not take into account any federal or state
income taxes that may be payable upon redemption or any applicable initial or
contingent deferred sales charges.

   
     The Fund's aggregate total return for Class A shares for the one, five and
five and seven-twelfths year periods ended December 31, 1994 was -7.02%, 27.84%
and 45.79%, respectively. The aggregate total return for Class B shares for the
one year and one year and eleven and one-half month periods ended on December
31, 1994 was -7.69% and 9.92%, respectively. The aggregate total return for
Class C shares for the since inception period ended December 31, 1994 was
- -2.44%.
    

     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 and
Class C shares. The yield will be computed by dividing the Fund's net investment
income per share earned during this 30-day period by the maximum offering price
per share on the last day of this period. Yield is calculated according to the
following formula:

                                           a - b     6
                              YIELD = 2[( ------- +1) -1]   
                                             cd

     Where: a = dividends and interest earned during the period.
            b = expenses accrued for the period (net of reimbursements).
            c = the average daily number of shares outstanding during the period
                that were entitled to receive dividends.
            d = the maximum offering price per share on the last day of the
                period.

     Yield fluctuates and an annualized yield quotation is not a representation
by the Fund as to what an investment in the Fund will actually yield for any
given period.

   
     The Fund's 30-day yields for the 30 days ended December 31, 1994, where
5.58%, 5.14% and 5.92% for Class A, Class B and Class C shares, respectively.
    
                                      B-30

<PAGE>

     From time to time, the performance of the fund may be measured against
various indices. Set forth below is a chart which compares the performance of
different types of investments over the long-term and the rate of inflation.(1)

                 A Look At Performance Over the Long-Term
                                  (1926-1992)



12%       Average Annual
           Return 10.3%
10%           ******
              ******
 8%           ******
              ******       Average Annual 
 6%           ******        Return 4.8% 
              ******          ******
 4%           ******          ******           3.1%
              ******          ******          ******
 2%           ******          ******          ******
              ******          ******          ******
 0%--------------------------------------------------------
              Common         Long-Term       Inflation
              Stocks      Goverment Bonds


     (1) Source: Ibbotson Associates, "Stocks, Bonds, Bills and Inflation--1993
Yearbook" (annually updates the work of Roger G. Ibbotson and Rex A.
Sinquefield). Common stock returns are based on the Standard & Poor's 500 Stock
Index, a market-weighted, unmanaged index of 500 common stocks in a variety of
industry sectors. It is a commonly used indicator of broad stock price
movements. This chart is for illustrative purposes only, and is not intended to
represent the performance of any particular investment or fund.

                       TAXES, DIVIDENDS AND DISTRIBUTIONS

     General. The Fund has qualified and intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code for
each taxable year. Accordingly, the Fund must, among other things, (a) derive at
least 90% of its gross income (without offset for losses from the sale or other
disposition of securities or foreign currencies) from dividends, interest,
proceeds from loans of securities and gains from the sale or other disposition
of securities or foreign currencies or other income, including, but not limited
to, gains derived from options and futures on such securities or foreign
currencies; (b) derive less than 30% of its gross income from gains (without
offset for losses) from the sale or other disposition of securities or options
thereon held less than three months; and (c) diversify its holdings so that, at
the end of each fiscal quarter, (i) 50% of the market value of the Fund's assets
is represented by cash, U.S. Government securities and other securities limited,
in respect of any one issuer, to an amount not greater than 5% of the Fund's
assets and no more than 10% of the outstanding voting securities of any such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than U.S. Government securities). These
requirements may limit the Fund's ability to engage in transactions involving
options on securities, futures contracts and options thereon.

     The Fund declares dividends on a daily basis in an amount based on actual
net investment income determined in accordance with generally accepted
accounting principles. A portion of such dividend may also include projected net
investment income. Such dividends will be payable monthly in additional shares
of the Fund unless otherwise requested by the shareholder.

   
     Net capital gains, if any, will be distributed at least annually. In
determining the amount of capital gains to be distributed, any capital loss
carryforwards from prior years will be offset against capital gains. The Fund
had a capital loss carryforward for federal income tax purposes at December 31,
1994 of approximately $87,639,600 of which $45,765,500 expires in 1997,
$23,240,000 expires in 1998 and $18,634,100 expires in 2002.

     The Fund will elect to treat approximately $2,165,600 of net capital losses
and $5,287,500 of net foreign currency losses incurred in the two month period
ended December 31, 1994 as having been incurred in the following fiscal year.
Distributions, if any, will be paid in additional Fund shares based on the net
asset value unless the shareholder elects in writing not less than 5 full
business days prior to the record date to receive such distributions in cash.
    

                                      B-31

<PAGE>

     The per share dividends on Class B and Class C shares typically will be
lower than the per share dividends on Class A shares as a result of the higher
distribution-related fee applicable to the Class B and Class C shares. The per
share distributions of net capital gains, if any, will be paid in the same
amount for Class A, Class B and Class C shares. See "Net Asset Value."

     As a regulated investment company, the Fund will not be subject to federal
income tax on its net investment income and capital gains, if any, that it
distributes to its shareholders, provided that it distributes at least 90% of
its net investment income and short-term capital gains earned in each year.
Distributions of net investment income, net currency gains and net short-term
capital gains will be taxable to the shareholder at ordinary income rates
regardless of whether the shareholder receives such distributions in additional
shares or in cash. Distributions of net long-term capital gains, if any, are
taxable as long-term capital gains regardless of how long the investor has held
his or her Fund shares. However, if a shareholder holds shares in the Fund for
not more than six months, then any loss recognized on the sale of such shares
will be treated as long-term capital loss to the extent of any distribution on
the shares which was treated as long-term capital gain. To the extent that, in a
given year, distributions to shareholders exceed recognized net investment
income and recognized short-term and long-term capital gains for the year,
shareholders will receive a return of capital in respect of such year and, in an
annual statement, will be notified of the amount of any return of capital for
such year. Shareholders will be notified annually by the Fund as to the federal
tax status of dividends and distributions made by the Fund. A 4% nondeductible
excise tax will be imposed on the Fund to the extent the Fund does not meet
certain distribution requirements by the end of each calendar year.
Distributions may be subject to additional state and local taxes. See "Taxes,
Dividends and Distributions" in the Prospectus.

     Gains or losses attributable to fluctuations in exchange rates which occur
between the time the Fund accrues interest or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities are treated as
ordinary income or ordinary loss. Similarly, gains or losses on disposition of
debt securities denominated in a foreign currency attributable to fluctuations
in the value of the foreign currency between the date of acquisition of the
security and the date of disposition also are treated as ordinary gain or loss.
These gains, referred to under the Code as "Section 988" gains or losses,
increase or decrease the amount of the Fund's investment company taxable income
available to be distributed to its shareholders as ordinary income, rather than
increasing or decreasing the amount of the Fund's net capital gain, as was the
case prior to 1987. If Section 988 losses exceed other investment company
taxable income during a taxable year, the Fund would not be able to make any
taxable ordinary dividend distributions, or distributions made before the losses
were realized would be recharacterized as a return of capital to shareholders,
rather than as an ordinary dividend, reducing each shareholder's basis in his or
her shares.

     Any loss realized on a sale, redemption or exchange of shares of the Fund
by a shareholder will be disallowed to the extent the shares are replaced within
a 61-day period (beginning 30 days before the disposition of shares). Shares
purchased pursuant to the reinvestment of a dividend will constitute a
replacement of shares.

     A shareholder who acquires shares of the Fund and sells or otherwise
disposes of such shares within 90 days of acquisition may not be allowed to
include certain sales charges incurred in acquiring such shares for purposes of
calculating gain or loss realized upon a sale or exchange of shares of the Fund.

   
     Distributions of net investment income made to a nonresident alien
individual fiduciary of a foreign estate or trust or foreign corporation or
foreign partnership (foreign shareholder) will be subject to U.S. withholding
tax at a rate of 30% (or lower treaty rate), unless the dividends are
effectively connected with the U.S. trade or business of the shareholder. Gains
realized upon the sale or redemption of shares of the Fund by a foreign
shareholder, and distributions of net long-term capital gains to a foreign
shareholder will generally not be subject to U.S. income tax unless the gain is
effectively connected with a trade or business carried on by the shareholder
within the United States or, in the case of a shareholder who is a nonresident
alien individual, the shareholder is present in the United States for more than
182 days during the taxable year and certain other conditions are met. In the
case of a foreign shareholder who is a nonresident alien individual, the Fund
may be required to withhold U.S. federal income tax at the rate of 31% of
distributions of net long-term capital gains unless IRS Form W-8 is provided. If
distributions are effectively connected with a U.S. trade or business carried on
by a foreign shareholder, distributions of net investment income and net
long-term capital gains will be subject to U.S. income tax at the graduated
rates applicable to U.S. citizens or domestic corporations. Transfers by gift of
shares of the Fund by a foreign shareholder who is a nonresident alien
individual will not be subject to U.S. federal gift tax, but the value of the
shares of the Fund held by such a shareholder at his death will be includable in
his gross estate for U.S. federal estate tax purposes. The tax consequences to a
foreign shareholder entitled to claim the benefits of an applicable tax treaty
may be different from those described herein. Foreign shareholders are advised
to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the Fund.
    

     Income received by the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of the Fund's assets to be invested in
various countries is not known.

                                      B-32

<PAGE>

     If the Fund is liable for foreign taxes, the Fund expects to meet the
requirements of the Internal Revenue Code for "passing-through" to its
shareholders foreign taxes paid, but there can be no assurance that the Fund
will be able to do so. Under the Internal Revenue Code, if more than 50% of the
value of the Fund's total assets at the close of its taxable year consists of
stock or securities of foreign corporations, the Fund will be eligible and may
file an election with the Internal Revenue Service to "pass-through" to the
Fund's shareholders the amount of foreign taxes paid by the Fund. Pursuant to
this election shareholders will be required to: (i) include in gross income (in
addition to taxable dividends actually received) their pro rata share of the
foreign taxes paid by the Fund; (ii) treat their pro rata share of foreign taxes
as paid by them; and (iii) either deduct their pro rata share of foreign taxes
in computing their taxable income or, subject to certain limitations, use it as
a foreign tax credit against U.S. income taxes. No deduction for foreign taxes
may be claimed by a shareholder who does not itemize deductions. A shareholder
that is a nonresident alien individual or foreign corporation may be subject to
U.S. withholding tax on the income resulting from the election described in this
paragraph, but may not be able to claim a credit or deduction against such tax
for the foreign taxes treated as having been paid by such shareholder. A
tax-exempt shareholder will not ordinarily benefit from this election. The
amount of foreign taxes for which a shareholder may claim a credit in any year
will generally be subject to various limitations including a separate limitation
for "passive income," which includes, among other things, dividends, interest
and certain foreign currency gains.

     Each shareholder will be notified within 60 days after the close of the
Fund's taxable year whether the foreign taxes paid by the Fund will
"pass-through" for that year and, if so, such notification will designate (a)
the shareholder's portion of the foreign taxes paid to each such country and (b)
the portion of the dividend which represents income derived from sources within
each such country.

     Listed Options and Futures. Exchange-traded futures contracts, listed
options on futures contracts and listed options on U.S. Government securities
constitute "Section 1256 contracts" under the Internal Revenue Code. Section
1256 contracts are required to be "marked-to-market" at the end of the Fund's
tax year; that is, treated as having been sold at market value. Sixty percent of
any gain or loss recognized as a result of such "deemed sales" will be treated
as long-term capital gain or loss and the remainder will be treated as
short-term capital gain or loss.

     Backup Withholding. With limited exceptions, the Fund is required to
withhold federal income tax at the rate of 31% of all taxable distributions
payable to shareholders who fail to provide the Fund with their correct taxpayer
identification number or to make required certification or who have been
notified by the Internal Revenue Service that they are subject to backup
withholding. Any amounts withheld may be credited against a shareholder's
federal income tax liability.

     Other Taxation. Distributions may also be subject to state, local and
foreign taxes depending on each shareholder's particular situation. Shareholders
are advised to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the Fund.

                        ORGANIZATION AND CAPITALIZATION

     The Fund was initially incorporated in Maryland on March 15, 1988. On
August 8, 1991, the Fund's shareholders voted to change the name of the Fund to
Prudential Intermediate Global Income Fund, Inc. and to change the Fund from a
closed-end company to an open-end company. On October 20, 1992, the Fund's Board
of Directors approved a change in the Fund's fiscal year end to December 31.

                  CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING
                       AGENT AND INDEPENDENT ACCOUNTANTS

     State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for the Fund's portfolio securities and
cash, and in that capacity maintains certain financial and accounting books and
records pursuant to an agreement with the Fund. Subcustodians provide custodial
services for the Fund's foreign assets held outside the United States. See "How
the Fund is Managed--Custodian and Transfer and Dividend Disbursing Agent" in
the Prospectus.

   
     Prudential Mutual Fund Services, Inc. (PMFS), Raritan Plaza One, Edison,
New Jersey 08837, serves as the Transfer and Dividend Disbursing Agent of the
Fund. PMFS is a wholly-owned subsidiary of PMF. PMFS provides customary transfer
agency services to the Fund, including the handling of shareholder
communications, the processing of shareholder transactions, the maintenance of
shareholder account records, the payment of dividends and distributions, and
related functions. For these services, PMFS receives an annual fee per
shareholder account, a new account set-up fee for each manually-established
account and a monthly inactive zero balance account fee per shareholder account.
PMFS is also reimbursed for its out-of-pocket expenses, including but not
limited to postage, stationery, printing, allocable communications expenses and
other costs. For the fiscal year December 31, 1994, the Fund incurred fees of
approximately $484,200 for the services of PMFS.

     Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York
10036, serves as the Fund's independent accountants and in that capacity audits
the Fund's annual financial statements.
    

                                      B-33

<PAGE>
   
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Portfolio of Investments
                               December 31, 1994
<TABLE>
<CAPTION>
Principal
  Amount                                         Value
  (000)               Description               (Note 1)
<C>               <S>                        <C>
                  LONG-TERM INVESTMENTS--79.6%
                  Australia--3.2%
                  Australian Gov't. Bonds,
A$      10,200    9.00%, 9/15/04...........  $  7,407,399#
                                             ------------
                  Belgium--2.3%
                  Belgium Gov't. Bonds,
 BF     89,000    7.00%, 4/29/99...........     2,709,524#
        90,000    7.25%, 4/29/04...........     2,633,158#
                                             ------------
                                                5,342,682
                                             ------------
                  Canada--2.4%
                  Canadian Gov't. Bonds,
C$       8,550    7.50%, 12/1/03...........     5,493,955#
                                             ------------
                  Denmark--2.9%
                  Danish Gov't. Bonds,
 DKr    42,700    8.00%, 5/15/03...........     6,565,691#
                                             ------------
                  France--3.0%
                  French Gov't. Bonds,
 FF     34,200    4.50%, 5/12/96...........     6,182,610
        39,000    Zero Coupon, 4/25/23.....       668,534
                                             ------------
                                                6,851,144
                                             ------------
                  Germany--11.0%
                  Fed. Rep. of Germany,
  DM     3,500    8.00%, 3/20/97...........     2,318,815
         6,000    8.00%, 7/22/02...........     3,934,490
        24,900    6.75%, 4/22/03...........    15,168,947
                  Treuhandanstalt,
         6,000    7.75%, 10/1/02...........     3,903,772
                                             ------------
                                               25,326,024
                                             ------------
                  Ireland--1.5%
                  Irish Gov't. Bonds,
 IEP     2,230    9.00%, 7/15/01...........     3,481,789
                                             ------------
                  Italy--1.5%
                  Italian Gov't. Bonds,
Lira 4,000,000    12.00%, 5/19/98..........  $  2,505,493
     1,990,000    8.50%, 4/1/04............       992,293
                                             ------------
                                                3,497,786
                                             ------------
                  Japan--18.0%
                  Japanese Gov't. Bonds,
(YEN)  390,000    5.00%, 9/21/98...........     4,084,425
       470,000    4.80%, 6/21/99...........     4,888,396
       940,000    6.60%, 6/20/01...........    10,574,705
       593,000    4.10%, 12/22/03..........     5,770,542
     1,660,000    4.10%, 6/21/04...........    16,067,639
                                             ------------
                                               41,385,707
                                             ------------
                  Netherlands--1.6%
                  Netherlands Gov't. Bonds,
  NLG    6,500    7.50%, 6/15/99...........     3,753,257#
                                             ------------
                  Spain--2.3%
                  Spanish Gov't. Bonds,
 Pts   700,000    11.45%, 8/30/98..........     5,306,637
                                             ------------
                  United Kingdom--7.2%
                  Exchequer,
 BP      4,300    9.75%, 1/19/98...........     6,928,668
                  United Kingdom Treasury
                    Bonds,
         3,350    13.25%, 1/22/97..........     5,728,434
                  United Kingdom Treasury
                    Notes,
         2,600    8.00%, 9/27/13...........     3,860,521
                                             ------------
                                               16,517,623
                                             ------------
                  United States--22.7%
                  Sovereign Bonds--4.1%
                  Republic of Argentina,
US$        800    7.90%*, 9/1/00, Series
                    CHR1...................       708,000
                  BOCON,
         1,310    6.125%*, 4/1/01..........       972,423
         1,225    FRB, 6.50%*, 3/31/05.....       780,938
</TABLE>

                                    B-34    See Notes to Financial Statements.
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
<TABLE>
<CAPTION>
  Principal
    Amount                                      Value
    (000)                Description           (Note 1)
<C>               <S>                        <C>
                  United States (cont'd.)
                  Republic of Brazil,
US$      1,348    IDU, 6.0625%*, 1/1/01....  $  1,125,163
         2,150    6.6875%*, 4/15/24........     1,333,000
                  Republic of Ecuador,DD
         1,400    Zero Coupon, 12/30/24....       756,000
                  Republic of Poland,
                    Discount Bond,
         3,125    6.8125%*, 10/27/24.......     2,238,281
                  Central Bank of the
                    Philippines,
         1,700    6.0625%*, 1/5/05.........     1,547,000
                                             ------------
                                                9,460,805
                                             ------------
                  U.S. Government Bonds--18.6%
                  United States Treasury
                    Bonds,
         1,300    6.25%, 8/15/23...........     1,056,861
        26,350    7.50%, 11/15/24..........    25,205,356
                  United States Treasury
                    Notes,
        10,100    6.75%, 6/30/99...........     9,684,991
         7,200    6.375%, 1/15/00..........     6,770,232
                                             ------------
                                               42,717,440
                                             ------------
                  Total long-term
                    investments
                    (cost
                    US$186,075,339)........   183,107,939
                                             ------------
                  SHORT-TERM INVESTMENTS--19.7%
                  Argentina--2.0%
                  Argentina Gov't. Treasury
                    Bills,D
 AP      4,800    9.03%, 2/24/95...........     4,681,309#
                                             ------------
                  Mexico--4.7%
                  Mexican Tesobonos,D
US$      8,646    8.45%, 7/27/95...........     7,746,540
         3,347    8.35%, 8/3/95............     2,988,393
                                             ------------
                                               10,734,933
                                             ------------
                  United States--12.7%
                  Repurchase Agreements
                  Joint Repurchase Agreement Account,
US$     25,018    5.82%, 1/3/95, (Note
                    5).....................  $ 25,018,000
                  State Street Bank & Trust Co.,
         4,277    4.75%, dated 12/30/94,
                    due 1/3/95 in the
                    amount of $4,279,257
                    (cost $4,277,000;
                    collateralized by
                    $4,435,000 U.S.
                    Treasury Notes, 5.125%,
                    due 3/31/96;
                    approximate value
                    including accrued
                    interest-$4,424,535)...     4,277,000
                                             ------------
                                               29,295,000
                                             ------------
                  Outstanding Options
                    Purchased**--0.3%

<CAPTION>
  Contracts
    (000)         Call Options--0.2%
- --------------
<C>               <S>                        <C>
        24,183    German Deutschemarks,
                    expiring 2/13/95 @
                    DM1.57.................       532,026
                                             ------------
                  Put Options--0.1%
                  Japanese Yen,
        17,185      expiring 2/2/95 @
                    (YEN)100...............       109,984
                                             ------------
                  Cross-Currency Call Options
                  Italian Lira,
                    expiring 1/12/95 @Lira
                    971.7
                  per German
        16,475      Deutschemark...........            --
                  Swedish Krona,
                    expiring 1/21/95 @
                    Skr4.54
        31,590    per German
                    Deutschemark...........            --
                                             ------------
                                                       --
                                             ------------
                  Total outstanding options
                    purchased..............       642,010
                                             ------------
                  Total short-term
                    investments
                    (cost US$46,727,040)...    45,353,252
                                             ------------
</TABLE>

                                      B-35    See Notes to Financial Statements.
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
<TABLE>
<CAPTION>
  Contracts                                     Value
    (000)                Description           (Note 1)
<C>               <S>                        <C>
                  Total Investments Before
                    Outstanding Options
                    Written--99.3%
                  (cost US$232,802,379;
                    Note 4)                  $228,461,191
                                             ------------
                  OUTSTANDING OPTIONS
                    WRITTEN**--(0.2%)
                  Call Options--(0.1%)
                  German Deutschemarks,
        24,183    expiring 2/13/95 @
                    DM1.545................      (307,124)
                                             ------------
                  Cross-Currency Put Options--(0.1%)
                  Italian Lira, expiring
                    1/12/95
                  @ Italian Lira 1025 per
        16,475      German Deutschemark....      (244,324)
                                             ------------
                  Total outstanding options
                    written (premiums
                    received US$466,627)...      (551,448)
                                             ------------
                  Total Investments, Net of
                    Outstanding Options
                    Written--99.1%.........   227,909,743
                  Other assets in excess of
                  other
                    liabilities--0.9%......     2,149,465
                                             ------------
                  Net Assets--100%.........  $230,059,208
                                             ------------
                                             ------------
</TABLE>

- ------------------
Portfolio securities are classified according to the
securities currency denomination. Option contracts are
expressed in local currency units.
   # Principal amount segregated as collateral for
     forward currency contracts, when-issued securities and
     options written. Aggregate value of segregated
     securities--$33,244,293.
   * Rate shown reflects current rate on variable
     rate instrument.
  ** Non-income producing security.
   D Percentages quoted represent yield-to-maturity as of purchase date.
  DD Represents when-issued security.
BOCON--Bonos de Consolidacion.
FRB--Floating Rate Bonds.
IDU--Interest Due and Unpaid Bonds.

