As filed with the Securities and Exchange Commission
on May 9, 1994
Registration No. 33-33479
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 [X]
Amendment No. 9 [X]
(Check appropriate box or boxes)
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PRUDENTIAL SHORT-TERM
GLOBAL 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)
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):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)
[ ] on ( ), pursuant to paragraph (a), of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
Registrant has previously registered an indefinite number of shares of
beneficial interest, par value $.001 per share. The Registrant will file a
notice under such Rule for its fiscal year ended October 31, 1994 on or
before December 31, 1994.
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<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 495)
<TABLE>
<CAPTION>
N-1A Item No. Location
- ------------- --------
Part A
<S> <C>
Item 1. Cover Page ...................................................... Cover Page
Item 2. Synopsis ........................................................ Fund Expenses; Fund Highlights
Item 3. Condensed Financial Information ................................. Fund Highlights, How the Fund Invests
Item 4. General Description of Registrant ............................... Cover Page; Fund Expenses, Financial
Highlights; How the Fund Calculates
Performance, Description of Common
Stock
Item 5. Management of the Fund .......................................... How The Fund Is Managed
Item 6. Capital Stock and Other Securities .............................. How The Fund Is Managed; Taxes,
Dividends and Distributions; Description
of Common Stock
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
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 ................................. Organization and Capitalization
Item 13. Investment Objectives and Policies .............................. Investment Objectives and Policies;
Investment Restrictions; Additional
Investment Information
Item 14. Management of the Fund .......................................... Directors and Officers; Manager;
Distributor
Item 15. Control Persons and Principal Holders of Securities ............. Not Applicable
Item 16. Investment Advisory and Other Services .......................... Manager; Distributor; Custodian,
Transfer and Dividend Disbursing
Agent and Independent Accountants
Item 17. Brokerage Allocation and Other Practices ........................ Portfolio Transactions and Brokerage
Item 18. Capital Stock and Other Securities .............................. Not Applicable
Item 19. Purchase, Redemption and Pricing of Securities Being Offered .... Purchase and Redemption of Fund
Shares; Shareholder Investment
Account
Item 20. Tax Status ...................................................... Taxes
Item 21. Underwriters .................................................... Distributor
Item 22. Calculation of Performance Data ................................. Performance Information
Item 23. Financial Statements ............................................ Financial Statements
Part C
</TABLE>
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
Prudential Short-Term
Global Income Fund, Inc.
(Short-Term Global Income Portfolio)
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Prospectus dated , 1994
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Prudential Short-Term Global Income Fund, Inc., (the Fund)-Short- Term
Global Income Portfolio (the Portfolio) is one of two separate portfolios
of an open-end management investment company. Only shares of the Short-Term
Global Income Portfolio are offered by this means of this Prospectus. The
Short-Term Global Income Portfolio's investment objective is to maximize
total return, the components of which are current income and capital
appreciation. The Portfolio, which is not a money market fund, seeks to
achieve its objective by investing primarily in a portfolio of investment
grade debt securities having remaining maturities of not more than three
years. The Portfolio will maintain an average weighted maturity of three
years or less. The Portfolio seeks to maximize total return by investing in
debt securities denominated in the U.S. dollar and a range of foreign
currencies. The Portfolio 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 Portfolio 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 Portfolio's investment
objective will be achieved. 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.
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This Prospectus sets forth concisely the information about the Fund and
the Portfolio that a prospective investor ought to know before investing.
Additional information about the Fund and the Portfolio has been filed
with the Securities and Exchange Commission in a Statement of Additional
Information, dated , 1994, 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.
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Investors are advised to read this Prospectus and retain it for future
reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
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FUND HIGHLIGHTS
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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.
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What is Prudential Short-Term Global Income Fund, Inc., Short-Term
Global Income Portfolio?
Prudential Short-Term Global Income Fund, Inc., Short-Term Global
Income Portfolio 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 Portfolio's Investment Objective?
The Portfolio's investment objective is to maximize total return, the
components of which are current income and capital appreciation. See "How
the Fund Invests-Investment Objectives and Policies" at page 6.
What are the Portfolio's Special Characteristics and Risks?
In seeking to achieve its investment objective, the Portfolio invests
primarily in a portfolio of investment grade debt securities having
remaining maturities of not more than three years. The Portfolio, which is
not a money market fund, seeks to maximize total return by investing in
debt securities denominated in the U.S. dollar and a range of foreign
securities. See "How the Fund Invests-Investment Objectives and Policies"
at page 6. Investing in securities of foreign companies and countries
involves certain considerations and risks not typically associated with
investing in U.S. Government Securities and securities of domestic
companies. See "How the Fund Invests-Risk Factors on Foreign Investments"
at page 8. In addition, the Portfolio 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 Services, Inc. (Moody's),
or Standard & Poor's Ratings Group (S&P) or by another nationally
recognized statistical ratings organization, or if unrated, are deemed to
be of equivalent quality by the Subadviser. Investment in non- investment
(NRSRO) grade securities may entail additional risks to the Fund. See
"Medium and Lower-Rated Securities". The Portfolio may also engage in
hedging and income enhancement strategies, including the purchase and sale
of put and call options and related short-term trading. See "How the Fund
Invests-Other Investments and Investment Techniques" at page 8.
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 .55 of 1% of the Fund's average daily net assets. As of March 31, 1994,
PMF served as manager or administrator to [66] investment companies,
including [37] mutual funds, with aggregate assets of approximately [$49]
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 12.
Who Distributes the Portfolio's Shares?
Prudential Mutual Fund Distributors, Inc. (PMFD) acts as the
Distributor of the Portfolio's Class A shares and is currently paid for its
services at an annual 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 Portfolio's Class B and Class C shares and is paid
for its services at an annual rate of 1% of the average daily net assets of
the Class B shares and is currently paid for its services at an annual rate
of .75 of 1% of the average net assets of the Class C shares. See "How the
Fund is Managed-Distributor" at page 13.
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2
<PAGE>
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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 18 and
"Shareholder Guide-Shareholder Services" at page 24.
How Do I Purchase Shares?
You may purchase shares of the Portfolio 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 15 and "Shareholder
Guide-How to Buy Shares of the Fund" at page 18.
What Are My Purchase Alternatives?
The Portfolio offers three classes of shares:
*Class A Shares: Sold with an initial sales charge of up to 3% of the
offering price.
*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 expenses) approximately five years after
purchase.
*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 19.
How Do I Sell My Shares?
You may redeem your shares 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 21.
How Are Dividends and Distributions Paid?
The Portfolio expects to pay dividends of net investment income monthly
and make distributions of any net capital gains at least annually.
Dividends and distributions will be automatically reinvested in additional
shares of the Portfolio at NAV without a sales charge unless you request
that they be paid to you in cash. See "Taxes, Dividends and Distributions"
at page 16.
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3
<PAGE>
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FUND EXPENSES-SHORT-TERM GLOBAL INCOME PORTFOLIO
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<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
Shareholder Transaction Expenses\D
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ..... 3% None None
Maximum Sales Load or Deferred Sales Load
Imposed on Reinvested Dividends ........... None None None
Deferred Sales Load (as a percentage of
original purchase price or redemption
proceeds, whichever is lower) ............. None 3% during the first year, 1% on redemptions
decreasing by 1% annually made within one year
to 1% in the third year and of purchase
1% in the fourth year and
0% in the fifth year*
Redemption Fees ........................... None None None
Exchange Fees ............................. None None None
</TABLE>
Annual Portfolio Operating Expenses*\D
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares**
-------------- -------------- --------------
<S> <C> <C> <C>
Management Fees ........................... .55% .55% .55%
12b-1 Fees\D\D ............................ .15% 1.00% .75%
Other Expenses ............................ .32% .32% .32%
---- ---- ----
Total Portfolio Operating Expenses ........ 1.02% 1.87% 1.62%
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Example 1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
Class A ................................................................. $40 $61 $ 85 $ 151
Class B ................................................................. $49 $69 $101 $ 187
Class C** .............................................................. $26 $51 $ 88 $ 192
You would pay the following expenses on the same investment, assuming
no redemption:
Class A ................................................................. $40 $61 $ 85 $ 151
Class B ................................................................. $19 $59 $101 $ 187
Class C** .............................................................. $16 $51 $ 88 $ 192
<FN>
The above example with respect to Class A and Class B shares is based
on restated data for the Portfolio's fiscal year ended October 31, 1993.
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 fiscal year ended October 31, 1993. 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 Portfolio 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 Portfolio, such as
directors' and professional fees, registration fees, reports to
shareholders and transfer agency and custodian fees (foreign and domestic).
*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 fiscal year ended October
31, 1993.
\D 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 Portfolio may not
exceed 6.25% of total gross sales, subject to certain exclusions.
This 6.25% limitation is imposed on the Portfolio rather than on a
per shareholder basis. Therefore, long-term Class B and Class C
shareholders of the Portfolio 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."
\D\D Although the Class A and Class C Distribution and Service Plans
provide that the Portfolio may pay up to an annual rate of .30 of
1% of the average daily net assets of the Class A shares and up to
1% per annum of the average daily net assets of the Class C shares,
the Distributor has agreed to limit its distribution expenses with
respect to the Class A shares of the Portfolio to no more than .15
of 1% of the average daily net asset value of the Class A shares
and to no more than .75 of 1% of the average daily net assets of
the Class C shares for the fiscal year ending October 31, 1994. See
"How the Fund is Managed-Distributor."
</TABLE>
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4
<PAGE>
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FINANCIAL HIGHLIGHTS
(for a share of common stock outstanding throughout each of the years indicated)
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The following financial highlights have been audited by Deloitte &
Touche, 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 and
Class B share of common stock outstanding, total return, ratios to average
net assets and other supplemental data for the years indicated. The
information is based on data contained in the financial statements. No
Class C shares were outstanding during the periods indicated.
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Short-Term Global Income Portfolio
<TABLE>
<CAPTION>
CLASS A CLASS B
Year ended October 31, Year ended October 31,
---------------------- ----------------------
1993 1992 1991 1993 1992 1991
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of year ...... $ 9.16 $ 9.97 $ 10.00 $ 9.16 $ 9.97 $ 10.00
------- -------- -------- ------- -------- -------
Income from investment operations:
Net investment income ................... .97 .96 1.03 .88 .88 .95
Net realized and unrealized loss
on investment and foreign currency
transactions ............................ (.26) (.95) (.02) (.26) (.95) (.02)
------- -------- -------- -------- -------- -------
Total from investment operations ........ .71 .01 1.01 .62 (.07) .93
------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income .... (.58) (.82) (1.03) (.49) (.74) (.95)
Distributions from net capital gains .... - - (.01) - - (.01)
------- -------- -------- -------- -------- -------
Total distributions ..................... (.58) (.82) (1.04) (.49) (.74) (.96)
------- -------- -------- -------- -------- --------
Net asset value, end of year ............ $ 9.29 $ 9.16 $ 9.97 $ 9.29 $ 9.16 $ 9.97
======= ======== ======== ======== ======== ========
TOTAL RETURN# ........................... 7.96% (0.07)% 10.41% 7.00% (0.86)% 9.51%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) ........... $59,458 $101,358 $105,148 $375,013 $606,899 $669,086
Average net assets (000) ................ $70,347 $119,171 $ 51,830 $474,175 $814,734 $349,607
Ratios to average net assets:
Expenses, including distribution fees ... 1.02% 1.08% 1.01% 1.87% 1.93% 1.87%
Expenses, excluding distribution fees ... .87% .93% .86% .87% .93% .87%
Net investment income ................... 10.81% 9.93% 10.23% 9.42% 9.05% 9.46%
Portfolio turnover rate ................. 307% 180% 66% 307% 180% 66%
<FN>
#Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions.
</TABLE>
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5
<PAGE>
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HOW THE FUND INVESTS
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INVESTMENT OBJECTIVES AND POLICIES
The Portfolio's investment objective is to maximize total return, the
components of which are current income and capital appreciation. The
Portfolio seeks to achieve its objective by investing primarily in a
portfolio of investment grade debt securities having remaining maturities
of not more than three years. The Portfolio may also invest up to 10% of
its total assets in debt securities rated below investment grade, with a
minimum rating of B, by either S&P or Moody's or by another NRSRO, or, if
unrated, are deemed to be of equivalent quality by the Investment Adviser.
See "Medium and Lower-Rated Securities." There is no assurance that the
Portfolio will achieve its investment objective.
The Portfolio, which is not a money market fund, will maintain an
average weighted maturity of three years or less and will invest at least
65% of its total assets in income-producing securities. The Portfolio seeks
to maximize total return by investing in debt securities denominated in
U.S. dollars and a range of foreign currencies. Under normal circumstances,
the Portfolio will invest its assets in debt securities of issuers in at
least three different countries including the United States. The Portfolio
may also purchase and sell covered call and put options on certain of these
securities, indices and currencies, as well as on futures contracts
relating to such securities, indices and currencies.
The Portfolio's investment objective is a fundamental policy and can
not be changed without the approval of the holders of a majority of the
Portfolio's outstanding voting securities as defined in the Investment
Company Act of 1940 (the Investment Company Act). Fund policies that are
not fundamental may be modified by the Board of Directors.
The Portfolio is managed in accordance with a multi-market investment
strategy, allocating the Portfolio's investments among securities
denominated in the U.S. dollar and the currencies of a number of foreign
countries and, within each such country, among different types of debt
securities. The investment adviser adjusts the Portfolio's exposure to each
currency based on its perception of the most favorable markets and issuers.
In this regard, the percentage of assets invested in securities of a
particular country or denominated in a particular currency will vary in
accordance with the investment adviser's assessment of the relative yield
of such securities and the relationship of a country's currency to the U.S.
dollar. The Portfolio may from time to time invest 25% or more of its total
assets in securities of issuers in one or more countries depending upon the
investment adviser's assessment. The investment adviser considers
fundamental economic strength, credit quality and interest rate trends in
determining whether to increase or decrease the emphasis placed upon a
particular type of security or industry sector within the Portfolio's
investment portfolio.
Returns on short-term foreign currency denominated debt instruments can
be adversely affected by changes in exchange rates. The Portfolio'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 Portfolio'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 Portfolio 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 successfully employ cross- currency hedging techniques. A
cross-currency hedge cannot protect against exchange rates risks perfectly,
and if the investment adviser is incorrect in its judgment of future
exchange rate relationships, the Portfolio could be in a less advantageous
position than if such a hedge had not been established.
6
<PAGE>
The Portfolio invests in debt securities denominated in the currencies
of countries whose governments are considered stable by the Portfolio's
investment adviser. In addition to the U.S. Dollar, such currencies
include, among others, the Australian Dollar, Austrian Schilling, British
Pound Sterling, Canadian Dollar, Dutch Guilder, European Currency Unit
(ECU), French Franc, German Mark, Italian Lira, Japanese Yen, New Zealand
Dollar, Spanish Peseta, Finnish Marka, Mexican Peso, Danish Kroner,
Norwegian Kroner, Swedish Krona and Swiss Franc. An issuer of debt
securities purchased by the Portfolio may be domiciled in a country other
than the country in whose currency the instrument is denominated. The
Portfolio may also invest in debt securities denominated in the currencies
of certain "emerging market" nations, such as, but not limited to, the
Czech Republic, Greece, South Korea, Hong Kong, Malaysia, Indonesia,
Thailand, China, Israel, Chile, Columbia, Venezuela, Turkey and Argentina.
The Portfolio will primarily invest in investment grade debt
securities. Accordingly, the Portfolio's investments will consist of (i)
debt securities issued or guaranteed by the U.S. Government, its agencies
and instrumentalities (U.S. Government securities), (ii) obligations issued
or guaranteed by a foreign government or any of its political subdivisions,
authorities, agencies or instrumentalities, or by supranational entities,
all of which are rated at least BBB by S&P or Baa by Moody's or by any
other NRSRO, or if unrated, are determined by the Portfolio's investment
adviser to be of equivalent rating using similar rating standards
(investment grade), (iii) corporate debt securities rated at least
investment grade by S&P or Moody's or by any other NRSRO, or if unrated,
are determined by the Portfolio's investment adviser to be of equivalent
rating using similar rating standards, (iv) certificates of deposit and
bankers acceptances issued or guaranteed by, or time deposits maintained
at, banks (including foreign branches of U.S. banks or U.S. or foreign
branches of foreign banks having total assets of more than $500 million and
determined by the investment adviser to be of investment grade using
similar standards, (v) commercial paper rated A-1 by S&P, P-1 by Moody's,
or if not rated, issued by U.S. or foreign companies having outstanding
long term debt securities rated at least investment grade by S&P or Moody's
or by any other NRSRO, or if unrated, are determined by the Portfolio's
investment adviser to be of equivalent rating using similar rating
standards; and (vi) loan participations having a remaining term not
exceeding one year in loans extended by banks to such companies. The value
of long term fixed income securities will fluctuate inversly with interest
rates. See the description of securities ratings in the Appendix.
The Portfolio may also invest up to 10% of its total assets in
securities rated B or BB by S&P or B or Ba by Moody's or by any other
NRSRO, or if unrated, are determined by the Portfolio's investment adviser
to be of equivalent rating using similar rating standards. Investment in
non-investment grade securities may entail additional risks to the
Portfolio. See "Medium and Lower-Rated Securities".
The Portfolio 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio may invest in debt securities issued by supranational
organizations such as the World Bank, which was chartered to finance
development projects in developing member countries; the European
Community, which is a twelve-nation organization engaged in cooperative
economic activities; the European Coal and Steel Community, which is an
economic union of various European nations' steel and coal industries; and
the Asian Development Bank, which is an
7
<PAGE>
international development bank established to lend funds, promote
investment and provide technical assistance to member nations in the Asian
and Pacific regions.
The Portfolio may invest in debt securities denominated in the ECU,
which is a "basket" consisting of specified amounts of currencies of
certain of the twelve member states of the European Community.
The specific amounts of currencies comprising the ECU may be
adjusted by the Council of Ministers of the European Community to reflect
changes in relative values of the underlying currencies. The Portfolio's
investment adviser does not believe that such adjustments will adversely
affect holders of ECU-denominated obligations or the marketability of such
securities. European supranationals, in particular, issue ECU-denominated
obligations.
The Portfolio is "non-diversified" so that the Portfolio 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 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.
RISK FACTORS
Risk Factors on Foreign Investments
Investing in securities issued by foreign governments and corporations
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.
Shareholders should be aware that investing in the fixed-income markets
of developing 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 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 Portfolio may invest in medium
(i.e., rated Baa by Moody's or BBB by S&P) and lower- rated securities
(i.e., rated lower than Baa by Moody's or lower than BBB by S&P). However,
the Portfolio will not purchase a security rated lower than B by Moody's or
S&P. Securities rated Baa by Moody's or BBB by S&P, 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 by S&P) 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 corporate
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
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<PAGE>
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 issue whether rated or unrated, take
various factors into consideration, which may include, as applicable, the
issuer's financial resources, its sensitivity to economic conditions and
trends, the operating history of and the community support for the
facility financed by the issue, the ability of the issuer's management 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 Portfolio
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 Portfolio to
purchase and may also have the effect of limiting the ability of the
Portfolio 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
Portfolio 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 Portfolio may
decline proportionately more than a portfolio consisting of higher-rated
securities. If the Portfolio 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 Portfolio and
increasing the exposure of the Portfolio 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 the Portfolio, an issue of securities may
cease to be rated or its rating may be reduced below the minimum required
for purchase by the Portfolio. Neither event will require sale of these
securities by the Portfolio, but the investment adviser will consider this
event in its determination of whether the Portfolio should continue to hold
the securities.
As of October 31, 1993, the monthly dollar weighted average ratings of
the debt obligations held by the Fund, expressed as a percentage of the
Fund's total investments, were as follows:
Percentage of Total
Ratings Investments
------- -------------------
AAA/Aaa -- %
AA/Aa --
A/A --
BBB/Baa --
BB/Ba --
B/B --
Unrated --
OTHER INVESTMENTS AND INVESTMENT TECHNIQUES
In addition, the Portfolio is permitted to make the investments and
engage in the investment techniques described below. Under normal
circumstances, these investments will represent no more than 35% of the
total assets of the Portfolio.
Hedging and Income Enhancement Strategies
The Portfolio may engage in various portfolio strategies 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 Portfolio'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 "Additional
Investment Information-Investment Policies" in the Statement of
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<PAGE>
Additional Information. New financial products and risk management
techniques continue to be developed and the Portfolio may use these new
investments and techniques to the extent consistent with its investment
objective and policies.
Options Transactions
The Portfolio 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
the Portfolio's investments. These options will be on debt securities,
financial indices (e.g., S&P 500), U.S. Government securities, foreign
government securities and foreign currencies. The Portfolio 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 Portfolio may also
purchase put and call options to offset previously written put and call
options of the same series. See "Additional Investment
Information-Additional Risks- 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, the Portfolio 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 Portfolio might,
therefore, be obligated to purchase the underlying securities or currency
for more than their current market price.
The Portfolio will write only "covered" options. An option is covered
if, so long as the Portfolio 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
in a segregated account. See "Additional Investment Information-Additional
Risks" in the Statement of Additional Information.
There is no limitation on the amount of call options the Portfolio may
write. The Portfolio may only write covered put options to the extent that
cover for such options does not exceed 25% of the Portfolio's net assets.
The Portfolio 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 for futures.
Forward Currency Exchange Contracts
The Portfolio 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 Portfolio 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 Portfolio'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 Portfolio generally
arising in connection with the purchase or sale of its portfolio securities
and accruals of interest or dividends receivable and Portfolio expenses.
Position hedging is the sale of a foreign currency with respect to
portfolio security positions denominated or quoted in that currency or in a
different foreign currency (cross-hedge). Although there are no limits on
the number of forward contracts which the Portfolio may enter into, the
Portfolio may not position hedge with respect to a particular currency for
an amount greater than the aggregate market
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<PAGE>
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 or bearing substantial correlation to, such currency. See
"Additional Investment Information-Forward Currency Exchange Contracts" in
the Statement of Additional Information.
Futures Contracts and Options Thereon
The Portfolio 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 Portfolio 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
Portfolio's existing futures and options on futures and premiums paid for
such related options would exceed 5% of the liquidation value of the
Portfolio's total assets. The Portfolio may purchase and sell futures
contracts and related options, without limitation, for bona fide hedging
purposes. Although there are no other limits applicable to futures
contracts, the value of all futures contracts sold will not exceed the
total market value of the Portfolio's portfolio.
The Portfolio'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 or currencies being hedged is imperfect and there is a risk that
the value of the securities or currencies being hedged may increase or
decrease at a greater rate than the related futures contracts resulting in
losses to the Portfolio. Certain futures exchanges or boards of trade have
established daily limits on the amount that the price of futures contracts
or related options may vary, either up or down, from the previous day's
settlement price. These daily limits may restrict the Portfolio's ability
to purchase or sell certain futures contracts or related options on any
particular day.
The Portfolio's ability to enter into futures contracts and options
thereon is limited by the requirements of the Internal Revenue Code of
1986, as amended (the Internal Revenue Code), for qualification as a
regulated investment company. See "Additional Investment Information-
Futures Contracts and Options Thereon" and "Taxation" in the Statement of
Additional Information.
Special 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 Portfolio 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 Portfolio may leave the
Portfolio 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 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 Portfolio 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 Portfolio
to sell a security at a disadvantageous time, due to the need for the
Portfolio to maintain "cover" or to segregate securities in connection with
hedging transactions. See "Taxation" in the Statement of Additional
Information.
Short Sales Against-the-Box
The Portfolio 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 Portfolio 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.
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<PAGE>
Repurchase Agreements
The Portfolio may enter into repurchase agreements, whereby the seller
of a security agrees to repurchase that security from the Portfolio 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
Portfolio's money is invested in the security. The Portfolio'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 Portfolio will require
additional collateral. If the seller defaults and the value of the
collateral securing the repurchase agreement declines, the Portfolio may
incur a loss. The Portfolio 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 or
Commission). See "Additional Investment Information-Repurchase Agreements"
in the Statement of Additional Information.
Securities Lending
The Portfolio 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 Portfolio 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
Portfolio an amount equivalent to any dividend or interest paid on such
securities and the Portfolio may invest the cash collateral and earn
additional income, or it may receive an agreed-upon amount of interest
income from the borrower. As a matter of fundamental policy, the Portfolio
cannot lend more than 30% of the value of its total assets.
When-Issued and Delayed Delivery Securities
The Portfolio 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 Portfolio with payment and
delivery taking place a month or more in the future in order to secure what
is considered to be an advantageous price and yield to the Portfolio at the
time of entering into the transaction. The Fund's Custodian will maintain,
in a segregated account of the Portfolio, cash, U.S. Government securities
or other liquid high-grade debt obligations having a value equal to or
greater than the Portfolio's purchase commitments; the Custodian will
likewise segregate securities sold on a delayed delivery basis.
Borrowing
The Portfolio may borrow an amount equal to no more than 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 Portfolio has borrowed
for temporary, extraordinary or emergency purposes or for the clearance of
transactions, the Portfolio may pursue its investment objective by
purchasing additional securities which can result in increased volatility
of the Portfolio's net asset value. The Portfolio will not borrow to take
advantage of investment opportunities. See "Additional Investment
Information-Borrowing" in the Statement of Additional Information. The
Portfolio may pledge up to 20% of its total assets to secure these
borrowings.
Illiquid Securities
The Portfolio may invest up to 10% 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) that have a readily available
market are not considered illiquid for purposes of this limitation. The
investment adviser will monitor the liquidity of 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 also taken the position that purchased over-
the-counter options and the assets used as "cover" for written over-the-
counter 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
12
<PAGE>
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."
Portfolio Turnover
The Portfolio has no fixed policy with respect to portfolio turnover;
however, it is anticipated that the Portfolio's annual portfolio turnover
rate will not exceed 75%. The portfolio turnover rate is calculated by
dividing the lesser of sales or purchases of portfolio securities by the
average monthly value of the Portfolio'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
Portfolio. For the fiscal year ended October 31, 1993, the Fund's portfolio
turnover rate was 307%. See "Portfolio Transactions and Brokerage" in the
Statement of Additional Information.
INVESTMENT RESTRICTIONS
The Portfolio is subject to certain investment restrictions which, like
its investment objectives, constitute fundamental policies. Fundamental
policies cannot be changed without the approval of the holders of a
majority of the Portfolio'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 Portfolio's Manager, Subadviser and Distributor, as set
forth below, decides upon matters of general policy. The Portfolio's
Manager conducts and supervises the daily business operations of the
Portfolio. The Fund's Subadviser furnishes daily investment advisory
services.
For the year ended October 31, 1993, total expenses for the Portfolio's
Class A and Class B shares as a percentage of average net assets were 1.02%
and 1.87%, respectively. See "Financial Highlights." No Class C shares were
outstanding during the fiscal year ended October 31, 1993.
MANAGER
Prudential Mutual Fund Management, Inc. (PMF or the Manager), One
Seaport Plaza, New York, New York 10292, is the manager of the Portfolio
and is compensated for its services at an annual rate of .55 of 1% of the
Portfolio's average daily net assets. It was incorporated in May 1987 under
the laws of the State of Delaware. For the fiscal year ended October 31,
1993, the Portfolio paid a management fee to PMF of .55 of 1% of the
average net assets of the Portfolio.
As of March 31, 1994, PMF served as the manager to [37] open-end
investment companies, constituting substantially all of the Prudential
Mutual Funds, and as manager or administrator to [29] closed-end investment
companies with aggregate assets of approximately [$49] billion.
Under the Management Agreement with the Portfolio, PMF manages the
investment operations of the Portfolio and also administers the Portfolio's
corporate affairs. See "Manager" in the Statement of Additional
Information.
Under the Subadvisory Agreement between PMF and The Prudential
Investment Corporation (PIC or the Subadviser), the Subadviser furnishes
investment advisory services in connection with the management of the
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<PAGE>
Portfolio and is reimbursed by PMF for its reasonable costs and expenses
incurred in providing such services. Under the Management
Agreement, PMF continues to have responsibility for all investment
advisory services and supervises PIC's performance of such services.
The Portfolio is managed by Global Advisors, a unit of The Prudential
Investment Corporation (PIC). Nicholas Sargen, as Chief Investment Officer
of Global Advisors, sets broad investment strategies which are then
implemented by a senior portfolio manager, Jeffrey Brummette, who has
responsibility for the day-to-day management of each portfolio. Mr.
Brummette performs these duties with the assistance of the mutual fund
investment team. Messrs. Sargen and Brummette are Managing Directors of
PIC. Mr. Sargen has managed the Portfolio since October 1991. Mr. Brummette
has managed the Portfolio since November 1990. Mr. Sargen has been employed
by PIC since October 1991 and was previously Director of International Bond
Market Research at Salomon Brothers where he was employed from 1984 to
1991. Mr. Brummette has been employed by PIC since 1986. Mr. Brummette also
serves as the portfolio manager of Global Assets Portfolio of the Fund, of
The Global Yield Fund, Inc. and for other institutional client portfolios.
PMF and PIC are indirect, wholly-owned subsidiaries of The Prudential
Insurance Company of America (Prudential), a major diversified insurance
and financial services company.
FEE WAIVERS AND SUBSIDY
PMF may from time to time agree to waive its management fee and
subsidize certain operating expenses with respect to the Portfolio,
although no such waiver or subsidy is currently in effect. Fee
waivers and expense subsidies will lower the overall expenses of the
Portfolio and increase its yield and total return. See "How the Fund
Calculates Performance." The fee waiver or expense subsidies may be
terminated at any time without notice after which the Portfolio's expenses
will increase and its yield and total return will be reduced.
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 Portfolio. 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 Portfolio. 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
Portfolio 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 Portfolio'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 Pruco
Securities Corporation (Prusec), an affiliated broker-dealer, commissions
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 Portfolio
shares, including lease, utility, communications and sales promotion
expenses. The State of Texas requires that shares of the Portfolio may be
sold in that state only by dealers or other financial institutions which
are registered there as broker-dealers.
Under the Plans, the Portfolio 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
Portfolio 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.
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<PAGE>
Under the Class A Plan, the Portfolio may pay PMFD for its
distribution-related expenses with respect to Class A shares at an annual
rate of up to .30 of 1% of the average daily net assets of the Class A
shares. 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% 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 October 31, 1994.
For the fiscal year ended October 31, 1993, PMFD received payments of
$105,520, under the Class A Plan as reimbursement of expenses related to
the distribution of Class A shares. 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 October 31, 1993. PMFD
also received approximately $64,400 in initial sales charges.
Under the Class B and Class C Plans, the Fund may pay Prudential
Securities for its distribution-related expenses with respect to Class B
and Class C shares at an annual rate of up to (i) with respect to the Class
B Plan, 1% of the average daily net assets of the Class B shares, and (ii)
with respect to the Class C Plan, .75 of 1% of the average daily net assets
of the Class C shares. 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. 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-related 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 October 31, 1994. 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 October 31, 1993, Prudential Securities
incurred distribution expenses of approximately $2,326,500 under the Class
B Plan and received $4,741,700 from the Fund under the Class B Plan and
approximately $2,203,700 in contingent deferred sales charges from
redemptions of Class B shares. No Class C shares were outstanding during
the fiscal year ended October 31, 1993.
For the fiscal year ended October 31, 1993, the Fund paid distribution
expenses of .15% and 1.00% of the average net assets of the Class A and
Class B shares of the Portfolio, respectively. The Fund records all
payments made under the Plans as expenses in the calculation of net
investment income. No Class C shares were outstanding during the fiscal
year ended October 31, 1993.
Distribution expenses attributable to the sale of shares of the
Portfolio will be allocated to each class based upon the ratio of sales of
each class to the sales of all shares of the Portfolio other than expenses
allocable to a particular class. The distribution fee and 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 Portfolio. 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 Portfolio
under the Class A, Class B and Class C Plans, the Manager (or one of its
affiliates) may make payments to dealers and other persons which distribute
shares of the
15
<PAGE>
Portfolio. 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. governing maximum sales charges. See "Distributor"
in the Statement of Additional Information.
PORTFOLIO TRANSACTIONS
Prudential Securities may act as a broker or futures commission
merchant for the Portfolio 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 Portfolio's investment
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., 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 Portfolio'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. For valuation purposes, quotations of foreign securities in
a foreign currency are converted to U.S. dollar equivalents. The Board of
Directors has fixed the specific time of day for the computation of the
Portfolio's net asset value 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.
The Portfolio 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 Portfolio or days
on which changes in the value of the Portfolio's 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. See
"Net Asset Value" in the Statement of Additional Information.
Although the legal rights of each class of shares are substantially
identical, the different expenses borne by each class may result in
different NAVs and dividends. As long as the Portfolio declares dividends
daily, the NAV 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 Portfolio may advertise its total return
(including "average annual" total return and "aggregate" total return) and
yield in advertisements or sales literature. Total return and yield are
calculated
16
<PAGE>
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 "total return" shows how much an investment in the Portfolio would have
increased (decreased) over a specified period of time (i.e., one, five or
ten years or since inception of the Portfolio) assuming that all
distributions and dividends by the Portfolio 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 "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 Portfolio also may include comparative performance
information in advertising or marketing the Portfolio's shares. Such
performance information may include data from Lipper Analytical Services,
Inc., other industry publications, business periodicals and market indices.
See "Performance Information" in the Statement of Additional Information.
The Portfolio will include performance data for each class of shares of the
Portfolio in any advertisement or information including performance data of
the Portfolio. Further performance information is contained in the
Portfolio'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 Portfolio
The Portfolio has elected to qualify and intends to remain qualified as
a regulated investment company under the Internal Revenue Code.
Accordingly, the Portfolio will not be subject to federal income taxes on
its net investment income and capital gains, if any, that it distributes to
its shareholders.
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 Portfolio's investment
company taxable income available to be distributed to you as ordinary
income, rather than increasing or decreasing the amount of the Portfolio's
net capital gain. If currency fluctuation losses exceed other investment
company taxable income during a taxable year, distributions made by the
Portfolio during the year would be characterized as a return of capital to
you, reducing your basis in your Portfolio shares.
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 Portfolio
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 "Taxation" in the Statement
of Additional Information.
Taxation of Shareholders
All dividends out of net investment income, together with distributions
of short-term capital gains, will be taxable as ordinary income to you
whether or not reinvested. Any net long-term capital gains distributed to
you will be taxable as such to you, whether or not reinvested and
regardless of the length of time you have owned your shares. The maximum
17
<PAGE>
long-term capital gains rate for individuals is 28%. The maximum long-term
capital gains rate for corporate shareholders is currently the same as the
maximum tax rate for ordinary income.
Any gain or loss realized upon a sale or redemption of shares by a
shareholder who is not a dealer in securities will be treated as long-term
capital gain or loss if the shares have been held more than one year and
otherwise as short-term capital gain or loss. Any short-term capital loss,
however, will be treated as long-term capital loss to the extent of any
capital gain distributions received by the shareholder regardless of the
length of time such shares were held.
The Fund has obtained an opinion of counsel to the effect that the
conversion of Class B shares into Class A shares does not constitute a
taxable event for U.S. income tax purposes. However, such opinion is not
binding on the Internal Revenue Service.
Shareholders are advised to consult their own tax advisers regarding
specific questions as to federal, state or local taxes.
Withholding Taxes
Under U.S. Treasury Regulations, the Portfolio is required to withhold
and remit to the U.S. Treasury 31% of dividend, capital gain income and
redemption proceeds payable on your account if you fail to furnish your 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
your status under the federal income tax law.
Dividends And Distributions
The Portfolio expects to declare daily and pay monthly dividends of all
or substantially all of the net investment income (if any) and make
distributions at least annually of any net capital gains. Dividends paid by
the Portfolio with respect to each class of shares, to the extent any
dividends are paid, will be calculated in the same manner, at the same
time, on the same day and will be in the same amount except that each class
will bear its own distribution charges, generally resulting in lower
dividends for Class B and Class C shares. Distribution of net capital
gains, if any, will be paid in the same amount for each class of shares.
See "How the Fund Values Its Shares."
Dividends and distributions will be paid in additional shares based on
the NAV of each class on record date, or such other date as the Board of
Directors may determine, unless the shareholder elects in writing not less
than five business days prior to the record date to receive such dividends
and distributions in cash. Such election should be submitted to Prudential
Mutual Fund Services, Inc., Account Maintenance, P.O. Box 15015, New
Brunswick, New Jersey 08906-5015. If you hold shares through Prudential
Securities, you should contact your financial adviser to elect to receive
dividends and distributions in cash. The Fund will notify each shareholder
after the close of the Fund's taxable year both of the dollar amount and
the taxable status of that year's dividends and distributions on a per
share basis.
- -------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------------------------------------------------------------------
DESCRIPTION OF COMMON STOCK
The Fund was incorporated in Maryland on February 21, 1990. 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 and Class B common stock of the Fund
consists of 750 million authorized shares, and the Class C common stock
consists of 500 million authorized shares. Each class of common stock
represents an interest in the same assets of the Portfolio and is identical
in all respects to other shares of the Portfolio except that (i) each class
bears different distribution expenses, (ii) each class has exclusive voting
rights with respect to its distribution
18
<PAGE>
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 for the Portfolio to both Class A
and Class B shareholders of the Portfolio), (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 Portfolio is offering three classes,
designated 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 may determine.
The Board of Directors may increase or decrease the number of
authorized shares without the approval of shareholders. Shares of the
Portfolio, when issued, are fully paid, nonassessable, fully transferable
and redeemable at the option of the holder. Shares are also redeemable at
the option of the Portfolio 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 of the Portfolio, there are no conversion, preemptive or
other subscription rights. In the event of liquidation, each share of
common stock of the Portfolio is entitled to its portion of all of the
Portfolio's assets after all debt and expenses of the Portfolio 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
Portfolio'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 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 Portfolio
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 Portfolio 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.
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. See
"Shareholder Services."
The purchase price is the NAV per share 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" below. See also "How the Fund
Values its Shares."
19
<PAGE>
Application forms can be obtained from PMFS, Prudential Securities or
Prusec. 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 stock certificates.
The Fund reserves the right to reject any purchase order (including an
exchange) 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 Portfolio by
wire, you must first telephone PMFS to receive an account number at (800)
225-1852 (toll-free). The following information will be requested: your
name, address, tax identification number, class election, 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 Short- Term Global
Income Fund, Inc.-Short-Term Global Income Portfolio, 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 of Federal Funds prior to
4:15 P.M., New York time, on a business day, you may purchase shares of the
Portfolio as of that day.
In making a subsequent purchase order by wire, you should wire State
Street directly and should be sure that the wire specifies Prudential
Short-Term Global Income Fund, Inc.-Short-Term Global Income Portfolio,
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> <C>
Class A Maximum initial sales charge of [4]% of 0.30 of 1% (Currently Initial sales charge waived or reduced
the public offering price being charged at a for certain purchases
rate of 0.15 of 1%)
Class B Maximum contingent deferred sales 1% Shares convert to Class A shares
charge or CDSC of 3% of the lesser of approximately five years after
the amount invested or the redemption purchase
proceeds; declines to zero after four
years
Class C Maximum CDSC of 1% of the lesser of 1% (Currently being Shares do not convert to another class
the amount invested or the redemption charged at a rate of
proceeds on redemptions made .75 of 1%)
within one year of purchase
</TABLE>
20
<PAGE>
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 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
Portfolio 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) that Class B
shares automatically convert to Class A shares approximately five 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 5 years or less
and do not qualify for a reduced sales charge on Class A shares, since
Class A shares are subject to an 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 more than 5 years, you should
consider purchasing Class A shares over either Class B or Class C shares.
If you qualify for a reduced charge in 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 fee 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 this period of
time or redemptions during which the CDSC is applicable.
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 of Class A shares for investors choosing
the initial sales charge alternative is the next determined NAV plus a
sales charge (expressed as a percentage of the offering price and of the
amount invested) as shown in the following table:
21
<PAGE>
<TABLE>
<CAPTION>
Sales Charge as Sales Charge as Dealer Concession
Amount of Percentage of Percentage of as Percentage 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 $500,000 2.5 2.56 2.25
$500,000 but less than $1,000,000 2.0 2.04 1.75
$1,000,000 but less than $3,000,000 1.5 1.52 1.30
$3,000,000 and above* 0.0 0.00 0.00
</TABLE>
Selling dealers may be deemed to be underwriters, as that term is
defined in the Securities Act.
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 "Reduction and
Waiver of Initial Sales Charges-Class A shares" in the Statement of
Additional Information.
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 members. In the case of
Benefit Plans whose accounts are held directly with the Transfer Agent and
for which the Transfer Agent 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. Additional information concerning the
reduction and waiver of initial sales charges is set forth in the Statement
of Additional Information.
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) on
which no deferred sales load, fee or other charge was imposed on redemption
and (iii) the financial adviser served as the client's broker on the
previous purchases.
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 purchased 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 charge alternatives is the NAV per share next
determined following receipt of an order by the Transfer Agent or
Prudential Securities.
22
<PAGE>
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 shares of the Portfolio at any time for cash at the NAV
per share 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 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 Portfolio in care of the 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 the 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 Preferred 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. 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 Portfolio of
securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Portfolio 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.
Payment for redemption of recently purchased shares will be delayed
until the Portfolio or the 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
check.