                                      B-36    See Notes to Financial Statements.
<PAGE>
 PRUDENTIAL INTERMEDIATE GLOBAL INCOME
 FUND, INC.
 Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets                                                                                   December 31, 1994
                                                                                         -----------------
<S>                                                                                      <C>
Investments, at value (cost $232,802,379).............................................     $ 228,461,191
Receivable for investments sold.......................................................         4,681,964
Interest receivable...................................................................         4,320,712
Forward currency contracts--net amount receivable from counterparties.................         3,997,916
Receivable for Fund shares sold.......................................................            27,470
Other assets..........................................................................            49,200
                                                                                           -------------
  Total assets........................................................................       241,538,453
                                                                                           -------------
Liabilities
Bank overdraft........................................................................            85,683
Bank overdraft--foreign currency (cost $1,764)........................................             1,795
Forward currency contracts--net amount payable to counterparties......................         5,262,637
Payable for investments purchased.....................................................         2,968,026
Payable for Fund shares reacquired....................................................         1,898,546
Outstanding options written, at value (premiums received $466,627)....................           551,448
Accrued expenses......................................................................           392,269
Management fee payable................................................................           152,444
Dividends payable.....................................................................            91,015
Distribution fee payable..............................................................            42,874
Withholding taxes payable.............................................................            32,508
                                                                                           -------------
  Total liabilities...................................................................        11,479,245
                                                                                           -------------
Net Assets............................................................................     $ 230,059,208
                                                                                           -------------
                                                                                           -------------
Net assets were comprised of:
  Common stock, at par................................................................     $      31,419
  Paid-in capital in excess of par....................................................       330,876,017
                                                                                           -------------
                                                                                             330,907,436
  Distributions in excess of net investment income....................................        (4,707,187)
  Accumulated net realized loss on investments........................................       (90,428,140)
  Net unrealized depreciation on investments and foreign currencies...................        (5,712,901)
                                                                                           -------------
Net assets, December 31, 1994.........................................................     $ 230,059,208
                                                                                           -------------
                                                                                           -------------
Class A:
  Net asset value and redemption price per share ($207,152,995 / 28,295,864 shares of
    common stock issued and outstanding)..............................................             $7.32
  Maximum sales charge (3.00% of offering price)......................................               .23
                                                                                           -------------
  Maximum offering price to public....................................................             $7.55
                                                                                           -------------
                                                                                           -------------
Class B:
  Net asset value, offering price and redemption price per share ($22,906,020 /
    3,123,336 shares of common stock issued and outstanding)..........................             $7.33
                                                                                           -------------
                                                                                           -------------
Class C:
  Net asset value, offering price and redemption price per share ($193 / 26.338 shares
    of common stock issued and outstanding)...........................................             $7.33
                                                                                           -------------
                                                                                           -------------
</TABLE>
See Notes to Financial Statements.


                                      B-37

<PAGE>
                                      
 PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
 Statement of Operations
<TABLE>
<CAPTION>
                                        Year Ended
                                       December 31,
Net Investment Income                      1994
                                      -------------
Income
<S>                                     <C>
  Interest and discount earned (net
    of foreign withholding taxes of
    $2,918)..........................   $22,073,945
  Income from securities loaned......        42,383
                                       -------------
                                         22,116,328
                                       -------------
Expenses
  Management fee.....................     2,210,372
  Distribution fee--Class A..........       394,323
  Distribution fee--Class B..........       238,759
  Transfer agent's fees and
    expenses.........................       668,000
  Custodian's fees and expenses......       482,000
  Reports to shareholders............       264,000
  Registration fees..................        70,000
  Audit fee..........................        67,000
  Directors' fees....................        43,125
  Legal fees and expenses............        40,000
  Insurance expense..................         8,000
  Miscellaneous......................        15,620
                                       -------------
    Total expenses...................     4,501,199
                                       -------------
Net investment income................    17,615,129
                                       -------------
<CAPTION>
Net Realized and Unrealized Gain
(Loss)
on Investment and Foreign
Currency Transactions
<S>                                     <C>
Net realized gain (loss) on:
  Investment transactions............   (27,108,122)
  Foreign currency transactions......    (7,359,323)
  Financial futures transactions.....      (196,685)
  Written option transactions........       889,826
                                       -------------
                                        (33,774,304)
                                       -------------
Net change in net unrealized 
appreciation/depreciation of:
  Investments........................    (3,880,246)
  Foreign currencies.................    (2,893,776)
  Financial futures..................        (5,188)
  Written options....................       306,686
                                       -------------
                                         (6,472,524)
                                       -------------
Net loss on investments and foreign
  currencies.........................   (40,246,828)
                                       -------------
Net Decrease in Net Assets
Resulting from Operations............   ($22,631,699)
                                       -------------
                                       -------------
</TABLE>

 PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
 Statement of Changes in Net Assets
<TABLE>
<CAPTION>
                             Year Ended December 31,
Increase (Decrease)       ------------------------------
in Net Assets                 1994             1993
                          -------------    -------------
<S>                       <C>              <C>
Operations
  Net investment
  income................  $  17,615,129    $  28,763,222
  Net realized gain
    (loss) on investment
    and foreign currency
    transactions........    (33,774,304)      17,756,201
  Net change in net
    unrealized
    appreciation/depreciation
    on investments and
    foreign
    currencies..........     (6,472,524)      12,385,620
                          -------------    -------------
  Net increase
    (decrease) in net
    assets resulting
    from operations.....    (22,631,699)      58,905,043
                          -------------    -------------
Net equalization
  debits................       (298,272)         (35,899)
                          -------------    -------------
Dividends and distributions (Note 1)
  Dividends from net
    investment income
    Class A.............     (9,720,977)     (20,557,518)
    Class B.............     (1,068,617)      (1,903,164)
                          -------------    -------------
                            (10,789,594)     (22,460,682)
                          -------------    -------------
  Distributions from net
    realized gains
    Class A.............       (451,238)      (3,742,148)
    Class B.............        (57,559)        (346,439)
                          -------------    -------------
                               (508,797)      (4,088,587)
                          -------------    -------------
  Tax return of capital
    distributions
    Class A.............     (7,599,757)              --
    Class B.............       (836,616)              --
                          -------------    -------------
                             (8,436,373)              --
                          -------------    -------------
Fund share transactions
  (Note 6)
  Net proceeds from
    shares subscribed...     12,598,805       23,663,564
  Net asset value of
    shares issued to
    shareholders in
    reinvestment of
    dividends and
    distributions.......      4,734,600        5,464,081
  Cost of shares
    reacquired..........   (104,455,068)    (113,967,037)
                          -------------    -------------
  Net decrease in net
    assets from Fund
    share
    transactions........    (87,121,663)     (84,839,392)
                          -------------    -------------
Total decrease..........   (129,786,398)     (52,519,517)
Net Assets
Beginning of year.......    359,845,606      412,365,123
                          -------------    -------------
End of year.............  $ 230,059,208    $ 359,845,606
                          -------------    -------------
                          -------------    -------------
</TABLE>

See Notes to Financial Statements.        


                                      B-38
<PAGE>



 PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
 Notes to Financial Statements
   Prudential Intermediate Global Income Fund, Inc., (the "Fund") was organized
in Maryland as a closed-end, non-diversified management investment company and
commenced investment operations on May 26, 1988. On October 4, 1991 the Fund
concluded operations as a closed-end investment company and effective October 7,
1991, commenced operations as an open-end, non-diversified investment company.
   The Fund's investment objective is to maximize total return, the components
of which are current income and capital appreciation, by investing in a
portfolio consisting primarily of U.S. and foreign government securities. The
Fund will also engage in certain hedging strategies to meet its investment
objective. The ability of issuers of debt securities held by the Fund to meet
their obligations may be affected by economic and political developments in a
specific country or region.

Note 1. Accounting            The following is a summary of
Policies                      significant accounting policies
                              followed by the Fund in the preparation of its
financial statements.
Security Valuation: In valuing the Fund's assets, quotations of foreign
securities in a foreign currency are converted to U.S. dollar equivalents at the
then current currency rate. Portfolio securities (including options) are valued
at their current market value as determined by an independent pricing service,
principal market maker or by reference to the applicable exchange price. Forward
currency exchange contracts are valued at the current cost of covering or
offsetting the contract on the day of valuation. Securities and assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Directors of
the Fund.
   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 which approximates market value.
   In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian or designated
subcustodians, as the case may be under triparty repurchase agreements, take
possession of the underlying collateral securities, the value of which exceeds
the principal amount of the repurchase transaction including accrued interest.
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.
 
Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
    (i) market value of investment securities, other assets and liabilities--at
    the current rates of exchange; 
    (ii) purchases and sales of investment securities, income and expenses--at  
    the rates of exchange prevailing on the respective dates of such 
    transactions.
   Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the year, the Fund does not isolate that
portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of the securities held at period end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of long-term debt securities sold
during the period. Accordingly, such realized foreign currency gains and losses
are included in the reported net realized gains/losses on investment
transactions.
   Net realized losses on foreign currency transactions represents net foreign
exchange gains and losses from sales and maturities of short-term securities and
forward currency contracts, holding of foreign currencies, currency gains or
losses realized between the trade and settlement dates on securities
transactions, and the difference between the amounts of interest and foreign
taxes recorded on the Fund's books and the U.S. dollar equivalent amounts
actually received or paid. Net currency gains and losses from valuing foreign
currency denominated assets (excluding investments) and liabilities at period
end exchange rates are reflected as a component of net unrealized
appreciation/depreciation on investments and foreign currencies.
   Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. companies as a result of,
among other factors, the possibility of political or economic instability and
the level of governmental supervision and regulation of foreign securities
markets. 

Forward Currency Contracts: A forward currency contract is a commitment
to purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Fund enters into forward currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings or on specific receivables and payables denominated in a foreign
currency. The contracts are valued daily at
                                      


                                      B-39
<PAGE>




current exchange rates and any unrealized gain or loss is included in net
unrealized appreciation or depreciation on investments. Gain or loss is realized
on the settlement date of the contract equal to the difference between the
settlement value of the original and renegotiated forward contracts. This gain
or loss, if any, is included in net realized gain (loss) on foreign currency
transactions. Risks may arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.

Financial Futures Contracts: A financial futures contract is an agreement to
purchase (long) or sell (short) an agreed amount of securities at a set price
for delivery on a future date. Upon entering into a financial futures contract,
the Fund is required to pledge to the broker an amount of cash and/or other
assets equal to a certain percentage of the contract amount. This amount is
known as the "initial margin." Subsequent payments, known as "variation margin,"
are made or received by the Fund each day, depending on the daily fluctuations
in the value of the underlying security. Such variation margin is recorded for
financial statement purposes on a daily basis as unrealized gain or loss. When
the contract expires or is closed, the gain or loss is realized and is presented
in the statement of operations as net realized gain (loss) on financial futures
contracts.
   The Fund invests in financial futures contracts in order to hedge its
existing portfolio securities, or securities the Fund intends to purchase,
against fluctuations in value caused by changes in prevailing interest rates.
Should interest rates move unexpectedly, the Fund may not achieve the
anticipated benefits of the financial futures contracts and may realize a loss.
The use of futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates and the underlying
hedged assets. 

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 or foreign currency exchange rates with respect to
securities or currencies which the Fund currently owns or intends to purchase.
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 basis 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 writer of an option, has no control over whether the underlying
securities or currencies 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 or currency 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. 

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
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. As of December 31, 1994, the Fund had no securities on loan.

Security Transactions and Investment Income: Security transactions are recorded
on the trade date. Realized gains and losses from security and currency
transactions are calculated on the identified cost basis. Interest income is
recorded on the accrual basis.
   Net investment income (other than distribution fees), and unrealized 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. 

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 income to shareholders. Therefore, no federal
income tax provision is required.
   Withholding taxes on foreign interest have been provided for in accordance
with the Fund's understanding of the applicable country's tax rules and rates.

Equalization: The Fund follows the accounting practice known as equalization by
which a portion of the proceeds from sales and costs of reacquisitions of Fund
shares, equivalent on a per share basis to the amount of distributable net
investment income on the date of the transaction, is credited or charged to


                                      B-40
<PAGE>
                                      



undistributed net investment income. As a result, undistributed net investment
income per share is unaffected by sales or reacquisitions of the Fund's shares.

Dividends and Distributions: The Fund declares daily and pays dividends of net
investment income monthly and makes distributions at least annually of any net
capital gains. 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. These differences are primarily due to differing
treatments for foreign currency transactions. 

Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with AICPA Statement of Position
93-2: Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. The
effect of applying this Statement of Position was to reclassify $13,986,440 of
foreign currency losses to distributions in excess of net investment income from
accumulated net realized loss on investments. Tax return of capital
distributions are charged to paid-in capital. Net investment income, net
realized gains and net assets were not affected by this change.

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 .75% of the Fund's average daily net assets.
   The Fund has distribution agreements with Prudential Mutual Fund
Distributors, Inc. ("PMFD"), which acts as the distributor of the Class A shares
of the Fund, and with Prudential Securities Incorporated ("PSI"), which 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.
   On July 19, 1994, shareholders of the Fund approved amendments to the Class A
and Class B distribution plans under which the distribution plans became
compensation plans, effective August 1, 1994. Prior thereto, the distribution
plans were reimbursement plans, under which PMFD and PSI were reimbursed for
expenses actually incurred by them up to the amount permitted under the Class A
and Class B Plans, respectively. The Fund is not obligated to pay any prior or
future excess distribution costs (costs incurred by the Distributors in excess
of distribution fees paid by the Fund or contingent deferred sales charges
received by the Distributors). The rate of the distribution fees charged to
Class A and Class B shares of the Fund did not change under the amended plans of
distribution. The Fund began offering Class C shares on August 1, 1994.
   Pursuant to the Class A, B and C Plans, the Fund compensates the Distributors
for distribution-related activities at an annual rate of up to .30 of 1%, .75 of
1% and 1%, of the average daily net assets of the Class A, B and C shares,
respectively. Such expenses under the Plans were .15% of 1%, .75% of 1% and .75
of 1% of the average daily net assets of the Class A, B and C shares,
respectively, for the fiscal year ended December 31, 1994.
   PMFD has advised the Fund that it has received approximately $32,800 in
front-end sales charges resulting from sales of Class A shares during the fiscal
year ended December 31, 1994. From these fees, PMFD paid such sales charges to
dealers (PSI and Prusec) which in turn paid commissions to salespersons.
   PSI has advised the Fund that for the fiscal year ended December 31, 1994, it
received approximately $133,200 in contingent deferred sales charges imposed
upon certain redemptions by Class B 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.

Note 3. Other                 Prudential Mutual Fund Ser-
Transactions                  vices, Inc. ("PMFS"), a
with Affiliates               wholly-owned subsidiary of
                              PMF, serves as the Fund's transfer agent and
during the fiscal year ended December 31, 1994, the Fund incurred fees of
approximately $484,200 for the services of PMFS. As of December 31, 1994, fees
of approximately $36,000 were due to PMFS. Transfer agent fees and expenses in
the Statement of Operations include certain out-of-pocket expenses paid to
non-affiliates.

Note 4. Portfolio             Purchases and sales of invest-
Securities                    ment securities, other than
                              short-term investments and
                                    


                                      B-41
<PAGE>


written options, for the fiscal year ended December 31, 1994, aggregated
$1,449,290,570 and $1,564,259,022, respectively.
   At December 31, 1994, the Fund had outstanding forward currency contracts,
both to purchase and sell foreign currencies, as follows:
<TABLE>
<CAPTION>
Foreign Currency     Value at
    Purchase      Settlement Date     Current       Appreciation
    Contracts         Payable          Value       (Depreciaton)
- ----------------- ---------------   ------------   --------------
<S>               <C>               <C>            <C>
Australian
  Dollars,
  expiring
  3/15/95........  $    9,033,969   $  9,048,030    $      14,061
Belgian Francs,
  expiring
  1/30/95........       3,614,997      3,631,949           16,952
British Pounds,
  expiring
  1/23/95........      27,995,988     27,299,769         (696,219)
Canadian Dollars,
  expiring
  2/9/95.........      29,230,592     28,334,506         (896,086)
Danish Kroner,
  expiring
  3/6/95.........       1,701,182      1,718,292           17,110
Deutschemarks,
  expiring 1/6-
  3/28/95........     118,832,187    118,943,338          111,151
French Francs,
  expiring
  2/7/95.........       9,173,218      8,932,039         (241,179)
Italian Lira,
  expiring
  2/21/95........       9,633,135      9,732,170           99,035
Japanese Yen,
  expiring 2/14-
  3/13/95........      48,897,207     48,383,369         (513,838)
Netherland
  Guilders,
  expiring
  3/6/95.........       3,591,662      3,652,347           60,685
New Zealand
  Dollars,
  expiring 2/14-
  4/26/95........      18,897,841     19,348,850          451,009
Spanish Pesetas,
  expiring
  2/22/95........       1,596,391      1,608,469           12,078
Swedish Krona,
  expiring
  2/7/95.........       2,918,033      2,877,872          (40,161)
Swiss Francs,
  expiring
  1/23/95........      13,002,045     12,877,341         (124,704)
                  ---------------   ------------   --------------
                   $  298,118,447   $296,388,341    $  (1,730,106)
                  ---------------   ------------   --------------
                  ---------------   ------------   --------------
</TABLE>

<TABLE>
<CAPTION>
                     Value at
Foreign Currency  Settlement Date     Current       Appreciation
 Sale Contracts     Receivable         Value       (Depreciaton)
- ----------------- ---------------   ------------   --------------
<S>               <C>               <C>            <C>
Australian
  Dollars,
  expiring 2/17-
  3/6/95.........  $   11,417,188   $ 11,680,595    $    (263,407)
Belgian Francs,
  expiring
  1/30/95........       2,744,200      2,748,441           (4,241)
British Pounds,
  expiring
  1/23/95........      32,901,182     32,791,369          109,813
Canadian Dollars,
  expiring
  2/9/95.........      28,078,686     27,247,763          830,923
Danish Kroner,
  expiring 2/6-
  3/6/95.........       5,484,985      5,358,026          126,959
Deutschemarks,
  expiring 1/23-
  3/28/95........     110,911,633    111,200,317         (288,684)
Irish Punts,
  expiring
  3/10/95........       3,526,159      3,551,890          (25,731)
Italian Lira,
  expiring
  2/21/95........      11,734,946     11,794,472          (59,526)
Japanese Yen,
  expiring 2/14-
  3/13/95........      32,519,019     32,158,719          360,300
New Zealand
  Dollars,
  expiring 2/14-
  4/26/95........      10,197,180     10,503,442         (306,262)
Spanish Pesetas,
  expiring
  2/22/95........       3,064,395      3,082,599          (18,204)
Swiss Francs,
  expiring
  1/23/95........      12,880,786     12,877,341            3,445
                  ---------------   ------------   --------------
                   $  265,460,359   $264,994,974    $     465,385
                  ---------------   ------------   --------------
                  ---------------   ------------   --------------
</TABLE>

   Transactions in options written during the fiscal year ended December 31,
1994, were as follows:
<TABLE>
<CAPTION>
                                      Number of
                                      Contracts     Premiums
                                        (000)       Received
<S>                                   <C>          <C>
                                      ----------   -----------
Options outstanding at
  December 31, 1993.................     116,811   $   663,233
Options written.....................     441,702     3,003,985
Options terminated in closing
  purchase transactions.............    (121,415)     (979,056)
Options expired.....................    (230,110)   (1,284,174)
Options exercised...................    (166,330)     (937,361)
                                      ----------   -----------
Options outstanding at
  December 31, 1994.................      40,658   $   466,627
                                      ----------   -----------
                                      ----------   -----------
</TABLE>

 


                                      B-42
<PAGE>

   The federal income tax basis of the Portfolio's investments at December 31,
1994 was $233,634,022 and, accordingly, net unrealized depreciation for federal
income tax purposes was $5,172,831 (gross unrealized appreciation--$981,541
gross unrealized depreciation--$6,154,372).
   For federal income tax purposes, the Fund has a capital loss carryforward as
of December 31, 1994, of approximately $87,639,600 of which $45,765,500 expires
in 1997, $23,240,000 expires in 1998 and $18,634,100 expires in 2002.
   The Fund will elect to treat approximately $2,165,600 of net capital losses
and $5,287,500 of net foreign currency losses incurred in the two month period
ended December 31, 1994 as having been incurred in the following fiscal year.