Redemption in Kind. If the Board of Directors determines that it would
be detrimental to the best interests of the remaining shareholders of the
Portfolio to make payment wholly or partly in cash, the Portfolio may pay
the redemption price in whole or in part by a distribution in kind of
securities from the investment portfolio of the Portfolio, in lieu of cash,
in conformity with applicable rules of the Commission. Securities will be
readily marketable 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 Portfolio, however, has elected to be governed by
Rule 18f-1 under the Investment Company Act, pursuant to which the
Portfolio is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of the Portfolio during any 90-day
period for any one shareholder.
Involuntary Redemption. In order to reduce expenses of the Portfolio,
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 Portfolio will give such shareholders 60 days' prior
written notice in which to purchase sufficient additional shares to avoid
such redemption.
23
<PAGE>
30-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 Portfolio at the
NAV next determined after the order is received, which must be within 30
days after the date of the redemption. No sales charge will apply to such
repurchases. You will receive pro rata credit for any contingent deferred
sales charge paid in connection with the redemption of your shares. You
must notify the Portfolio'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 contingent deferred sales
charge previously paid. Exercise of the repurchase privilege will generally
not affect federal income 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 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 five-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 Class B or Class C 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 purchased through
reinvestment of dividends or distributions are not subject to a CDSC. The
amount of any contingent deferred sales charge will be paid to and retained
by the Distributor. See "How the Fund Is Managed-Distributor" and "Waiver
of the Contingent Deferred Sales Charges" 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 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 and thereafter .... 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 Class B 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 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
contingent deferred sales charge of $4.80.
24
<PAGE>
For federal income tax purposes, the amount of the contingent deferred
sales charge 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 a lump-sum
or other distribution after retirement, or for an IRA or Section 403(b)
custodial account, after attaining age 59-1/2, 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. 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 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 Transfer Agent either directly or through
Prudential Securities or Prusec, at the time of redemption, that you are
entitled to waiver of the CDSC. The waiver will be granted subject to
confirmation of your entitlement.
A quantity discount may apply to redemptions of Class B shares
purchased prior to , 1994. See "Purchase and Redemption of Fund
Shares-Quantity Discount-Class B Shares Purchased Prior to ,
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. Conversions will
occur during the month following each calendar quarter and will be effected
at relative net asset value without the imposition of any additional sales
charge. It is currently anticipated that conversions will occur on the
first Friday of the month following each calendar quarter or, if not a
business day, on the next Friday of the month.
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.
25
<PAGE>
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 the 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 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. It is currently anticipated that the first conversion of Class B
shares will occur in or about January, 1995. At that time all amounts
representing Class B shares then outstanding beyond the applicable
conversion period will automatically convert to Class A shares together
with all shares or amounts representing Class B shares acquired through the
automatic reinvestment of dividends and distributions then held in your
account.
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 Portfolio 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 Portfolio, 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 of the Portfolio may be
exchanged for Class A, Class B and Class C shares, respectively, of another
fund on the basis of the relative net asset value per share. 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. If your investment in shares of
Prudential Mutual Funds (excluding money market funds other than those
acquired pursuant to the exchange privilege) reach $1 million and you then
hold Class B and/or Class C shares of the Fund which are free of CDSC, you
will be so notified and offered the opportunity to exchange those shares
for Class A shares of the Fund without the imposition of any sales charge.
In the case of tax-exempt shareholders, if no response is received within
60 days of the mailing of such notice, eligible Class B and/or Class C
shares will be automatically exchanged for Class A shares. All other
shareholders must affirmatively elect to have their eligible Class B and/or
Class C shares exchanged for Class A shares. 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 Portfolio at (800) 225-1852 to execute a
telephone exchange of shares, 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
26
<PAGE>
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."
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.
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:
* 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 Portfolio 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.
* Automatic Savings Accumulation Plan (ASAP). Under ASAP you may make
regular purchases of the Portfolio'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 registered representative or the Transfer Agent directly.
* 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.
* Systematic Withdrawal Plan. A systematic withdrawal plan is available
for 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."
* Reports to Shareholders. The Portfolio will send 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 Portfolio 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 is available from the Portfolio
upon request.
* Shareholder Inquiries. Inquiries should be addressed to the Portfolio
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.
27
<PAGE>
APPENDIX
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 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 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 or 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 registered
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 GNMA Fund, Inc.
Prudential Government Income Fund Inc.
Prudential Government Securities Trust
Intermediate Term Series
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
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 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 IncomeVertible\'AE Fund, Inc.
Prudential Multi-Sector Fund, Inc.
Prudential Strategist Fund, Inc.
Prudential Utility Fund, Inc.
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Money Market Funds
* 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
* 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
* Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
* 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 and offer by the Fund or
by the Distributor to sell or a solicitation of an 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
FUND EXPENSES................................ 4
FINANCIAL HIGHLIGHTS......................... 5
HOW THE FUND INVESTS......................... 6
Investment Objective and Policies.......... 6
Risk Factors............................... 8
Other Investments and Investment Techniques 9
Investment Restrictions.................... 13
HOW THE FUND IS MANAGED...................... 13
Manager.................................... 13
Fee Waivers and Subsidy.................... 14
Portfolio Transactions..................... 16
Custodian and Transfer and
Dividend Disbursing Agent................ 16
HOW THE FUND VALUES ITS SHARES............... 16
HOW THE FUND CALCULATES PERFORMANCE.......... 16
TAXES, DIVIDENDS AND DISTRIBUTIONS........... 17
GENERAL INFORMATION.......................... 18
Description of Common Stock................ 18
Additional Information..................... 19
SHAREHOLDER GUIDE............................ 19
How to Buy Shares of the Fund.............. 19
Alternative Purchase Plan.................. 20
How to Sell Your Shares.................... 23
Conversion Feature--Class B Shares......... 25
How to Exchange Your Shares................ 26
Shareholder Services....................... 27
DESCRIPTION OF SECURITY RATINGS..............A-1
THE PRUDENTIAL MUTUAL FUND FAMILY............B-1
________________________________________________
MF144A
________________________________________________
Class A: 74436H 10 1
CUSIP Nos.: Class B: 74436H 20 0
Class C:
________________________________________________
Prudential
Short-Term
Global Income
Fund, Inc.
(Short-Term Global Income Portfolio)
Prudential Mutual Funds (LOGO)
Building Your Future
On Our StrengthSM
PROSPECTUS
, 1994
<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC.
Statement of Additional Information
dated [ , 1994]
Prudential Short-Term Global Income Fund, Inc. (the Fund) is an open-
end, non-diversified management investment company, or mutual fund
comprised of two Portfolios, the Global Assets Portfolio and the Short-
Term Global Income Portfolio: Only the Short-Term Global Income Portfolio
is offered by means of this Statement of Additional Information. The
investment objective of the Short-Term Global Income Portfolio (the
Portfolio) is to maximize total return, the components of which are current
income and capital appreciation.
The Portfolio seeks to achieve its objective by investing primarily in
a portfolio of investment grade debt securities having remaining maturities
of not more than three years. The Portfolio seeks to maximize current
income by investing in debt securities denominated in U.S. dollars and a
range of foreign currencies.
Under normal circumstances, the Portfolio will invest its assets in
debt securities of issuers in at least three different countries including
the United States. There can be no assurance that the Portfolio's objective
will be achieved.
The Fund's address is One Seaport Plaza, New York, New York 10292, and
its telephone number is (800) 225-1852.
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Prospectus of the Portfolio, dated
[ , 1994], a copy of which may be obtained from the Fund at One
Seaport Plaza, New York, New York 10292.
-----------------
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Cross-reference
to page in
Page Prospectus
---- ---------------
<S> <C> <C>
Additional Investment Information ...................................................... B-2
Investment Restrictions ................................................................ B-9 13
Directors and Officers ................................................................. B-10 12
Manager ................................................................................ B-12 13
Distributor ........................................................................... B-14 14
Portfolio Transactions and Brokerage ................................................... B-15 16
Purchase and Redemption of Fund Shares ................................................. B-16 20
Shareholder Investment Account ........................................................ B-18 24
Net Asset Value ........................................................................ B-22 16
Taxation .............................................................................. B-22 17
Performance Information ................................................................ B-23 16/17
Custodian, Transfer and Dividend Disbursing Agent, and Independent Accountants ........ B-25 16
Financial Statements B-26/38 -
Independent Auditors' Reports B-37/48 -
- -------------------------------------------------------------------------------------------------------------------
MF1498
</TABLE>
<PAGE>
ADDITIONAL INVESTMENT INFORMATION
Investment Policies
U.S. Government Securities
"U.S. Government securities" shall include the following:
U.S. Treasury Securities. The Portfolio may invest in U.S. Treasury
securities, including bills, notes and bonds 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.
Obligations Issued or Guaranteed by U.S. Government Agencies and
Instrumentalities. The Portfolio may invest in obligations issued by
agencies of the U.S. Government or instrumentalities established or
sponsored by the U.S. Government. These obligations, including those that
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 Export-Import Bank are backed by the full faith and
credit of the U.S. Government. Securities in which the Portfolio may invest
that are not backed by the full faith and credit of the U.S. Government
include obligations issued by the Tennessee Valley Authority, the Federal
National Mortgage Association (FNMA), the Federal Home Loan Mortgage
Corporation (FHLMC), the Resolution Funding Corporation and the United
States Postal Service, each of which has the right to borrow from the
United States Treasury to meet its obligations, and obligations of the
Federal Farm Credit Bank and the Federal Home Loan Bank, the obligations of
which may be satisfied only by the individual credit of the issuing agency.
In the case of securities not backed by the full faith and credit of the
United States, the Portfolio 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.
The Portfolio may invest in U.S. Government securities that are zero-
coupon securities. Zero-coupon securities pay no cash income but are
purchased at a discount from their value at maturity. When held to
maturity, their entire return, which consists of the amortization of the
discount, equals the difference between their purchase price and their
maturity value. At no time will the aggregate market value of the
Portfolio's investments in zero-coupon securities exceed 5% of the
Portfolio's total assets.
Special Considerations. U.S. Government securities are considered among
the most creditworthy of fixed income investments. The yields available
from U.S. Government securities are generally lower than the yields
available from corporate debt securities. The values of U.S. Government
securities (like those of fixed-income securities generally) will change as
interest rates fluctuate. During periods of falling U.S. interest rates,
the values of outstanding long-term U.S. Government securities generally
rise. Conversely, during periods of rising interest rates, the values of
such securities generally decline. The magnitude of those fluctuations will
generally be greater for securities with longer maturities. Although
changes in the value of U.S. Government securities will not affect
investment income from those securities, they will affect the net asset
value of the Portfolio.
At a time when the Portfolio has written call options on a portion of
its U.S. Government securities, its ability to profit from declining
interest rates will be limited. Any appreciation in the value of the
securities held in the portfolio above the strike price would likely be
partially or wholly offset by unrealized losses on call options written by
the Portfolio. The termination of option positions under these conditions
would generally result in the realization of capital losses, which would
reduce the Portfolio's capital gains distributions. Accordingly, the
Portfolio would generally seek to realize capital gains to offset realized
losses by selling portfolio securities. In such circumstances, however, it
is likely that the proceeds of such sales would be reinvested in lower
yielding securities. See "Additional Risks-Options Transactions and Related
Risks."
Loan Participations
The Portfolio may invest up to 5% of its total assets in high quality
participation interests having remaining maturities not exceeding one year
in loans extended by banks to United States and foreign companies. In a
typical corporate loan syndication, a number of lenders, usually banks
(co-lenders), lend a corporate borrower a specified sum pursuant to the
terms and conditions of a loan agreement. One of the co- lenders usually
agrees to act as the agent bank with respect to the loan. The loan
agreement among the corporate borrower and the co-lenders identifies the
agent bank as well as sets forth the rights and duties of the parties. The
agreement often (but not always) provides for the collateralization of the
corporate borrower's obligations thereunder and includes various types of
restrictive covenants which must be met by the borrower.
The participation interests acquired by the Portfolio may, depending on
the transaction, take the form of a direct or co-lending relationship with
the corporate borrower, an assignment of an interest in the loan by a
co-lender or another participant, or a participation in the seller's share
of the loan. Typically, the Portfolio will look to the agent bank to
collect principal of and interest on a participation interest, to monitor
compliance with loan covenants, to enforce all credit remedies, such as
foreclosures on
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collateral, and to notify co-lenders of any adverse changes in the
borrower's financial condition or declarations of insolvency. The agent
bank in such cases will be qualified to serve as a custodian for a
registered investment company such as the Fund. The agent bank is
compensated for these services by the borrower pursuant to the terms of
the loan agreement.
When the Portfolio acts as co-lender in connection with a participation
interest or when the Portfolio acquires a participation interest the terms
of which provide that the Portfolio will be in privity with the corporate
borrower, the Portfolio will have direct recourse against the borrower in
the event the borrower fails to pay scheduled principal and interest. In
cases where the Portfolio lacks such direct recourse, the Portfolio will
look to the agent bank to enforce appropriate credit remedies against the
borrower.
The Portfolio believes that the principal credit risk associated with
acquiring participation interests from a co-lender or another participant
is the credit risk associated with the underlying corporate borrower. The
Portfolio may incur additional credit risk, however, when the Portfolio is
in the position of participant rather than a co-lender because the
Portfolio must assume the risk of insolvency of the co-lender from which
the participation interest was acquired and that of any person
interpositioned between the Portfolio and the co-lender. However, in
acquiring participation interests, the Portfolio will conduct analysis and
evaluation of the financial condition of each such co-lender and
participant to ensure that the participation interest meets the Portfolio's
high quality standard and will continue to do so as long as it holds a
participation. For purposes of the Portfolio's requirement to maintain
diversification for tax purposes, the issuer of a loan participation will
be the underlying borrower. In cases where the Portfolio does not have
recourse directly against the borrower, both the borrower and each agent
bank and co-lender interposed between the Portfolio and the borrower will
be deemed issuers of the loan participation for tax diversification
purposes.
For purposes of the Portfolio's fundamental investment restriction
against investing 25% or more of its total assets in any one industry, the
Portfolio will consider all relevant factors in determining who is the
issuer of a loan participation including the credit quality of the
underlying borrower, the amount and quality of the collateral, the terms of
the loan participation agreement and other relevant agreements (including
any intercreditor agreements), the degree to which the credit of such
intermediary was deemed material to the decision to purchase the loan
participation, the interest environment, and general economic conditions
applicable to the borrower and such intermediary. Certificates of Deposit
and Bankers' Acceptances
Certificates of deposit are receipts issued by a depository institution
in exchange for the deposit of funds. The issuer agrees to pay the amount
deposited plus interest to the bearer of the receipt on the date specified
on the certificate. The certificate usually can be traded in the secondary
market prior to maturity. Bankers' acceptances typically arise from
short-term credit arrangements designed to enable businesses to obtain
funds to finance commercial transactions. Generally, an acceptance is a
time draft drawn on a bank by an exporter or an importer to obtain a stated
amount of funds to pay for specific merchandise. The draft is then
"accepted" by a bank that, in effect, unconditionally guarantees to pay the
face value of the instrument on its maturity date. The acceptance may then
be held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity.
Although maturities for acceptance can be as long as 270 days, most
acceptances have maturities of six months or less.
Commercial Paper
Commercial paper consists of short-term (usually from 1 to 270 days)
unsecured promissory notes issued by corporations in order to finance their
current operations. A variable amount master demand note (which is a type
of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between
a commercial paper issuer and an institutional lender pursuant to which the
lender may determine to invest varying amounts.
Additional Risks
Options Transactions and Related Risks
The Portfolio may purchase put and call options and sell covered put
and call options which are traded on United States or other foreign
exchanges and may also engage in over-the-counter options transactions with
United States securities dealers or foreign government securities dealers
(OTC options).
Options on Securities. 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 or strike price). By
writing a call option, the Portfolio becomes obligated during the term of
the option, upon exercise of the option, to deliver the underlying
securities or a specified amount of cash to the purchaser against receipt
of the exercise price. When the Portfolio writes a call option, the
Portfolio loses the potential for gain on the underlying securities in
excess of the exercise price of the option during the period that the
option is open.
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 the specified exercise price. By writing a put option, the Portfolio
becomes obligated during the term of the
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option, upon exercise of the option, to purchase the securities underlying
the option at the exercise price. The Portfolio might, therefore, be
obligated to purchase the underlying securities for more than their
current market price.
The writer of an option retains the amount of the premium, although
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.
The Portfolio 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 Advisers believe 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 Portfolio's investments and therefore the put option may
not provide complete protection against a decline in the value of the
Portfolio's investments below the level sought to be protected by the put
option.
The Portfolio may similarly wish to hedge against appreciation in the
value of debt securities that it intends to acquire through purchase of
call options on other carefully selected debt securities which the
Investment Advisers believe may move in the same direction as those
portfolio securities. In such circumstances the Portfolio will be subject
to risks analogous to those summarized above in the event that the
correlation between the value of call options so purchased and the value of
the securities intended to be acquired by the Portfolio is not as close as
anticipated and the value of the securities underlying the call options
increases less than the value of the securities to be acquired by the
Portfolio.
The Portfolio may write options on securities in connection with buy-
and-write transactions; that is, the Portfolio may purchase a security and
concurrently write a call option against that security. If the call option
is exercised, the Portfolio's maximum gain will be the premium it received
for writing the option, adjusted upwards or downwards by the difference
between the Portfolio'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 the decline will be offset in
part, or entirely, by the premium received.
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 an out-of-the-
money call option 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 Portfolio's maximum gain
will be the premium received by it for writing the option, adjusted upwards
or downwards by the difference between the Portfolio'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
the decline will be offset in part, or entirely, by the premium received.
The Portfolio 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,
however, may only be exercised as of the expiration of the option.
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. Likewise, an investor who is 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.
Exchange-traded options in the United States 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 Portfolio
and its contra-party with no clearing organization guarantee. Thus, when
the Portfolio 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 Portfolio as well as the loss of the
expected benefit of the transaction. The Board of Directors of the Fund
will approve a list of dealers with which the Portfolio may engage in OTC
options.
When the Portfolio writes an OTC option, it generally will be able to
close out the OTC options prior to its expiration only by entering into a
closing purchase transaction with the dealer to which the Portfolio
originally wrote the OTC option. While the
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Portfolio 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 Portfolio, there can be no assurance that the
Portfolio will be able to liquidate an OTC option at a favorable price at
any time prior to expiration. Until the Portfolio is able to effect a
closing purchase transaction in a covered OTC call option the Portfolio
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 Portfolio
may be unable to liquidate an OTC option.
OTC options purchased by the Portfolio will be treated as illiquid
securities subject to any applicable limitation on such securities.
Similarly, the assets used to "cover" OTC options written by the Portfolio
will be treated as illiquid unless the OTC options are sold to qualified
dealers who agree that the Portfolio may repurchase any OTC options it
writes for a maximum price to be calculated by a formula set forth in the
option agreement. The "cover" for an OTC option written subject to this
procedure would be considered illiquid only to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the
option.
The Portfolio may write only "covered" options. This means that so long
as the Portfolio 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 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 equal to the fluctuating market value of
the optioned securities. A put option written by the Portfolio will be
considered "covered" if, so long as the Portfolio 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 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
segregate or deposit cash, U.S. Government securities or liquid high-grade
obligations equivalent to the amount, if any, by which the put is "in the
money."
Options on Currencies
Instead of purchasing or selling futures, options on futures or forward
currency exchange contracts, the Portfolio may attempt to accomplish
similar objectives by purchasing put or call options on currencies either
on exchanges or in over-the-counter markets or by writing put options or
covered call options on currencies. A put option gives the Portfolio the
right to sell a currency at the exercise price until the option expires. A
call option gives the Portfolio 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.
Futures Contracts and Options Thereon
The Portfolio will purchase or sell interest rate or currency futures
contracts to take advantage of or to protect the Portfolio against
fluctuations in interest rates affecting the value of debt securities which
the Portfolio holds or intends to acquire and may also purchase or sell
currency futures contracts and options thereon to manage currency risks.
Since the futures market may be more liquid than the cash market, the use
of futures contracts as a risk management technique permits the Fund to
maintain a defensive position without having to sell portfolio securities.
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.
At the time a futures contract is purchased or sold, the Portfolio must
allocate cash or securities as a deposit payment (initial margin). It is
expected that the initial margin on United States exchanges will vary from
one-half of 1% to 4% of the value of the securities or commodities
underlying the contract. Under certain circumstances, however, such as
periods of high volatility, the Portfolio 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 of "variation margin" may be
required, a process known as "mark to the market." Each day the Portfolio
is required to provide or is entitled to receive variation margin in an
amount equal to any decline (in the case of a long futures position) or
increase (in the case of a short futures position) in the contract's value
since the preceding day.
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 contracts. United States futures contracts are
traded on 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.
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Although futures contracts by their terms may require the actual
delivery or acquisition of underlying assets, in most cases the contractual
obligation is extinguished by offset before the expiration of the contract
without having to make or take delivery of the assets. 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.
The ordinary spreads between values in the cash and futures markets,
due to differences in the character of those markets, are subject to
distortions. Due to the possibility of distortion, a correct forecast of
general interest rate or currency trends by the investment adviser may
still not result in a successful transaction.
Although the Fund believes that use of futures contracts will benefit
the Portfolio, if the investment adviser's judgment about the general
direction of interest rates or currency values is incorrect, the
Portfolio's overall performance would be poorer than if it had not entered
into any such contracts.
Options on Futures
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 an
offsetting futures position 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 Portfolio may only write "covered" put and call options on futures
contracts. The Portfolio will be considered "covered" with respect to a
call option it writes on a futures contract if the Portfolio owns the
assets which are 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 future. The
Portfolio 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, or if it segregates and maintains with its Custodian
for the term of the option cash, U.S. Government securities or 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 Portfolio 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.
Forward Currency Exchange Contracts
The Portfolio's transactions in forward currency exchange contracts
will be limited to hedging involving either specific transactions or
portfolio positions. Transaction hedging is the forward purchase or sale of
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 that currency or in a currency bearing a
high degree of positive correlation to the value of that currency.
The Portfolio 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 Portfolio 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 Portfolio in an amount equal to the value of the Portfolio'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
Portfolio's commitment with respect to the forward contract.
At or before the maturity of a forward sale contract, the Portfolio 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 Portfolio
will obtain, on the same maturity date, the same amount of the currency
which it is obligated to deliver. If the Portfolio retains the portfolio
security and engages in an offsetting transaction, the Portfolio, 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 Portfolio
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
Portfolio will realize a gain to the extent the price of the
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currency it has agreed to purchase is less than the price of the
currency it has agreed to sell. Should forward prices increase, the
Portfolio 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 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.
Additional Risks of Options on Securities and Currencies, Futures
Contracts and Options Thereon and Forward Contracts
Options, futures contracts, options on futures contracts 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 United States, may not involve a clearing mechanism and
related guarantees, and are subject to the risk of governmental action
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 United States 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 United States, (iv) the
imposition of different exercise and settlement terms and procedures and
margin requirements than in the United States and (v) lesser trading
volume.
Exchanges on which options, futures and options on futures are traded
may impose limits on the positions that the Portfolio may take in certain
circumstances. If so, this would limit the ability of the Portfolio fully
to hedge against these risks.
Futures exchanges may establish daily limits in the amount that the
price of a futures contract or related options contract may vary either up
or down from the previous day's settlement price. Once the daily limit has
been reached in a particular contract, no trades may be made that day at a
price beyond the limit. The daily limit governs only price movements during
a particular trading day and therefore does not limit potential losses
because the limit may prevent the liquidation of unfavorable positions.
Futures or options contract prices could move to the daily limit for
several consecutive trading days with little or no trading and thereby
prevent prompt liquidation of positions and subject some traders to
substantial losses. In such event, it may not be possible for a Portfolio
to close a position, and in the event of adverse price movements, the
Portfolio would have to make daily cash payments of variation margin
(except in the case of purchased options).
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, it might not be possible to effect closing
transactions in particular options the Portfolio has purchased with the
result that the Portfolio would have to exercise the options in order to
realize any profit. If the Portfolio is unable to effect a closing purchase
transaction in a secondary market in an option the Portfolio 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 on operating 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 a particular class or series of
options) would cease to exist, although outstanding options would continue
to be exercisable in accordance with their terms.
The Portfolio's ability to establish and close out positions in futures
contracts and options on futures contracts will be subject to the
maintenance of a liquid market. Although the Portfolio 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 Portfolio
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
Portfolio 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 Portfolio has written and which
the Portfolio is unable to close, the Portfolio would be required to
maintain margin deposits on the futures contract or option and to make
variation margin payments until the contract is closed.
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Limitations on the Purchase and Sale of Futures Contracts and Options on
Futures Contracts
The Portfolio will engage in transactions in interest rate and foreign
currency 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 Portfolio may not purchase or
sell futures contracts or options thereof for yield enhancement or risk
management purposes if immediately thereafter the sum of the amounts of
initial margin deposits on the Portfolio's existing futures and premiums
paid for options on futures would exceed 5% of the liquidation value of the
Portfolio'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 Portfolio, an amount of cash, U.S.
Government securities or other liquid, high-grade debt obligations, 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
its Custodian to cover the position, or alternative cover will be employed
thereby insuring that the use of such futures contracts and options is
unleveraged.
As an alternative to bona fide hedging, the Portfolio may comply with a
different standard established by CFTC rules as to each long position with
respect to a futures contract or an option thereon which will be used as a
part of a portfolio management strategy and which is incidental to the
Portfolio' activities on the securities markets, under which the underlying
commodity value of the contract at all times will not exceed the sum of (i)
cash set aside in an identifiable manner or short-term U.S. Government or
other United States dollar-denominated high grade short-term money market
instruments segregated for this purpose plus margin deposited in the
market, (ii) cash proceeds from existing investments due within thirty days
and (iii) accrued profits on the particular futures contract or option
thereon.
CFTC regulations may impose limitations on the Portfolio's ability to
engage in certain yield enhancement and risk management strategies. There
are no limitations on the Portfolio's use of futures contracts and options
on futures contracts beyond the restrictions set forth above.
When-Issued and Delayed Delivery Securities
The Portfolio 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 Portfolio with payment and
delivery taking place in the future in order to secure what is considered
to be an advantageous price and yield to the Portfolio at the time of
entering into the transaction. The Fund's Custodian will maintain, in a
segregated account of each Portfolio, cash, U.S. Government securities or
other liquid high-grade debt obligations having a value equal (which is
marked to market daily) to or greater than the Portfolio's purchase
commitments; the Custodian will likewise segregate securities sold on a
delayed delivery basis.
Borrowing
When the Portfolio 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 Portfolio 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 Portfolio to sell a portion of its portfolio
securities at a time when it is disadvantageous to do so.
Repurchase Agreements
The Portfolio will enter into repurchase transactions only with parties
meeting creditworthiness standards approved by the Fund's Board of
Directors. The Fund's investment adviser will monitor the creditworthiness
of such parties, under the general supervision of the Board of Directors.
In the event of a default or bankruptcy by a seller, the Portfolio will
promptly seek to liquidate the collateral. To the extent that the proceeds
from any sale of such collateral upon a default in the obligation to
repurchase are less than the repurchase price, the Portfolio will suffer a
loss.
B-8
<PAGE>
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 Portfolio may be
aggregated with those of such 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.
INVESTMENT RESTRICTIONS
The following restrictions are fundamental policies. The Fund's
fundamental policies cannot be changed without the approval of the
outstanding shares of the Portfolio by a vote which is the lesser of (i)
67% or more of the voting securities of the Portfolio represented at a
meeting at which more than 50% of the outstanding voting securities of the
Portfolio are present in person or represented by proxy or (ii) more than
50% of the outstanding voting securities of the Portfolio.
The Portfolio 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) Make short sales of securities or maintain a short position, except
short sales "against the box."
(3) Issue senior securities, borrow money or pledge its assets, except
that the Portfolio may borrow up to 20% of the value of its total assets
(calculated when the loan is made) for temporary, extraordinary or
emergency purposes or for the clearance of transactions. The Portfolio 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, the purchase of
securities subject to repurchase agreements, collateral arrangements with
respect to interest rate swap transactions, reverse repurchase agreements
or dollar roll transactions or the purchase or sale of options and futures
contracts or options thereon, 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 options, futures contracts or 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.
(4) Buy or sell commodities, commodity contracts, real estate or
interests in real estate (including mineral leases or rights), except that
the Portfolio 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 on foreign currencies are not considered
by the Portfolio to be transactions in commodities or commodity contracts.
(5) Make loans, except (i) through repurchase agreements, (ii) through
loan participations, and (iii) loans of portfolio securities (limited to
30% of the Portfolio's total assets).
(6) Make investments for the purpose of exercising control or
management over the issuers of any security.
(7) Act as an underwriter except to the extent that, in connection with
the disposition of portfolio securities, the Portfolio may be deemed to be
an underwriter under certain federal securities laws.
The foregoing restrictions are fundamental policies that may not be
changed without the approval of a majority of the Portfolio's outstanding
voting securities.
Whenever any fundamental investment policy or investment restriction
states a maximum percentage of the Portfolio'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 Portfolio's asset coverage for borrowings falls below 300%,
the Portfolio will take prompt action to reduce its borrowings, as required
by applicable law.
In order to comply with certain state "blue sky" restrictions, the
Portfolio will not as a matter of operating policy:
1. Invest in oil, gas and mineral leases or programs.
2. Purchase any interests in real estate including real estate limited
partnerships which are not readily marketable.
3. 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.
B-9
<PAGE>
4. Purchase warrants if as a result the Portfolio would then have more
than 5% of its net 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 will be limited to 2% of the Portfolio's net
assets determined at the time of investment). For the purpose of this
limitation, warrants acquired in units or attached to securities are deemed
to be without value.
5. Purchase more than 10% of the voting securities or more than 10% of
any class of securities of any issuer. For purposes of this restriction,
all outstanding debt securities of an issuer are considered as one class,
and all preferred stocks of an issuer are considered as one class.
6. 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 limitation shall not apply to direct 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.
7. Purchase securities of other registered investment companies, except
in connection with a merger, consolidation, reorganization or acquisition
of assets.
8. 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.
9. Purchase securities on margin, except for such short-term credits as
are necessary for the clearance of purchases and sales of Portfolio
securities.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
Position with Principal Occupations
Name and Address the Fund During Past 5 Years
- ---------------- -------- -------------------
<S> <C> <C>
Stephen C. Eyre Director Executive Director, The John A. Hartford Foundation (charitable
c/o Prudential Mutual Fund foundation) (since May 1985); Director of Faircom, Inc.
Management, Inc.
One Seaport Plaza
New York, New York
Delayne Dedrick Gold Director Marketing and Management Consultant.
c/o Prudential Mutual Fund
Management, Inc.
One Seaport Plaza
New York, New York
Don G. Hoff Director Chairman and Chief Executive Officer of Intertec, Inc. (investments) since
c/o Prudential Mutual Fund 1980; Director of Innovative Capital Management Inc., The Asia Pacific
Management, Inc. Fund and The Greater China Fund.
One Seaport Plaza
New York, New York
*Harry A. Jacobs, Jr. Director Senior Director (since January 1986) of Prudential Securities Incorporated
One Seaport Plaza (Prudential Securities); formerly Interim Chairman and Chief Executive
New York, New York Officer of Prudential Mutual Fund Management, Inc. (PMF);
(June-September 1993); formerly Chairman of the Board of Prudential
Securities (1982-1985); Chairman and Chief Executive Officer of Bache
Group Inc. (1977-1982); Trustee of The Trudeau Institute; Director of The
First Australia Fund, Inc., The First Australia Prime Income Fund, Inc., The
Global Government Plus Fund, Inc., The Global Yield Fund, Inc. and the
Center for National Policy.
Sidney R. Knafel Director Managing Partner of SRK Management Company (investments) since 1981;
c/o Prudential Mutual Fund Chairman of Insight Communications Company, L.P. and Microbiological
Management, Inc. Associates, Inc.; Director of Cellular Communications, Inc., Cellular
One Seaport Plaza Communications of Puerto Rico Inc., IGENE Biotechnology, Inc.,
New York, New York International CabelTel Incorporated, Medical Imaging Centers of America,
Inc. and a number of private companies.
Robert E. LaBlanc Director President of Robert E. LaBlanc Associates, Inc. (telecommunications) since
c/o Prudential Mutual Fund 1981; Director of Contel Cellular, Inc., M/A-COM, Inc., Storage Technology
Management, Inc. Corporation, TIE/communications, Inc. and Tribune Company; Trustee of
One Seaport Plaza Manhattan College.
New York, New York
B-10
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Position with Principal Occupations
Name and Address the Fund During Past 5 Years
- ---------------- -------- -------------------
<S> <C> <C>
*Lawrence C. McQuade President and Vice Chairman of PMF (since 1988) and Managing Director, Investment
One Seaport Plaza Director Banking, of Prudential Securities (1988-1991); Director, BUNZL, P.L.C.
New York, New York (since June 1991); Director, Quixote Corporation (since February 1992);
formerly Director of Crazy Eddie Inc. (1987-1990), Kaiser Tech., Ltd.,
Kaiser Aluminum and Chemical Corp. (March 1987-November 1988);
formerly Executive Vice President and Director of W. R. Grace & Co.
(1975-1987); President and Director of The High Yield Income Fund, Inc.,
The Global Yield Fund, Inc. and The Global Government Plus Fund, Inc.
Thomas A. Owens, Jr. Director Consultant.
c/o Prudential Mutual Fund
Management, Inc.
One Seaport Plaza
New York, New York
*Richard A. Redeker Director President, Chief Executive Officer and Director (since October 1993), PMF;
One Seaport Plaza Executive Vice President, Director and Member of the Operating Committee
New York, New York (since October 1993); Prudential Securities; Director (since October 1993)
of Prudential Securities Group, Inc. (PSG). Formerly Senior Executive
Vice President and Director of Kemper Financial Services, Inc. (September
1978-September 1993); Director of The Global Government Plus Fund, Inc.
and The High Yield Income Fund, Inc.
Clay T. Whitehead Director President of National Exchange Inc. (since May 1983).
c/o Prudential Mutual Fund
Management, Inc.
One Seaport Plaza
New York, New York
Robert F. Gunia Vice President Director (since January 1989), Chief Administrative Officer (since August
One Seaport Plaza 1990) and Executive Vice President, Treasurer and Chief Financial Officer
New York, New York (since June 1987) of PMF; Senior Vice President (since March 1987) of
Prudential Securities; Vice President and Director of The Asia Pacific
Fund, Inc. (since May 1989).
S. Jane Rose Secretary Senior Vice President (since January 1991), Senior Counsel (since June
One Seaport Plaza 1987) and First Vice President (June 1987-December 1990) of PMF;
New York, New York Senior Vice President and Senior Counsel of Prudential Securities (since
July 1992); formerly Vice President and Associate General Counsel of
Prudential Securities.
Susan C. Cote Treasurer and Senior Vice President (since January 1989) and First Vice President (June
One Seaport Plaza Principal 1987-December 1988) of PMF; Senior Vice President (since January
New York, New York Financial and 1992) and Vice President (January 1986-December 1991) of Prudential
Accounting Securities.
Officer
Domenick Pugliese Assistant Vice President (since June 1992) and Associate General Counsel (since
One Seaport Plaza Secretary March 1992) of PMF; Vice President and Associate General Counsel of
New York, New York Prudential Securities (since July 1992); prior thereto, associated with the
law firm of Battle Fowler.
</TABLE>
- -----------------
* "Interested" director, as defined in the Investment Company Act, by
reason of his affiliation with Prudential Securities or PMF.
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.
B-11
<PAGE>
The Fund pays each of its Directors who is not an affiliated person of
the Manager annual compensation of $10,000, in addition to certain
out-of-pocket expenses.
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 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 at the daily rate of return of
a Portfolio of the Fund (the Fund rate). 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 Directors' fees,
together with interest thereon, is a general obligation of the Fund.
As of March 31, 1994, the Directors and officers of the Fund, as a
group, owned beneficially less than 1% of the common stock of the
Portfolio.
As of March 31, 1994, Midland National Life Insurance Company, One
Midland Plaza, Sioux Falls, South Dakota 57193-0001 owned 656,160 Class A
shares (16.6% of the outstanding Class A shares) of the Portfolio and
Investor's Life Insurance Company of Nebraska, One Midland Plaza, Sioux
Falls, South Dakota 57193-0001 owned 503,767 Class A shares (12.7% of the
outstanding Class A shares) of the Portfolio.
As of March 31, 1994, Prudential Securities was the record holder for
other beneficial owners of 3,401,268 Class A shares (or 86.1% of the
outstanding Class A shares) and 28,496,090 Class B shares (or 64.5% of the
outstanding Class B 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.
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 substantially 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 March 31, 1994, PMF managed
and/or administered open-end and closed-end management investment companies
with assets of approximately [$49] billion. According to the Investment
Company Institute, as of December 31, 1993, 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 Portfolio,
manages both the investment operations of the Portfolio and the composition
of the Portfolio's investments, 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 .55 of 1% of the average daily net assets of the
Portfolio. The fee is computed daily and payable monthly. The Management
Agreement also provides that, in the event the expenses of the Portfolio
(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 Portfolio. No such reductions
were required during the fiscal year ended October 31, 1993. 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.
B-12
<PAGE>
The Management Agreement was last approved by 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
Management Agreement, on June 3, 1993, and was approved by shareholders of
the Portfolio on October 21, 1991.
In connection with its management of the corporate 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 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 and Dividend Disbursing
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
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.
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.
For the fiscal years ended October 31, 1993, 1992 and 1991, PMF
received management fees of $2,994,867, $5,136,480 and $2,207,904 from the
Portfolio, respectively.
PMF has entered into the Subadvisory Agreement with PIC, a wholly-
owned subsidiary of The Prudential Insurance Company of America (the
Prudential). The Subadvisory Agreement provides that PIC 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 those services.
The Subadvisory Agreement was approved by 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
Subadvisory Agreement, on June 3, 1993, and was approved by the
shareholders of the Fund on October 21, 1991. 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 30 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.
B-13
<PAGE>
The Manager and the Subadviser (The Prudential Investment Corporation)
are subsidiaries of The Prudential which, as of December 31, 1993, was the
largest insurance company in North America. Prudential has been engaged in
the insurance business since 1875. In July 1993, Institutional Investor
ranked The Prudential the third largest institutional money manager of the
300 largest money management organizations in the United States as of
December 31, 1992.
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 Portfolio. Prudential Securities Incorporated (Prudential Securities),
One Seaport Plaza, New York, New York 10292, acts as the distributor of the
Class B and Class C shares of the Portfolio.
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 Portfolio's Class A, Class B and Class C shares. See "How
Fund the is Managed-Distributor" in the Prospectus.
On June 3, 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, approved the continuance of the Class A and Class B Plans and
Distribution Agreements and approved modifications of the Portfolio's
Class A and Class B Plans and Distribution Agreements to conform them to
recent amendments to the National Association of Securities Dealers, Inc.
(NASD) maximum sales charge rule described below. As modified, the Class A
Plan for the Portfolio 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 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 modified, the Class B Plan for the Portfolio 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% (not
including the service fee) may be used as reimbursement for distribution-
related expenses with respect to the Class B shares (asset-based sales
charge). Total distribution fees (including the service fee of .25 of 1%)
under the Class B Plan for the Portfolio may not exceed 1.00%. On March
14, 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 Portfolio and
approved further amendments to the plans of distribution for the
Portfolio's Class A and Class B Plans 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 3, 1993. 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 , 1994. The Class C Plan was approved
by the sole shareholder of Class C shares on , 1994.
Class A Plan. For the fiscal year ended October 31, 1993 PMFD received
payments of $105,520 under the Class A Plan as reimbursement of expenses
related to the distribution of Class A shares. 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 October
31, 1993. PMFD also received approximately $64,400 in initial sales
charges.
Class B Plan. For the fiscal year ended October 31, 1993, Prudential
Securities received $4,741,746 from the Portfolio under the Class B Plan
and spent approximately $2,326,500 in distributing the Portfolio's Class B
shares. It is estimated that of the latter amount, approximately $1,900
(0.1%) was spent on printing and mailing of prospectuses to other than
current shareholders; $630,700 (27.1%) on interest and/or carrying costs;
$197,700 (8.5%) on compensation to Pruco Securities Corporation, an
affiliated broker-dealer, for commissions to its financial advisers and
other expenses, including an allocation on account of overhead and other
branch office distribution-related expenses, incurred by it for
distribution of shares of the Portfolio; and $1,496,200 (64.3%) on the
aggregate of (i) payments of commissions and account servicing fees to
financial advisers ($700,000 or 30.1%) and (ii) an allocation on account of
overhead and other branch office distribution- related expenses ($796.200
or 34.2%). The term "overhead and other branch office distribution-related
expenses" represents (a) the expenses of operating Prudential Securities
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 shares.
Prudential Securities also receives the proceeds of contingent deferred
sales charges paid by investors 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 October 31, 1993,
Prudential Securities received approximately $2,203,700 in contingent
deferred sales charges.
B-14
<PAGE>
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. Prior to the date of this
Statement of Additional Information, no distribution expenses were incurred
under the Class C Plan.
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 Plans may each 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
applicable class 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 it is
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 share 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.
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, as amended. Each Distribution Agreement was approved by the Board of
Directors, including a majority of the Rule 12b-1 Directors, on March 4,
1993.
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. In the case of Class B 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
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.
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
Portfolio of 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.) Broker-dealers may receive brokerage
commissions on portfolio transactions of the Portfolio, including options,
futures, and options on futures transactions and the purchase and sale of
underlying securities upon the exercise of options. 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.