Note 5. Joint                 The Fund, along with other
Repurchase                    affiliated registered invest-
Agreement Account             ment companies, transfers
                              uninvested cash balances into a single joint
account, the daily aggregate balance of which is invested in one or more
repurchase agreements collateralized by U.S. Treasury or Federal agency
obligations. As of December 31, 1994, the Fund has a 3.2% undivided interest in
the joint account. The undivided interest for the Fund represents $25,018,000 in
the principal amount. As of such date, each repurchase agreement in the joint
account and the collateral therefore were as follows:
   Goldman, Sachs & Co., 5.75%, in the principal amount of $250,000,000,
repurchase price $250,159,722, due 1/3/95. The value of the collateral including
accrued interest is $255,000,108.
   Lehman Government Securities Inc., 5.90%, in the principal amount of
$70,000,000, repurchase price $70,045,889, due 1/3/95. The value of the
collateral including accrued interest is $71,379,084.
   Morgan Stanley & Co., 5.75%, in the principal amount of $250,000,000,
repurchase price $250,159,722, due 1/3/95. The value of the collateral including
accrued interest is $255,146,220.
   Smith Barney Inc., 5.95%, in the principal amount of $200,000,000, repurchase
price $200,132,222, due 1/3/95. The value of the collateral including accrued
interest is $204,036,161.

Note 6. 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 3.0%. Class B shares are sold with a
contingent deferred sales charge which declines from 3% 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 will
automatically convert to Class A shares on a quarterly basis approximately five
years after purchase commencing in or about February 1995.
   There are 2 billion authorized shares of $.001 par value common stock divided
equally into Class A, B and C shares. Of the 31,419,226 shares of common stock
issued and outstanding at December 31, 1994, PMF owned 12,284 Class A shares.
   Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A                             Shares         Amount
                                  -----------   ------------
<S>                               <C>           <C>
Year ended December 31, 1994:
Shares sold.....................      818,956   $  6,611,489
Shares issued in reinvestment of
  dividends and distributions...      477,735      3,708,750
Shares reacquired...............  (11,028,813)   (85,609,639)
                                  -----------   ------------
Net decrease in shares
  outstanding...................   (9,732,122)  $(75,289,400)
                                  -----------   ------------
                                  -----------   ------------
Year ended December 31, 1993:
Shares sold.....................      420,829   $  3,430,997
Shares issued in reinvestment of
  dividends and distributions...      537,723      4,448,300
Shares reacquired...............  (11,665,755)   (96,009,197)
                                  -----------   ------------
Net decrease in shares
  outstanding...................  (10,707,203)  $(88,129,900)
                                  -----------   ------------
                                  -----------   ------------
<CAPTION>
Class B
<S>                               <C>           <C>
Year ended December 31, 1994:
Shares sold.....................      741,502   $  5,987,116
Shares issued in reinvestment of
  dividends and distributions...      131,446      1,025,848
Shares reacquired...............   (2,424,396)   (18,845,429)
                                  -----------   ------------
Net decrease in shares
  outstanding...................   (1,551,448)  $(11,832,465)
                                  -----------   ------------
                                  -----------   ------------
Year ended December 31, 1993:
Shares sold.....................    2,410,382   $ 20,232,567
Shares issued in reinvestment of
  dividends and distributions...      122,288      1,015,781
Shares reacquired...............   (2,158,964)   (17,957,840)
                                  -----------   ------------
Net increase in shares
  outstanding...................      373,706   $  3,290,508
                                  -----------   ------------
                                  -----------   ------------
<CAPTION>
Class C
<S>                               <C>           <C>
August 1, 1994* through December 
  31, 1994:
Shares sold.....................           26   $        200
Shares issued in reinvestment of
  dividends.....................           --              2
                                  -----------   ------------
Net increase in shares
  outstanding...................           26   $        202
                                  -----------   ------------
                                  -----------   ------------
</TABLE>

- ---------------
* Commencement of offering of Class C shares.
 
                                      B-43
<PAGE>


 PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
 Financial Highlights
<TABLE>
<CAPTION>
                                                                   Class ADD                                     Class B
                                      -------------------------------------------------------------------   -----------------
<S>                                   <C>        <C>        <C>            <C>        <C>        <C>        <C>       <C>
                                          Year Ended         Ten Months                                        Year Ended
                                         December 31,          Ended          Year Ended February 28,         December 31,
                                      -------------------   December 31,   ------------------------------   -----------------
                                        1994       1993        1992@         1992       1991       1990      1994      1993
                                      --------   --------   ------------   --------   --------   --------   -------   -------
<CAPTION>
 PER SHARE OPERATING
  PERFORMANCE:
<S>                                   <C>        <C>        <C>            <C>        <C>        <C>        <C>       <C>
 Net asset value, beginning of
  period............................  $   8.43   $   7.77     $   8.39     $   8.79   $   8.56   $   8.93   $  8.44   $  7.79
                                      --------   --------   ------------   --------   --------   --------   -------   -------
 Income from investment operations
 Net investment income..............       .50        .59          .61          .71        .74        .73       .45       .54
 Net realized and unrealized gain
  (loss) on investment and foreign
  currency transactions.............     (1.09)       .63         (.36)        (.36)       .35       (.10)    (1.09)      .63
                                      --------   --------   ------------   --------   --------   --------   -------   -------
  Total from investment
    operations......................      (.59)      1.22          .25          .35       1.09        .63      (.64)     1.17
                                      --------   --------   ------------   --------   --------   --------   -------   -------
 Less distributions
 Dividends from net investment
  income............................      (.29)      (.48)        (.59)        (.71)      (.74)      (.73)     (.26)     (.44)
 Distributions from capital gains...      (.01)      (.08)        (.28)          --         --         --      (.01)     (.08)
 Tax return of capital
  distributions.....................      (.22)        --           --         (.04)      (.12)      (.27)     (.20)       --
                                      --------   --------   ------------   --------   --------   --------   -------   -------
  Total distributions...............      (.52)      (.56)        (.87)        (.75)      (.86)     (1.00)     (.47)     (.52)
                                      --------   --------   ------------   --------   --------   --------   -------   -------
 Net asset value, end of period.....  $   7.32   $   8.43     $   7.77     $   8.39   $   8.79   $   8.56   $  7.33   $  8.44
                                      --------   --------   ------------   --------   --------   --------   -------   -------
                                      --------   --------   ------------   --------   --------   --------   -------   -------
 TOTAL RETURN#:.....................     (7.02)%    16.12%        3.09%        4.24%     13.49%      7.20%    (7.69)%   15.29%
 RATIOS/SUPPLEMENTAL DATA:
 Net assets, end of period (000)....  $207,153   $320,406     $378,865     $271,714   $449,178   $437,558   $22,906   $39,440
 Average net assets (000)...........  $262,882   $355,018     $331,339     $399,714   $437,752   $455,386   $31,835   $36,197
 Ratios to average net assets:##
  Expenses, including distribution
    fees............................      1.46%      1.41%        1.30%*       1.20%      1.04%      1.07%     2.07%     2.01%
  Expenses, excluding distribution
    fees............................      1.31%      1.26%        1.15%*       1.15%      1.04%      1.07%     1.31%     1.26%
  Net investment income.............      6.04%      7.42%        9.08%*       8.43%      8.61%      8.16%     5.44%     6.67%
 Portfolio turnover rate                   554%       361%         201%         170%       250%       231%      554%      361%
 Total debt outstanding at end of
  period (000)......................        --         --           --           --   $ 20,240   $ 27,600        --        --
 Asset coverage@@...................        --         --           --           --   $ 23,193   $ 16,854        --        --
<CAPTION>
                                               Class B                Class C
                                      -------------------------    ------------
<S>                                   <C>           <C>            <C>
                                                    January 15,     August 1,
                                       Ten Months      1992+         1994DDD
                                         Ended        Through        Through
                                      December 31,  February 29,   December 31,
                                         1992@          1992           1994
                                      ------------  ------------   ------------
 PER SHARE OPERATING
  PERFORMANCE:
<S>                                   <C>           <C>            <C>
 Net asset value, beginning of
  period............................    $   8.40       $ 8.43         $ 7.69
                                          ------        -----          -----

 Income from investment operations
 Net investment income..............         .57          .08            .14
 Net realized and unrealized gain
  (loss) on investment and foreign
  currency transactions.............        (.35)        (.03)          (.32)
                                          ------        -----          -----

  Total from investment
    operations......................         .22          .05           (.18)
                                          ------        -----          -----

 Less distributions
 Dividends from net investment
  income............................        (.55)        (.08)          (.10)
 Distributions from capital gains...        (.28)          --             --
 Tax return of capital
  distributions.....................          --           --           (.08)
                                          ------        -----          -----

  Total distributions...............        (.83)        (.08)          (.18)
                                          ------        -----          -----

 Net asset value, end of period.....    $   7.79       $ 8.40         $ 7.33
                                          ------        -----          -----
                                          ------        -----          -----

 TOTAL RETURN#:.....................        2.70%        0.58%         (2.44)%
 RATIOS/SUPPLEMENTAL DATA:
 Net assets, end of period (000)....    $ 33,500       $1,049         $  193**
 Average net assets (000)...........    $ 18,358       $  456         $  197**
 Ratios to average net assets:##
  Expenses, including distribution
    fees............................        1.90%*       1.03%*         1.05%*
  Expenses, excluding distribution
    fees............................        1.15%*        .28%*          .30%*
  Net investment income.............        8.54%*       9.43%*         3.30%*
 Portfolio turnover rate ...........         201%         170%           554%
 Total debt outstanding at end of
  period (000)......................          --           --             --
 Asset coverage@@...................          --           --             --
</TABLE>

 ----------------
   * Annualized.
  ** Figures are actual and not rounded to the nearest thousand.
   D Commencement of offering of Class B shares.
  DD Prior to October 7, 1991, the Fund was organized as a closed-end fund. 
 DDD Commencement of offering of Class C shares.
   @ The Fund changed its fiscal year end to December 31.
  @@ Per $1,000 of debt outstanding.
   # Total return does not consider the effect 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.
  ## Because of the event referred to in DDD and the timing of such, the ratios
     for the Class C shares are not necessarily comparable to that of Class A or
     B shares and are not necessarily indicative of future ratios.

See Notes to Financial Statements.



                                      B-44
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS
 To the Board of Directors and Shareholders of
 Prudential Intermediate Global Income Fund, Inc.
 
 In our opinion, the accompanying statement of assets and liabilities, including
 the portfolio of investments, and the related statements of operations and of
 changes in net assets and the financial highlights present fairly, in all
 material respects, the financial position of Prudential Intermediate Global
 Income Fund, Inc. (the "Fund") at December 31, 1994, the results of its
 operations for the year then ended, the changes in its net assets for the two
 years then ended and the financial highlights for the two years ended December
 31, 1994, for the ten month period ended December 31, 1992 and for each of the
 three years in the period ended February 29, 1992 in conformity with generally
 accepted accounting principles. These financial statements and financial
 highlights (hereafter referred to as "financial statements") are the
 responsibility of the Fund's management; our responsibility is to express an
 opinion on these financial statements based on our audits. We conducted our
 audits of these financial statements in accordance with generally accepted
 auditing standards which require that we plan and perform the audit to obtain
 reasonable assurance about whether the financial statements are free of
 material misstatement. An audit includes examining, on a test basis, evidence
 supporting the amounts and disclosures in the financial statements, assessing
 the accounting principles used and significant estimates made by management,
 and evaluating the overall financial statement presentation. We believe that
 our audits, which included confirmation of securities at December 31, 1994 by
 correspondence with the custodian and brokers, provide a reasonable basis for
 the opinion expressed above. 
 

 PRICE WATERHOUSE LLP 
 1177 Avenue of the Americas
 New York, New York 
 February 21, 1995
     



                                      B-45

<PAGE>

                                   APPENDIX A

                        DESCRIPTION OF SECURITY RATINGS

Moody's lnvestors Service

     Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

     Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than Aaa bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

     A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
 
     Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

     Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

     B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

     Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
 
     Ca: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

     C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Commercial Paper

     Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months.

     P-1: The designation "Prime-1" or "P-1" indicates the highest quality
repayment capacity of the rated issue.

     P-2: The designation "Prime-2" or "P-2" indicates a strong capacity for
repayment.

Standard & Poor's Ratings Group
                    
     AAA: Debt rated AAA has the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

     AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.

     A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

                                      A-1

<PAGE>

     BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories.

     BB, B, CCC, CC: Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions.

Commercial Paper

     Standard & Poor's commercial paper ratings are current assessments of the
likelihood of timely payment of debt having an original maturity of no more than
270 days.

     A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is very strong.

     A-2: Capacity for timely payment on issues with the designation A-2 is
strong. However, the relative degree of safety is not as overwhelming as for
issues designated A-1.

                                      A-2


<PAGE>

                                     PART C

                               OTHER INFORMATION

Item 24. Financial Statements and Exhibits

     (a) Financial Statements:

        (1) Financial Statements incorporated by reference in the Prospectus
            constituting Part A of this Registration Statement: 
   
            Financial Highlights.
    
        (2) Financial statements included in the Statement of Additional
            Information constituting Part B of this Registration Statement:
   
            Portfolio of Investments at December 31, 1994. 

            Statement of Assets and Liabilities at December 31, 1994.

            Statement of Operations for the Fiscal Year Ended December 31, 1994.

            Statement of Changes in Net Assets for the Fiscal Years ended 
            December 31, 1994 and 1993.
    
            Notes to Financial Statements.

            Financial Highlights.

            Report of Independent Accountants.


      (b) Exhibits:
   
          1    Restated Articles of Incorporation.*
    
          2.   Amended By-Laws of Registrant. (Incorporated by reference to
               Exhibit 2 (b) to Registration Statement on Form N-1A, File No.
               33-42093, filed on August 13, 1991.)

          3.   Not Applicable.

          4.   (a) Specimen stock certificates for Class A and Class B shares.
               (Incorporated by reference to Exhibit 4 to Post-Effective
               Amendment No. 1 to Registration Statement on Form N-1A, File No.
               33-42093.)

          (b)  Instruments Defining Rights of Shareholders. (Incorporated by
               reference to Exhibit 4(b) to Post-Effective Amendment No. 4 to
               the Registration Statement on form N-1A filed via EDGAR on March
               2, 1994 (File No. 33-42093).)

          5.   (a) Management Agreement between the Registrant and Prudential
               Mutual Fund Management, Inc. (Incorporated by reference to
               Exhibit 6(a) of Amendment No. 1 to Registration Statement on Form
               N-2, File No. 2-82976.)

               (b) Subadvisory Agreement between Prudential Mutual Fund
               Management, Inc. and The Prudential Investment Corporation.
               (Incorporated by reference to Exhibit 6(b) of Amendment No. 1 to
               Registration Statement on Form N-2, File No. 2-82976.)

               (c) Management Agreement between Registrant and Prudential Mutual
               Fund Management, Inc. (Incorporated by reference to Exhibit 5(c)
               to Registration Statement on Form N-1A, File No. 33-42093, filed
               on August 13, 1991.)

               (d) Subadvisory Agreement between Prudential Mutual Fund
               Management, Inc. and The Prudential Investment Corporation.
               (Incorporated by reference to Exhibit 5(d) to Registration
               Statement on Form N-1A, File No. 33-42093, filed on August 13,
               1991.)

          6.   (a) Distribution Agreement between the Registrant and Prudential
               Mutual Fund Distributors, Inc. for Class A shares. (Incorporated
               by reference to Exhibit 6(a) to Registration Statement on Form
               N-1A, File No. 33-42093, filed on August 13, 1991.)
              -------------------- 
              *Filed herewith.


                                      C-1

<PAGE>


             (b) Distribution Agreement between the Registrant and Prudential
             Securities Incorporated for Class B shares. (Incorporated by
             reference to Exhibit 6(b) to Post-Effective Amentment No. 1 to
             Registration Statement on Form N-1A, File No. 33-42093.)

             (c) Selected Dealer Agreement. (Incorporated by reference to
             Exhibit 6(b) to Registration Statement on Form N-1A, File No.
             33-42093, filed on August 13, 1991.)

             (d) Amended and Restated Distribution Agreement with respect to
             Class A shares between the Registrant and Prudential Mutual Fund
             Distributors, Inc. (Incorporated by reference to Exhibit 6(d) to
             Post-Effective Amendment No. 4 to the Registration Statement on
             form N-1A filed via EDGAR on March 2, 1994 (File No. 33-42093).)

             (e) Amended and Restated Distribution Agreement with respect to
             Class B shares between the Registrant and Prudential Securities
             Incorporated. (Incorporated by reference to Exhibit 6(e) to
             Post-Effective Amendment No. 4 to the Registration Statement on
             form N-1A filed via EDGAR on March 2, 1994 (File No. 33-42093).)
   
            (f) Distribution Agreement for Class A shares.*

            (g) Distribution Agreement for Class B shares.*

            (h) Distribution Agreement for Class C shares.*
    
        7.  Not Applicable.

        8.  (a) Custodian Contract between the Registrant and State Street Bank
            and Trust Company. (Incorporated by reference to Exhibit 9 to
            Registration Statement on Form N-2, File No. 2-82976.)

            (b) Custodian Contract between the Registrant and State Street Bank
            and Trust Company. (Incorporated by reference to Exhibit 8(b) to
            Registration Statement on Form N-1A, File No. 33-42093, filed on
            August 13, 1991.)

        9.  (a) Transfer Agency and Service Agreement between the Registrant and
            Prudential Mutual Fund Services, Inc. (Incorporated by reference to
            Exhibit 10(a) of Amendment No. 2 to Registration Statement on Form
            N-2, File No. 2-82976.)

            (b) Transfer Agency and Service Agreement between the Registrant and
            Prudential Mutual Fund Services, Inc. (Incorporated by reference to
            Exhibit 9(b) to Registration Statement on Form N-1A, File No.
            33-42093, filed on August 13, 1991.)

   
        10. Opinion of Shereff, Friedman, Hoffman & Goodman LLP.*
    

        11. Consent of Independent Accountants.*

        12. Not Applicable.

        13. Subscription Agreement between the Registrant and Prudential Mutual
            Fund Management, Inc. (Incorporated by reference to Exhibit 14 to
            Pre-Effective Amendment No. 2 to Registration Statement on Form N-2,
            File No. 2-82976.)

        14. Not Applicable.

        15. (a) Plan of Distribution pursuant to Rule 12b-1 for Class A shares.
            (Incorporated by reference to Exhibit 15 to Registration Statement
            on Form N-1A, File No. 33-42093, filed on August 13, 1991.)

            (b) Form of Plan of Distribution pursuant to Rule 12b-1 for Class B
            shares. (Incorporated by reference to Exhibit 15(b) to
            Post-Effective Amendment No. 1 to Registration Statement on Form
            N-1A, File No. 33-42093.)

            (c) Distribution and Service Plan with respect to Class A shares
            between the Registrant and Prudential Mutual Fund Distributors, Inc.
            (Incorporated by reference to Exhibit 15(c) to Post-Effective
            Amendment No. 4 to the Registration Statement on form N-1A filed via
            EDGAR on March 2, 1994 (File No. 33-42093).)

            (d) Distribution and Service Plan with respect to Class B shares
            between the Registrant and Prudential Securities Incorporated.
            (Incorporated by reference to Exhibit 15(d) to Post-Effective
            Amendment No. 4 to the Registration Statement on form N-1A filed via
            EDGAR on March 2, 1994 (File No. 33-42093).)
            ------------------------
            *Filed herewith.

                                      C-2
<PAGE>
   
            (e) Distribution and Service Plan for Class A shares.*

            (f) Distribution and Service Plan for Class B shares.*

            (g) Distribution and Service Plan for Class C shares.*

    
        16. (a) Schedule of Computation of Performance Quotations.
            (Incorporated by reference to Exhibit 16 to Post-Effective Amendment
            No. 1 to Registration Statement on Form N-1A File No. 33-42093.)

            (b) Schedule of Calculation of Aggregate Total Return for Class A
            and Class B shares. (Incorporated by reference to Exhibit 16(b) to
            Post-Effective Amendment No. 4 to the Registration Statement on form
            N-1A filed via EDGAR on March 2, 1994 (File No. 33-42093).)