Debt 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 Portfolio
will not deal with Prudential Securities in any transaction in which
Prudential Securities acts as principal. Thus, it will not deal in
securities 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 Portfolio's order.
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 Portfolio's ability to pursue its
present investment objective. However, in the future in other
circumstances, the Portfolio may be at a disadvantage because of this
limitation in comparison to other funds with similar objectives but not
subject to such limitations.
B-15
<PAGE>
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. 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 or futures commission merchant in the light of
generally prevailing rates. The Manager's policy is to pay higher
commissions to brokers, dealers 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.
Subject to the above considerations, Prudential Securities 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
Portfolio, 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 arms-length transaction. Furthermore, the Board of Directors
of the Fund, including a majority of the Rule 12b-1 Directors, has 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) under 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 from transactions effected
for the Fund during the applicable period. Brokerage transactions with
Prudential Securities (or any affiliate) are also subject to such fiduciary
standards as may be imposed by applicable law.
During the fiscal periods ended October 31, 1993, 1992 and 1991, the
Portfolio did not pay any brokerage commissions to Prudential Securities.
PURCHASE AND REDEMPTION OF FUND SHARES
Shares of the Portfolio 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" in the Prospectus.
Each class of shares represents an interest in the same portfolio of
investments of the Portfolio 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 SEC 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 of the Portfolio) 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."
B-16
<PAGE>
Specimen Price Make-Up
Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold at a maximum sales charge of 3% and
Class B* and Class C* shares are sold at net asset value. Using the Fund's
net asset value at October 31, 1993, the maximum offering price of the
Portfolio's shares is as follows:
<TABLE>
Short-Term
Global Income
Portfolio
---------
<S> <C>
Class A
Net asset value and redemption price per Class A share .................................. $9.29
Maximum Sales Charge: (3% of offering price) ............................................ .29
-----
Offering price to public ................................................................ $9.58
=====
Class B
Net asset value, redemption price and offering price to public per Class B share* ....... $9.29
=====
Class C
Net asset value, offering price and redemption price per Class C share* ................. $9.29
=====
<FN>
- -------------
*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. Reduced
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 spouses Individual Retirement Account (IRA);
(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
the following an 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 charge
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 the retirement and group plans described above
under "Retirement and 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
B-17
<PAGE>
aggregate the value of their existing holdings of the 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 or price (net asset
value plus maximum sales charge) as of the previous business day. See "How
the Fund Values Its Shares" 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.
Letters of Intent. Reduced sales charges are available to investors or
an eligible group of related investors 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 which (excluding
money market funds other than those acquired pursuant to the exchange
privilege) 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. 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.
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 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.
SHAREHOLDER INVESTMENT ACCOUNT
A Shareholder Investment Account is established for each investor upon
the initial purchase of shares of the Fund. The Fund makes available to its
stockholders the following privileges and plans.
Equity Participation Program
Under the Equity Participation Program, an investor may arrange to have
a specified number of Class A or Class B shares of the Portfolio
automatically exchanged into either one or two Prudential equity funds on a
monthly basis (subject to minimum initial and subsequent investment of
$1,000 and $100, respectively). Further details about this service and an
application form are available from the Transfer Agent, Prudential
Securities or Prusec.
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 Portfolio of the Fund at
net asset value. An investor may direct the Transfer Agent in writing not
less than 5 full business days prior to the payment 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 payment 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.
B-18
<PAGE>
Exchange Privilege
The Fund makes available to its shareholders the privilege of
exchanging their shares of the Portfolio 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 Portfolio. 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 Portfolio may exchange their Class A
shares for Class A shares of certain other Prudential Mutual Funds, shares
of Prudential Structured Maturity Fund, Inc. and 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 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 Portfolio 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, a money market fund. No contingent deferred sales charge
will 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 were initially purchased and the purchase date will be deemed
to be the date of the initial purchase, rather than the date of the
exchange.
Class B and Class C shares of the Portfolio may also be exchanged for
shares of Prudential Special 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 Portfolio, such shares will be
subject to the CDSC calculated without regard to 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 Portfolio, 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.
B-19
<PAGE>
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 than 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
</TABLE>
<TABLE>
<CAPTION>
Period of
Monthly investments: $100,000 $150,000 $200,000 $250,000
--------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
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
<FN>
- --------------
See "Automatic Savings Accumulation Plan".
1Source 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.
2The 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.
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. Stock 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.
B-20
<PAGE>
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 sales charges applicable
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 if
used in connection with a retirement plan.
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 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.
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, an 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 Compounding1
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
<FN>
- --------------
1The chart is for illustrative purposes only and does not represent
the performance of the Portfolio 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
Under the Investment Company Act, the Board of Directors is responsible
for determining in good faith the fair market value of the securities of
the Portfolio. 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. In accordance with procedures adopted by the Board of
Directors, the value of the Portfolio will be determined as follows:
Government securities for which quotations are available will be based
on prices provided by independent pricing services or principal market
makers. 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. 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 between the
bid and asked prices provided by principal market makers. Options will be
valued at market value or fair value
B-21
<PAGE>
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 pay prior to
maturity, unless the Fund's Manager determines that such valuation does not
represent fair value. The Manager has determined that amortized cost does
not represent fair value regarding certain short-term securities with
remaining maturities of 60 days or less. Such securities are valued at
market 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
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.
As long as the Portfolio 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 Portfolio's dividends will differ by
approximately the amount of the distribution expense accrual among the
classes.
TAXATION
General. The Fund has elected to qualify and intends to remain
qualified as a regulated investment company under Subchapter M of the
Internal Revenue Code for each taxable year. Accordingly, the Portfolio
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 a Portfolio'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 Portfolio'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
Portfolio's ability to engage in transactions involving options on
securities, interest rate futures and options thereon.
As a regulated investment company, the Portfolio will not be subject to
federal income tax on its net investment income and capital gains, if any,
that it distributes to its stockholders, 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 and net short- term
capital gains will be taxable to the stockholder at ordinary income rates
regardless of whether the stockholder 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 stockholder holds
shares in the Portfolio 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. Stockholders will be notified annually by the Fund
as to the federal tax status of distributions made by a Portfolio of the
Fund. A 4% nondeductible excise tax will be imposed on the Portfolio of the
Fund to the extent a Portfolio 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.
The per share dividends on Class B and Class C shares will typically be
lower than the per share dividends and distributions 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 capital gains, if any, will
be in the same amounts for Class A, Class B and Class C shares. See "How
the Fund Values its Shares" in the Prospectus.
For federal income tax purposes, the Short-Term Global Income Portfolio
had a capital loss carryforward as of October 31, 1993, of approximately
$26,697,000 which expires in 2001. Accordingly, no capital gains
distributions are expected to be paid to shareholders until future net
gains have been realized in excess of such carryforwards.
Currency Fluctuations. Gains or losses attributable to fluctuations in
exchange rates which occur between the time the Portfolio accrues interest
or other receivables or accrues expenses or other liabilities denominated
in a foreign currency and the time the Portfolio 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 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 Portfolio's investment
company taxable income available to be distributed to shareholders as
ordinary income, rather than increasing or decreasing the amount of the
Portfolio's
B-22
<PAGE>
net capital gain. If currency fluctuation losses exceed other investment
company taxable income during a taxable year, distributions made by the
Portfolio during the year would be characterized as a return of capital to
shareholders, reducing each shareholder's basis in their shares.
Backup Withholding. With limited exceptions, the Fund is required to
withhold federal income tax at the rate of 31% of all taxable distributions
payable after December 31, 1993 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.
PERFORMANCE INFORMATION
Yield. The Portfolio may from time to time advertise its "yield" as
calculated over a 30-day period. Yield is determined separately for Class
A, Class B and Class C shares. The yield will be computed by dividing the
Portfolio's net investment income per share earned during this 30-day
period by the offering price on the last day of this period. The average
number of shares used in determining the net investment income per share
will be the average daily number of shares outstanding during the 30-day
period that were eligible to receive dividends. In accordance with SEC
regulations, income will be computed by totaling the interest earned on all
debt obligations during the 30-day period and subtracting from that amount
the total of all expenses incurred during the period, which include
management and distribution fees. The 30-day yield is then annualized on a
bond-equivalent basis assuming semi-annual reinvestment and compounding of
net investment income, as described in the Prospectus. Yields for the Fund
will vary based on a number of factors including changes in net asset
value, market conditions, the level of interest rates and the level of Fund
income and expenses.
The yield for the 30 days ended October 31, 1993 was 8.98% and 8.40%
for Class A and Class B shares, respectively. During this period, no Class
C shares were outstanding for the Portfolio.
The Portfolio's yield is calculated according to the following formula:
a - b
YIELD = 2 [ (------ + 1) 6- 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.
Average Annual Total Return. The Portfolio may from time to
time advertise its average annual total return. Average annual total
return is calculated separately for Class A, Class B and, Class C shares.
See "How the Fund Calculates Performance" in the Prospectus. The average
annual total returns for the one year period ended October 31, 1993 and
for the period from inception of the Portfolios were as follows:
Year Ended
October 31,
1993 From Inception
---- --------------
Short-Term Global Income Portfolio-Class A 4.73% 4.93%
Short-Term Global Income Portfolio-Class B 4.00% 4.82%
The average annual total return is computed according to the following
formula:
P (1 + T)n = 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 1, 5 or 10 year
periods (or fractional portion thereof) of hypothetical
$1,000 payment made at the beginning of the 1, 5 or 10 year
periods.
Average annual total return does not take into account any federal or
state income taxes that may be payable upon redemption. Average annual
total return takes into account any applicable initial or deferred sales
charges. During these periods, no Class C shares were outstanding.
B-23
<PAGE>
Aggregate Total Return. The Portfolio 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 at the end of the 1, 5 or 10 year
periods (or fractional portion thereof) of a hypothetical
$1,000 payment made at the beginning of the 1, 5 or 10 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 aggregate total returns for the one year period ended October 31,
1993 and for the period from inception of the Portfolio were as follows:
Year Ended
October 31,
1993 From Inception
---- --------------
Short-Term Global Income Portfolio-Class A 7.96% 19.13%
Short-Term Global Income Portfolio-Class B 7.00% 16.18%
During these periods, no Class C shares were outstanding.
Performance Chart
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
[GRAPHIC]
1Source: 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.
B-24
<PAGE>
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.
Prudential Mutual Fund Services, Inc. (PMFS), Raritan Plaza One,
Edison, New Jersey 08837, serves as the Transfer and Dividend Disbursing
Agent of the Fund. Its mailing address is P.O. Box 15005, New Brunswick,
New Jersey 08906-5005. 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, payment of
dividends and distributions, and related functions. For these services, PMF
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. For the fiscal year ended October 31, 1993, the Fund incurred
fees of approximately $544,800 for the Portfolio, for the services of PMFS.
PMFS is also reimbursed for its out-of-pocket expenses, including but not
limited to postage, stationery, printing, allocable communications expenses
and other costs.
Deloitte & Touche, 1633 Broadway, New York, N.Y. 10019, serves as the
Fund's independent accountants and in that capacity audits the Fund's
annual financial statements.
B-25
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Principal US$
Amount Value
(000) Description(a) (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--82.7%
Australia--11.3%
Australian Gov't.
Bonds,
A$ 3,840# 12.50%, 4/15/95........ $ 2,826,913
Queensland Treasury
Corp.,
21,700# 12.00%, 3/15/95........ 15,779,924
State Electric Comm.
Victoria,
25,700# 12.00%, 10/22/95....... 19,261,117
Western Australia
Treasury Corp.,
15,400# 12.00%, 9/15/95........ 11,487,762
------------
49,355,716
------------
Canada--7.6%
Alberta Province
Canada,
C$ 20,000# 5.75%, 9/3/96.......... 15,252,366
Canadian Gov't. Bonds,
22,650# 6.50%, 8/1/96.......... 17,672,214
------------
32,924,580
------------
Denmark--10.2%
Danish Treasury Notes,
DKr 285,000# 9.25%, 8/10/95......... 44,207,403
------------
Finland--3.0%
Finland Gov't. Bonds,
FM 74,000 6.50%, 9/15/96......... 12,954,601
------------
France--5.6%
Gov't. of France,
FF 163,000# Zero Coupon, 4/25/96... 24,305,478
------------
Germany--2.3%
German Gov't. Bonds,
DM 15,600# 8.50%, 4/22/96......... 9,983,348
------------
Ireland--1.7%
Irish Gov't. Bonds,
IEP 5,000 9.00%, 7/30/96......... 7,543,346
------------
Italy--12.0%
Eurofima,
Lira 5,500,000# 12.13%, 8/9/95......... $ 3,603,410
Export Finance of
Norway,
8,000,000# 12.25%, 8/5/96......... 5,396,193
General Electric
Capital Corp.,
4,000,000# 11.50%, 2/7/95......... 2,553,648
Italian Gov't. BTP,
63,750,000# 10.00%, 8/1/96......... 40,659,505
------------
52,212,756
------------
New Zealand--9.1%
Electric Corp. of New
Zealand,
NZ$ 30,000# 10.00%, 6/15/96........ 18,319,246
New Zealand Gov't.
Bonds,
36,000# 10.00%, 2/15/95........ 21,065,637
------------
39,384,883
------------
Norway--1.6%
Bolig Og Norgeskreditt
Mortgage Bonds,
NKr 45,200 10.50%, 12/20/95....... 6,762,033
------------
Spain--12.3%
Kingdom of Spain,
Pts 1,500,000 11.90%, 7/15/96........ 12,155,163
4,900,000 11.85%, 8/30/96........ 40,008,229
Nordic Investment Bank,
150,000 13.80%, 11/30/95....... 1,220,213
------------
53,383,605
------------
Sweden--2.3%
SBAB,
SKr 20,000 13.00%, 9/20/95........ 2,712,870
Swedish Gov't. Bonds,
55,000 11.50%, 9/1/95......... 7,323,431
------------
10,036,301
------------
</TABLE>
See Notes to Financial Statements.
B-26
<PAGE>
<TABLE>
<CAPTION>
Principal US$
Amount Value
(000) Description(a) (Note 1)
<C> <S> <C>
United Kingdom--3.7%
Bayerische Hypothelsen
Bank,
; 5,000# 11.13%, 6/24/96........ $ 8,338,297
United Kingdom Treasury
Notes,
5,000# 10.25%, 7/21/95........ 8,033,502
------------
16,371,799
------------
Total long-term
investments
(cost
US$358,046,699)...... 359,425,849
------------
SHORT-TERM INVESTMENTS--13.3%
Mexico--3.5%
Mexican Treasury
Bills,**
MP 5,676# 14.25%, 11/4/93........ 1,813,633
12,417# 16.95%, 11/11/93....... 3,956,929
8,469# 15.10%, 11/18/93....... 2,691,785
15,490# 13.80%, 12/23/93....... 4,869,268
5,979# 14.73%, 2/3/94......... 1,849,323
------------
15,180,938
------------
United Kingdom--3.4%
Dresdner Bank Sterling
C.D.,
; 10,000# 5.84%, 12/22/93........ 14,890,768
------------
United States--6.4%
Cariplo, IND.,
US$ 5,000 10.25%, 10/11/94....... 2,786,000
Nordbanken, IND.,
5,000 10.00%, 8/16/94........ 3,297,000
5,000 13.30%, 9/6/94......... 2,858,500
5,000 9.85%, 9/27/94......... 3,655,000
Joint Repurchase
Agreement Account,
US$ 15,270 2.93%, 11/1/93 (Note
5)................... $ 15,270,000
------------
27,866,500
------------
Total short-term
investments
(cost US$65,590,035)... 57,938,206
------------
<CAPTION>
OUTSTANDING OPTIONS
Contracts+ PURCHASED*--1.0%
- --------------
<C> <S> <C>
Call Options--0.2%
Japanese Yen,
Y= 18,900,000 expiring 1/13/94 @
Y=109.20............ 262,710
17,600,000 expiring 1/25/94 @
Y=110.00............ 225,280
------------
487,990
------------
Put Options--0.8%
Deutschemarks,
DM 35,100 expiring 1/25/94
@DM1.72.............. 621,270
40,000 expiring 3/29/94
@DM1.68.............. 1,568,000
19,000 expiring 4/18/94
@DM1.68.............. 725,800
French Francs,
FF 19,000 expiring 4/18/94
@FF6.08.............. 513,000
------------
3,428,070
------------
Total outstanding
options
purchased
(cost
US$3,234,535)........ 3,916,060
------------
Total Investments Before
Outstanding Put Options
Written--97.0%
(cost US$426,871,269;
Note 4).............. 421,280,115
------------
</TABLE>
See Notes to Financial Statements.
B-27
<PAGE>
<TABLE>
<CAPTION>
US$
Value
Contracts+ Description (Note 1)
<C> <S> <C>
OUTSTANDING PUT OPTIONS
WRITTEN*--(0.1%)
Deutschemarks,
DM 30,500 expiring 11/24/93
@DM1.70
(premiums received
US$230,275).......... $ (274,500)
------------
Total Investments, Net of
Outstanding Put Options
Written--96.9%..........421,005,615
Other assets in excess
of
other
liabilities--3.1%.... 13,466,062
------------
Net Assets--100%....... $434,471,677
------------
------------
</TABLE>
- ------------------
Portfolio securities are classified according to the security's
currency denomination.
(a) The following abbreviations are used in portfolio descriptions:
C.D.--Certificate of Deposit.
IND.--Foreign Currency Index Linked Commercial Paper.
# Principal amount segregated as collateral for forward currency
contracts and put options written. Aggregate value of segregated
securities--$298,817,669.
* Non-income producing security.
** Percentage quoted represent yields to maturity as of purchase date.
+ Expressed in thousands of local currency units.
See Notes to Financial Statements.
B-28
<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL
INCOME FUND, INC.
Short-Term Global Income Portfolio
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets
October 31, 1993
----------------
<S>
<C>
Investments, at value (cost $426,871,269) ...................................... $421,280,115
Foreign currency, at value (cost $2,155,068) ................................... 2,147,115
Cash ........................................................................... 65,948
Receivable for investments sold ................................................ 17,991,844
Interest receivable ............................................................ 8,237,166
Forward currency contracts--net amount receivable from counterparties .......... 821,121
Receivable for Fund shares sold ................................................ 104,241
Deferred expenses and other assets.............................................. 90,468
----------------
Total assets ............................................................... 450,738,018
----------------
Liabilities
Payable for investments purchased .............................................. 11,627,027
Payable for Fund shares reacquired.............................................. 2,630,208
Dividends payable............................................................... 628,545
Accrued expenses................................................................ 360,103
Due to Distributors............................................................. 334,905
Outstanding put options written, at value (premiums received $230,275).......... 274,500
Due to Manager.................................................................. 209,665
Withholding taxes payable....................................................... 201,388
-------------
Total liabilities........................................................... 16,266,341
-------------
Net Assets...................................................................... $434,471,677
-------------
-------------
Net assets were comprised of:
Common stock, at par.......................................................... $ 46,785
Paid-in capital in excess of par.............................................. 472,008,986
-------------
472,055,771
Overdistributed net investment income......................................... (5,978,475)
Accumulated net realized loss on investment and foreign currency transactions. (26,697,014)
Net unrealized depreciation on investments and foreign currencies............. (4,908,605)
--------------
Net assets, October 31, 1993.................................................... $434,471,677
--------------
--------------
Class A:
Net asset value and redemption price per share ($59,458,310 / 6,399,282
shares of common stock issued and outstanding)............................... $9.29
Maximum sales charge (3.00% of offering price)................................ .29
-------------
Maximum offering price to public.............................................. $9.58
-------------
-------------
Class B:
Net asset value, offering price and redemption price per share
($375,013,367 / 40,385,776 shares of common stock issued and outstanding).... $9.29
-------------
-------------
</TABLE>
See Notes to Financial Statements.
B-29
<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL
INCOME FUND, INC.
Short-Term Global Income Portfolio
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
October 31,
Net Investment Income 1993
------------
<S> <C>
Income
Interest (net of foreign
withholding
taxes of $450,769)............... $ 61,871,823
------------
Expenses
Distribution fee--Class A.......... 105,520
Distribution fee--Class B.......... 4,741,746
Management fee..................... 2,994,867
Custodian's fees and expenses...... 770,000
Transfer agent's fees and
expenses......................... 625,000
Reports to shareholders............ 161,000
Registration fees.................. 43,000
Amortization of organization
expenses......................... 40,000
Audit fee.......................... 38,000
Directors' fees.................... 35,000
Legal.............................. 28,000
Miscellaneous...................... 25,279
------------
Total expenses................... 9,607,412
------------
Net investment income................ 52,264,411
------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions
Net realized gain (loss) on:
Investment transactions............ (18,599,346)
Foreign currency transactions...... (36,226,723)
Written option transactions........ 2,782,651
------------
(52,043,418)
------------
Net change in unrealized
appreciation/
depreciation of:
Investments........................ 51,502,372
Foreign currencies................. (14,324,433)
Written options.................... (21,806)
------------
37,156,133
------------
Net loss on investments, foreign
currencies and written options..... (14,887,285)
------------
Net Increase in Net Assets
Resulting from Operations............ $ 37,377,126
------------
------------
</TABLE>
PRUDENTIAL SHORT-TERM GLOBAL
INCOME FUND, INC.
Short-Term Global Income Portfolio
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31,
Increase (Decrease) ----------------------------
in Net Assets 1993 1992
------------- ------------
<S> <C> <C>
Operations
Net investment income... $ 52,264,411 $ 85,611,889
Net realized loss on
investment and
foreign currency
transactions........ (52,043,418) (51,353,219)
Net change in
unrealized
appreciation/depreciation
of investments and
foreign
currencies.......... 37,156,133 (38,850,911)
------------- ------------
Net increase
(decrease) in net
assets resulting
from operations..... 37,377,126 (4,592,241)
------------- ------------
Net equalization
debits.............. (7,869,071) (3,256,032)
------------- ------------
Dividends to
shareholders from net
investment income
(Note 1)
Class A............... (4,363,707) (9,993,936)
Class B............... (25,199,590) (61,597,698)
------------- ------------
(29,563,297) (71,591,634)
------------- ------------
Fund share transactions
(Note 6)
Proceeds from shares
subscribed.......... 39,187,479 486,194,823
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends........... 17,172,475 38,998,777
Cost of shares
reacquired.......... (330,090,306) (511,730,357)
------------- ------------
Net increase (decrease)
in net assets from
Fund share
transactions.......... (273,730,352) 13,463,243
------------- ------------
Total decrease.......... (273,785,594) (65,976,664)
Net Assets
Beginning of year....... 708,257,271 774,233,935
------------- ------------
End of year............. $ 434,471,677 $708,257,271
------------- ------------
------------- ------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
B-30
<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC.
Short-Term Global Income Portfolio
Notes to Financial Statements
Prudential Short-Term Global Income Fund, Inc. (the ``Fund'') is
registered under the Investment Company Act of 1940 as a non-diversified,
open-end management investment company. The Fund consists of two series,
namely: Short-Term Global Income Portfolio and Global Assets Portfolio. The
Fund was incorporated in Maryland on February 21, 1990 and had no
significant operations other than the issuance of 5,000 shares each of
Class A and Class B common stock of the Short-Term Global Income Portfolio
for $100,000 on September 21, 1990 to Prudential Mutual Fund Management,
Inc. (``PMF''). The Short-Term Global Income Portfolio (the ``Portfolio'')
commenced investment operations on November 1, 1990. The investment
objective of the Portfolio is to seek high current income with minimum risk
to principal, by investing primarily in high-quality debt securities in
both the U.S. and abroad having remaining maturities of not more than three
years. The ability of the issuers of the debt securities held by the Fund
to meet their obligations may be affected by economic developments in a
specific country or industry.
Note 1. Accounting The following is a summary
Policies of significant accounting poli
cies followed by the Fund, and the Portfolio in
the preparation of its financial statements.
Securities 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 value. Government securities for
which quotations are available will be based on prices provided by an
independent pricing service or principal market makers. 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.
Securities 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.
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. Certain
short-term securities with remaining maturities of 60 days or less are
valued at market value.
In connection with transactions in repurchase agreements with U.S.
financial institutions, it is the Fund's policy that its custodian takes
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 closing daily rate of exchange;
(ii) purchases and sales of investment securities, income and
expenses--at the rate 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 fiscal 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 securities held at the end of
the fiscal year. 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 fiscal year.
Accordingly, realized foreign currency gains and losses are included in the
reported net realized loss on investment transactions.
Net realized loss on foreign currency transactions represents net
foreign exchange gains or losses from sales and maturities of short-term
securities, holding of foreign currencies, currency gains or losses
realized between the trade and settlement dates on security 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 fiscal year end
B-31
<PAGE>
exchange rates are reflected as a component of net unrealized
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
and economic instability and the level of governmental supervision and
regulation of foreign securities markets.
Forward Currency Contracts: 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. A forward contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The gain or loss arising from the difference
between the settlement value of the original and renegotiated forward
contracts, if any, is isolated and is included in net realized gain (loss)
from 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.
Option Writing: When the Fund writes an option, an amount equal to the
premium received by the Fund is recorded as a liability and is subsequently
adjusted to the current market value of the option written. Premiums
received from writing options which expire unexercised are treated by the
Fund on the expiration date as realized gains from securities or currencies
based on the type of option written. The difference between the premium and
the amount paid on effecting a closing purchase transaction, including
brokerage commissions, is also treated as a realized gain, or if the
premium is less than the amount paid for the closing purchase transaction,
as a realized loss. If a call option is exercised, the premium is added to
the proceeds from the sale of the underlying security or currency in
determining whether the Fund has realized a gain or loss. If a put option
is exercised, the premium reduces the cost basis of the securities or
currencies purchased by the Fund. The Fund as writer of an option may have
no control over whether the underlying securities or currencies may be sold
(called) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security or currency underlying the
written option.
Securities Transactions and Investment Income: Securities 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
and realized gains or losses are allocated daily to each class of shares
based upon the relative proportion of net assets of each class at the
beginning of the day.
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 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: Effective November 1, 1992, the
Fund began accounting and reporting for distributions to shareholders in
accordance with 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 caused by
adopting this statement was to decrease paid-in capital by $40,708,162,
decrease undistributed net investment income by $31,574,741 and decrease
accumulated net realized loss by $72,282,903 with respect to amounts
reported through October 31, 1993. Net investment income, net realized
gains and net assets were not affected by this change.
Federal Income Taxes: For federal income tax purposes, each portfolio
in the Fund is treated as a separate taxpaying entity. It is the
Portfolio's intent 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.
Deferred Organization Expenses: Approximately $200,000 of organization
and initial registration costs were incurred. These costs have been
deferred and are being amortized over the period of benefit not to exceed
60 months from the date the Portfolio commenced investment operations. PMF
has agreed not to redeem the 10,000
B-32
<PAGE>
shares purchased until all organization expenses have been amortized.
Note 2. Agreements The Fund has a management
agreement with 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 managment 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 .55 of 1% of the average daily net assets of the
Portfolio.
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 shares of the Fund (collectively,
the ``Distributors''). To reimburse the Distributors for their expenses
incurred in distributing and servicing the Fund's Class A and B shares, the
Fund, pursuant to plans of distribution, pays the Distributors a
reimbursement, accrued daily and payable monthly.
Pursuant to the Class A Plan, the Portfolio reimburses PMFD for its
expenses with respect to Class A shares at an annual rate of up to .30 of
1% of the average daily net assets of the Class A shares. Such expenses
under the Class A Plan were .15 of 1% of the average daily net assets of
the Class A shares for the fiscal year ended October 31, 1993. PMFD pays
various broker-dealers, including PSI and Pruco Securities Corporation
(``Prusec''), affiliated broker-dealers, for account servicing fees and
other expenses incurred by such broker-dealers.
Pursuant to the Class B Plan, the Portfolio reimburses PSI for its
distribution-related expenses with respect to Class B shares at an annual
rate of up to 1% of the average daily net assets of the Class B shares.
The Class B distribution expenses include commission credits for
payment of commissions and account servicing fees to financial advisers and
an allocation for overhead and other distribution-related expenses,
interest and/or carrying charges, the cost of printing and mailing
prospectuses to potential investors and of advertising incurred in
connection with the distribution of shares.
The Distributors recover the distribution expenses and account
servicing fees incurred through the receipt of reimbursement payments from
the Portfolio under the plans and the receipt of initial sales charges
(Class A only) and contingent deferred sales charges (Class B only) from
shareholders.
PMFD has advised the Portfolio that it has received approximately
$64,400 in front-end sales charges resulting from sales of Class A shares
during the fiscal year ended October 31, 1993. From these fees, PMFD paid
such sales charges to dealers (PSI and Prusec) which in turn paid
commissions to salespersons.
With respect to the Class B Plan, at any given time the amount of
expenses incurred by PSI in distributing the Portfolio's shares and not
recovered through the imposition of contingent deferred sales charges in
connection with certain redemptions of shares may exceed the total payments
made by the Portfolio pursuant to the Class B Plan. PSI has advised the
Portfolio that, for the fiscal year ended October 31, 1993, it received
approximately $2,203,700 in contingent deferred sales charges imposed upon
certain redemptions by investors. PSI, as distributor, has also advised the
Portfolio that at October 31, 1993, the amount of distribution expenses
incurred by PSI and not yet reimbursed by the Portfolio or recovered
through contingent deferred sales charges approximated $15,751,800. This
amount may be recovered through future payments under the Class B Plan or
contingent deferred sales charges.
In the event of termination or noncontinuation of the Class B Plan,
the Fund would not be contractually obligated to pay PSI, as distributor,
for any expenses not previously reimbursed or recovered through contingent
deferred sales charges.
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 wholly-
With Affiliates owned subsidiary of PMF,
serves as the Fund's transfer agent and during the
fiscal year ended October 31, 1993, the Portfolio incurred fees of
approximately $544,800 for the services of PMFS. As of October 31, 1993,
approximately $37,700 of such fees were due to PMFS for its services.
Transfer agent fees and expenses in the Statement of Operations include
certain out-of-pocket expenses paid to non-affiliates.
B-33
<PAGE>
Note 4. Portfolio Purchases and sales of invest
Securities ment securities, other than
short-term investments and options, for the fiscal
year ended October 31, 1993 aggregated $1,291,897,873 and
$1,350,325,743, respectively.
The federal income tax basis of the Portfolio's investments at October
31, 1993 was $428,334,476 and, accordingly, net unrealized depreciation for
federal income tax purposes was $7,054,361 (gross unrealized appreciation--
$4,122,681; gross unrealized depreciation--$11,177,042).
For federal income tax purposes, the Portfolio had a capital loss
carryforward as of October 31, 1993, of approximately $26,697,000 which
expires in 2001. Accordingly, no capital gains distributions are expected
to be paid to shareholders until future net gains have been realized in
excess of such carryforward.
Transactions in options written during the fiscal year ended October
31, 1993 were as follows:
<TABLE>
<CAPTION>
Number of
Contracts Premiums
(000) Received
--------- -----------
<S> <C> <C>
Options outstanding at
October 31, 1992............ 1,112 $ 695,000
Options written............... 442,208 6,190,524
Options terminated in closing
purchase transactions....... (316,745) (4,514,322)
Options expired............... (96,075) (2,140,927)
--------- -----------
Options outstanding at
October 31, 1993............ 30,500 $ 230,275
--------- -----------
--------- -----------
</TABLE>
At October 31, 1993, the Portfolio had outstanding forward currency
contracts, both to purchase and sell foreign currencies, as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Purchase Contracts Payable Value (Depreciation)
- ------------------ --------------- ------------ -----------
<S> <C> <C> <C>
Australian
Dollars,
expiring
11/16/93........ $ 14,145,407 $ 13,973,601 $ (171,806)
Belgian Francs,
expiring
11/17//93....... 24,549,557 23,924,519 (625,038)
British Pounds,
expiring 11/2-
11/9/93......... 20,548,825 20,609,508 60,683
Canadian Dollars,
expiring
11/10/93........ 18,540,489 18,561,189 20,700
Danish Kroner,
expiring 11/1-
11/15/93........ 45,664,273 46,012,293 348,020
Deutschemarks,
expiring
11/4/93-
3/3/94.......... 167,624,265 165,346,862 (2,277,403)
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Purchase Contracts Payable Value (Depreciation)
- ------------------ --------------- ------------ -----------
<S> <C> <C> <C>
French Francs,
expiring 2/7-
2/14/94......... $ 64,665,845 $ 63,612,265 $(1,053,580)
Italian Lira,
expiring 11/15-
11/24/93........ 24,072,525 23,045,518 (1,027,007)
New Zealand
Dollars,
expiring
12/2/93......... 9,970,144 9,921,089 (49,055)
Spanish Pesetas,
expiring 11/2-
1/27/94......... 55,093,021 55,083,455 (9,566)
Swedish Krona,
expiring 11/10-
11/29/93........ 20,629,370 20,437,377 (191,993)
Swiss Francs,
expiring
11/8/93......... 53,742,316 51,330,773 (2,411,543)
--------------- ------------ -----------
$ 519,246,037 $511,858,449 $(7,387,588)
--------------- ------------ -----------
--------------- ------------ -----------
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciation)
- ------------------ --------------- ------------ -----------
<S> <C> <C> <C>
Australian
Dollars,
expiring
11/16/93........ $ 19,881,425 $ 20,327,438 $ (446,013)
Belgian Francs,
expiring 11/9-
11/16/93........ 48,181,987 47,788,761 393,226
British Pounds,
expiring
11/9/93......... 11,421,280 11,309,479 111,801
Canadian Dollars,
expiring 11/9-
11/10/93........ 40,300,000 39,812,040 487,960
Danish Kroner,
expiring 11/1-
12/1/93......... 112,577,537 110,971,009 1,606,528
Deutschemarks,
expiring
11/1/93-
3/3/94.......... 200,173,868 197,000,447 3,173,421
French Francs,
expiring
11/4/93-
2/14/94......... 116,925,020 117,045,973 (120,953)
Italian Lira,
expiring 11/15-
11/17/93........ 45,163,381 43,935,801 1,227,580
Japanese Yen,
expiring 11/4-
11/8/93......... 4,426,666 4,284,090 142,576
New Zealand
Dollars,
expiring
12/2/93......... 12,310,420 12,388,364 (77,944)
Norwegian Kroner,
expiring
11/26/93........ 7,026,179 6,945,979 80,200
Spanish Pesetas,
expiring
11/2/93-
1/14/94......... 91,037,924 89,643,732 1,394,192
Swedish Krona,
expiring 11/1-
11/29/93........ 19,794,621 19,782,288 12,333
Swiss Francs,
expiring
11/8/93......... 10,933,085 10,709,283 223,802
--------------- ------------ -----------
$ 740,153,393 $731,944,684 $ 8,208,709
--------------- ------------ -----------
--------------- ------------ -----------
</TABLE>
B-34
<PAGE>
Note 5. Joint The Portfolio, along with
Repurchase other affiliated registered
Agreement investment companies, trans
Account fers 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
October 31, 1993, the Portfolio has a 1.1% undivided interest in the
repurchase agreements in the joint account. The undivided interest for the
Portfolio represents $15,270,000 in principal amount. As of such date, each
repurchase agreement in the joint account and the collateral therefor were
as follows:
CS First Boston Corp., 2.93%, in the principal amount of $360,000,000,
repurchase price $360,087,900, due 11/1/93, collateralized by $47,400,000
U.S. Treasury Notes, 6.75%, due 2/28/97; $40,000,000 U.S. Treasury Notes,
11.25%, due 2/15/95; $100,000,000 U.S. Treasury Bonds, 7.50%, due 11/15/16;
$50,000,000 U.S. Treasury Bonds, 10.375%, due 11/15/12 and $50,000,000 U.S.
Treasury Bonds, 12.00%, due 5/15/05; aggregate value including accrued
interest--$368,368,052.
Goldman Sachs & Co., 2.93%, in the principal amount of $450,154,000,
repurchase price $450,263,913, due 11/1/93, collateralized by $104,915,000
U.S. Treasury Bonds, 12.00%, due 8/15/13 and $200,000,000 U.S. Treasury
Bonds, 10.75%, due 8/15/05; aggregate value including accrued
interest--$462,739,932.
Kidder, Peabody & Co. Inc., 2.95%, in the principal amount of
$305,000,000, repurchase price $305,074,979, due 11/1/93, collateralized by
$210,030,000 U.S. Treasury Bonds, 9.875%, due 11/15/15; value including
accrued interest--$311,527,136. Nomura Securities International, Inc.,
2.90%, in the principal amount of $60,889,000, repurchase price
$60,903,715, due 11/1/93, collateralized by $8,280,000 U.S. Treasury Notes,
7.75%, due 2/15/95; $25,000,000 U.S. Treasury Notes, 7.375%, due 5/15/96
and $22,775,000 U.S. Treasury Notes, 8.875%, due 2/15/96; aggregate value
including accrued interest--$62,140,276. Smith Barney Shearson, Inc.,
2.94%, in the principal amount of $175,000,000, repurchase price
$175,042,875, due 11/1/93, collateralized by $4,465,000 U.S. Treasury
Bonds, 12.00%, due 5/15/05; $11,435,000 U.S. Treasury Notes, 9.125%, due
5/15/99; $75,000,000 U.S. Treasury Bonds, 8.125%, due 8/15/19 and
$50,000,000 U.S. Treasury Bonds, 8.00%, due 11/15/21; aggregate value
including accrued interest--$178,771,706.
Note 6. Capital The Portfolio offers both
Class A and Class B 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. Both classes of shares
have equal rights as to earnings, assets and voting privileges except that
each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan.
There are 1.5 billion authorized shares of $.001 par value common
stock divided into two classes, designated Class A and Class B common
stock, each of which consists of 750 million authorized shares. Of the
46,758,058 shares issued and outstanding at October 31, 1993, PMF owned
10,000 shares.
Transactions in shares of common stock for the fiscal years ended
October 31, 1993 and fiscal 1992 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ---------------------------- ----------- -------------
<S> <C> <C>
Year ended October 31, 1993:
Shares sold................. 2,800,748 $ 25,157,507
Shares issued in
reinvestment of
dividends................. 334,726 3,006,237
Shares reacquired........... (7,797,277) (69,726,785)
----------- -------------
Net decrease in shares
outstanding............... (4,661,803) $ (41,563,041)
----------- -------------
----------- -------------
Year ended October 31, 1992:
Shares sold................. 8,598,472 $ 84,065,302
Shares issued in
reinvestment of
dividends................. 575,099 5,554,232
Shares reacquired........... (8,654,040) (83,274,185)
----------- -------------
Net increase in shares
outstanding............... 519,531 $ 6,345,349
----------- -------------
----------- -------------
<CAPTION>
Class B
- ----------------------------
<S> <C> <C>
Year ended October 31, 1993:
Shares sold................. 1,558,807 $ 14,029,972
Shares issued in
reinvestment of
dividends................. 1,575,399 14,166,238
Shares reacquired........... (29,032,710) (260,363,521)
----------- -------------
Net decrease in shares
outstanding............... (25,898,504) $(232,167,311)
----------- -------------
----------- -------------
Year ended October 31, 1992:
Shares sold................. 40,963,635 $ 402,129,521
Shares issued in
reinvestment of
dividends................. 3,451,357 33,444,545
Shares reacquired........... (45,225,866) (428,456,172)
----------- -------------
Net decrease in shares
outstanding............... (810,874) $ 7,117,894
----------- -------------
----------- -------------
</TABLE>
B-35
<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC.
Short-Term Global Income Portfolio
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B
---------------------------------- ----------------------------------
Year Ended October 31, Year Ended October 31,
---------------------------------- ----------------------------------
1993 1992 1991 1993 1992 1991
---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................. $ 9.16 $ 9.97 $ 10.00 $ 9.16 $ 9.97 $ 10.00
--------- -------- -------- --------- -------- --------
Income from investment operations
Net investment income.............................. .97 .96 1.03 .88 .88 .95
Net realized and unrealized loss on investment and
foreign currency transactions.................... (.26) (.95) (.02) (.26) (.95) (.02)
---------- -------- -------- ---------- -------- --------
Total from investment operations................. .71 .01 1.01 .62 (.07) .93
---------- -------- -------- ---------- -------- --------
Less distributions
Dividends from net investment income............... (.58) (.82) (1.03) (.49) (.74) (.95)
Distributions from net capital gains............... -- -- (.01) -- -- (.01)
---------- -------- -------- ---------- -------- --------
Total distributions.............................. (.58) (.82) (1.04) (.49) (.74) (.96)
---------- -------- -------- ---------- -------- --------
Net asset value, end of year....................... $ 9.29 $ 9.16 $ 9.97 $ 9.29 $ 9.16 $ 9.97
---------- -------- -------- ---------- -------- --------
---------- -------- -------- ---------- -------- --------
TOTAL RETURN#:..................................... 7.96% (0.07)% 10.41% 7.00% (0.86)% 9.51%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)...................... $59,458 $101,358 $105,148 $375,013 $606,899 $669,086
Average net assets (000)........................... $70,347 $119,171 $51,830 $474,175 $814,734 $349,607
Ratios to average net assets:
Expenses, including distribution fees............ 1.02% 1.08% 1.01% 1.87% 1.93% 1.87%
Expenses, excluding distribution fees............ .87% .93% .86% .87% .93% .87%
Net investment income............................ 10.81% 9.93% 10.23% 9.42% 9.05% 9.46%
Portfolio turnover rate............................ 307% 180% 66% 307% 180% 66%
- ---------------
# Total return does not consider the effects of sales loads. Total
return is calculated assuming a purchase of shares on the first day and a
sale on the last day of each period reported and includes reinvestment of
dividends and distributions.