   
        27. Financial Data Schedules*
    

Item 25. Persons Controlled by or under Common Control with Registrant

     None.

Item 26. Number of Holders of Securities

   
     As of January 27, 1995 there were 27,409, 1,810 and 2 record holders of
Class A, Class B and Class C shares of common stock, $.001 par value per share,
of the Registrant, respectively.
    

Item 27. Indemnification

     As permitted by Sections 17(h) and (i) of the Investment Company Act of
1940 (the 1940 Act) and pursuant to Article VII 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 (Exhibits 6(a)
and (b) 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.

     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 Sections 17(h) and 17(i) of such Act remain
in effect and are consistently applied.


                                      C-3

<PAGE>

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, 1994).

     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  
- ----------------      -----------------                    ---------------------                
     (a) Prudential Mutual Fund Management, Inc.
<S>                   <C>                                  <C>
   
Brendan D. Boyle      Executive Vice President,            Executive Vice President, Director of Marketing and Director,
                      Director of Marketing and              PMF; Senior Vice President, Prudential Securities
                      Director                               Incorporated (Prudential Securities); Chairman and Director
                                                             of Prudential Mutual Fund Distributors (PMFD)

Stephen P. Fisher     Senior Vice President                Senior Vice President, PMF; Senior Vice President, Prudential
                                                             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 and                 Securities; Director, Prudential Mutual Fund Services, Inc.
                      Director                               (PMFS)

Robert F. Gunia       Executive Vice                       Executive Vice President, Chief Financial and Administrative
                      President, Chief                       Officer, Treasurer and Director, PMF; Senior Vice President,
                      Financial and Administrative           Prudential Securities; Executive Vice President, Treasurer,
                      Officer, Treasurer, and                Comptroller and Director, PMFD; Director, PMFS
                      Director 

Lawrence C. McQuade   Vice Chairman                        Vice Chairman, PMF 

Timothy J. O'Brien    Director                             President, Chief Executive Officer, Chief Operating Officer and
                                                             Director, PMFD; Chief Executive Officer and Director, PMFS; 
                                                             Director, PMF 

Richard A. Redeker    President, Chief                     President, Chief Executive Officer and Director, PMF; Executive
                      Executive Officer and                  Vice President, Director and Member of Operating
                      Director                               Committee, Prudential Securities; Director, PSG; Executive
                                                             Vice President, PIC; Director, PMFD; Director, PMFS 
    
S. Jane Rose          Senior Vice President,               Senior Vice President, Senior Counsel and Assistant Secretary,
                      Senior Counsel                         PMF; Senior Vice President and Senior Counsel, Prudential
                      and Assistant                          Securities
                      Secretary 


   
     (b) The Prudential Investment Corporation (PIC)
</TABLE>

     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.
    

                                      C-4

<PAGE>


     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>
Martin A. Berkowitz       Senior Vice President and           Senior Vice President and Chief Financial and Compliance
                          Chief Financial Officer and           Officer, PIC; Vice President, Prudential
                          Compliance Officer                                                            

William M. Bethke         Senior Vice President               Senior Vice President, Prudential; Senior Vice President, PIC
Two Gateway Center
Newark, NJ 07102                    

John D. Brookmeyer, Jr.   Senior Vice President and           Senior Vice President, Prudential; Senior Vice President and
51 JFK PKWY               Director                              Director, PIC
Short Hills, NJ 07078                        

Theresa A. Hamacher       Vice President                      Vice President, Prudential; Vice President, PIC

Harry E. Knapp            President, Director and Chief       President, Director and Chief Executive Officer, PIC; Vice
                          Executive Officer                     President, Prudential
    
William P. Link           Senior Vice President               Executive Vice President, Prudential; Senior Vice President,
Four Gateway Center                                             PIC
Newark, NJ 07102                                           
   
Richard A. Redeker        Executive Vice President            President, Chief Executive Officer and Director, PMF; 
                                                                Executive Vice President, Director and member of Operating 
                                                                Committee, Prudential Securities; Director, PSG; Executive 
                                                                Vice President, PIC; Director, PMFD; Director, PMFS

Arthur F. Ryan            Director                            Chairman of the Board, President and Chief Executive Officer, 
                                                                 Prudential; Director, PIC; Chairman of the Board and Director, 
                                                                 PSG

Eric A. Simonsen          Director                            Vice President and Director, PIC; Executive Vice President, 
                                                                 Prudential
    
Claude J. Zinngrabe, Jr.  Executive Vice President            Vice President, Prudential; Executive Vice President, PIC
</TABLE>


                                      C-5

<PAGE>

Item 29. Principal Underwriters

   
     (a)(i) Prudential Securities

     Prudential Securities is distributor for Prudential Government Securities
Trust (Intermediate Term Series) and The Target Portfolio Trust, for Class B
shares of Prudential Adjustable Rate Securities Fund, Inc. and for Class B and
Class C shares of Prudential Allocation Fund, Prudential California Municipal
Fund (California Income Series and California Series), 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 Global Natural Resouces Fund, Inc.,
Prudential GNMA Fund, Inc., Prudential Government Income Fund, Inc., Prudential
Growth Opportunity Fund, Inc., Prudential High Yield Fund, Inc., Prudential
IncomeVertible(R) Fund, Inc., Prudential Intermediate Global Income Fund, Inc.,
Prudential Multi-Sector Fund, Inc., Prudential Municipal Bond Fund, Prudential
Municipal Series Fund (except Connecticut Money Market Series, Massachusetts
Money Market Series, New York Money Market Series and New Jersey Money Market
Series), Prudential National Municipals Fund, Inc., Prudential Pacific Growth
Fund, Inc., Prudential Short-Term Global Income Fund, Inc., Prudential
Strategist Fund, Inc., Prudential Structured Maturity Fund, Inc., Prudential
U.S. Government Fund, Prudential Utility 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 trusts:

                  Corporate Investment Trust Fund
                  Prudential Equity Trust Shares
                  National Equity Trust
                  Prudential Unit Trusts
                  Government Securities Equity Trust
                  National Municipal Trust

     (ii) Prudential Mutual Fund Distributors, Inc.

     Prudential Mutual Fund Distributors, Inc, is distributor for Command
Government Fund, Command Money Fund, Command Tax-Free Fund, Prudential
California Municipal Fund (California Money Market Series), Prudential
Government Securities Trust (Money Market Series and U.S. Treasury Money Market
Series), Prudential Institutional Liquidity Portfolio, Inc., Prudential-Bache
MoneyMart Assets Inc. (d/b/a Prudential MoneyMart Assets), Prudential Municipal
Series Fund (Connecticut Money Market Series, Massachusetts Money Market Series,
New York Money Market Series and New Jersey Money Market Series),
Prudential-Bache Special Money Market Fund, Inc. (d/b/a Prudential Special Money
Market Fund), Prudential-Bache Tax-Free Money Fund, Inc. (d/b/a Prudential
Tax-Free Money Fund), and for Class A shares of Prudential Adjustable Rate
Securities Fund, Inc., Prudential California Municipal Fund (California Income
Series and California Series), 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 Global Natural Resources Fund, Inc., Prudential GNMA Fund,
Inc., Prudential Government Income Fund, Inc., Prudential Growth Opportunity
Fund, Inc., Prudential High Yield Fund, Inc., Prudential IncomeVertible(R) Fund,
Inc., Prudential Intermediate Global Income Fund, Inc., Prudential Multi-Sector
Fund, Inc., Prudential Municipal Bond Fund, Prudential Municipal Series Fund
(Arizona Series, Georgia Series, Hawaii Income Series, Maryland Series,
Massachusetts Series, Michigan Series, Minnesota Series, New Jersey Series,
North Carolina Series, Ohio Series and Pennsylvania Series), Prudential National
Municipals Fund, Inc., Prudential Pacific Growth Fund, Inc., Prudential
Short-Term Global Income Fund, Inc., Prudential Strategist Fund, Inc.,
Prudential Structured Maturity Fund, Inc., Prudential U.S. Government Fund and
Prudential Utility Fund, Inc., Global Utility Fund, Inc., Nicholas-Applegate
Fund, Inc. (Nicholas-Applegate Growth Equity Fund) and The BlackRock Government
Income Trust.
    

                                      C-6

<PAGE>

   
     (b)(i) Information concerning the officers and directors 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>   
Alan D. Hogan ..............    Executive Vice President, Chief Administrative Officer and Director        None
George A. Murray ...........    Executive Vice President and Director                                      None
John P. Murray .............    Executive Vice President and Director of Risk Management                   None
Leland B. Paton ............    Executive Vice President and Director                                      None
Vincent T. Pica, II ........    Director; Member of Operating Committee and Executive Vice President       None,
Richard A. Redeker .........    Director                                                                   Director
Hardwick Simmons ...........    Chief Executive Officer, President and Director                            None
Lee B. Spencer, Jr. ........    General Counsel, Executive Vice President and Director                     None
</TABLE>

     (ii) Information concerning the officers and directors of Prudential Mutual
Fund Distributors, Inc. is set forth below.

<TABLE>
<CAPTION>
                                Positions and                                                              Positions and
                                Offices with                                                               Offices with
Name(1)                         Underwriter                                                                Registrant
- -------                         -------------                                                              -------------
<S>                             <C>                                                                        <C>    
Joanne Accurso-Soto .......     Vice President                                                             None
Dennis Annarumma ..........     Vice President, Assistant Treasurer and Assistant Comptroller              None
Phyllis J. Berman .........     Vice President                                                             None
Brendan D. Boyle ..........     Chairman and Director                                                      None
Stephen P. Fisher .........     Vice President                                                             None
Frank W. Giordano .........     Executive Vice President, General Counsel, Secretary and Director          None
Robert F. Gunia ...........     Executive Vice President, Director, Treasurer, Comptroller and Director    Vice President
Timothy J. O'Brien ........     President, Chief Executive Officer, Chief Operating Officer and Director   None
Richard A. Redeker ........     Director                                                                   Director
Andrew J. Varley ..........     Vice President                                                             None
Anita L. Whelan ...........     VIce President and Assistant Secretary                                     None
    
<FN>
- -----------

(1) The address of each person named is One Seaport Plaza, New York, NY 10292
    unless otherwise indicated.

(c) Registrant has no principal underwriter who is not an affiliated person of
    the Registrant.
</FN>
</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 Prudential Investment Corporation, Prudential
Plaza, 745 Broad Street, Newark, New Jersey 07102, the Registrant, One Seaport
Plaza, New York, New York 10292, and Prudential Mutual Fund Services, Inc.,
Raritan Plaza One, Edison, New Jersey 08837. Documents required by Rules
31a-1(b)(5), (6), (7), (9), (10) and (11) and 31a-1(f) will be kept at Three
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.
    

Item 31. Management Services

     Other than as set forth under the captions "How the Fund is
Managed--Manager" and "How the Fund is Managed--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

   
     The Registrant hereby undertakes to furnish each person to whom a
Prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, 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 meets all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and 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 24th day of February, 1995.
    

                                       PRUDENTIAL INTERMEDIATE GLOBAL INCOME
                                         FUND, INC. 
                                       
                                       /s/       LAWRENCE C. MCQUADE
                                       -------------------------------------
                                            Lawrence C. McQuade, 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.

   
      Signature                   Title                             Date
      ---------                   -----                             ----
/s/ LAWRENCE C. MCQUADE      President and Director            February 24, 1995
- -----------------------
  Lawrence C. McQuade

/s/ THOMAS A. OWENS, JR.     Director                          February 24, 1995
- -----------------------
  Thomas A. Owens, Jr.

/s/ RICHARD A. REDEKER       Director                          February 24, 1995
- -----------------------
  Richard A. Redeker

/s/  GERALD A. STAHL         Director                          February 24, 1995
- -----------------------
   Gerald A. Stahl

/s/ STEPHEN STONEBURN        Director                          February 24, 1995
- -----------------------      
  Stephen Stoneburn

/s/ ROBERT H. WELLINGTON      Director                         February 24, 1995
- ------------------------
 Robert H. Wellington

/s/ GRACE TORRES            Principal Financial and            February 24, 1995
- ------------------------   Accounting Officer
   Grace Torres                     
         




<PAGE>

                               INDEX TO EXHIBITS
                                                                    Sequentially
                                                                      Numbered
Exhibit No.                 Description                                 Page
- -----------                 -----------                             ------------

   
     1.   Restated Articles of Incorporation.*
    

     2.   Amended By-Laws of Registrant. (Incorporated by
          reference to Exhibit 2 (b) to Registration Statement on
          Form N-1A, File No. 33-42093, filed on August 13,
          1991.)

     3.   Not Applicable.

     4.   (a) Specimen stock certificates for Class A and Class B
          shares. (Incorporated by reference to Exhibit 4 to
          Post-Effective Amendment No. 1 to Registration
          Statement on Form N-1A, File No. 33-42093.)

          (b) Instruments Defining Rights of Shareholders.
          (Incorporated by reference to Exhibit 4(b) to
          Post-Effective Amendment No. 4 to the Registration
          Statement on form N-1A filed via EDGAR on March 2, 1994
          (File No. 33-42093).)

     5.   (a) Management Agreement between the Registrant and
          Prudential Mutual Fund Management, Inc. (Incorporated
          by reference to Exhibit 6(a) of Amendment No. 1 to
          Registration Statement on Form N-2, File No. 2-82976.)

          (b) Subadvisory Agreement between Prudential Mutual
          Fund Management, Inc. and The Prudential Investment
          Corporation. (Incorporated by reference to Exhibit 6(b)
          of Amendment No. 1 to Registration Statement on Form
          N-2, File No. 2-82976.)

          (c) Management Agreement between Registrant and
          Prudential Mutual Fund Management, Inc. (Incorporated
          by reference to Exhibit 5(c) to Registration Statement
          on Form N-1A, File No. 33-42093, filed on August 13,
          1991.)

          (d) Subadvisory Agreement between Prudential Mutual
          Fund Management, Inc. and The Prudential Investment
          Corporation. (Incorporated by reference to Exhibit 5(d)
          to Registration Statement on Form N-1A, File No.
          33-42093, filed on August 13, 1991.)

     6.   (a) Distribution Agreement between the Registrant and
          Prudential Mutual Fund Distributors, Inc. for Class A
          shares. (Incorporated by reference to Exhibit 6(a) to
          Registration Statement on Form N-1A, File No. 33-42093,
          filed on August 13, 1991.)

          (b) Distribution Agreement between the Registrant and
          Prudential Securities Incorporated for Class B shares.
          (Incorporated by reference to Exhibit 6(b) to
          Post-Effective Amendment No. 1 to Registration
          Statement on Form N-1A, File No. 33-42093.)

          (c) Selected Dealer Agreement. (Incorporated by
          reference to Exhibit 6(b) to Registration Statement on
          Form N-1A, File No. 33-42093, filed on August 13,
          1991.)

          (d) Amended and Restated Distribution Agreement with
          respect to Class A shares between the Registrant and
          Prudential Mutual Fund Distributors, Inc. (Incorporated
          by reference to Exhibit 6(d) to Post-Effective
          Amendment No. 4 to the Registration Statement on form
          N-1A filed via EDGAR on March 2, 1994 (File No.
          33-42093).)
  
          (e) Amended and Restated Distribution Agreement with
          respect to Class B shares between the Registrant and
          Prudential Securities Incorporated. (Incorporated by
          reference to Exhibit 6(e) to Post-Effective Amendment
          No. 4 to the Registration Statement on form N-1A filed
          via EDGAR on March 2, 1994 (File No. 33-42093).)

     
          (f) Distribution Agreement for Class A shares.*

          (g) Distribution Agreement for Class B shares.*

          (h) Distribution Agreement for Class C shares.*
    
          -------------------
          *Filed herewith.




<PAGE>


                                                                   Sequentially
                                                                     Numbered
Exhibit No.                 Description                                Page
- -----------                 -----------                             ------------

     7.   Not Applicable.
       
     8.   (a) Custodian Contract between the Registrant and State
          Street Bank and Trust Company. (Incorporated by
          reference to Exhibit 9 to Registration Statement on
          Form N-2, File No. 2-82976.)

          (b) Custodian Contract between the Registrant and State
          Street Bank and Trust Company. (Incorporated by
          reference to Exhibit 8(b) to Registration Statement on
          Form N-1A, File No. 33-42093, filed on August 13,
          1991.)

     9.   (a) Transfer Agency and Service Agreement between the
          Registrant and Prudential Mutual Fund Services, Inc.
          (Incorporated by reference to Exhibit 10(a) of
          Amendment No. 2 to Registration Statement on Form N-2,
          File No. 2-82976.)

          (b) Transfer Agency and Service Agreement between the
          Registrant and Prudential Mutual Fund Services, Inc.
          (Incorporated by reference to Exhibit 9(b) to
          Registration Statement on Form N-1A, File No. 33-42093,
          filed on August 13, 1991.)

   
     10.  Opinion of Shereff, Friedman, Hoffman & Goodman, LLP*
    

     11.  Consent of Independent Accountants.*

     12.  Not Applicable.

     13.  Subscription Agreement between the Registrant and
          Prudential Mutual Fund Management, Inc. (Incorporated
          by reference to Exhibit 14 to Pre-Effective Amendment
          No. 2 to Registration Statement on Form N-2, File No.
          2-82976.)

     14.  Not Applicable.

     15.  (a) Plan of Distribution pursuant to Rule 12b-1 for
          Class A shares. (Incorporated by reference to Exhibit
          15 to Registration Statement on Form N-1A, File No.
          33-42093, filed on August 13, 1991.)

          (b) Form of Plan of Distribution pursuant to Rule 12b-1
          for Class B shares. (Incorporated by reference to
          Exhibit 15(b) to Post-Effective Amendment No. 1 to
          Registration Statement on Form N-1A, File No.
          33-42093.)

          (c) Distribution and Service Plan with respect to Class
          A shares between the Registrant and Prudential Mutual
          Fund Distributors, Inc. (Incorporated by reference to
          Exhibit 15(c) to Post-Effective Amendment No. 4 to the
          Registration Statement on form N-1A filed via EDGAR on
          March 2, 1994 (File No. 33-42093).)

          (d) Distribution and Service Plan with respect to Class
          B shares between the Registrant and Prudential
          Securities Incorporated. (Incorporated by reference to
          Exhibit 15(d) to Post-Effective Amendment No. 4 to the
          Registration Statement on form N-1A filed via EDGAR on
          March 2, 1994 (File No. 33-42093).)

   
          (e) Distribution and Service Plan for Class A shares.*

          (f) Distribution and Service Plan for Class B shares.*

          (g) Distribution and Service Plan for Class C shares.*
    

     16.  (a) Schedule of Computation of Performance Quotations.
          (Incorporated by reference to Exhibit 16 to
          Post-Effective Amendment No. 1 to Registration
          Statement on Form N-1A File No. 33-42093.)

          (b) Schedule of Calculation of Aggregate Total Return
          for Class A and Class B shares. (Incorporated by
          reference to Exhibit 16(b) to Post-Effective Amendment
          No. 4 to the Registration Statement on form N-1A filed
          via EDGAR on March 2, 1994 (File No. 33-42093).)

   
     27.  Financial Data Schedules.*
    
          ---------------------
          *Filed herewith.



                                                                     EXHIBIT (1)

                PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.

                            ARTICLES OF RESTATEMENT

     PRUDENTIAL INTERMEDIATE GLOBAL 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 Charter of the Corporation is hereby restated in its entirety to
read as follows:

                                   ARTICLE I.

     The name of the corporation (hereinafter called the "Corporation") is
Prudential Intermediate Global 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, as
amended (the "Investment Company Act") 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 hereinafter 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 CT Corporation System, 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 the par
value of $.001 per share and of the aggregate par value of $2,000,000 to be
divided initially into three classes, consisting of 666,666,666 shares of Class
A Common Stock, 666,666,666 shares of Class B Common Stock and 666,666,668
shares of Class C Common Stock.

          (a) Each share of Class A Common Stock, Class B Common Stock and Class
     C 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 Board of
     Directors from time to time; (iv)

                                       2
<PAGE>


     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; and (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. 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, a "Conversion
     Date"), determined by the Board of Directors in accordance with applicable
     laws, rules, regulations, and 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

                                       3

<PAGE>


     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 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

                                       4

<PAGE>


     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 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

                                       5

<PAGE>

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 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 

                                       6
<PAGE>

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

                                       7
<PAGE>


     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 into series),
     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 the Corporation shall be
     classified or reclassified into series, may differ from class to class or
     from series to

                                       8

<PAGE>

     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, 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 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

                                       9
<PAGE>


     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;

               (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

                                       10
<PAGE>


          (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 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

                                       11
<PAGE>

     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,
     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 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

                                       12
<PAGE>

     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 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

                                       13
<PAGE>

     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.

               (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

                                       14
<PAGE>

          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 gains may be reduced by the amount offset.

          (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

                                       15
<PAGE>

     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 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.

                                       16
<PAGE>

     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.

     Section 11. Notwithstanding any provisions 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 outstanding shares of all classes or
series or of the outstanding shares of a particular class or classes or series,
as the case may be, 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 all classes or series or of the total number of shares of
such class or classes or series, as the case may be, outstanding and entitled to
vote thereupon pursuant to the provisions of these Articles of Incorporation.

                                       17
<PAGE>

                                   ARTICLE V.

                                   Directors

     The By-Laws of the Corporation may fix the number of directors at not less
than three 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, if there are
no shares outstanding, the number of directors may be less than three but not
less than one), 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 one year or for a period longer
than five years, and the term of office of at least one class shall expire each
year.

                                  ARTICLE VI.

                 Indemnification and Limitation of Liability of
                             Directors and Officers

     Section 1. The Corporation shall indemnify to the fullest extent permitted
by law (including the Investment Company Act), as currently in effect or as the
same may hereafter be amended, any person made or threatened to be made a party
to any action, suit or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that such person or such person's testator
or intestate is or was a director or officer of

                                       18
<PAGE>

the Corporation or serves or served at the request of the Corporation any other
enterprise as a director or officer. To the fullest extent permitted by law
(including the Investment Company Act), as currently in effect or as the same
may hereafter be amended, expenses incurred by any such person in defending any
such action, suit or proceeding shall be paid or reimbursed by the Corporation
promptly upon receipt by it of an undertaking of such person to repay such
expenses if it shall ultimately be determined that such person is not entitled
to be indemnified by the Corporation. The rights provided to any person by this
Article VI shall be enforceable against the Corporation by such person who shall
be presumed to have relied upon it in serving or continuing to serve as a
director or officer as provided above. No amendment of this Article VI shall
impair the rights of any person arising at any time with respect to events
occurring prior to such amendment. For purposes of this Article VI, the term
"Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation or merger; the term "other enterprise" shall
include any corporation, partnership, joint venture, trust or employee benefit
plan; service "at the request of the Corporation" shall include service as a
director or officer of the Corporation which imposes duties on, or involves
services by, such director or officer with respect to an employee benefit plan,
its participants or beneficiaries; any excise taxes assessed on a person with
respect to an employee benefit plan shall be deemed to

                                       19
<PAGE>

be indemnifiable expenses; and action by a person with respect to any employee
benefit plan which such person reasonably believes to be in the interest of the
participants and beneficiaries of such plan shall be deemed to be action not
opposed to the best interests of the Corporation.

     Section 2. A director of 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

                                       20
<PAGE>

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:

          (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.

                                       21
<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.

                                       22
<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
shares of capital stock 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.

                                       23
<PAGE>


                                 ARTICLE VIII.

                                  Amendments

     The Corporation reserves the right from time to time to amend, alter or
repeal any of the provisions of these Articles of Incorporation (including any
amendment that changes the terms of any of the outstanding shares by
classification, reclassification or otherwise), and to add or insert any other
provisions that may, under the statutes of the State of Maryland at the time in
force, be lawfully contained in articles of incorporation, and all rights at any
time conferred upon the stockholders of the Corporation by these Articles of
Incorporation are subject to the provisions of this Article VIII.

     SECOND: The provisions set forth in these Articles of Restatement are all
provisions of the Charter currently in effect. These Articles do not amend the
Charter of the Corporation.

     THIRD: The restatement of the Charter of the Corporation has been approved
by the affirmative vote of a majority of the Directors at a meeting duly called
and held on February 1, 1995. The Corporation currently has six directors. The
names of the directors currently in office are as follows:

                              Lawrence C. McQuade
                              Thomas A. Owens, Jr.
                              Richard A. Redeker
                              Gerald A. Stahl
                              Stephen Stoneburn
                              Robert H. Wellington

                                       24
<PAGE>


     IN WITNESS WHEREOF, PRUDENTIAL INTERMEDIATE GLOBAL 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 February 1, 1995.


                                          PRUDENTIAL INTERMEDIATE GLOBAL INCOME
                                            FUND, INC.


                                           By /s/ LAWRENCE C. MCQUADE
                                              ---------------------------------
                                              Lawrence C. McQuade
                                              President



Attest:  /s/ DEBORAH A. DOCS
         -------------------
         Deborah A. Docs
         Assistant Secretary

                                       25

<PAGE>


     THE UNDERSIGNED, President of Prudential Intermediate Global Income Fund,
Inc. who executed on behalf of said 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 further 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.


                                              /s/ LAWRENCE C. MCQUADE
                                              ---------------------------------
                                              Lawrence C. McQuade
                                              President
                                                                      



                                       26


                                                                  EXHIBIT 6(f)
                PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.

                             Distribution Agreement

                                (Class A Shares)


     Agreement made as of October 7, 1991, and amended and restated as of August
1, 1994, between Prudential Intermediate Global Income Fund, Inc., a Maryland
Corporation (the Fund) and Prudential Mutual Fund Distributors, Inc., a Delaware
Corporation (the Distributor).

                                   WITNESSETH

     WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the Investment Company Act), as a diversified, open-end, management
investment company and it is in the interest of the Fund to offer its Class A
shares for sale continuously;

     WHEREAS, the Distributor is a broker-dealer registered under the Securities
Exchange Act of 1934, as amended, and is engaged in the business of selling
shares of registered investment companies either directly or through other
broker-dealers;

     WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other, with respect to the continuous offering of the Fund's Class A shares
from and after the date hereof in order to promote the growth of the Fund and
facilitate the distribution of its Class A shares; and

     WHEREAS, upon approval by the Class A shareholders of the Fund it is
contemplated that the Fund will adopt a plan of distribution pursuant to Rule
12b-1 under the Investment Company Act (the Plan) authorizing payments by the
Fund to the Distributor with respect to the distribution of Class A shares of
the Fund and the maintenance of Class A shareholder accounts.

     NOW, THEREFORE, the parties agree as follows:

Section 1.  Appointment of the Distributor

     The Fund hereby appoints the Distributor as the principal underwriter and
distributor of the Class A shares of the Fund to sell Class A shares to the
public and the Distributor hereby accepts such appointment and agrees to act
hereunder. The Fund hereby agrees during the term of this Agreement to sell
Class A shares of the Fund to the Distributor on the terms and conditions set
forth below.





<PAGE>




Section 2.  Exclusive Nature of Duties

     The Distributor shall be the exclusive representative of the Fund to act as
principal underwriter and distributor of the Fund's Class A shares, except that:

     2.1 The exclusive rights granted to the Distributor to purchase Class A
shares from the Fund shall not apply to Class A shares of the Fund issued in
connection with the merger or consolidation of any other investment company or
personal holding company with the Fund or the acquisition by purchase or
otherwise of all (or substantially all) the assets or the outstanding shares of
any such company by the Fund.

     2.2 Such exclusive rights shall not apply to Class A shares issued by the
Fund pursuant to reinvestment of dividends or capital gains distributions.

     2.3 Such exclusive rights shall not apply to Class A shares issued by the
Fund pursuant to the reinstatement privilege afforded redeeming shareholders.

     2.4 Such exclusive rights shall not apply to purchases made through the
Fund's transfer and dividend disbursing agent in the manner set forth in the
currently effective Prospectus of the Fund. The term "Prospectus" shall mean the
Prospectus and Statement of Additional Information included as part of the
Fund's Registration Statement, as such Prospectus and Statement of Additional
Information may be amended or supplemented from time to time, and the term
"Registration Statement" shall mean the Registration Statement filed by the Fund
with the Securities and Exchange Commission and effective under the Securities
Act of 1933, as amended (Securities Act), and the Investment Company Act, as
such Registration Statement is amended from time to time.

Section 3.  Purchase of Class A Shares from the Fund

     3.1 The Distributor shall have the right to buy from the Fund the Class A
shares needed, but not more than the Class A shares needed (except for clerical
errors in transmission) to fill unconditional orders for Class A shares placed
with the Distributor by investors or registered and qualified securities dealers
and other financial institutions (selected dealers). The price which the
Distributor shall pay for the Class A shares so purchased from the Fund shall be
the net asset value, determined as set forth in the Prospectus.

     3.2 The Class A shares are to be resold by the Distributor or selected
dealers, as described in Section 6.4 hereof, to investors at the offering price
as set forth in the Prospectus.


                                       2

<PAGE>




     3.3 The Fund shall have the right to suspend the sale of its Class A shares
at times when redemption is suspended pursuant to the conditions in Section 4.3
hereof or at such other times as may be determined by the Board of Directors.
The Fund shall also have the right to suspend the sale of its Class A shares if
a banking moratorium shall have been declared by federal or New York
authorities.

     3.4 The Fund, or any agent of the Fund designated in writing by the Fund,
shall be promptly advised of all purchase orders for Class A shares received by
the Distributor. Any order may be rejected by the Fund; provided, however, that
the Fund will not arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of Class A shares. The Fund (or its agent) will
confirm orders upon their receipt, will make appropriate book entries and upon
receipt by the Fund (or its agent) of payment therefor, will deliver deposit
receipts for such Class A shares pursuant to the instructions of the
Distributor. Payment shall be made to the Fund in New York Clearing House funds
or federal funds. The Distributor agrees to cause such payment and such
instructions to be delivered promptly to the Fund (or its agent).

Section 4.  Repurchase or Redemption of Class A Shares by the Fund

     4.1 Any of the outstanding Class A shares may be tendered for redemption at
any time, and the Fund agrees to repurchase or redeem the Class A shares so
tendered in accordance with its Articles of Incorporation as amended from time
to time, and in accordance with the applicable provisions of the Prospectus. The
price to be paid to redeem or repurchase the Class A shares shall be equal to
the net asset value determined as set forth in the Prospectus. All payments by
the Fund hereunder shall be made in the manner set forth in Section 4.2 below.

     4.2 The Fund shall pay the total amount of the redemption price as defined
in the above paragraph pursuant to the instructions of the Distributor on or
before the seventh calendar day subsequent to its having received the notice of
redemption in proper form. The proceeds of any redemption of Class A shares
shall be paid by the Fund to or for the account of the redeeming shareholder, in
each case in accordance with applicable provisions of the Prospectus.

     4.3 Redemption of Class A shares or payment may be suspended at times when
the New York Stock Exchange is closed for other than customary weekends and
holidays, when trading on said Exchange is restricted, when an emergency exists
as a result of which disposal by the Fund of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Fund fairly
to determine the value of its net assets, or during any other period when the
Securities and Exchange Commission, by order,

                                       3

<PAGE>



so permits.

Section 5.  Duties of the Fund

     5.1 Subject to the possible suspension of the sale of Class A shares as
provided herein, the Fund agrees to sell its Class A shares so long as it has
Class A shares available.

     5.2 The Fund shall furnish the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Class A shares, and this
shall include one certified copy, upon request by the Distributor, of all
financial statements prepared for the Fund by independent public accountants.
The Fund shall make available to the Distributor such number of copies of its
Prospectus and annual and interim reports as the Distributor shall reasonably
request.

     5.3 The Fund shall take, from time to time, but subject to the necessary
approval of the Board of Directors and the shareholders, all necessary action to
fix the number of authorized Class A shares and such steps as may be necessary
to register the same under the Securities Act, to the end that there will be
available for sale such number of Class A shares as the Distributor reasonably
may expect to sell. The Fund agrees to file from time to time such amendments,
reports and other documents as may be necessary in order that there will be no
untrue statement of a material fact in the Registration Statement, or necessary
in order that there will be no omission to state a material fact in the
Registration Statement which omission would make the statements therein
misleading.

     5.4 The Fund shall use its best efforts to qualify and maintain the
qualification of any appropriate number of its Class A shares for sales under
the securities laws of such states as the Distributor and the Fund may approve;
provided that the Fund shall not be required to amend its Articles of
Incorporation or By-Laws to comply with the laws of any state, to maintain an
office in any state, to change the terms of the offering of its Class A shares
in any state from the terms set forth in its Registration Statement, to qualify
as a foreign corporation in any state or to consent to service of process in any
state other than with respect to claims arising out of the offering of its Class
A shares. Any such qualification may be withheld, terminated or withdrawn by the
Fund at any time in its discretion. As provided in Section 9.1 hereof, the
expense of qualification and maintenance of qualification shall be borne by the
Fund. The Distributor shall furnish such information and other material relating
to its affairs and activities as may be required by the Fund in connection with
such qualifications.



                                       4

<PAGE>




Section 6.  Duties of the Distributor

     6.1 The Distributor shall devote reasonable time and effort to effect sales
of Class A shares of the Fund, but shall not be obligated to sell any specific
number of Class A shares. Sales of the Class A shares shall be on the terms
described in the Prospectus. The Distributor may enter into like arrangements
with other investment companies. The Distributor shall compensate the selected
dealers as set forth in the Prospectus.

     6.2 In selling the Class A shares, the Distributor shall use its best
efforts in all respects duly to conform with the requirements of all federal and
state laws relating to the sale of such securities. Neither the Distributor nor
any selected dealer nor any other person is authorized by the Fund to give any
information or to make any representations, other than those contained in the
Registration Statement or Prospectus and any sales literature approved by
appropriate officers of the Fund.

     6.3 The Distributor shall adopt and follow procedures for the confirmation
of sales to investors and selected dealers, the collection of amounts payable by
investors and selected dealers on such sales and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
National Association of Securities Dealers, Inc. (NASD).

     6.4 The Distributor shall have the right to enter into selected dealer
agreements with registered and qualified securities dealers and other financial
institutions of its choice for the sale of Class A shares, provided that the
Fund shall approve the forms of such agreements. Within the United States, the
Distributor shall offer and sell Class A shares only to such selected dealers as
are members in good standing of the NASD. Class A shares sold to selected
dealers shall be for resale by such dealers only at the offering price
determined as set forth in the Prospectus.

Section 7.  Payments to the Distributor

     The Distributor shall receive and may retain any portion of any front-end
sales charge which is imposed on sales of Class A shares and not reallocated to
selected dealers as set forth in the Prospectus, subject to the limitations of
Article III, Section 26 of the NASD Rules of Fair Practice. Payment of these
amounts to the Distributor is not contingent upon the adoption or continuation
of the Plan.

Section 8.  Payment of the Distributor under the Plan

     8.1 The Fund shall pay to the Distributor as compensation for services
under the Distribution and Service Plan and this Agreement a fee of .30 of 1%
(including an asset-based sales charge of .05 of 1% and a service fee of .25 of
1%) per annum

                                       5

<PAGE>



of the average daily net assets of the Class A shares of the Fund. Amounts
payable under the Plan shall be accrued daily and paid monthly or at such other
intervals as Directors may determine. Amounts payable under the Plan shall be
subject to the limitations of Article III, Section 26 of the NASD Rules of Fair
Practice.

     8.2 So long as the Plan or any amendment thereto is in effect, the
Distributor shall inform the Board of Directors of the commissions and account
servicing fees to be paid by the Distributor to account executives of the
Distributor and to broker-dealers and financial institutions which have dealer
agreements with the Distributor. So long as the Plan (or any amendment thereto)
is in effect, at the request of the Board of Directors or any agent or
representative of the Fund, the Distributor shall provide such additional
information as may reasonably be requested concerning the activities of the
Distributor hereunder and the costs incurred in performing such activities.

     8.3 Expenses of distribution with respect to the Class A shares of the Fund
include, among others:

     (a)  amounts paid to Prudential Securities for performing services under a
          selected dealer agreement between Prudential Securities and the
          Distributor for sale of Class A shares of the Fund, including sales
          commissions and trailer commissions paid to, or on account of, account
          executives and indirect and overhead costs associated with
          distribution activities, including central office and branch expenses;

     (b)  amounts paid to Prusec for performing services under a selected dealer
          agreement between Prusec and the Distributor for sale of Class A
          shares of the Fund, including sales commissions and trailer
          commissions paid to, or on account of, agents and indirect and
          overhead costs associated with distribution activities;

     (c)  sales commissions and trailer commissions paid to, or on account of,
          broker-dealers and financial institutions (other than Prudential
          Securities and Prusec) which have entered into selected dealer
          agreements with the Distributor with respect to Class A shares of the
          Fund.

     (d)  amounts paid to, or an account of, account executives of Prudential
          Securities, Prusec, or of other broker-dealers or financial

                                       6

<PAGE>




          institutions for personal service and/or the maintenance of
          shareholder accounts; and

     (e)  advertising for the Fund in various forms through any available
          medium, including the cost of printing and mailing Fund Prospectuses,
          and periodic financial reports and sales literature to persons other
          than current shareholders of the Fund.

     Indirect and overhead costs referred to in clauses (a) and (b) of the
foregoing sentence include (i) lease expenses, (ii) salaries and benefits of
personnel including operations and sales support personnel, (iii) utility
expenses, (iv) communications expenses, (v) sales promotion expenses, (vi)
expenses of postage, stationery and supplies and (vii) general overhead.

Section 9.  Allocation of Expenses

     9.1 The Fund shall bear all costs and expenses of the continuous offering
of its Class A shares, including fees and disbursements of its counsel and
auditors, in connection with the preparation and filing of any required
Registration Statements and/or Prospectuses under the Investment Company Act or
the Securities Act, and preparing and mailing annual and periodic reports and
proxy materials to shareholders (including but not limited to the expense of
setting in type any such Registration Statements, Prospectuses, annual or
periodic reports or proxy materials). The Fund shall also bear the cost of
expenses of qualification of the Class A shares for sale, and, if necessary or
advisable in connection therewith, of qualifying the Fund as a broker or dealer,
in such states of the United States or other jurisdictions as shall be selected
by the Fund and the Distributor pursuant to Section 5.4 hereof and the cost and
expense payable to each such state for continuing qualification therein until
the Fund decides to discontinue such qualification pursuant to Section 5.4
hereof. As set forth in Section 8 above, the Fund shall also bear the expenses
it assumes pursuant to the Plan with respect to Class A shares, so long as the
Plan is in effect.

Section 10.  Indemnification

     10.1 The Fund agrees to indemnify, defend and hold the Distributor, its
officers and directors and any person who controls the Distributor within the
meaning of Section 15 of the Securities Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Distributor, its officers,
directors or any such controlling person may incur under the Securities Act, or
under common law or otherwise, arising out of or based upon any untrue statement
of a

                                       7

<PAGE>



material fact contained in the Registration Statement or Prospectus or arising
out of or based upon any alleged omission to state a material fact required to
be stated in either thereof or necessary to make the statements in either
thereof not misleading, except insofar as such claims, demands, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information furnished in writing by the Distributor to the Fund for use in
the Registration Statement or Prospectus; provided, however, that this indemnity
agreement shall not inure to the benefit of any such officer, director, or
controlling person unless a court of competent jurisdiction shall determine in a
final decision on the merits, that the person to be indemnified was not liable
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations under this Agreement (disabling conduct), or, in the absence of such
a decision, a reasonable determination, based upon a review of the facts, that
the indemnified person was not liable by reason of disabling conduct, by (a) a
vote of a majority of a quorum of directors who are neither "interested persons"
of the Fund as defined in Section 2(a)(19) of the Investment Company Act nor
parties to the proceeding, or (b) an independent legal counsel in a written
opinion. The Fund's agreement to indemnify the Distributor, its officers and
directors or and any such controlling person as aforesaid is expressly
conditioned upon the Fund's being promptly notified of any action brought
against the Distributor, its officers or directors or any such controlling
person, such notification to be given by letter or telegram addressed to the
Fund at its principal business office. The Fund agrees promptly to notify the
Distributor of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issue and sale of any
Class A shares.

     10.2 The Distributor agrees to indemnify, defend and hold the Fund, its
officers and Directors and any person who controls the Fund, if any, within the
meaning of Section 15 of the Securities Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending against such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its officers and
Directors or any such controlling person may incur under the Securities Act or
under common law or otherwise, but only to the extent that such liability or
expense incurred by the Fund, its Directors or officers or such controlling
person resulting from such claims or demands shall arise out of or be based upon
any alleged untrue statement of a material fact contained in information
furnished in writing by the Distributor to the Fund for use in the Registration
Statement or Prospectus or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such information required
to be stated in the Registration Statement or Prospectus or necessary to

                                       8

<PAGE>




make such information not misleading. The Distributor's agreement to indemnify
the Fund, its officers and Directors and any such controlling person as
aforesaid, is expressly conditioned upon the Distributor's being promptly
notified of any action brought against the Fund, its officers and Directors or
any such controlling person, such notification being given to the Distributor at
its principal business office.

Section 11.  Duration and Termination of this Agreement

     11.1 This Agreement shall become effective as of the date first above
written and shall remain in force for two years from the date hereof and
thereafter, but only so long as such continuance is specifically approved at
least annually by (a) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Class A shares of the Fund,
and (b) by the vote of a majority of those Directors who are not parties to this
Agreement or interested persons of any such parties and who have no direct or
indirect financial interest in this Agreement or in the operation of the Fund's
Plan or in any agreement related thereto (Rule 12b-1 Directors), cast in person
at a meeting called for the purpose of voting upon such approval.

     11.2 This Agreement may be terminated at any time, without the payment of
any penalty, by a majority of the Rule 12b-1 Directors or by vote of a majority
of the outstanding voting securities of the Class A shares of the Fund, or by
the Distributor, on sixty (60) days' written notice to the other party. This
Agreement shall automatically terminate in the event of its assignment.

     11.3 The terms "affiliated person," "assignment," "interested person" and
"vote of a majority of the outstanding voting securities", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.

Section 12.  Amendments to this Agreement

     This Agreement may be amended by the parties only if such amendment is
specifically approved by (a) the Board of Directors of the Fund, or by the vote
of a majority of the outstanding voting securities of the Class A shares of the
Fund, and (b) by the vote of a majority of the Rule 12b-1 Directors cast in
person at a meeting called for the purpose of voting on such amendment.

Section 13.  Governing Law

     The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict

                                       9

<PAGE>


with the applicable provisions of the Investment Company Act, the
latter shall control.


     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year above written.


                                              Prudential Mutual Fund
                                                Distributors, Inc.


                                              By: /s/ ROBERT F. GUNIA
                                                  -------------------------
                                                  Robert F. Gunia
                                                  Executive Vice President,
                                                  Treasurer and Comptroller




                                              Prudential Intermediate Global
                                               Income Fund, Inc.


                                              By: /s/ LAWRENCE C. MCQUADE
                                                  -------------------------
                                                  Lawrence C. McQuade
                                                  President




PIF-A.AGR


                                       10


                                                                   
                                                                  EXHIBIT 6(g)


                PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.

                             Distribution Agreement

                                (Class B Shares)

     Agreement made January 15, 1992 and amended and restated as of August 1,
1994, between Prudential Intermediate Global Income Fund, Inc., a Maryland
Corporation (the Fund) and Prudential Securities Incorporated, a Delaware
Corporation (the Distributor).

                                   WITNESSETH

     WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the Investment Company Act), as a diversified, open-end, management
investment company and it is in the interest of the Fund to offer its Class B
shares for sale continuously;

     WHEREAS, the Distributor is a broker-dealer registered under the Securities
Exchange Act of 1934, as amended, and is engaged in the business of selling
shares of registered investment companies either directly or through other
broker-dealers;

     WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other, with respect to the continuous offering of the Fund's Class B shares
from and after the date hereof in order to promote the growth of the Fund and
facilitate the distribution of its Class B shares; and

     WHEREAS, the Fund has adopted a distribution and service plan pursuant to
Rule 12b-1 under the Investment Company Act (the Plan) authorizing payments by
the Fund to the Distributor with respect to the distribution of Class B shares
of the Fund and the maintenance of Class B shareholder accounts.

     NOW, THEREFORE, the parties agree as follows:

Section 1.  Appointment of the Distributor

     The Fund hereby appoints the Distributor as the principal underwriter and
distributor of the Class B shares of the Fund to sell Class B shares to the
public and the Distributor hereby accepts such appointment and agrees to act
hereunder. The Fund hereby agrees during the term of this Agreement to sell
Class B shares of the Fund to the Distributor on the terms and conditions set
forth below.



<PAGE>



Section 2.  Exclusive Nature of Duties

     The Distributor shall be the exclusive representative of the Fund to act as
principal underwriter and distributor of the Fund's Class B shares, except that:

     2.1 The exclusive rights granted to the Distributor to purchase Class B
shares from the Fund shall not apply to Class B shares of the Fund issued in
connection with the merger or consolidation of any other investment company or
personal holding company with the Fund or the acquisition by purchase or
otherwise of all (or substantially all) the assets or the outstanding shares of
any such company by the Fund.

     2.2 Such exclusive rights shall not apply to Class B shares issued by the
Fund pursuant to reinvestment of dividends or capital gains distributions.

     2.3 Such exclusive rights shall not apply to Class B shares issued by the
Fund pursuant to the reinstatement privilege afforded redeeming shareholders.

     2.4 Such exclusive rights shall not apply to purchases made through the
Fund's transfer and dividend disbursing agent in the manner set forth in the
currently effective Prospectus of the Fund. The term "Prospectus" shall mean the
Prospectus and Statement of Additional Information included as part of the
Fund's Registration Statement, as such Prospectus and Statement of Additional
Information may be amended or supplemented from time to time, and the term
"Registration Statement" shall mean the Registration Statement filed by the Fund
with the Securities and Exchange Commission and effective under the Securities
Act of 1933, as amended (the Securities Act), and the Investment Company Act, as
such Registration Statement is amended from time to time.

Section 3.  Purchase of Class B Shares from the Fund

     3.1 The Distributor shall have the right to buy from the Fund the Class B
shares needed, but not more than the Class B shares needed (except for clerical
errors in transmission) to fill unconditional orders for Class B shares placed
with the Distributor by investors or registered and qualified securities dealers
and other financial institutions (selected dealers). The price which the
Distributor shall pay for the Class B shares so purchased from the Fund shall be
the net asset value, determined as set forth in the Prospectus.

     3.2 The Class B shares are to be resold by the Distributor or selected
dealers, as described in Section 6.4 hereof, to investors at the offering price
as set forth in the Prospectus.


                                       2

<PAGE>



     3.3 The Fund shall have the right to suspend the sale of its Class B shares
at times when redemption is suspended pursuant to the conditions in Section 4.3
hereof or at such other times as may be determined by the Board of Directors.
The Fund shall also have the right to suspend the sale of its Class B shares if
a banking moratorium shall have been declared by federal or New York
authorities.

     3.4 The Fund, or any agent of the Fund designated in writing by the Fund,
shall be promptly advised of all purchase orders for Class B shares received by
the Distributor. Any order may be rejected by the Fund; provided, however, that
the Fund will not arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of Class B shares. The Fund (or its agent) will
confirm orders upon their receipt, will make appropriate book entries and upon
receipt by the Fund (or its agent) of payment therefor, will deliver deposit
receipts for such Class B shares pursuant to the instructions of the
Distributor. Payment shall be made to the Fund in New York Clearing House funds
or federal funds. The Distributor agrees to cause such payment and such
instructions to be delivered promptly to the Fund (or its agent).

Section 4.  Repurchase or Redemption of Class B Shares by the Fund

     4.1 Any of the outstanding Class B shares may be tendered for redemption at
any time, and the Fund agrees to repurchase or redeem the Class B shares so
tendered in accordance with its Articles of Incorporation as amended from time
to time, and in accordance with the applicable provisions of the Prospectus. The
price to be paid to redeem or repurchase the Class B shares shall be equal to
the net asset value determined as set forth in the Prospectus. All payments by
the Fund hereunder shall be made in the manner set forth in Section 4.2 below.

     4.2 The Fund shall pay the total amount of the redemption price as defined
in the above paragraph pursuant to the instructions of the Distributor on or
before the seventh day subsequent to its having received the notice of
redemption in proper form. The proceeds of any redemption of Class B shares
shall be paid by the Fund as follows: (a) any applicable contingent deferred
sales charge shall be paid to the Distributor and (b) the balance shall be paid
to or for the account of the redeeming shareholder, in each case in accordance
with applicable provisions of the Prospectus.

     4.3 Redemption of Class B shares or payment may be suspended at times when
the New York Stock Exchange is closed for other than customary weekends and
holidays, when trading on said Exchange is restricted, when an emergency exists
as a result of which disposal by the Fund of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the

                                       3

<PAGE>



Fund fairly to determine the value of its net assets, or during any other period
when the Securities and Exchange Commission, by order, so permits.

Section 5.  Duties of the Fund

     5.1 Subject to the possible suspension of the sale of Class B shares as
provided herein, the Fund agrees to sell its Class B shares so long as it has
Class B shares available.

     5.2 The Fund shall furnish the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Class B shares, and this
shall include one certified copy, upon request by the Distributor, of all
financial statements prepared for the Fund by independent public accountants.
The Fund shall make available to the Distributor such number of copies of its
Prospectus and annual and interim reports as the Distributor shall reasonably
request.

     5.3 The Fund shall take, from time to time, but subject to the necessary
approval of the Board of Directors and the shareholders, all necessary action to
fix the number of authorized Class B shares and such steps as may be necessary
to register the same under the Securities Act, to the end that there will be
available for sale such number of Class B shares as the Distributor reasonably
may expect to sell. The Fund agrees to file from time to time such amendments,
reports and other documents as may be necessary in order that there will be no
untrue statement of a material fact in the Registration Statement, or necessary
in order that there will be no omission to state a material fact in the
Registration Statement which omission would make the statements therein
misleading.

     5.4 The Fund shall use its best efforts to qualify and maintain the
qualification of any appropriate number of its Class B shares for sales under
the securities laws of such states as the Distributor and the Fund may approve;
provided that the Fund shall not be required to amend its Articles of
Incorporation or By-Laws to comply with the laws of any state, to maintain an
office in any state, to change the terms of the offering of its Class B shares
in any state from the terms set forth in its Registration Statement, to qualify
as a foreign corporation in any state or to consent to service of process in any
state other than with respect to claims arising out of the offering of its Class
B shares. Any such qualification may be withheld, terminated or withdrawn by the
Fund at any time in its discretion. As provided in Section 9.1 hereof, the
expense of qualification and maintenance of qualification shall be borne by the
Fund. The Distributor shall furnish such information and other material relating
to its affairs and activities as may be required by the Fund in connection with
such qualifications.

                                       4

<PAGE>





Section 6.  Duties of the Distributor

     6.1 The Distributor shall devote reasonable time and effort to effect sales
of Class B shares of the Fund, but shall not be obligated to sell any specific
number of Class B shares. Sales of the Class B shares shall be on the terms
described in the Prospectus. The Distributor may enter into like arrangements
with other investment companies. The Distributor shall compensate the selected
dealers as set forth in the Prospectus.

     6.2 In selling the Class B shares, the Distributor shall use its best
efforts in all respects duly to conform with the requirements of all federal and
state laws relating to the sale of such securities. Neither the Distributor nor
any selected dealer nor any other person is authorized by the Fund to give any
information or to make any representations, other than those contained in the
Registration Statement or Prospectus and any sales literature approved by
appropriate officers of the Fund.

     6.3 The Distributor shall adopt and follow procedures for the confirmation
of sales to investors and selected dealers, the collection of amounts payable by
investors and selected dealers on such sales and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
National Association of Securities Dealers, Inc. (NASD).

     6.4 The Distributor shall have the right to enter into selected dealer
agreements with registered and qualified securities dealers and other financial
institutions of its choice for the sale of Class B shares, provided that the
Fund shall approve the forms of such agreements. Within the United States, the
Distributor shall offer and sell Class B shares only to such selected dealers as
are members in good standing of the NASD. Class B shares sold to selected
dealers shall be for resale by such dealers only at the offering price
determined as set forth in the Prospectus.

Section 7.  Payments to the Distributor

     The Distributor shall receive and may retain any contingent deferred sales
charge which is imposed with respect to repurchases and redemptions of Class B
shares as set forth in the Prospectus, subject to the limitations of Article
III, Section 26 of the NASD Rules of Fair Practice. Payment of these amounts to
the Distributor is not contingent upon the adoption or continuation of the Plan.

Section 8.  Payment of the Distributor under the Plan

     8.1 The Fund shall pay to the Distributor as compensation for services
under the Distribution and Service Plan and this Agreement a fee of up to .75 of
1% (including an asset-

                                       5

<PAGE>



based sales charge of .75 of 1% and a service fee of .25 of 1%) per annum of the
average daily net assets of the Class B shares of the Fund. Amounts payable
under the Plan shall be accrued daily and paid monthly or at such other
intervals as Directors may determine. Amounts payable under the Plan shall be
subject to the limitations of Article III, Section 26 of the NASD Rules of Fair
Practice.

     8.2 So long as the Plan or any amendment thereto is in effect, the
Distributor shall inform the Board of Directors of the commissions (including
trailer commissions) and account servicing fees to be paid by the Distributor to
account executives of the Distributor and to broker-dealers and financial
institutions which have selected dealer agreements with the Distributor. So long
as the Plan (or any amendment thereto) is in effect, at the request of the Board
of Directors or any agent or representative of the Fund, the Distributor shall
provide such additional information as may reasonably be requested concerning
the activities of the Distributor hereunder and the costs incurred in performing
such activities.

     8.3 Expenses of distribution with respect to the Class B shares of the Fund
include, among others:

     (a)  sales commissions (including trailer commissions) paid to, or on
          account of, account executives of the Distributor;

     (b)  indirect and overhead costs of the Distributor associated with
          performance of distribution activities, including central office and
          branch expenses;

     (c)  amounts paid to Prusec for performing services under a selected dealer
          agreement between Prusec and the Distributor for sale of Class B
          shares of the Fund, including sales commissions and trailer
          commissions paid to, or on account of, agents and indirect and
          overhead costs associated with distribution activities;

     (d)  sales commissions (including trailer commissions) paid to, or on
          account of, broker-dealers and financial institutions (other than
          Prusec) which have entered into selected dealer agreements with the
          Distributor with respect to Class B shares of the Fund;

     (e)  amounts paid to, or an account of, account executives of the
          Distributor or of other broker-dealers or financial institutions for

                                       6

<PAGE>



          personal service and/or the maintenance of shareholder accounts;
          and

     (f)  advertising for the Fund in various forms through any available
          medium, including the cost of printing and mailing Fund Prospectuses,
          and periodic financial reports and sales literature to persons other
          than current shareholders of the Fund.

     Indirect and overhead costs referred to in clauses (b) and (c) of the
foregoing sentence include (i) lease expenses, (ii) salaries and benefits of
personnel including operations and sales support personnel, (iii) utility
expenses, (iv) communications expenses, (v) sales promotion expenses, (vi)
expenses of postage, stationery and supplies and (vii) general overhead.

Section 9.  Allocation of Expenses

     9.1 The Fund shall bear all costs and expenses of the continuous offering
of its Class B shares, including fees and disbursements of its counsel and
auditors, in connection with the preparation and filing of any required
Registration Statements and/or Prospectuses under the Investment Company Act or
the Securities Act, and preparing and mailing annual and periodic reports and
proxy materials to shareholders (including but not limited to the expense of
setting in type any such Registration Statements, Prospectuses, annual or
periodic reports or proxy materials). The Fund shall also bear the cost of
expenses of qualification of the Class B shares for sale, and, if necessary or
advisable in connection therewith, of qualifying the Fund as a broker or dealer,
in such states of the United States or other jurisdictions as shall be selected
by the Fund and the Distributor pursuant to Section 5.4 hereof and the cost and
expense payable to each such state for continuing qualification therein until
the Fund decides to discontinue such qualification pursuant to Section 5.4
hereof. As set forth in Section 8 above, the Fund shall also bear the expenses
it assumes pursuant to the Plan with respect to Class B shares, so long as the
Plan is in effect.

Section 10.  Indemnification

     10.1 The Fund agrees to indemnify, defend and hold the Distributor, its
officers and Directors and any person who controls the Distributor within the
meaning of Section 15 of the Securities Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Distributor, its officers,
Directors or any such controlling person may incur under the Securities Act, or
under common law or otherwise, arising out of or based upon any untrue statement
of a

                                       7

<PAGE>



material fact contained in the Registration Statement or Prospectus or arising
out of or based upon any alleged omission to state a material fact required to
be stated in either thereof or necessary to make the statements in either
thereof not misleading, except insofar as such claims, demands, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information furnished in writing by the Distributor to the Fund for use in
the Registration Statement or Prospectus; provided, however, that this indemnity
agreement shall not inure to the benefit of any such officer, Director or
controlling person unless a court of competent jurisdiction shall determine in a
final decision on the merits, that the person to be indemnified was not liable
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations under this Agreement (disabling conduct), or, in the absence of such
a decision, a reasonable determination, based upon a review of the facts, that
the indemnified person was not liable by reason of disabling conduct, by (a) a
vote of a majority of a quorum of Directors who are neither "interested persons"
of the Fund as defined in Section 2(a)(19) of the Investment Company Act nor
parties to the proceeding, or (b) an independent legal counsel in a written
opinion. The Fund's agreement to indemnify the Distributor, its officers and
Directors and any such controlling person as aforesaid is expressly conditioned
upon the Fund's being promptly notified of any action brought against the
Distributor, its officers or Directors, or any such controlling person, such
notification to be given in writing addressed to the Fund at its principal
business office. The Fund agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or Directors in connection with the issue and sale of any Class B shares.

     10.2 The Distributor agrees to indemnify, defend and hold the Fund, its
officers and Directors and any person who controls the Fund, if any, within the
meaning of Section 15 of the Securities Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending against such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its officers and
Directors or any such controlling person may incur under the Securities Act or
under common law or otherwise, but only to the extent that such liability or
expense incurred by the Fund, its Directors or officers or such controlling
person resulting from such claims or demands shall arise out of or be based upon
any alleged untrue statement of a material fact contained in information
furnished in writing by the Distributor to the Fund for use in the Registration
Statement or Prospectus or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such information required
to be stated in the Registration Statement or Prospectus or necessary to

                                       8

<PAGE>



make such information not misleading. The Distributor's agreement to indemnify
the Fund, its officers and Directors and any such controlling person as
aforesaid, is expressly conditioned upon the Distributor's being promptly
notified of any action brought against the Fund, its officers and Directors or
any such controlling person, such notification to be given to the Distributor in
writing at its principal business office.

Section 11.  Duration and Termination of this Agreement

     11.1 This Agreement shall become effective as of the date first above
written and shall remain in force for two years from the date hereof and
thereafter, but only so long as such continuance is specifically approved at
least annually by (a) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Class B shares of the Fund,
and (b) by the vote of a majority of those Directors who are not parties to this
Agreement or interested persons of any such parties and who have no direct or
indirect financial interest in this Agreement or in the operation of the Fund's
Plan or in any agreement related thereto (Rule 12b-1 Directors), cast in person
at a meeting called for the purpose of voting upon such approval.

     11.2 This Agreement may be terminated at any time, without the payment of
any penalty, by a majority of the Rule 12b-1 Directors or by vote of a majority
of the outstanding voting securities of the Class B shares of the Fund, or by
the Distributor, on sixty (60) days' written notice to the other party. This
Agreement shall automatically terminate in the event of its assignment.

     11.3 The terms "affiliated person," "assignment," "interested person" and
"vote of a majority of the outstanding voting securities," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.

Section 12.  Amendments to this Agreement

     This Agreement may be amended by the parties only if such amendment is
specifically approved by (a) the Board of Directors of the Fund, or by the vote
of a majority of the outstanding voting securities of the Class B shares of the
Fund, and (b) by the vote of a majority of the Rule 12b-1 Board of Directors
cast in person at a meeting called for the purpose of voting on such amendment.

Section 13.  Governing Law

     The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict

                                       9

<PAGE>


with the applicable provisions of the Investment Company Act, the
latter shall control.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year above written.



                                              Prudential Securities
                                                Incorporated


                                              By: /s/ ROBERT F. GUNIA
                                                  ------------------------
                                                  Robert F. Gunia
                                                  Senior Vice President




                                              Prudential Intermediate Global
                                                Income Fund, Inc.


                                              By: /s/ LAWRENCE C. MCQUADE
                                                  ------------------------
                                                  Lawrence C. McQuade
                                                  President




pif-b.agr




                                       10



                                                                  EXHIBIT 6(h)


                PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC

                             Distribution Agreement

                                (Class C Shares)

     Agreement made as of August 1, 1994, between Prudential Intermediate Global
Income Fund, Inc., a Maryland Corporation (the Fund) and Prudential Securities
Incorporated, a Delaware Corporation (the Distributor).

                                   WITNESSETH

     WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the Investment Company Act), as a diversified, open-end, management
investment company and it is in the interest of the Fund to offer its Class C
shares for sale continuously;

     WHEREAS, the Distributor is a broker-dealer registered under the Securities
Exchange Act of 1934, as amended, and is engaged in the business of selling
shares of registered investment companies either directly or through other
broker-dealers;

     WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other, with respect to the continuous offering of the Fund's Class C shares
from and after the date hereof in order to promote the growth of the Fund and
facilitate the distribution of its Class C shares; and

     WHEREAS, the Fund has adopted a distribution and service plan pursuant to
Rule 12b-1 under the Investment Company Act (the Plan) authorizing payments by
the Fund to the Distributor with respect to the distribution of Class C shares
of the Fund and the maintenance of Class C shareholder accounts.

     NOW, THEREFORE, the parties agree as follows:

Section 1.  Appointment of the Distributor

     The Fund hereby appoints the Distributor as the principal underwriter and
distributor of the Class C shares of the Fund to sell Class C shares to the
public and the Distributor hereby accepts such appointment and agrees to act
hereunder. The Fund hereby agrees during the term of this Agreement to sell
Class C shares of the Fund to the Distributor on the terms and conditions set
forth below.



<PAGE>



Section 2.  Exclusive Nature of Duties

     The Distributor shall be the exclusive representative of the Fund to act as
principal underwriter and distributor of the Fund's Class C shares, except that:

     2.1 The exclusive rights granted to the Distributor to purchase Class C
shares from the Fund shall not apply to Class C shares of the Fund issued in
connection with the merger or consolidation of any other investment company or
personal holding company with the Fund or the acquisition by purchase or
otherwise of all (or substantially all) the assets or the outstanding shares of
any such company by the Fund.

     2.2 Such exclusive rights shall not apply to Class C shares issued by the
Fund pursuant to reinvestment of dividends or capital gains distributions.

     2.3 Such exclusive rights shall not apply to Class C shares issued by the
Fund pursuant to the reinstatement privilege afforded redeeming shareholders.

     2.4 Such exclusive rights shall not apply to purchases made through the
Fund's transfer and dividend disbursing agent in the manner set forth in the
currently effective Prospectus of the Fund. The term "Prospectus" shall mean the
Prospectus and Statement of Additional Information included as part of the
Fund's Registration Statement, as such Prospectus and Statement of Additional
Information may be amended or supplemented from time to time, and the term
"Registration Statement" shall mean the Registration Statement filed by the Fund
with the Securities and Exchange Commission and effective under the Securities
Act of 1933, as amended (the Securities Act), and the Investment Company Act, as
such Registration Statement is amended from time to time.

Section 3.  Purchase of Class C Shares from the Fund

     3.1 The Distributor shall have the right to buy from the Fund the Class C
shares needed, but not more than the Class C shares needed (except for clerical
errors in transmission) to fill unconditional orders for Class C shares placed
with the Distributor by investors or registered and qualified securities dealers
and other financial institutions (selected dealers). The price which the
Distributor shall pay for the Class C shares so purchased from the Fund shall be
the net asset value, determined as set forth in the Prospectus.

     3.2 The Class C shares are to be resold by the Distributor or selected
dealers, as described in Section 6.4 hereof, to investors at the offering price
as set forth in the Prospectus.


                                       2

<PAGE>



     3.3 The Fund shall have the right to suspend the sale of its Class C shares
at times when redemption is suspended pursuant to the conditions in Section 4.3
hereof or at such other times as may be determined by the Board of Directors.
The Fund shall also have the right to suspend the sale of its Class C shares if
a banking moratorium shall have been declared by federal or New York
authorities.

     3.4 The Fund, or any agent of the Fund designated in writing by the Fund,
shall be promptly advised of all purchase orders for Class C shares received by
the Distributor. Any order may be rejected by the Fund; provided, however, that
the Fund will not arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of Class C shares. The Fund (or its agent) will
confirm orders upon their receipt, will make appropriate book entries and upon
receipt by the Fund (or its agent) of payment therefor, will deliver deposit
receipts for such Class C shares pursuant to the instructions of the
Distributor. Payment shall be made to the Fund in New York Clearing House funds
or federal funds. The Distributor agrees to cause such payment and such
instructions to be delivered promptly to the Fund (or its agent).

Section 4.  Repurchase or Redemption of Class C Shares by the Fund

     4.1 Any of the outstanding Class C shares may be tendered for redemption at
any time, and the Fund agrees to repurchase or redeem the Class C shares so
tendered in accordance with its Articles of Incorporation as amended from time
to time, and in accordance with the applicable provisions of the Prospectus. The
price to be paid to redeem or repurchase the Class C shares shall be equal to
the net asset value determined as set forth in the Prospectus. All payments by
the Fund hereunder shall be made in the manner set forth in Section 4.2 below.

     4.2 The Fund shall pay the total amount of the redemption price as defined
in the above paragraph pursuant to the instructions of the Distributor on or
before the seventh day subsequent to its having received the notice of
redemption in proper form. The proceeds of any redemption of Class C shares
shall be paid by the Fund as follows: (a) any applicable contingent deferred
sales charge shall be paid to the Distributor and (b) the balance shall be paid
to or for the account of the redeeming shareholder, in each case in accordance
with applicable provisions of the Prospectus.

     4.3 Redemption of Class C shares or payment may be suspended at times when
the New York Stock Exchange is closed for other than customary weekends and
holidays, when trading on said Exchange is restricted, when an emergency exists
as a result of which disposal by the Fund of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the

                                       3

<PAGE>



Fund fairly to determine the value of its net assets, or during any other period
when the Securities and Exchange Commission, by order, so permits.

Section 5.  Duties of the Fund

     5.1 Subject to the possible suspension of the sale of Class C shares as
provided herein, the Fund agrees to sell its Class C shares so long as it has
Class C shares available.

     5.2 The Fund shall furnish the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Class C shares, and this
shall include one certified copy, upon request by the Distributor, of all
financial statements prepared for the Fund by independent public accountants.
The Fund shall make available to the Distributor such number of copies of its
Prospectus and annual and interim reports as the Distributor shall reasonably
request.

     5.3 The Fund shall take, from time to time, but subject to the necessary
approval of the Board of Directors and the shareholders, all necessary action to
fix the number of authorized Class C shares and such steps as may be necessary
to register the same under the Securities Act, to the end that there will be
available for sale such number of Class C shares as the Distributor reasonably
may expect to sell. The Fund agrees to file from time to time such amendments,
reports and other documents as may be necessary in order that there will be no
untrue statement of a material fact in the Registration Statement, or necessary
in order that there will be no omission to state a material fact in the
Registration Statement which omission would make the statements therein
misleading.

     5.4 The Fund shall use its best efforts to qualify and maintain the
qualification of any appropriate number of its Class C shares for sales under
the securities laws of such states as the Distributor and the Fund may approve;
provided that the Fund shall not be required to amend its Articles of
Incorporation or By-Laws to comply with the laws of any state, to maintain an
office in any state, to change the terms of the offering of its Class C shares
in any state from the terms set forth in its Registration Statement, to qualify
as a foreign corporation in any state or to consent to service of process in any
state other than with respect to claims arising out of the offering of its Class
C shares. Any such qualification may be withheld, terminated or withdrawn by the
Fund at any time in its discretion. As provided in Section 9.1 hereof, the
expense of qualification and maintenance of qualification shall be borne by the
Fund. The Distributor shall furnish such information and other material relating
to its affairs and activities as may be required by the Fund in connection with
such qualifications.

                                       4

<PAGE>





Section 6.  Duties of the Distributor

     6.1 The Distributor shall devote reasonable time and effort to effect sales
of Class C shares of the Fund, but shall not be obligated to sell any specific
number of Class C shares. Sales of the Class C shares shall be on the terms
described in the Prospectus. The Distributor may enter into like arrangements
with other investment companies. The Distributor shall compensate the selected
dealers as set forth in the Prospectus.

     6.2 In selling the Class C shares, the Distributor shall use its best
efforts in all respects duly to conform with the requirements of all federal and
state laws relating to the sale of such securities. Neither the Distributor nor
any selected dealer nor any other person is authorized by the Fund to give any
information or to make any representations, other than those contained in the
Registration Statement or Prospectus and any sales literature approved by
appropriate officers of the Fund.

     6.3 The Distributor shall adopt and follow procedures for the confirmation
of sales to investors and selected dealers, the collection of amounts payable by
investors and selected dealers on such sales and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
National Association of Securities Dealers, Inc. (NASD).

     6.4 The Distributor shall have the right to enter into selected dealer
agreements with registered and qualified securities dealers and other financial
institutions of its choice for the sale of Class C shares, provided that the
Fund shall approve the forms of such agreements. Within the United States, the
Distributor shall offer and sell Class C shares only to such selected dealers as
are members in good standing of the NASD. Class C shares sold to selected
dealers shall be for resale by such dealers only at the offering price
determined as set forth in the Prospectus.

Section 7.  Payments to the Distributor

     The Distributor shall receive and may retain any contingent deferred sales
charge which is imposed with respect to repurchases and redemptions of Class C
shares as set forth in the Prospectus, subject to the limitations of Article
III, Section 26 of the NASD Rules of Fair Practice. Payment of these amounts to
the Distributor is not contingent upon the adoption or continuation of the Plan.

Section 8.  Payment of the Distributor under the Plan

     8.1 The Fund shall pay to the Distributor as compensation for services
under the Distribution and Service Plan and this Agreement a fee of 1%
(including an asset-based sales

                                       5

<PAGE>



charge of .75 of 1% and a service fee of .25 of 1%) per annum of the average
daily net assets of the Class C shares of the Fund. Amounts payable under the
Plan shall be accrued daily and paid monthly or at such other intervals as
Directors may determine. Amounts payable under the Plan shall be subject to the
limitations of Article III, Section 26 of the NASD Rules of Fair Practice.

     8.2 So long as the Plan or any amendment thereto is in effect, the
Distributor shall inform the Board of Directors of the commissions (including
trailer commissions) and account servicing fees to be paid by the Distributor to
account executives of the Distributor and to broker-dealers and financial
institutions which have selected dealer agreements with the Distributor. So long
as the Plan (or any amendment thereto) is in effect, at the request of the Board
of Directors or any agent or representative of the Fund, the Distributor shall
provide such additional information as may reasonably be requested concerning
the activities of the Distributor hereunder and the costs incurred in performing
such activities.

     8.3 Expenses of distribution with respect to the Class C shares of the Fund
include, among others:

     (a)  sales commissions (including trailer commissions) paid to, or on
          account of, account executives of the Distributor;

     (b)  indirect and overhead costs of the Distributor associated with
          performance of distribution activities, including central office and
          branch expenses;

     (c)  amounts paid to Prusec for performing services under a selected dealer
          agreement between Prusec and the Distributor for sale of Class C
          shares of the Fund, including sales commissions and trailer
          commissions paid to, or on account of, agents and indirect and
          overhead costs associated with distribution activities;

     (d)  sales commissions (including trailer commissions) paid to, or on
          account of, broker-dealers and financial institutions (other than
          Prusec) which have entered into selected dealer agreements with the
          Distributor with respect to Class C shares of the Fund;

     (e)  amounts paid to, or an account of, account executives of the
          Distributor or of other broker-dealers or financial institutions for

                                       6

<PAGE>



           personal service and/or the maintenance of shareholder accounts;
           and

     (f)  advertising for the Fund in various forms through any available
          medium, including the cost of printing and mailing Fund Prospectuses,
          and periodic financial reports and sales literature to persons other
          than current shareholders of the Fund.

     Indirect and overhead costs referred to in clauses (b) and (c) of the
foregoing sentence include (i) lease expenses, (ii) salaries and benefits of
personnel including operations and sales support personnel, (iii) utility
expenses, (iv) communications expenses, (v) sales promotion expenses, (vi)
expenses of postage, stationery and supplies and (vii) general overhead.

Section 9.  Allocation of Expenses

     9.1 The Fund shall bear all costs and expenses of the continuous offering
of its Class C shares, including fees and disbursements of its counsel and
auditors, in connection with the preparation and filing of any required
Registration Statements and/or Prospectuses under the Investment Company Act or
the Securities Act, and preparing and mailing annual and periodic reports and
proxy materials to shareholders (including but not limited to the expense of
setting in type any such Registration Statements, Prospectuses, annual or
periodic reports or proxy materials). The Fund shall also bear the cost of
expenses of qualification of the Class C shares for sale, and, if necessary or
advisable in connection therewith, of qualifying the Fund as a broker or dealer,
in such states of the United States or other jurisdictions as shall be selected
by the Fund and the Distributor pursuant to Section 5.4 hereof and the cost and
expense payable to each such state for continuing qualification therein until
the Fund decides to discontinue such qualification pursuant to Section 5.4
hereof. As set forth in Section 8 above, the Fund shall also bear the expenses
it assumes pursuant to the Plan with respect to Class C shares, so long as the
Plan is in effect.

Section 10.  Indemnification

     10.1 The Fund agrees to indemnify, defend and hold the Distributor, its
officers and Directors and any person who controls the Distributor within the
meaning of Section 15 of the Securities Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Distributor, its officers,
Directors or any such controlling person may incur under the Securities Act, or
under common law or otherwise, arising out of or based upon any untrue statement
of a

                                       7

<PAGE>



material fact contained in the Registration Statement or Prospectus or arising
out of or based upon any alleged omission to state a material fact required to
be stated in either thereof or necessary to make the statements in either
thereof not misleading, except insofar as such claims, demands, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information furnished in writing by the Distributor to the Fund for use in
the Registration Statement or Prospectus; provided, however, that this indemnity
agreement shall not inure to the benefit of any such officer, Director or
controlling person unless a court of competent jurisdiction shall determine in a
final decision on the merits, that the person to be indemnified was not liable
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations under this Agreement (disabling conduct), or, in the absence of such
a decision, a reasonable determination, based upon a review of the facts, that
the indemnified person was not liable by reason of disabling conduct, by (a) a
vote of a majority of a quorum of Directors who are neither "interested persons"
of the Fund as defined in Section 2(a)(19) of the Investment Company Act nor
parties to the proceeding, or (b) an independent legal counsel in a written
opinion. The Fund's agreement to indemnify the Distributor, its officers and
Directors and any such controlling person as aforesaid is expressly conditioned
upon the Fund's being promptly notified of any action brought against the
Distributor, its officers or Directors, or any such controlling person, such
notification to be given in writing addressed to the Fund at its principal
business office. The Fund agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or Directors in connection with the issue and sale of any Class C shares.

     10.2 The Distributor agrees to indemnify, defend and hold the Fund, its
officers and Directors and any person who controls the Fund, if any, within the
meaning of Section 15 of the Securities Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending against such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its officers and
Directors or any such controlling person may incur under the Securities Act or
under common law or otherwise, but only to the extent that such liability or
expense incurred by the Fund, its Directors or officers or such controlling
person resulting from such claims or demands shall arise out of or be based upon
any alleged untrue statement of a material fact contained in information
furnished in writing by the Distributor to the Fund for use in the Registration
Statement or Prospectus or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such information required
to be stated in the Registration Statement or Prospectus or necessary to

                                       8

<PAGE>



make such information not misleading. The Distributor's agreement to indemnify
the Fund, its officers and Directors and any such controlling person as
aforesaid, is expressly conditioned upon the Distributor's being promptly
notified of any action brought against the Fund, its officers and Directors or
any such controlling person, such notification to be given to the Distributor in
writing at its principal business office.

Section 11.  Duration and Termination of this Agreement

     11.1 This Agreement shall become effective as of the date first above
written and shall remain in force for two years from the date hereof and
thereafter, but only so long as such continuance is specifically approved at
least annually by (a) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Class C shares of the Fund,
and (b) by the vote of a majority of those Directors who are not parties to this
Agreement or interested persons of any such parties and who have no direct or
indirect financial interest in this Agreement or in the operation of the Fund's
Plan or in any agreement related thereto (Rule 12b-1 Directors), cast in person
at a meeting called for the purpose of voting upon such approval.

     11.2 This Agreement may be terminated at any time, without the payment of
any penalty, by a majority of the Rule 12b-1 Directors or by vote of a majority
of the outstanding voting securities of the Class C shares of the Fund, or by
the Distributor, on sixty (60) days' written notice to the other party. This
Agreement shall automatically terminate in the event of its assignment.

     11.3 The terms "affiliated person," "assignment," "interested person" and
"vote of a majority of the outstanding voting securities," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.

Section 12.  Amendments to this Agreement

     This Agreement may be amended by the parties only if such amendment is
specifically approved by (a) the Board of Directors of the Fund, or by the vote
of a majority of the outstanding voting securities of the Class C shares of the
Fund, and (b) by the vote of a majority of the Rule 12b-1 Board of Directors
cast in person at a meeting called for the purpose of voting on such amendment.

Section 13.  Governing Law

     The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict

                                       9

<PAGE>


with the applicable provisions of the Investment Company Act, the latter
shall control.


     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year above written.



                                              Prudential Securities
                                                Incorporated


                                              By: /s/ ROBERT F. GUNIA
                                                  --------------------------
                                                  Robert F. Gunia
                                                  Senior Vice President




                                              Prudential Intermediate Global
                                                Income Fund, Inc.


                                              By: /s/ LAWRENCE C. MCQUADE
                                                  --------------------------
                                                  Lawrence C. McQuade
                                                  President





pif-c.agr




                                       10



                   SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN, LLP
                                919 Third Avenue
                            New York, New York 10022

                                                               February 27, 1995



Prudential Intermediate Global Income
  Fund, Inc.
One Seaport Plaza
New York, New York 10292


Gentlemen and Ladies:

         Prudential Intermediate Global Income Fund, Inc. (the "Fund"), is
filing with the Securities and Exchange Commission Post-Effective Amendment No.
7 to its Registration Statement under the Securities Act of 1933 (the "1933
Act") on Form N-1A (File No. 33-42093), relating to the registration under the
1933 Act of 13,415,379 additional shares of its Common Stock, par value $.001
per share (the "Additional Shares"), which are to be offered and sold by the
Fund in the manner and on the terms set forth in the prospectus of the Fund
current and effective under the 1933 Act at the time of sale. Of the Additional
Shares, 13,377,619 are previously outstanding shares of the Fund's Common Stock,
par value $.001 per share, which were redeemed by the Fund during its fiscal
year ended December 31, 1994. According to Post-Effective Amendment No. 7 to the
Fund's Registration Statement, none of the Additional Shares have previously
been used by the Fund for reduction pursuant to paragraph (a) of Rule 24e-2
under the Investment Company Act of 1940 (the "1940 Act") in previous filings of
post-effective amendments to the Fund's Registration Statement during the
current year, or for reduction pursuant to paragraph (c) of Rule 24f-2 under the
1940 Act during the Fund's current fiscal year, of the registration fee payable
by the Fund for the registration of shares for sale under the 1933 Act.

         We have, as counsel, participated in various proceedings relating to
the Fund and to the proposed issuance of the Additional Shares. We have examined
copies, either certified or otherwise proven to our satisfaction to be genuine,
of the Fund's Articles of Incorporation and By-laws, as currently in effect, and
a certificate issued by the State Department of Assessments and Taxation of the
State of Maryland, certifying the existence and good standing of the Fund. We
are generally familiar with the corporate affairs of the Fund.

         Based upon the foregoing, it is our opinion that:

     1. The Fund has been duly organized and is validly existing under the laws
of the State of Maryland.

<PAGE>


         2. The Fund is authorized to issue two billion (2,000,000,000) shares
of Common Stock, par value $.001 per share. Under Maryland law, (a) the number
of authorized shares may be increased or decreased by action of the Board of
Directors and (b) shares which are issued and subsequently redeemed by the Fund
are, by virtue of such redemption, restored to the status of authorized and
unissued shares.

         3. Subject to the effectiveness of the above-mentioned Post-Effective
Amendment No. 7 to the Fund's Registration Statement and compliance with
applicable state securities laws, upon the issuance of the Additional Shares for
a consideration not less than the par value thereof as required by the laws of
Maryland, and not less than the net asset value thereof as required by the 1940
Act and in accordance with the terms of the Registration Statement, such shares
will be legally issued and outstanding and fully paid and non-assessable.

         We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as a part of the above-mentioned Post-Effective Amendment
No. 7 to the Registration Statement and with any state securities commission
where such filing is required. In giving this consent we do not admit that we
come within the category of persons whose consent is required under Section 7 of
the 1933 Act.

         We are members of the Bar of the State of New York and do not hold
ourselves out as being conversant with the laws of any jurisdiction other than
those of the United States of America and the State of New York. We note that we
are not licensed to practice law in the State of Maryland, and to the extent
that any opinion herein involves the laws of the State of Maryland, such


                                       2

<PAGE>



opinion should be understood to be based solely upon our review of the documents
referred to above, the published statutes of the State of Maryland and, where
applicable, published cases, rules or regulations of regulatory bodies of that
State.

                              Very truly yours,



                              /s/ SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN, LLP
                             ------------------------------------------------
                                Shereff, Friedman, Hoffman & Goodman, LLP



SFH&G:JHG:MKN:LEB:yg


                                       3





            CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 7 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
February 21, 1995, relating to the financial statements and financial highlights
of Prudential Intermediate Global Income Fund, Inc., which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this Registration
Statement. We also consent to the reference to us under the heading "Custodian,
Transfer and Dividend Disbursing Agent and Independent Accountants" in such
Statement of Additional Information and to the reference to us under the heading
"Financial Highlights" in such Prospectus.



PRICE WATERHOUSE LLP
New York, NY
February 23, 1995





                                                                 EXHIBIT 15(e)


                PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.

                         Distribution and Service Plan

                                (Class A Shares)

                                 August 1, 1994


                                  Introduction

     The Distribution and Service Plan (the Plan) set forth below which is
designed to conform to the requirements of Rule 12b-1 under the Investment
Company Act of 1940 (the Investment Company Act) and Article III, Section 26 of
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. (NASD) has been adopted by Prudential Intermediate Global Income Fund, Inc.
(the Fund) and by Prudential Mutual Fund Distributors, Inc., the Fund's
distributor (the Distributor).

     The Fund has entered into a distribution agreement pursuant to which the
Fund will employ the Distributor to distribute Class A shares issued by the Fund
(Class A shares). Under the Plan, the Fund intends to pay to the Distributor, as
compensation for its services, a distribution and service fee with respect to
Class A shares.

     A majority of the Board of Directors of the Fund, including a majority of
those Directors who are not "interested persons" of the Fund (as defined in the
Investment Company Act) and who have no direct or indirect financial interest in
the operation of this Plan or any agreements related to it (the Rule 12b-1
Directors), have determined by votes cast in person at a meeting called for the
purpose of voting on this Plan that there is a reasonable


<PAGE>



likelihood that adoption of this Plan will benefit the Fund and its
shareholders. Expenditures under this Plan by the Fund for Distribution
Activities (defined below) are primarily intended to result in the sale of Class
A shares of the Fund within the meaning of paragraph (a)(2) of Rule 12b-1
promulgated under the Investment Company Act.

     The purpose of the Plan is to create incentives to the Distributor and/or
other qualified broker-dealers and their account executives to provide
distribution assistance to their customers who are investors in the Fund, to
defray the costs and expenses associated with the preparation, printing and
distribution of prospectuses and sales literature and other promotional and
distribution activities and to provide for the servicing and maintenance of
shareholder accounts.

                                    The Plan

                The material aspects of the Plan are as follows:


1. Distribution Activities

     The Fund shall engage the Distributor to distribute Class A shares of the
Fund and to service shareholder accounts using all of the facilities of the
distribution networks of Prudential Securities Incorporated (Prudential
Securities) and Pruco Securities Corporation (Prusec), including sales personnel
and branch office and central support systems, and also using such other
qualified broker-dealers and financial institutions as the Distributor may
select. Services provided and activities undertaken to distribute Class A shares
of the Fund are referred to herein as "Distribution Activities."

                                       2

<PAGE>



2. Payment of Service Fee

     The Fund shall pay to the Distributor as compensation for providing
personal service and/or maintaining shareholder accounts a service fee of .25 of
1% per annum of the average daily net assets of the Class A shares (service
fee). The Fund shall calculate and accrue daily amounts payable by the Class A
shares of the Fund hereunder and shall pay such amounts monthly or at such other
intervals as the Board of Directors may determine.

3. Payment for Distribution Activities

     The Fund shall pay to the Distributor as compensation for its services a
distribution fee, together with the service fee (described in Section 2 hereof),
of .30 of 1% per annum of the average daily net assets of the Class A shares of
the Fund for the performance of Distribution Activities. The Fund shall
calculate and accrue daily amounts payable by the Class A shares of the Fund
hereunder and shall pay such amounts monthly or at such other intervals as the
Board of Directors may determine. Amounts payable under the Plan shall be
subject to the limitations of Article III, Section 26 of the NASD Rules of Fair
Practice.

     Amounts paid to the Distributor by the Class A shares of the Fund will not
be used to pay the distribution expenses incurred with respect to any other
class of shares of the Fund except that distribution expenses attributable to
the Fund as a whole will be allocated to the Class A shares according to the
ratio of the sales of Class A shares to the total sales of the Fund's shares

                                       3

<PAGE>



over the Fund's fiscal year or such other allocation method approved by the
Board of Directors. The allocation of distribution expenses among classes will
be subject to the review of the Board of Directors.

     The Distributor shall spend such amounts as it deems appropriate on
Distribution Activities which include, among others:

     (a)  amounts paid to Prudential Securities for performing services under a
          selected dealer agreement between Prudential Securities and the
          Distributor for sale of Class A shares of the Fund, including sales
          commissions and trailer commissions paid to, or on account of, account
          executives and indirect and overhead costs associated with
          Distribution Activities, including central office and branch expenses;

     (b)  amounts paid to Prusec for performing services under a selected dealer
          agreement between Prusec and the Distributor for sale of Class A
          shares of the Fund, including sales commissions and trailer
          commissions paid to, or on account of, agents and indirect and
          overhead costs associated with Distribution Activities;

     (c)  advertising for the Fund in various forms through any available
          medium, including the cost of printing and mailing Fund prospectuses,
          statements of additional information and periodic financial reports
          and sales literature to persons other than current shareholders of the
          Fund; and

     (d)  sales commissions (including trailer commissions) paid to, or on
          account of, broker-dealers and financial institutions (other than
          Prudential Securities and Prusec) which have entered into selected
          dealer agreements with the Distributor with respect to shares of the
          Fund.





                                       4

<PAGE>



4. Quarterly Reports; Additional Information

     An appropriate officer of the Fund will provide to the Board of Directors
of the Fund for review, at least quarterly, a written report specifying in
reasonable detail the amounts expended for Distribution Activities (including
payment of the service fee) and the purposes for which such expenditures were
made in compliance with the requirements of Rule 12b-1. The Distributor will
provide to the Board of Directors of the Fund such additional information as the
Board shall from time to time reasonably request, including information about
Distribution Activities undertaken or to be undertaken by the Distributor.

     The Distributor will inform the Board of Directors of the Fund of the
commissions and account servicing fees to be paid by the Distributor to account
executives of the Distributor and to broker-dealers and financial institutions
which have selected dealer agreements with the Distributor.

5. Effectiveness; Continuation

     The Plan shall not take effect until it has been approved by a vote of a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of the Class A shares of the Fund.

     If approved by a vote of a majority of the outstanding voting securities of
the Class A shares of the Fund, the Plan shall, unless earlier terminated in
accordance with its terms, continue in full force and effect thereafter for so
long as such continuance is specifically approved at least annually by a
majority of the Board of Directors of the Fund and a majority of

                                       5

<PAGE>



the Rule 12b-1 Directors by votes cast in person at a meeting called for the
purpose of voting on the continuation of the Plan.

6. Termination

     This Plan may be terminated at any time by vote of a majority of the Rule
12b-1 Directors, or by vote of a majority of the outstanding voting securities
(as defined in the Investment Company Act) of the Class A shares of the Fund.

7. Amendments

     The Plan may not be amended to change the combined service and distribution
fees to be paid as provided for in Sections 2 and 3 hereof so as to increase
materially the amounts payable under this Plan unless such amendment shall be
approved by the vote of a majority of the outstanding voting securities (as
defined in the Investment Company Act) of the Class A shares of the Fund. All
material amendments of the Plan shall be approved by a majority of the Board of
Directors of the Fund and a majority of the Rule 12b-1 Directors by votes cast
in person at a meeting called for the purpose of voting on the Plan.

8. Rule 12b-1 Directors

     While the Plan is in effect, the selection and nomination of the Rule 12b-1
Directors shall be committed to the discretion of the Rule 12b-1 Directors.

9. Records

     The Fund shall preserve copies of the Plan and any related agreements and
all reports made pursuant to Section 4 hereof, for a period of not less than six
years from the date of

                                       6

<PAGE>


effectiveness of the Plan, such agreements or reports, and for at least the
first two years in an easily accessible place.




PIF-A.PLN


                                       7



                                                                  EXHIBIT 15(f)

                PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.

                         Distribution and Service Plan

                                (Class B Shares)

                                 August 1, 1994


                                  Introduction

     The Distribution and Service Plan (the Plan) set forth below which is
designed to conform to the requirements of Rule 12b-1 under the Investment
Company Act of 1940 (the Investment Company Act) and Article III, Section 26 of
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. (NASD) has been adopted by Prudential Intermediate Global Income Fund, Inc.
(the Fund) and by Prudential Securities Incorporated (Prudential Securities),
the Fund's distributor (the Distributor).

     The Fund has entered into a distribution agreement pursuant to which the
Fund will continue to employ the Distributor to distribute Class B shares issued
by the Fund (Class B shares). Under the Plan, the Fund wishes to pay to the
Distributor, as compensation for its services, a distribution and service fee
with respect to Class B shares.

     A majority of the Board of Directors of the Fund including a majority who
are not "interested persons" of the Fund (as defined in the Investment Company
Act) and who have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it (the Rule 12b-1 Directors or Trust),
have determined by votes cast in person at a meeting called for the purpose of
voting on this Plan that there is a reasonable likelihood that adoption of this
Plan will benefit the Fund and its shareholders.


<PAGE>



Expenditures under this Plan by the Fund for Distribution Activities (defined
below) are primarily intended to result in the sale of Class B shares of the
Fund within the meaning of paragraph (a)(2) of Rule 12b-1 promulgated under the
Investment Company Act.

     The purpose of the Plan is to create incentives to the Distributor and/or
other qualified broker-dealers and their account executives to provide
distribution assistance to their customers who are investors in the Fund, to
defray the costs and expenses associated with the preparation, printing and
distribution of prospectuses and sales literature and other promotional and
distribution activities and to provide for the servicing and maintenance of
shareholder accounts.

                                    The Plan

                The material aspects of the Plan are as follows:


1. Distribution Activities

     The Fund shall engage the Distributor to distribute Class B shares of the
Fund and to service shareholder accounts using all of the facilities of the
Prudential Securities distribution network including sales personnel and branch
office and central support systems, and also using such other qualified
broker-dealers and financial institutions as the Distributor may select,
including Pruco Securities Corporation (Prusec). Services provided and
activities undertaken to distribute Class B shares of the Fund are referred to
herein as "Distribution Activities."

                                       2

<PAGE>



2. Payment of Service Fee

     The Fund shall pay to the Distributor as compensation for providing
personal service and/or maintaining shareholder accounts a service fee of .25 of
1% per annum of the average daily net assets of the Class B shares (service
fee). The Fund shall calculate and accrue daily amounts payable by the Class B
shares of the Fund hereunder and shall pay such amounts monthly or at such other
intervals as the Board of Directors may determine.

3. Payment for Distribution Activities

     The Fund shall pay to the Distributor as compensation for its services a
distribution fee of up to .75 of 1% per annum of the average daily net assets of
the Class B shares of the Fund for the performance of Distribution Activities.
The Fund shall calculate and accrue daily amounts payable by the Class B shares
of the Fund hereunder and shall pay such amounts monthly or at such other
intervals as the Board of Directors may determine. Amounts payable under the
Plan shall be subject to the limitations of Article III, Section 26 of the NASD
Rules of Fair Practice.

     Amounts paid to the Distributor by the Class B shares of the Fund will not
be used to pay the distribution expenses incurred with respect to any other
class of shares of the Fund except that distribution expenses attributable to
the Fund as a whole will be allocated to the Class B shares according to the
ratio of the sale of Class B shares to the total sales of the Fund's shares over
the Fund's fiscal year or such other allocation method approved by the Board of
Directors. The allocation of distribution expenses among

                                       3

<PAGE>



classes will be subject to the review of the Board of Directors.

     The Distributor shall spend such amounts as it deems appropriate on
Distribution Activities which include, among others:

     (a)  sales commissions (including trailer commissions) paid to, or on
          account of, account executives of the Distributor;

     (b)  indirect and overhead costs of the Distributor associated with
          performance of Distribution Activities including central office and
          branch expenses;

     (c)  amounts paid to Prusec for performing services under a selected dealer
          agreement between Prusec and the Distributor for sale of Class B
          shares of the Fund, including sales commissions and trailer
          commissions paid to, or on account of, agents and indirect and
          overhead costs associated with Distribution Activities;

     (d)  advertising for the Fund in various forms through any available
          medium, including the cost of printing and mailing Fund prospectuses,
          statements of additional information and periodic financial reports
          and sales literature to persons other than current shareholders of the
          Fund; and

     (e)  sales commissions (including trailer commissions) paid to, or on
          account of, broker-dealers and other financial institutions (other
          than Prusec) which have entered into selected dealer agreements with
          the Distributor with respect to shares of the Fund.

4. Quarterly Reports; Additional Information

     An appropriate officer of the Fund will provide to the Board of Directors
of the Fund for review, at least quarterly, a written report specifying in
reasonable detail the amounts expended for Distribution Activities (including
payment of the service fee) and the purposes for which such expenditures were
made in compliance with the requirements of Rule 12b-1. The Distributor will
provide to the Board of Directors of the Fund such additional information as
they shall from time to time reasonably request, including

                                       4

<PAGE>



information about Distribution Activities undertaken or to be undertaken by the
Distributor.

     The Distributor will inform the Board of Directors of the Fund of the
commissions and account servicing fees to be paid by the Distributor to account
executives of the Distributor and to broker-dealers and other financial
institutions which have selected dealer agreements with the Distributor.

5. Effectiveness; Continuation

     The Plan shall not take effect until it has been approved by a vote of a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of the Class B shares of the Fund.

     If approved by a vote of a majority of the outstanding voting securities of
the Class B shares of the Fund, the Plan shall, unless earlier terminated in
accordance with its terms, continue in full force and effect thereafter for so
long as such continuance is specifically approved at least annually by a
majority of the Board of Directors of the Fund and a majority of the Rule 12b-1
Directors by votes cast in person at a meeting called for the purpose of voting
on the continuation of the Plan.

6. Termination

     This Plan may be terminated at any time by vote of a majority of the Rule
12b-1 Directors, or by vote of a majority of the outstanding voting securities
(as defined in the Investment Company Act) of the Class B shares of the Fund.

                                       5

<PAGE>


7. Amendments

     The Plan may not be amended to change the combined service and distribution
fees to be paid as provided for in Sections 2 and 3 hereof so as to increase
materially the amounts payable under this Plan unless such amendment shall be
approved by the vote of a majority of the outstanding voting securities (as
defined in the Investment Company Act) of the Class B shares of the Fund. All
material amendments of the Plan shall be approved by a majority of the Board of
Directors of the Fund and a majority of the Rule 12b-1 Directors by votes cast
in person at a meeting called for the purpose of voting on the Plan.

8. Rule 12b-1 Directors

     While the Plan is in effect, the selection and nomination of the Rule 12b-1
Directors shall be committed to the discretion of the Rule 12b-1 Directors.

9. Records

     The Fund shall preserve copies of the Plan and any related agreements and
all reports made pursuant to Section 4 hereof, for a period of not less than six
years from the date of effectiveness of the Plan, such agreements or reports,
and for at least the first two years in an easily accessible place.




PIF-B.PLN


                                       6



                                                                  EXHIBIT 15(g)


                PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.

                         Distribution and Service Plan

                                (Class C Shares)

                                 August 1, 1994


                                  Introduction

     The Distribution and Service Plan (the Plan) set forth below which is
designed to conform to the requirements of Rule 12b-1 under the Investment
Company Act of 1940 (the Investment Company Act) and Article III, Section 26 of
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. (NASD) has been adopted by Prudential Intermediate Global Income Fund, Inc.
(the Fund) and by Prudential Securities Incorporated (Prudential Securities),
the Fund's distributor (the Distributor).

     The Fund has entered into a distribution agreement pursuant to which the
Fund will continue to employ the Distributor to distribute Class C shares issued
by the Fund (Class C shares). Under the Plan, the Fund wishes to pay to the
Distributor, as compensation for its services, a distribution and service fee
with respect to Class C shares.

     A majority of the Board of Directors of the Fund including a majority who
are not "interested persons" of the Fund (as defined in the Investment Company
Act) and who have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it (the Rule 12b-1 Directors), have
determined by votes cast in person at a meeting called for the purpose of voting
on this Plan that there is a reasonable likelihood that adoption of this Plan
will benefit the Fund and its shareholders. Expenditures


<PAGE>



under this Plan by the Fund for Distribution Activities (defined below) are
primarily intended to result in the sale of Class C shares of the Fund within
the meaning of paragraph (a)(2) of Rule 12b-1 promulgated under the Investment
Company Act.

     The purpose of the Plan is to create incentives to the Distributor and/or
other qualified broker-dealers and their account executives to provide
distribution assistance to their customers who are investors in the Fund, to
defray the costs and expenses associated with the preparation, printing and
distribution of prospectuses and sales literature and other promotional and
distribution activities and to provide for the servicing and maintenance of
shareholder accounts.

                                    The Plan

                The material aspects of the Plan are as follows:

1. Distribution Activities

     The Fund shall engage the Distributor to distribute Class C shares of the
Fund and to service shareholder accounts using all of the facilities of the
Prudential Securities distribution network including sales personnel and branch
office and central support systems, and also using such other qualified
broker-dealers and financial institutions as the Distributor may select,
including Pruco Securities Corporation (Prusec). Services provided and
activities undertaken to distribute Class C shares of the Fund are referred to
herein as "Distribution Activities."

2. Payment of Service Fee

                                       2

<PAGE>



     The Fund shall pay to the Distributor as compensation for providing
personal service and/or maintaining shareholder accounts a service fee of .25 of
1% per annum of the average daily net assets of the Class C shares (service
fee). The Fund shall calculate and accrue daily amounts payable by the Class C
shares of the Fund hereunder and shall pay such amounts monthly or at such other
intervals as the Board of Directors may determine.

3. Payment for Distribution Activities

     The Fund shall pay to the Distributor as compensation for its services a
distribution fee of up to 1% per annum of the average daily net assets of the
Class C shares of the Fund for the performance of Distribution Activities. The
Fund shall calculate and accrue daily amounts payable by the Class C shares of
the Fund hereunder and shall pay such amounts monthly or at such other intervals
as the Board of Directors may determine. Amounts payable under the Plan shall be
subject to the limitations of Article III, Section 26 of the NASD Rules of Fair
Practice.

     Amounts paid to the Distributor by the Class C shares of the Fund will not
be used to pay the distribution expenses incurred with respect to any other
class of shares of the Fund except that distribution expenses attributable to
the Fund as a whole will be allocated to the Class C shares according to the
ratio of the sale of Class C shares to the total sales of the Fund's shares over
the Fund's fiscal year or such other allocation method approved by the Board of
Directors. The allocation of distribution expenses among classes will be subject
to the review of the Board of Directors.

                                       3

<PAGE>



     The Distributor shall spend such amounts as it deems appropriate on
Distribution Activities which include, among others:

     (a)  sales commissions (including trailer commissions) paid to, or on
          account of, account executives of the Distributor;

     (b)  indirect and overhead costs of the Distributor associated with
          performance of Distribution Activities including central office and
          branch expenses;

     (c)  amounts paid to Prusec for performing services under a selected dealer
          agreement between Prusec and the Distributor for sale of Class C
          shares of the Fund, including sales commissions and trailer
          commissions paid to, or on account of, agents and indirect and
          overhead costs associated with Distribution Activities;

     (d)  advertising for the Fund in various forms through any available
          medium, including the cost of printing and mailing Fund prospectuses,
          statements of additional information and periodic financial reports
          and sales literature to persons other than current shareholders of the
          Fund; and

     (e)  sales commissions (including trailer commissions) paid to, or on
          account of, broker-dealers and other financial institutions (other
          than Prusec) which have entered into selected dealer agreements with
          the Distributor with respect to shares of the Fund.

4. Quarterly Reports; Additional Information

     An appropriate officer of the Fund will provide to the Board of Directors
of the Fund for review, at least quarterly, a written report specifying in
reasonable detail the amounts expended for Distribution Activities (including
payment of the service fee) and the purposes for which such expenditures were
made in compliance with the requirements of Rule 12b-1. The Distributor will
provide to the Board of Directors of the Fund such additional information as
they shall from time to time reasonably request, including information about
Distribution Activities undertaken or to be

                                       4

<PAGE>



undertaken by the Distributor.

     The Distributor will inform the Board of Directors of the Fund of the
commissions and account servicing fees to be paid by the Distributor to account
executives of the Distributor and to broker-dealers and other financial
institutions which have selected dealer agreements with the Distributor.

5. Effectiveness; Continuation

     The Plan shall not take effect until it has been approved by a vote of a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of the Class C shares of the Fund.

     If approved by a vote of a majority of the outstanding voting securities of
the Class C shares of the Fund, the Plan shall, unless earlier terminated in
accordance with its terms, continue in full force and effect thereafter for so
long as such continuance is specifically approved at least annually by a
majority of the Board of Directors of the Fund and a majority of the Rule 12b-1
Directors by votes cast in person at a meeting called for the purpose of voting
on the continuation of the Plan.

6. Termination

     This Plan may be terminated at any time by vote of a majority of the Rule
12b-1 Directors, or by vote of a majority of the outstanding voting securities
(as defined in the Investment Company Act) of the Class C shares of the Fund.

7. Amendments

     The Plan may not be amended to change the combined service and

                                       5

<PAGE>


distribution fees to be paid as provided for in Sections 2 and 3 hereof so as to
increase materially the amounts payable under this Plan unless such amendment
shall be approved by the vote of a majority of the outstanding voting securities
(as defined in the Investment Company Act) of the Class C shares of the Fund.
All material amendments of the Plan shall be approved by a majority of the Board
of Directors of the Fund and a majority of the Rule 12b-1 Directors by votes
cast in person at a meeting called for the purpose of voting on the Plan.

8. Rule 12b-1 Directors

     While the Plan is in effect, the selection and nomination of the Rule 12b-1
Directors shall be committed to the discretion of the Rule 12b-1 Directors.

9. Records

     The Fund shall preserve copies of the Plan and any related agreements and
all reports made pursuant to Section 4 hereof, for a period of not less than six
years from the date of effectiveness of the Plan, such agreements or reports,
and for at least the first two years in an easily accessible place.




pif-c.pln

                                       6


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