</TABLE>
See Notes to Financial Statements.
B-36
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
Prudential Short-Term Global Income Fund, Inc.
Short-Term Global Income Portfolio
We have audited the accompanying statement of assets and liabilities
of Prudential Short-Term Global Income Fund, Inc., Short-Term Global Income
Portfolio, including the portfolio of investments, as of October 31, 1993,
the related statements of operations for the year then ended and of changes
in net assets for each of the two years in the period then ended, and the
financial highlights for each of the three years in the period then ended.
These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of the
securities owned as of October 31, 1993 by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Prudential Short-Term Global Income Fund, Inc., Short-Term Global Income
Portfolio, as of October 31, 1993, the results of its operations, the
changes in its net assets and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
Deloitte & Touche
New York, New York
December 15, 1993
B-37
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
(1) The following financial statements are included in the
Prospectus constituting Part A of this Registration Statement:
Financial Highlights.
(2) The following financial statements are included in the Statement
of Additional Information, constituting Part B of this Registration
Statement on behalf of the Short-Term Global Income Fund:
Portfolio of Investments at October 31, 1993
Statement of Assets and Liabilities at October 31, 1993
Statement of Operations for the fiscal year ended October 31, 1993
Statement of Changes in Net Assets for the fiscal years ended October
31, 1993 and October 31, 1992
Notes to Financial Statements
Financial Highlights
Independent Auditors' Report
(b)Exhibits:
1. Articles of Incorporation of the Registrant. Incorporated by
reference to Exhibit 1 in Registrant's initial Registration
Statement on Form N-1A (File No. 33-33479) filed on February 23,
1990.
(a) Articles of Amendment to Articles of Incorporation.
Incorporated by reference to Exhibit 1(a) to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A (File
No. 33-33479) filed by Registrant on August 24, 1990.
(b) Articles Supplementary. Incorporated by reference to Exhibit
1(b) to Post-Effective Amendment No. 1 to the Registration
Statement on Form N-1A (File No. 33-33479) filed by Registrant
on December 18, 1990.
(c) Articles of Amendment of Articles of Incorporation.
Incorporated by reference to Exhibit 1(c) to Post-Effective
Amendment No. 4 to the Registration Statement on Form N-1A (File
No. 33-33479) filed by Registrant on December 31, 1991.
(d) Form of Amended and Restated Articles of Incorporation.*
2. By-Laws of the Registrant incorporated by reference to Exhibit
No. 2 to Pre-Effective Amendment No. 3 to the Registration
Statement on Form N-1A (File No. 33-33479) filed by Registrant
on October 22, 1990.
4. Instruments defining rights of shareholders. Incorporated by
reference to Exhibit 4 to Post-Effective Amendment No. 6 to the
Registration Statment on Form N-1A (File No. 33-33470) filed on
Edgar by Registrant on December 30, 1993.
5. (a) Management Agreement between the Registrant and Prudential
Mutual Fund Management, Inc, Incorporated by reference to
Exhibit 5(a) to Pre- Effective Amendment No. 3 to the
Registration Statement on Form N-1A (File No. 33-33479) filed by
Registrant on October 22, 1990.
(b) Subadvisory Agreement between Prudential Mutual Fund
Management, Inc. and The Prudential Investment Corporation,
Incorporated by reference to Exhibit No. 5(b) to Pre-Effective
Amendment No. 3 to the Registration Statement on Form N-1A (File
No. 33-33479) filed by Registrant on October 22, 1990.
6. (a) Subscription Offering Agreement among the Registrant,
Prudential- Bache Securities Inc. and Prudential Mutual Fund
Distributors, Inc. incorporated by reference to Exhibit No. 6(c)
to Pre-Effective Amendment No. 3 to the Registration Statement
on Form N-1A (File No. 33-33479) filed by Registrant on October
22, 1990.
(b) Subscription Offering Agreement among the Registrant,
Prudential-Bache Securities Inc. and Prudential Mutual Fund
Distributors, Inc. incorporated by reference to Exhibit No. 6(d)
to Post-Effective Amendment No. 1 to the Registration Statement
on Form N-1A (File No. 33-33479) filed by Registrant on December
18, 1990.
C-1
<PAGE>
(c)(i) Distribution Agreement between the Registrant and
Prudential Mutual Fund Distributors for the Class A shares dated
July 1, 1993, incorporated by reference to Exhibit 6 (e)(ii) to
Post-Effective Amendment No. 6 to the Registration Statement on
Form N-1A (File No. 33-33479) via EDGAR filed on December 30, 1993.
(c)(ii) Restated Distribution Agreement between the Fund and
Prudential Securities Incorporated for the Class B shares dated
July 1, 1993, incorporated by reference to Exhibit 6 (e)(iii) to
Post-Effective Amendment No. 6 to the Registration Statement on
Form N-1A (File No. 33- 33479) filed via EDGAR on December 30, 1993.
(c)(iii) Form of Distribution Agreement for Class A shares.*
(c)(iv) Form of Distribution Agreement for Class B shares.*
(c)(v) Form of Distribution Agreement for Class C shares.*
8. Custodian Contract between the Registrant and State Street Bank
and Trust Company. Incorporated by reference to Exhibit No. 8 to
Pre-Effective Amendment No. 3 to the Registration Statement on
Form N-1A (File No. 33- 33479) filed by Registrant on October
22, 1990.
9. Transfer Agency and Dividend Disbursing Agreement between the
Registrant and Prudential Mutual Fund Services, Inc.
Incorporated by reference to Exhibit No. 9 to Pre-Effective
Amendment No. 3 to the Registration Statement on Form N-1A (File
No. 33-33479) filed by Registrant on October 22, 1990.
10. Opinion of Counsel. Incorporated by reference to Exhibit No. 10
to Pre- Effective Amendment No. 3 to the Registration Statement
on Form N-1A (File No. 33-33479) filed by Registrant on October
22, 1990.
11. Consent of Independent Accountants.*
13. Purchase Agreement. Incorporated by reference to Exhibit 13 to
Pre- Effective Amendment No. 3 to the Registration Statement on
Form N-1A (File No. 33-33479) filed by Registrant on October 22,
1990.
14. Not Applicable.
15. (a)(i) Distribution and Service Plan for Class A shares of
Short-Term Global Income Portfolio dated July 1, 1993,
incorporated by reference to Exhibit 15(a)(i) to Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A (File
No. 33-33479) filed via EDGAR on December 30, 1993.
(b)(i) Distribution and Service Plan for Class B shares of the
Fund dated July 1, 1993, incorporated by reference to Exhibit
15(b)(ii) to Post- Effective Amendment No. 6 to the Registration
Statement on Form N-1A (File No. 33-33479) filed via EDGAR on
December 30, 1993.
(b)(ii) Distribution and Service Plan for Class A shares of
Global Assets Portfolio dated July 1, 1993, incorporated by
reference to Exhibit 15(b)(ii) to Post-Effective Amendment No. 6
to the Registration Statement on Form N-1A (File No. 33-33479)
filed via EDGAR on December 30, 1993.
(c) Form of Distribution and Service Plan for Class A shares of
the Short-Term Global Income Portfolio and Global Assets Portfolio.
(d) Form of Distribution and Service Plan for Class B shares of
the Short-Term Global Income Portfolio.*
(e) Form of Distribution and Service Plan for Class C shares of
the Short- Term Global Income Portfolio.*
16. (a) Not Applicable.
17. (a) Not Applicable.
- ------------
* Filed herewith.
Item 25. Persons Controlled by or Under Common Control with Registrant.
No person is controlled by or under common control with the Registrant.
Item 26. Number of Holders of Securities.
As of March 31, 1994 there were 350 Class A shareholders and 17
Class B shareholders of the Global Assets Portfolio and 441 Class A
shareholders and 2,700 Class B shareholders of the Short-Term Global
Income Portfolio of the Fund.
C-2
<PAGE>
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 VI of the Fund's Articles of
Incorporation (Exhibit 1 to the Registration Statement) and Section 2-418
of the Maryland General Law, officers and directors of the Registrant may
be indemnified against liabilities in connection with the Registrant unless
it is proved that (i) the act or omission of the director of officer was
material to the cause of action adjudicated in the proceeding and was
committed in bad faith or with active and deliberate dishonesty, (ii) the
director actually received an improper personal benefit in money, property
or services, or (iii) in the case of a criminal proceeding, the director
had reasonable cause to believe that the act or omission was unlawful. As
permitted by Section 17(i) of the 1940 Act, pursuant to Section 10 of each
Distribution Agreement (Exhibit 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 Securities 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 Securities Act and will be governed by the final adjudication of such
issue.
The Registrant intends to purchase an insurance policy insuring its
officers and directors against certain 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 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, the Management Agreement 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.
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.
C-3
<PAGE>
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 in October 1993).
The business and other connections of PMF's directors and principal
executive officers are set forth below. Except as otherwise indicated, the
address of each person is One Seaport Plaza, New York, NY 10292.
<TABLE>
<CAPTION>
Name and Address Position with PMF Principal Occupations
- ---------------- ----------------- ---------------------
<S> <C> <C>
Brendan D. Boyle Executive Vice Executive Vice President and Director of Marketing, PMF
President and
Director of
Marketing
John D. Brookmeyer, Jr. Director Senior Vice President, PIC; Senior Vice President, The Prudential Insurance
Two Gateway Center Company of America (Prudential)
Newark, NJ 07102
Susan C. Cote Senior Vice President Senior Vice President, PMF; Senior Vice President, Prudential Securities
Fred A. Fiandaca Executive Vice Executive Vice President, Chief Operating Officer and Director, PMF;
Raritan Plaza One President, Chief Chairman, Chief Operating Officer and Director, Prudential Mutual Fund
Edison, NJ 08847 Operating Officer Services, Inc.
and Director
Stephen P. Fisher Senior Vice President Senior Vice President, PMF; Senior Vice President, Prudential Securities
Frank W. Giordano Executive Vice Executive Vice President, General Counsel and Secretary, PMF; Senior Vice
President, General President, Prudential Securities
Counsel and
Secretary
Robert F. Gunia Executive Vice Executive Vice President, Chief Administrative Officer, Chief Financial
President, Chief Officer and Director, PMF; Senior Vice President, Prudential Securities
Administrative
Officer, Chief
Financial Officer and
Director
Eugene B. Heimberg Director Senior Vice President, Prudential; President, Director and Chief Investment
Prudential Plaza Officer, PIC
Newark, NJ 07101
Lawrence C. McQuade Vice Chairman Vice Chairman, PMF
Leland B. Paton Director Executive Vice President and Director, Prudential Securities; Director,
Prudential Securities Group, Inc., ("PSG")
Richard A. Redeker President, Chief President, Chief Executive Officer and Director, PMF; Executive Vice
Executive Officer and President, Director and Member of Operating Committee, Prudential
Director Securities; Director, PSG
S. Jane Rose Senior Vice Senior Vice President, Senior Counsel and Assistant Secretary, PMF; Senior
President, Senior Vice President and Senior Counsel, Prudential Securities
Counsel and
Assistant Secretary
Donald G. Southwell Director Senior Vice President, Prudential; Director, PSG
213 Washington Street
Newark, NJ 07102
</TABLE>
C-4
<PAGE>
(b) Prudential Investment Corporation (PIC)
See "How the Fund is Managed-Subadviser" in the Prospectus constituting
Part A of this Registration Statement and "Subadviser" in the Statement of
Additional Information constituting Part B of this Registration Statement.
The business and other connections of PIC's directors and executive
officers are 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 Vice President, Prudential Chief Financial Officer and Chief
Chief Financial Compliance Officer, PIC; Vice President, Prudential
Officer and Chief
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 Senior Vice President, Prudential; Senior Vice President, PIC
Two Gateway Center
Newark, NJ 07102
Eugene B. Heimberg President, Director, Senior Vice President, Prudential; President, Director and Chief
and Chief Investment Chief Investment Officer, PIC
Officer
Garnett L. Keith, Jr. Director Vice Chairman and Director, Prudential; Director, PIC
Harry E. Knapp Vice President Vice President, Prudential; Vice President, PIC
Four Gateway Center
Newark, NJ 07102
William P. Link Senior Vice Executive Vice President, Prudential; Senior Vice President, PIC
Four Gateway Center President
Newark, NJ 07102
Robert E. Riley Executive Vice Executive Vice President, Prudential; Executive Vice President,
800 Boylston Avenue President PIC; Director, PSG
Boston, MA 02199
James W. Stevens Executive Vice Executive Vice President, Prudential; Executive Vice President, PIC;
Four Gateway Center President Director, PSG
Newark, NJ 07102
Robert C. Winters Director Chairman of the Board and Chief Executive Officer, Prudential; Chairman of
the Board and Director, PSG
Claude J. Zinngrabe, Jr. Executive Vice Vice President, Prudential; Executive Vice President, PIC
President
</TABLE>
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
and for Class B shares of Prudential Adjustable Rate Securities Fund, Inc.,
The BlackRock Government Income Trust, Prudential California Municipal Fund
and (California Series), Prudential Equity Fund, Inc., Prudential Equity
Income Fund, Prudential FlexiFund, Prudential Global Fund, Inc.,
Prudential-Bache Global Genesis Fund, Inc. (d/b/a Prudential Global Genesis
Fund), Prudential-Bache Global Natural Resources Fund, Inc. (d/b/a
Prudential Global Natural Resources Fund), Prudential-Bache GNMA Fund, Inc.
(d/b/a Prudential GNMA Fund), Prudential-Bache Government Plus Fund, Inc.
(d/b/a Prudential Government Plus Fund), Prudential Growth Fund, Inc.,
Prudential-Bache Growth Opportunity Fund, Inc. (d/b/a
C-5
<PAGE>
Prudential Growth Opportunity Fund), Prudential-Bache High Yield Fund, Inc.
(d/b/a Prudential High Yield Fund), Prudential IncomeVertible\'AE 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, New Jersey
Money Market Series and Florida Series), Prudential-Bache National
Municipals Fund, Inc. (d/b/a Prudential National Municipals Fund),
Prudential Pacific Growth Fund, Inc., Prudential Short-Term Global Income
Fund, Inc., Prudential U.S. Government Fund, Prudential-Bache Utility Fund,
Inc. (d/b/a Prudential Utility Fund), Global Utility Fund, Inc.,
Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth Equity Fund).
Prudential Securities is also a depositor for the following unit investment
trusts:
The Corporate Income Fund
Corporate Investment Trust Fund
Equity Income Fund
Government Securities Income Fund
International Bond Fund
Municipal Investment Trust
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 and California
Income Series and Class A shares of the California Series), Prudential
Government Securities Trust (Money Market Series and U.S. Treasury Money
Market Series), Prudential-Bache MoneyMart Assets (d/b/a Prudential
MoneyMart Assets), Prudential Municipal Series Fund (Connecticut Money
Market Series, Massachusetts Money Market Series, New York Money Market
Series, New Jersey Money Market Series and Florida Series), Prudential
Institutional Liquidity Portfolio, Inc., Prudential-Bache Special Money
Market Fund, Inc. (d/b/a Prudential Special Money Market Fund), Prudential-
Bache Structured Maturity Fund, Inc. (d/b/a Prudential Structured Maturity
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., The BlackRock Government Income Trust, Prudential
California Municipal Fund (California Series), Prudential-Bache Equity
Fund, Inc., (d/b/a Prudential Equity Fund), Prudential Equity Income Fund,
Prudential FlexiFund, Prudential Global Fund, Inc., Prudential-Bache Global
Genesis Fund, Inc. (d/b/a Prudential Global Genesis Fund), Prudential-Bache
Global Natural Resources Fund, Inc. (d/b/a Prudential Global Natural
Resources Fund), Prudential- Bache GNMA Fund, Inc. (d/b/a Prudential GNMA
Fund), Prudential-Bache Government Plus Fund, Inc. (d/b/a Prudential
Government Plus Fund), Prudential Growth Fund, Inc., Prudential-Bache
Growth Opportunity Fund, Inc. (d/b/a Prudential Growth Opportunity Fund),
Prudential-Bache High Yield Fund, Inc. (d/b/a Prudential High Yield Fund),
Prudential-Bache IncomeVertible\'AE 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, Maryland Series, Massachusetts Series, Michigan Series,
Minnesota Series, New Jersey Series, North Carolina Series, Ohio Series and
Pennsylvania Series), Prudential-Bache National Municipals Fund, Inc.
(d/b/a Prudential National Municipals Fund), Prudential Pacific Growth
Fund, Inc., Prudential Short-Term Global Income Fund, Inc., Prudential U.S.
Government Fund and Prudential-Bache Utility Fund, Inc. (d/b/a Prudential
Utility Fund), Global Utility Fund, Inc., and Nicholas-Applegate Fund, Inc.
(Nicholas-Applegate Growth Equity Fund).
(b)(i) Information concerning the directors and officers of Prudential
Securities Incorporated is set forth below.
<TABLE>
<CAPTION>
Positions and Positions and
Offices with Offices with
Name(1) Underwriter Registrant
- ------- ------------- -------------
<S> <C> <C>
Alan D. Hogan .............. Executive Vice President, Chief Administrative None
Officer and Director
Howard A. Knight ........... Executive Vice President, Director, Corporate None
Strategy and New Business Development
George A. Murray ........... Executive Vice President and Director None
C-6
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Positions and Positions and
Offices with Offices with
Name(1) Underwriter Registrant
- ------- ------------- -------------
<S> <C> <C>
John P. Murray ............. Executive Vice President and Director of Risk None
Management
Leland B. Paton ............ Executive Vice President and Director None
Richard A. Redeker ......... Director Director
Hardwick Simmons ........... Chief Executive Officer, President and Director None
Lee Spenser ................ Interim General Counsel None
</TABLE>
(ii) Prudential Mutual Fund Distributors, Inc.:
<TABLE>
<S> <C> <C>
Joanne Accurso-Soto ........ Vice President None
Dennis Annarumma ........... Vice President, Assistant Treasurer None
and Assistant Comptroller
Phyllis J. Berman .......... Vice President None
Fred A. Fiandaca ........... President, Chief Executive Officer and Director None
Raritan Plaza One
Edison, NJ 08847
Stephen P. Fisher .......... Vice President None
Frank W. Giordano .......... Executive Vice President, General Counsel, None
Secretary and Director
Robert F. Gunia ............ Executive Vice President, Treasurer, Comptroller Vice President
and Director
Andrew J. Varley ........... Vice President None
Anita 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.
</TABLE>
(c) Registrant has no principal underwriter who is not an affiliated
person of the Registrant.
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, 1776 Heritage Drive,
North Quincy, Massachusetts, The Prudential Investment Corporation,
Prudential Plaza, 745 Broad Street, Newark, New Jersey, the Registrant, One
Seaport Plaza, New York, New York, and Prudential Mutual Fund Services,
Inc., Raritan Plaza One, Edison, New Jersey. Documents required by Rules
31a-1 (b)(5), (6), (7), (9), (10) and (11) and 31a-1(f) will be kept at Two
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
1. 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, 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 9th day of May, 1994.
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC.
By /s/ Lawrence C. McQuade
----------------------------------------------
Lawrence C. McQuade, President
Pursuant to the requiements 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 May 9, 1994
- --------------------------------
Lawrence C. McQuade
/s/ Stephen C. Eyre Director May 9, 1994
- --------------------------------
Stephen C. Eyre
/s/ Delayne D. Gold Director May 9, 1994
- --------------------------------
Delayne D. Gold
/s/ Dan G. Hoff Director May 9, 1994
- --------------------------------
Dan G. Hoff
/s/ Harry A. Jacobs Jr. Director May 9, 1994
- --------------------------------
Harry A. Jacobs, Jr.
/s/ Sidney R. Knafel Director May 9, 1994
- --------------------------------
Sidney R. Knafel
/s/ Robert E. LaBlanc Director May 9, 1994
- --------------------------------
Robert E. LaBlanc
/s/ Thomas A. Owens Jr. Director May 9, 1994
- --------------------------------
Thomas A. Owens, Jr.
/s/ Richard A. Redeker Director May 9, 1994
- --------------------------------
Richard A. Redeker
/s/ Clay T. Whitehead Director May 9, 1994
- --------------------------------
Clay T. Whitehead
/s/ Susan C. Cote Treasurer and May 9, 1994
- -------------------------------- Principal Financial and
Susan C. Cote Accounting Officer
<PAGE>
EXHIBIT INDEX
1. Articles of Incorporation of the Registrant. Incorporated by reference
to Exhibit 1 in Registrant's initial Registration Statement on Form N-1A
(File No. 33-33479) filed on February 23, 1990.
(a) Articles of Amendment to Articles of Incorporation. Incorporated by
reference to Exhibit 1(a) to Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A (File No. 33-33479) filed by
Registrant on August 24, 1990.
(b) Articles Supplementary. Incorporated by reference to Exhibit 1(b)
to Post-Effective Amendment No. 1 to the Registration Statement on Form
N-1A (File No. 33-33479) filed by Registrant on December 18, 1990.
(c) Articles of Amendment of Articles of Incorporation. Incorporated by
reference to Exhibit 1(c) to Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A (File No. 33-33479) filed by
Registrant on December 31, 1991.
(d) Form of Amended and Restated Articles of Incorporation.*
2. Amended and Restated By-Laws of the Registrant incorporated by reference
to Exhibit No. 2 to Pre-Effective Amendment No. 3 to the Registration
Statement on Form N-1A (File No. 33-33479) filed by Registrant on
October 22, 1990.
4. Instruments defining rights of shareholders. Incorporated by reference
to Exhibit 4 to Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A (File No. 33-33470) filed on Edgar by Registrant
on December 30, 1993.
5. (a) Management Agreement between the Registrant and Prudential Mutual
Fund Management, Inc, Incorporated by reference to Exhibit 5(a) to Pre-
Effective Amendment No. 3 to the Registration Statement on Form N-1A
(File No. 33-33479) filed by Registrant on October 22, 1990.
(b) Subadvisory Agreement between Prudential Mutual Fund Management,
Inc. and The Prudential Investment Corporation, Incorporated by
reference to Exhibit No. 5(b) to Pre-Effective Amendment No. 3 to the
Registration Statement on Form N-1A (File No. 33-33479) filed by
Registrant on October 22, 1990.
6. (a) Subscription Offering Agreement among the Registrant, Prudential-
Bache Securities Inc. and Prudential Mutual Fund Distributors, Inc.
incorporated by reference to Exhibit No. 6(c) to Pre-Effective
Amendment No. 3 to the Registration Statement on Form N-1A (File No.
33-33479) filed by Registrant on October 22, 1990.
(b) Subscription Offering Agreement among the Registrant,
Prudential-Bache Securities Inc. and Prudential Mutual Fund
Distributors, Inc. incorporated by reference to Exhibit No. 6(d) to
Post-Effective Amendment No. 1 to the Registration Statement on Form
N-1A (File No. 33-33479) filed by Registrant on December 18, 1990.
(c)(i) Distribution Agreement between the Registrant and Prudential
Mutual Fund Distributors for the Class A shares dated July 1, 1993,
incorporated by reference to Exhibit 6 (e)(ii) to Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A (File No.
33-33479) filed via EDGAR on December 30, 1993.
(c)(ii) Restated Distribution Agreement between the Fund and Prudential
Securities Incorporated for the Class B shares dated July 1, 1993,
incorporated by reference to Exhibit 6 (e)(iii) to Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A (File No.
33- 33479) filed via EDGAR on December 30, 1993.
(c)(iii) Form of Distribution Agreement for Class A shares.*
(c)(iv) Form of Distribution Agreement for Class B shares.*
(c)(v) Form of Distribution Agreement for Class C shares.*
8. Custodian Contract between the Registrant and State Street Bank and
Trust Company. Incorporated by reference to Exhibit No. 8 to
Pre-Effective Amendment No. 3 to the Registration Statement on Form
N-1A (File No. 33- 33479) filed by Registrant on October 22, 1990.
9. Transfer Agency and Dividend Disbursing Agreement between the
Registrant and Prudential Mutual Fund Services, Inc. Incorporated by
reference to Exhibit No. 9 to Pre-Effective Amendment No. 3 to the
Registration Statement on Form N-1A (File No. 33-33479) filed by
Registrant on October 22, 1990.
10. Opinion of Counsel. Incorporated by reference to Exhibit No. 10 to Pre-
Effective Amendment No. 3 to the Registration Statement on Form N-1A
(File No. 33-33479) filed by Registrant on October 22, 1990.
11. Consent of Independent Accountants.*
13. Purchase Agreement. Incorporated by reference to Exhibit 13 to Pre-
Effective Amendment No. 3 to the Registration Statement on Form N-1A
(File No. 33-33479) filed by Registrant on October 22, 1990.
14. Not Applicable.
15. (a)(i) Distribution and Service Plan for Class A shares of Short-Term
Global Income Portfolio dated July 1, 1993, incorporated by reference
to Exhibit 15(a)(i) to Post-Effective Amendment No. 6 to the
Registration Statement on Form N-1A (File No. 33-33479) filed via EDGAR
on December 30, 1993.
<PAGE>
(b)(i) Distribution and Service Plan for Class B shares of the Fund
dated July 1, 1993, incorporated by reference to Exhibit 15(b)(ii) to
Post- Effective Amendment No. 6 to the Registration Statement on Form
N-1A (File No. 33-33479) filed via EDGAR on December 30, 1993.
(b)(ii) Distribution and Service Plan for Class A shares of Global
Assets Portfolio dated July 1, 1993, incorporated by reference to
Exhibit 15(b)(ii) to Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A (File No. 33-33479) filed via EDGAR on
December 30, 1993.
(c) Form of Distribution and Service Plan for Class A shares of the
Short- Term Global Income Portfolio and Global Assets Portfolio.*
(d) Form of Distribution and Service Plan for Class B shares of the
Short- Term Global Income Portfolio.*
(e) Form of Distribution and Service Plan for Class C shares of the
Short- Term Global Income Portfolio.*
16. (a) Not Applicable.
17. (a) Not Applicable.
- ------------
* Filed herewith.
EXHIBIT 99.1(d)
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC.
FORM OF
ARTICLES OF AMENDMENT AND RESTATEMENT
Prudential Short-Term 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 Corporation desires to amend and restate its
charter as currently in effect, such amendment and restatement to
be effective on [ ], 1994, and the charter of the
Corporation is amended by deleting Articles I through VIII in their
entirety and substituting new Articles I through VIII, and, as so
amended, is restated as follows:
"ARTICLE I.
The name of the corporation (hereinafter called the
"Corporation") is Prudential Short-Term 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, corporationsby
the General Laws of the State of Maryland now or hereafter in
force.
<PAGE>
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 said resident agent South Street, Baltimore, Maryland 21202.
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 250,000,000 shares
of Class A Capital Stock of the Global Assets Portfolio,
250,000,000 shares of Class B Capital Stock of the Global Assets
Portfolio, 500,000,000 shares of Class A Capital Stock of the
Short-Term Global Income Portfolio, 500,000,000 shares of Class B
Capital Stock of the Short-Term Global Income Portfolio and
500,000,000 shares of the Class C Capital Stock of the Short-Term
Global Income Portfolio.
(a) Each share of Class A, Class B 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
<PAGE>
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) 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 a Portfolio
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 same Portfolio of the Corporation
(computed in the manner hereinafter described), at the
applicable net asset value 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
<PAGE>
issued for cash and shares purchased through the automatic
reinvestment of dividends and distributions with respect to
Class B Common Stock (each "Conversion Date"), determined by
the Board of Directors in accordance with applicable laws,
rules, regulations, and interpretations of the Securities and
Exchange Commission and the National Association of Securities
Dealers, Inc. and pursuant to such procedures as may be
established from time to time by the Board of Directors and
disclosed in the Corporation's then current prospectus for
such Class A and Class B Common Stock.
(c) The number of shares of the Class A Common Stock of
the Corporation into which a share of the Class B Common Stock
is converted pursuant to Paragraph (1)(b) hereof shall equal
the number (including for this purpose fractions of a share)
obtained by dividing the net asset value per share of the
Class B Common Stock for purposes of sales and redemptions
thereof at the time of the calculation of the net asset value
on the Conversion Date by the net asset value per share of the
Class A Common Stock for purposes of sales and redemptions
thereof at the time of the calculation of the net asset value
on the Conversion Date.
(d) On the Conversion Date, the shares of the Class B
Common Stock of the Corporation converted into shares of the
Class A Common Stock will cease to accrue dividends and will
no longer be outstanding and the rights of the holders thereof
will cease (except the right to receive declared but unpaid
dividends to the Conversion Date).
<PAGE>
(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
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.
<PAGE>
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
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
<PAGE>
Act, 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 or series as
described above; (b) in the event that the separate vote
requirements referred to in (a) above apply with respect to one or
more classes or series, then subject to paragraph (c) below, the
shares of all other classes and series not entitled to a separate
vote shall vote together as a single class; and (c) as to any
matter which in the judgment of the Board of Directors (which shall
be conclusive) does not affect the interest of a particular class
or series, such class or series shall not be entitled to any vote
and only the holders of shares of the one or more affected classes
and series shall be entitled to vote.
Section 5. Unless otherwise expressly provided in the charter
of the Corporation, including any Articles Supplementary creating
any class or series of capital stock, in the event of any
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, holders of shares of capital stock of the
Corporation shall be entitled, after payment or provision for
payment of the debts and other liabilities of the Corporation (as
such liabilities may affect one or more of the classes of shares of
capital stock of the Corporation), to share ratably in the
remaining net assets of the Corporation; provided, however, that in
the event the capital stock of the Corporation shall be classified
or reclassified into series, holders of any shares of capital stock
within such series shall be entitled to share ratably out of assets
<PAGE>
belonging to such series pursuant to the provisions of Section 7(c)
of this Article IV.
Section 6. Each share of any class of the capital stock of
the Corporation, and in the event the capital stock of the
Corporation shall be classified or reclassified into series, each
share of any class of capital stock of the Corporation within such
series shall be subject to the following provisions:
(a) The net asset value of each outstanding share
of capital stock of the Corporation (or of a class or
series, in the event the capital stock of the Corporation
shall be so classified or reclassified 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
<PAGE>
series, may differ from class to class or from series to
series) prescribed or approved by the Board of Directors
in its discretion, and shall be determined at the time or
times (which time or times may, in the event the capital
stock of the Corporation shall be classified into classes
or series, differ from series to series) prescribed or
approved by the Board of Directors in its discretion. In
addition, subject to subsection (b) of this Section 6,
the Board of Directors, in its discretion, may suspend
the daily determination of net asset value of any share
of any series or class of capital stock of the
Corporation.
(b) The net asset value of each share of the
capital stock of the Corporation or any class or series
thereof shall be determined in accordance with any
applicable provision of the Investment Company Act, 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
<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 (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
<PAGE>
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
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
<PAGE>
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
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
<PAGE>
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
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
<PAGE>
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
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
<PAGE>
series has a net capital loss for a fiscal year, and to
the extent that the net capital loss offsets net capital
gains from such series, the amount to be deemed available
for distribution to that series with the net capital gain
may be reduced by the amount offset.
(c) In the event of the liquidation or dissolution
of the Corporation, holders of shares of capital stock of
each series shall be entitled to receive, as a series,
out of the assets of the Corporation available for
distribution to such holders, but other than general
assets not belonging to any particular series, the assets
belonging to such series; and the assets so distributable
to the holders of shares of capital stock of any series
shall be distributed, subject to the provisions of
subsection (d) of this Section 7, among such stockholders
in proportion to the number of shares of such series held
by them and recorded on the books of the Corporation. In
the event that there are any general assets not belonging
to any particular series and available for distribution,
such distribution shall be made to the holders of all
series in proportion to the net asset value of the
respective series determined in accordance with the
charter of the Corporation.
(d) The assets belonging to any series shall be
charged with the liabilities in respect to such series,
and shall also be charged with its share of the general
liabilities of the Corporation, in proportion to the
<PAGE>
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.
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 provision of law requiring
action to be taken or authorized by the affirmative vote of the
holders of a designated proportion greater than a majority of the
outstanding shares of all classes or series or of the outstanding
<PAGE>
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.
ARTICLE V.
Directors
The initial number of directors of the Corporation shall be
three, and the names of those who shall act as such until the first
meeting of stockholders and until their successors are duly elected
and qualify are as follows:
J. Hamilton Crawford, Jr.
S. Jane Rose
Ronald Amblard
The By-Laws of the Corporation may fix the number of directors at
no 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
<PAGE>
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 of Directors and Officers
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 of officer of
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.
<PAGE>
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
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.
ARTICLE VII.
Miscellaneous
The following provisions are inserted for the management of
the business and for the conduct of the affairs of the Corporation,
and for creating, defining, limiting and regulating the powers of
the Corporation, the directors and the stockholders.
Section 1. The Board of Directors shall have the management
and control of the property, business and affairs of the
Corporation and is hereby vested with all the powers possessed by
the Corporation itself so far as is not inconsistent with law or
these Articles of Incorporation. In furtherance and without
<PAGE>
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.
(e) To take any and all action necessary or
<PAGE>
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.
Section 4. Except as required by law, the holders of shares
of capital stock of the Corporation shall have only such right to
<PAGE>
inspect the records, documents, accounts and books of the
Corporation as may be granted by the Board of Directors of the
Corporation.
Section 5. Any vote of the holders of shares of capital stock
of the Corporation authorizing liquidation of the Corporation or
proceedings for its dissolution may authorize the Board of
Directors to determine, as provided herein, or if provision is not
made herein, in accordance with generally accepted accounting
principles, which assets are the assets belonging to the
Corporation or any series thereof available for distribution to the
holders of the Corporation or any series thereof (pursuant to the
provisions of Section 7 of Article IV hereof) and may divide, or
authorize the Board of Directors to divide, such assets among the
stockholders of the shares of capital stock of the Corporation or
any series thereof in such manner as to ensure that each such
holder receives an amount from the proceeds of such liquidation or
dissolution that such holder is entitled to, as determined pursuant
to the provisions of Sections 3 and 7 of Article IV hereof.
ARTICLE VIII.
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
<PAGE>
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
Amendment and Restatement are all of the provisions of the Charter
currently in effect.
THIRD: The Corporation currently has ten directors. The
names of the directors currently in office are as follows:
Stephen C. Eyre
Delayne D. Gold
Don G. Hoff
Harry A. Jacobs, Jr.
Sidney R. Knafel
Robert E. LaBlanc
Lawrence C. McQuade
Thomas A. Owens, Jr.
Richard A. Redeker
Clay T. Whitehead
FOURTH: (a) As of immediately before the Amendment, the
total number of shares of stock of all classes which the
Corporation had authority to issue was 2,000,000 divided into
250,000 shares of Class A Common Stock (par value $.001 per share)
of the Global Assets Portfolio, 250,000 shares of Class B Common
Stock (par value $.001 per share) of the Global Assets Portfolio,
750,000 shares of Class A Common Stock (par value $.001 per share)
of the Short-Term Global Income Portfolio and 750,000 shares of
Class B Common Stock (par value $.001 per share) of the Short-Term
Global Income Portfolio.
(b) The aggregate par value of all shares having a
par value which the Corporation was authorized to issue is
$2,000,000.
(c) A description of the Class A Common Stock and
<PAGE>
Class B Common Stock of each Portfolio is as set forth above.
FIFTH: The Corporation's principal office in the state of
Maryland is c/o CT Corporation, 32 South Street, Baltimore,
Maryland 21202. The name and address of the Corporation's resident
agent is CT Corporation, 32 South Street, Baltimore, Maryland
21202.
SIXTH: The foregoing amendments to the Articles of
Incorporation have been advised by the Board of Directors and
approved by the shareholders of the Corporation.
IN WITNESS WHEREOF, Prudential Short-Term 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 Secretary on [ ],
1994.
Prudential Short-Term Global Income Fund, Inc.
By -------------------------------------------
Lawrence C. McQuade
President
Attest: ----------------------------------------
S. Jane Rose
Secretary
<PAGE>
THE UNDERSIGNED, President of Prudential Short-Term Global
Income Fund, Inc., who executed on behalf of the Corporation the
foregoing Articles of Amendment and Restatement of which this
certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles of Amendment and
Restatement to be the corporate act of said Corporation and hereby
certifies that to the best of his knowledge, information, and
belief the matters and facts set forth therein with respect to the
authorization and approval thereof are true in all material
respects under the penalties of perjury.
---------------------------------------------
Lawrence C. McQuade
President
EXHIBIT 99.6 (c)(iii)
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND
Form of
Distribution Agreement
(Class A Shares)
Agreement made as of _____________199_, between
Prudential Short-Term Global Income Fund, 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 the Short-
Term Global Income Portfolio and the Global Assets Portfolio (each.
a Portfolio) 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 Plans) with respect to each Portfolio 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.
<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,
<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.
<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 Plans.
Section 8. Payment of the Distributor under the Plans
8.1 The Fund shall pay to the Distributor as
compensation for services under the Distribution and Service Plans
and this Agreement a fee, (i) with respect to the Short-Term Global
Income Portfolio, of .30 of 1% (including an asset-based sales
<PAGE>
charge of .05 of 1% and a service fee of .25 of 1%) per annum of
the average daily net assets of the Class A shares of that
Portfolio, and (ii) with respect to the Global Assets Portfolio, of
.50 of 1% (including an asset-based sales charge of .25 of 1% and
a service fee of .25 of 1%) per annum of the average daily net
assets of the Class A shares of that Portfolio. Amounts payable
under the Plans shall be accrued daily and paid monthly or at such
other intervals as the Directors may determine. Amounts payable
under the Plans shall be subject to the limitations of Article III,
Section 26 of the NASD Rules of Fair Practice.
8.2 So long as the Plans or any amendment thereto are 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 Plans (or any
amendment thereto) are 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
<PAGE>
the Fund.
(d) amounts paid to, or an account of, account
executives of Prudential Securities, Prusec,
or of other broker-dealers or financial
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 Plans with respect to Class
A shares, so long as the Plans are 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
<PAGE>
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
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, trustee 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 or
trustees 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 trustees 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 trustees, 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
<PAGE>
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
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 Plans 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.
<PAGE>
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
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: ________________________
_______________________
(Title)
Prudential Short-Term Global Income
Fund
By: _______________________
(Name)
(Title)
EXHIBIT 99.6(c)(iv)
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND
Short-Term Global Income Portfolio
Form of
Distribution Agreement
(Class B Shares)
Agreement made as of ______ __, 199_, between Prudential
Short-Term Global Income Fund, Short-Term Global Income Portfolio, 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.
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
<PAGE>
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 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.
<PAGE>
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.
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
<PAGE>
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 1% (including an asset-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 the 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
<PAGE>
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 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.
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
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 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: ________________________
________________________
(Title)
Prudential Short-Term Global
Fund
By: _______________________
(Name)
(Title)
EXHIBIT 99.6(c)(v)
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND
Short-Term Global Income Portfolio
Form of
Distribution Agreement
(Class C Shares)
Agreement made as of ______ __, 199_, between Prudential
Short-Term Global Income Fund, Short-Term Global Income Portfolio, 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.
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
<PAGE>
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 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.
<PAGE>
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.
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
<PAGE>
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 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 the 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
<PAGE>
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 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.
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
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 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: ________________________
________________________
(Title)
Prudential Short-Term Global Income
Fund
By: _______________________
(Name)
(Title)
EXHIBIT 99.11
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Post-Effective Amendment No. 7 to
Registration Statement No. 33-33479 of Prudential Short-Term Global
Income Fund, Inc. of our report dated December 15, 1993, appearing in
the Statement of Additional Information, which is a part of such
Registration Statement, and to the references to us under the headings
"Financial Highlights" in the Prospectus, which is a part of such
Registration Statement, and "Custodian, Transfer and Dividend
Disbursing Agent and Independent Accountants" in the Statement of
Additional Information.
/s/ Deloitte & Touche
- -------------------------------------
Deloitte & Touche
New York, New York
April 29, 1994
EXHIBIT 99.15(c)
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND
Short-Term Global Income Portfolio
Distribution and Service Plan
(Class A Shares)
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 Short-Term Global Income Fund, Short-Term Global Income
Portfolio (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 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.
<PAGE>
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. 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 apply 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
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.
<PAGE>
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
Class A 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 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
<PAGE>
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
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
effectiveness of the Plan, such agreements or reports, and for at
least the first two years in an easily accessible place.
Dated:
<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND
Global Assets Portfolio
Distribution and Service Plan
(Class A Shares)
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 Short-Term Global Income Fund, Global Assets Portfolio (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 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.
<PAGE>
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. 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 apply 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 .50 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
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.
<PAGE>
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
Class A 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 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
<PAGE>
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
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
effectiveness of the Plan, such agreements or reports, and for at
least the first two years in an easily accessible place.
Dated:
EXHIBIT 99.15(d)
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND
Short-Term Global Income Portfolio
Distribution and Service Plan
(Class B Shares)
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 Short-Term Global Income Fund, Short-Term Global Income
portfolio (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 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), 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 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
<PAGE>
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. 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 .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
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
<PAGE>
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 Class B 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 the 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 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.
<PAGE>
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.
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.
Dated:
Exhibit 99.15(e)
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND
Short-Term Global Income Portfolio
Distribution and Service Plan
(Class C Shares)
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 Short-Term Global Income Fund, Short-Term Global Income
Portfolio (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 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 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
<PAGE>
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
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 .75 of 1% per annum of the average
daily net assets of the Class C shares 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.
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
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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 Class C 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 the 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 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
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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 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.
Dated:
